Published on December 14, 2021

Estonia: Fund covering loss of wages

Photo: An oil company from the Ida-Virumaa city in Estonia. Ida-Viru County or Ida-Virumaa is one of 15 counties of Estonia. It is the most north-eastern part of the country. The county contains large deposits of oil shale – the main mineral mined in Estonia

Ida-Virumaa, Estonia: In the North-Eastern corner of Estonia, some 150 kilometers from St Petersburg is the county of Ida-Virumaa. The county is unique in Estonia for at least two reasons: it is the only one of Estonia’s 15 counties with a majority of ethnic Russians and it is the only county where shale oil is produced. Shale oil is an unconventional type of oil with many of the same properties as conventional crude oil. The oil is produced through the combustion of a sedimentary rock called oil shale. In 2018, 76 percent of the Estonian electricity generation was derived from shale oil. This gives Estonia a high degree of energy independence, but also makes it one of the most carbon intensive countries in the EU. In addition, shale oil production comes with a long list of environmental concerns, including water pollution, land-use, erosion and air pollution. Despite this, the Estonian government has so far only made weak and vague promises on phase-out.

Ida-Virumaa has been in transition since the 1990’s. From a peak of 14.000 people employed in the oil shale mine alone in the 1980’s, the labour force employed in the entire sector was down to 5800 in January 2020. In 2020 alone, 1033 workers were laid off from their jobs. The region is already straddled with a rapidly ageing and decreasing population. With a large number of households dependent on incomes from the shale oil industry, the demographic and economic transformations put the region at risk of increased social issues.

Ida-Virumaa is the only region in Estonia applying for funding under the Just Transition Mechanism. One of the measures proposed in the Ida-Virumaa Territorial Just Transition Plans aims to tackle the job loss in the oil shale sector and provide security to laid off workers as the economy becomes more diversified. With a budget of 1.5 million euros, the Ministry of Social Affairs has created a fund for laid off workers in the shale oil industry. The fund comes in addition to regular unemployment benefits and is only available to workers who have been employed in the shale oil industry for at least two years within the previous three years. The total sum eligible to each worker corresponds to 30 percent of the salary they previously received, with a ceiling of 1000 euros/month. The payouts are available for different timeframes depending on the worker’s seniority in the industry. Those who have worked for under five years can received the payments for up to 6 months, those that have worked for 5-10 years can receive payments for 9 months and those that have worked for over 10 years are eligible for up to one year.

A key indicator of a successful regional transition from carbon fuels is that no-one gets left behind. Providing financial security along with upskilling and reskilling opportunities is a key part of that. Instead of being thrown into financial insecurity and precarious work, the Estonian fund enables laid off workers in Ida-Virumaa to enhance their qualifications, start new businesses and move onto new career paths. The result is a net win both for the climate and for the Ida-Virumaa region.