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Ramon Rask: Estonian entrepreneurship needs support, focus and ambition to restart. The public sector could set an example
Ramon Rask: Estonian entrepreneurship needs support, focus and ambition to restart. The public sector could set an example
The world's most generous parental benefit, solidary healthcare system, free education and a safe country come with a bill that requires a functioning business and economy to pay.
The economic climate map of the Ministry of Finance shows that the confidence of Estonian entrepreneurs to produce and recruit and the courage of consumers to consume is at the level of the recession of 2009 and 2010. At the same time, the country and society are in a multiplicity of concerns: the last four years have passed in the tact of crisis management, when several focus topics, such as health care, national defense, energy and climate change, demand attention at the same time.
Against the background of the objectively nad economic indicators, the realization begins to set in that all these focal topics contain a significant amount of public service – something that means a burden on the public purse. The state has not had many choices here, i.e. it has to borrow or tax to ensure public services.
However, the national debt released in recent years forces us to be careful with borrowing and rather to tax. However, business can tolerate tax increases and new taxes only up to a certain limit, and only what exists can be taxed.
It's like trimming a hedge – you can trim something that is viable and growing. But what is it that ensures that Estonia has a viable economy? To divide what to prune?
A question of ambition
A number of entrepreneurs believe that a fundamental change in mindset and focus is needed to ensure the viability of the Estonian economy. This is both from the side of the entrepreneurs themselves and the state. To understand that it is necessary to act, not to hope and believe. If many people would sign such a slogan call, it will become more difficult to start investigating how to act more concretely to revive the economy.
In this discussion, already in the introduction, the fact should be recognized that it is precisely these "other" focuses that often limit and frame entrepreneurship. Whether they are nature conservation restrictions in the case of forestry or agriculture, or security considerations in the recruitment of foreign labor, and so on.
Coming back to ambition and focus, the question arises whether, in addition to headlines, we are also ready to put entrepreneurship before other, equally important values. Is there a cross-government hunger and willingness to take risks to shift the balance in favor of business?
The public sector as an example
Several strategy and policy documents have been drawn up in Estonia, which should guide the economy in the next decade. In 2021, the Riigikogu adopted the "Estonia 2035" strategy. The economic policy plan for the next decade was prepared in the Ministry of Economy and Communications last year.
A development plan for research and development, innovation and economy has been prepared until 2035, as well as a development plan for Estonian industrial policy. This list could be continued for a long time.
These are voluminous documents containing a significant amount of involvement and gathering valuable thoughts in large quantities. However, their value or worthlessness depends on whether and what from this myriad array of words is actually implemented.
To prove that it is not just a well-arranged word salad, but realizable action plans, the example of the public sector in organizing its activity path is of critical importance. Be it a 15% cut in public sector operating costs allowed together with tax increases or, for example, setting more ambitious (exemplary) goals for the public sector in the Climate-Resistant Economy Act.
Since public sector consumption accounts for approx. 15% of Estonia's gross domestic product, the state has an important ability to manage changes by changing its own behavioral habits. Thus, one should ask whether the state power, which on the one hand sets the goal of a transition to renewable energy as quickly as possible, also manages itself according to its words.
For example, if by 2030 Estonia's carbon dioxide emissions should decrease by 37% compared to 2022, and from there to CO2-neutral energy production by 2040, the country sets itself the goal of ending the use of fossil fuels from 2040 in the draft law on a climate-proof economy. This is only on the condition that "reasonable alternatives" have been created by then.
The public sector, which meets the minimum requirements within 15 years if "reasonable alternatives" favor it, does not show direction and lead by example, but ticks along. An ambitious public sector would set goals for itself that exceed those set by others, do it earlier and direct the focus by example, influencing the market in real terms, depending on the share of the public sector in internal consumption.
If the ambition of the goals set by the public sector is something that should characterize state governance as a whole, then I will highlight five important "inputs" for entrepreneurs, in which it is necessary to find an additional step in cooperation with the public sector in order to encourage the growth of entrepreneurship.
1. Skilled workforce
It will not come as a surprise to anyone who has analyzed Estonia's demographic indicators that in the next ten years the expected shortage of top specialists needed in the Estonian economy will grow to about 50% of what local higher education institutions can train.
Therefore, only ibe projects and boosting the education system with additional funding will not save the labor market. These processes are too long-term, and the inevitable solution to revive the economy is the involvement of foreign labor on a larger scale. Here we collide with the quota system, but also with the broader question of what is under the quota and what is not.
Amendments to the Law on Aliens are currently circulating, which tightens the way to obtain a temporary residence permit in Estonia based on employment. The employer is expected to have at least one year of real economic activity in Estonia, except for start-up and film companies.
This is a completely reasonable request and a welcome step in the current security situation. At the same time, from the point of view of preferential development of entrepreneurship, it would be logical that together with the setting of qualitative additional conditions and restrictions, the possibilities of making the system more attractive to entrepreneurs are also reviewed.
The Central Union of Employers has stated that it would be important to increase the foreign labor quota. According to them, Estonia's regulation of foreign labor is one of the strictest in Europe, and there is a demand for worthy labor elsewhere as well.
Apparently, the truth, as always, lies somewhere between the two extremes. It is understandable that only people who do not pose a threat to security and who are of real use here should be invited to the country. At the same time, the flexibility, digitization, speed and affordability of the procedure are the keywords, based on which the system of work-related residence permits and visas should be revised.
At the same time, we also have success stories to show in each sector, where the involvement of foreign labor has made it possible to revive the Estonian economy. For example, according to KredEx data, in 2023, Estonian start-up companies hired 1,315 employees from abroad with the help of the start-up visa program. Estonian start-ups participating in the program paid more than 136 million euros in taxes to the state, and their total turnover reached 1.6 billion euros.
2. Cheap energy
When talking about inputs important for economic growth, competitive energy prices are also important in addition to an educated workforce.
What will most likely ensure cheap and competitive energy in Estonia in the near future? What is this cocktail of different production sources and associations? Why has it not been possible to realize it so far? And what needs to be done to make it happen in the near future? These and similar questions have been on the lips of politicians in recent years.
A number of steps have been taken in order to encourage the development of renewable energy - from the organization of national tenders for obtaining volumes of renewable energy to the revision of regulations related to the planning procedure to speed up the process.
At the same time, considering that according to various estimates, electricity consumption may double by 2050 due to the electrification of the energy economy (i.e., the replacement of different fuels with electricity), it remains unclear whether what has been done is still enough.
Conversely, considering the interested parties who are currently offering their technology as ingredients of the energy economy cocktail (solar plants, onshore wind farms, offshore wind farms, battery plants, hydraulic pumping station, nuclear plant, gas plant), the question arises whether there is a demand for all of this in Estonia. If the demand is located outside of Estonia, what does the country and the economy gain from such energy production?
Since the central question for several components of the energy cocktail is the securing of national support – for example through grid development or a price floor for energy sales – the ultimate question is how necessary a particular energy source is to make the whole work and how much it will cost the consumer.
In a general way, it can be stated that if in the case of a nuclear plant, which is planned to be connected to the existing grid connections to Ida-Virumaa, the bill presented to the public sector consists primarily of the cost of creating state administrative and supervisory capacity, then in the case of offshore wind farms, the construction of the grid in the water should also be paid for.
If we prefer to build wind, solar and battery parks (i.e. hybrid parks) in addition to the existing network capacities, the taxpayer would not receive a significant additional bill, but it would mean a stronger review of nature and national protection restrictions and the overturning of the community (NIMBY – not in my backyard) effect.
Therefore, a decision should be made whether to pay the additional bill for creating the development capacity of nuclear energy or offshore wind farm, or to adjust the focus and reevaluate restrictions and privacy requirements.
3. Attractive tax environment
In Estonia, there has been a long-standing belief that in order for entrepreneurship to flourish, it is important to ensure an environment that does not harass with too many burdens. Next to the reduction of bureaucracy, the most important thing is a tax system that favors entrepreneurs.
According to the economic policy development strategy of the Ministry of Economy and Communications, the attractiveness of Estonia's economic environment must be evaluated as a measure, among other things, by where we rank according to the ITCI (International Tax Competitiveness Index) indicator. In 2023, Estonia was the first and the Estonian tax system was considered the best among the OECD countries.
Four factors were cited as the reason. First, a simple and clear 20% corporation tax regulation that applies only to dividends. Second, a simple and clear 20% personal income tax that does not apply to dividends (no double taxation).
Thirdly, a simple land tax based on the value of land and non-land-related property (buildings). Fourthly, double taxation exclusions, i.e. income already taxed in a foreign country is not taxed in Estonia.
Will the planned 2 + 2 + 2 tax increase nullify the advantages related to the attractiveness of the Estonian business environment? The short answer is rather not. While tax increases are not good for any economic environment, it is important to look at what is being received in return for this tax increase. At least on paper, it is a targeted tax increase, the tax revenue from which goes to improving the defense capacity of the Estonian state.
The fact that the Estonian state now and in the future needs to prove both to its allies, as well as to entrepreneurs who are interested in investing here, that we are a stable country that is capable of defending itself and contributes to its defense capacity, is not doubted by anyone.
At the same time, the benefits resulting from this message are presumably sufficient to at least partially compensate for the damage caused by the tax increase. At least this could be said by studying the examples of countries like South Korea or Israel.
Unfortunately, the reality is that a country with the world's most generous parental benefits, a solidary healthcare system, free education and a hefty national defense budget cannot be maintained with a thin tax system. There is no doubt that the government's words will come true and tax changes will happen. However, it is about whether the tax increases announced as temporary will in reality also remain temporary. In order to restore the attractiveness of the tax environment and to emphasize the obedience of the public authorities, which is also a sign of a strong rule of law, it is important to stick to this promise.
4. Reduction of bureaucracy
Entrepreneurs from several sectors complain that they are drowning in questionnaires. Kai Realo has noted when drawing up Estonia's economic policy plan that "bureaucracy is growing rapidly and there is a constant struggle between where, what and how much you report and how to ensure that the principles of data protection are met."
In Estonia, entrepreneurs have over 400 forms that must be filled out. The fact that IT Tiger could work better here and that many of these questionnaires could be missing as a result of cross-use of data is apparently not questioned by anyone. "Formation" therefore needs a critical revision and a slogan goal in the style of other promises of the new coalition - half as many forms by 2025.
While the application process simply ruins the entrepreneur, it is existentially important for the entrepreneur that the attitudes of officials regarding administrative procedures change. Without wanting to do too much for the officials, who are not affected by the following, I dare to say that the biggest suffocator of entrepreneurship in the public sector is the epidemic unwillingness of officials to decide and/or to decide in a way that favors the entrepreneur in any way.
So we have got mammoth proceedings, where the matter is simply processed and processed. Also, the practice where the official makes a negative/refusal decision on the grounds that if his decision favors the entrepreneur, others will also want the same decision. So it seems easier not to decide and not to allow.
The latter, in turn, means that many entrepreneurs' initiatives are either suffocated or, by wasting the resources of the court, they are crushed in three stages. Perhaps using the hedge-trimming metaphor again, it seems easier to ban the planting of a hedge than to control it. And from the point of view of the specific decision-maker, it is so, but what are we planning to cut?
An official should dare and want to consider. Various ideas have been voiced to curb this kind of behavior, starting with the term of employment contracts concluded with officials (regular supervision would be preferable) or, for example, the publication of data on administrative procedures related to each official, i.e. something like a control board, which would show publicly and in real time how many cases a particular official has processed and are in the process of, and how many have been contested. or annulled decisions.
At the same time, one has to agree with those who claim that all of the above is dealing with symptoms and disease prevention starts with the guide. Just as in a company, so too in an office, attitudes and culture are determined by the head of the office. Unfortunately, the previous recognition alone does not help to lead to better management quality.
Whether these are soft measures (trainings, seminars) or more drastic ones (dashboard and metrics) - focusing on the entrepreneur as a customer and the need to ensure that the public service is customer-centric is certainly one of the key factors, the improvement of which would remove the bitter taste caused by the tax increase from the mouths of many entrepreneurs. Here, the state has a lot of internal (off-budget) resources that can be realized and with which business can be significantly revived.
5. Increasing investment in innovation
In addition to all this, it is also important to be smarter than before. In addition to the public sector's contribution to innovation, the entrepreneurs themselves have an important and decisive role here. Although we are currently going through an AI hype period, which is or has been followed by a certain hangover, the fact is that AI is here to stay. The winners are those who can make it work for themselves as quickly and painlessly as possible: both at the level of the country, sectors and specific companies.
According to recent research, only 4.7% of US entrepreneurs use AI in their operations. Here, Estonia's small and flexible economy has a big advantage and a momentum that should not be lost: the creation of a new knowledge and artificial intelligence-based, digitized economy.
TAIE, or Estonian research and development, innovation and entrepreneurship development plan for the years 2021–2035, stipulates that the Estonian state invests 1% in research development and entrepreneurs 2%. Estonia's reputation as an e-country is strong, but fading. We have moved from paper to digital, but the possibilities of further applying this data for the benefit of the state and society are unlimited. We are at the tipping point of the AI-driven economy and the time is right to make the Tiger Leap 2.0. But is there an ambition for that?
Let's go back to the first thesis that the public sector should lead by example. The state could set an example here with public services. Could the personal state declared by Estonia 200 be something like that? Here, it is important to deal with the anxiety that comes with any novelty. Be it the fear of unemployment or the invasion of privacy, or simply the fear of having to communicate with a chatbot instead of a person.
Fears should not be underestimated, because overcoming them can be the key to making another tiger leap. Every ministry in its area of responsibility should realistically show the places where artificial intelligence can and is planned to be implemented, and then do it. In summary, the mentioned five inputs are only a part of what we need for business success. However, as already noted, it is not a matter of ideas, but of attitude. If we want a generous parental benefit, a solidary health care system, free education and a safe country, it is important to realize that all this comes with a bill that requires a functioning business and economy to pay.
It is not a question of radicalization – entrepreneurship does not have to be supported at all costs and at the expense of all other values. No, far from it. But in the same way, radically, entrepreneurship should not be cut either. Be it for nature or national protection or any other considerations currently in the "focus topic". Estonian entrepreneurship needs support, focus and ambition to restart, perhaps a little more than thoughts and prayers.
The economic climate map of the Ministry of Finance shows that the confidence of Estonian entrepreneurs to produce and recruit and the courage of consumers to consume is at the level of the recession of 2009 and 2010. At the same time, the country and society are in a multiplicity of concerns: the last four years have passed in the tact of crisis management, when several focus topics, such as health care, national defense, energy and climate change, demand attention at the same time.
Against the background of the objectively nad economic indicators, the realization begins to set in that all these focal topics contain a significant amount of public service – something that means a burden on the public purse. The state has not had many choices here, i.e. it has to borrow or tax to ensure public services.
However, the national debt released in recent years forces us to be careful with borrowing and rather to tax. However, business can tolerate tax increases and new taxes only up to a certain limit, and only what exists can be taxed.
It's like trimming a hedge – you can trim something that is viable and growing. But what is it that ensures that Estonia has a viable economy? To divide what to prune?
A question of ambition
A number of entrepreneurs believe that a fundamental change in mindset and focus is needed to ensure the viability of the Estonian economy. This is both from the side of the entrepreneurs themselves and the state. To understand that it is necessary to act, not to hope and believe. If many people would sign such a slogan call, it will become more difficult to start investigating how to act more concretely to revive the economy.
In this discussion, already in the introduction, the fact should be recognized that it is precisely these "other" focuses that often limit and frame entrepreneurship. Whether they are nature conservation restrictions in the case of forestry or agriculture, or security considerations in the recruitment of foreign labor, and so on.
Coming back to ambition and focus, the question arises whether, in addition to headlines, we are also ready to put entrepreneurship before other, equally important values. Is there a cross-government hunger and willingness to take risks to shift the balance in favor of business?
The public sector as an example
Several strategy and policy documents have been drawn up in Estonia, which should guide the economy in the next decade. In 2021, the Riigikogu adopted the "Estonia 2035" strategy. The economic policy plan for the next decade was prepared in the Ministry of Economy and Communications last year.
A development plan for research and development, innovation and economy has been prepared until 2035, as well as a development plan for Estonian industrial policy. This list could be continued for a long time.
These are voluminous documents containing a significant amount of involvement and gathering valuable thoughts in large quantities. However, their value or worthlessness depends on whether and what from this myriad array of words is actually implemented.
To prove that it is not just a well-arranged word salad, but realizable action plans, the example of the public sector in organizing its activity path is of critical importance. Be it a 15% cut in public sector operating costs allowed together with tax increases or, for example, setting more ambitious (exemplary) goals for the public sector in the Climate-Resistant Economy Act.
Since public sector consumption accounts for approx. 15% of Estonia's gross domestic product, the state has an important ability to manage changes by changing its own behavioral habits. Thus, one should ask whether the state power, which on the one hand sets the goal of a transition to renewable energy as quickly as possible, also manages itself according to its words.
For example, if by 2030 Estonia's carbon dioxide emissions should decrease by 37% compared to 2022, and from there to CO2-neutral energy production by 2040, the country sets itself the goal of ending the use of fossil fuels from 2040 in the draft law on a climate-proof economy. This is only on the condition that "reasonable alternatives" have been created by then.
The public sector, which meets the minimum requirements within 15 years if "reasonable alternatives" favor it, does not show direction and lead by example, but ticks along. An ambitious public sector would set goals for itself that exceed those set by others, do it earlier and direct the focus by example, influencing the market in real terms, depending on the share of the public sector in internal consumption.
If the ambition of the goals set by the public sector is something that should characterize state governance as a whole, then I will highlight five important "inputs" for entrepreneurs, in which it is necessary to find an additional step in cooperation with the public sector in order to encourage the growth of entrepreneurship.
1. Skilled workforce
It will not come as a surprise to anyone who has analyzed Estonia's demographic indicators that in the next ten years the expected shortage of top specialists needed in the Estonian economy will grow to about 50% of what local higher education institutions can train.
Therefore, only ibe projects and boosting the education system with additional funding will not save the labor market. These processes are too long-term, and the inevitable solution to revive the economy is the involvement of foreign labor on a larger scale. Here we collide with the quota system, but also with the broader question of what is under the quota and what is not.
Amendments to the Law on Aliens are currently circulating, which tightens the way to obtain a temporary residence permit in Estonia based on employment. The employer is expected to have at least one year of real economic activity in Estonia, except for start-up and film companies.
This is a completely reasonable request and a welcome step in the current security situation. At the same time, from the point of view of preferential development of entrepreneurship, it would be logical that together with the setting of qualitative additional conditions and restrictions, the possibilities of making the system more attractive to entrepreneurs are also reviewed.
The Central Union of Employers has stated that it would be important to increase the foreign labor quota. According to them, Estonia's regulation of foreign labor is one of the strictest in Europe, and there is a demand for worthy labor elsewhere as well.
Apparently, the truth, as always, lies somewhere between the two extremes. It is understandable that only people who do not pose a threat to security and who are of real use here should be invited to the country. At the same time, the flexibility, digitization, speed and affordability of the procedure are the keywords, based on which the system of work-related residence permits and visas should be revised.
At the same time, we also have success stories to show in each sector, where the involvement of foreign labor has made it possible to revive the Estonian economy. For example, according to KredEx data, in 2023, Estonian start-up companies hired 1,315 employees from abroad with the help of the start-up visa program. Estonian start-ups participating in the program paid more than 136 million euros in taxes to the state, and their total turnover reached 1.6 billion euros.
2. Cheap energy
When talking about inputs important for economic growth, competitive energy prices are also important in addition to an educated workforce.
What will most likely ensure cheap and competitive energy in Estonia in the near future? What is this cocktail of different production sources and associations? Why has it not been possible to realize it so far? And what needs to be done to make it happen in the near future? These and similar questions have been on the lips of politicians in recent years.
A number of steps have been taken in order to encourage the development of renewable energy - from the organization of national tenders for obtaining volumes of renewable energy to the revision of regulations related to the planning procedure to speed up the process.
At the same time, considering that according to various estimates, electricity consumption may double by 2050 due to the electrification of the energy economy (i.e., the replacement of different fuels with electricity), it remains unclear whether what has been done is still enough.
Conversely, considering the interested parties who are currently offering their technology as ingredients of the energy economy cocktail (solar plants, onshore wind farms, offshore wind farms, battery plants, hydraulic pumping station, nuclear plant, gas plant), the question arises whether there is a demand for all of this in Estonia. If the demand is located outside of Estonia, what does the country and the economy gain from such energy production?
Since the central question for several components of the energy cocktail is the securing of national support – for example through grid development or a price floor for energy sales – the ultimate question is how necessary a particular energy source is to make the whole work and how much it will cost the consumer.
In a general way, it can be stated that if in the case of a nuclear plant, which is planned to be connected to the existing grid connections to Ida-Virumaa, the bill presented to the public sector consists primarily of the cost of creating state administrative and supervisory capacity, then in the case of offshore wind farms, the construction of the grid in the water should also be paid for.
If we prefer to build wind, solar and battery parks (i.e. hybrid parks) in addition to the existing network capacities, the taxpayer would not receive a significant additional bill, but it would mean a stronger review of nature and national protection restrictions and the overturning of the community (NIMBY – not in my backyard) effect.
Therefore, a decision should be made whether to pay the additional bill for creating the development capacity of nuclear energy or offshore wind farm, or to adjust the focus and reevaluate restrictions and privacy requirements.
3. Attractive tax environment
In Estonia, there has been a long-standing belief that in order for entrepreneurship to flourish, it is important to ensure an environment that does not harass with too many burdens. Next to the reduction of bureaucracy, the most important thing is a tax system that favors entrepreneurs.
According to the economic policy development strategy of the Ministry of Economy and Communications, the attractiveness of Estonia's economic environment must be evaluated as a measure, among other things, by where we rank according to the ITCI (International Tax Competitiveness Index) indicator. In 2023, Estonia was the first and the Estonian tax system was considered the best among the OECD countries.
Four factors were cited as the reason. First, a simple and clear 20% corporation tax regulation that applies only to dividends. Second, a simple and clear 20% personal income tax that does not apply to dividends (no double taxation).
Thirdly, a simple land tax based on the value of land and non-land-related property (buildings). Fourthly, double taxation exclusions, i.e. income already taxed in a foreign country is not taxed in Estonia.
Will the planned 2 + 2 + 2 tax increase nullify the advantages related to the attractiveness of the Estonian business environment? The short answer is rather not. While tax increases are not good for any economic environment, it is important to look at what is being received in return for this tax increase. At least on paper, it is a targeted tax increase, the tax revenue from which goes to improving the defense capacity of the Estonian state.
The fact that the Estonian state now and in the future needs to prove both to its allies, as well as to entrepreneurs who are interested in investing here, that we are a stable country that is capable of defending itself and contributes to its defense capacity, is not doubted by anyone.
At the same time, the benefits resulting from this message are presumably sufficient to at least partially compensate for the damage caused by the tax increase. At least this could be said by studying the examples of countries like South Korea or Israel.
Unfortunately, the reality is that a country with the world's most generous parental benefits, a solidary healthcare system, free education and a hefty national defense budget cannot be maintained with a thin tax system. There is no doubt that the government's words will come true and tax changes will happen. However, it is about whether the tax increases announced as temporary will in reality also remain temporary. In order to restore the attractiveness of the tax environment and to emphasize the obedience of the public authorities, which is also a sign of a strong rule of law, it is important to stick to this promise.
4. Reduction of bureaucracy
Entrepreneurs from several sectors complain that they are drowning in questionnaires. Kai Realo has noted when drawing up Estonia's economic policy plan that "bureaucracy is growing rapidly and there is a constant struggle between where, what and how much you report and how to ensure that the principles of data protection are met."
In Estonia, entrepreneurs have over 400 forms that must be filled out. The fact that IT Tiger could work better here and that many of these questionnaires could be missing as a result of cross-use of data is apparently not questioned by anyone. "Formation" therefore needs a critical revision and a slogan goal in the style of other promises of the new coalition - half as many forms by 2025.
While the application process simply ruins the entrepreneur, it is existentially important for the entrepreneur that the attitudes of officials regarding administrative procedures change. Without wanting to do too much for the officials, who are not affected by the following, I dare to say that the biggest suffocator of entrepreneurship in the public sector is the epidemic unwillingness of officials to decide and/or to decide in a way that favors the entrepreneur in any way.
So we have got mammoth proceedings, where the matter is simply processed and processed. Also, the practice where the official makes a negative/refusal decision on the grounds that if his decision favors the entrepreneur, others will also want the same decision. So it seems easier not to decide and not to allow.
The latter, in turn, means that many entrepreneurs' initiatives are either suffocated or, by wasting the resources of the court, they are crushed in three stages. Perhaps using the hedge-trimming metaphor again, it seems easier to ban the planting of a hedge than to control it. And from the point of view of the specific decision-maker, it is so, but what are we planning to cut?
An official should dare and want to consider. Various ideas have been voiced to curb this kind of behavior, starting with the term of employment contracts concluded with officials (regular supervision would be preferable) or, for example, the publication of data on administrative procedures related to each official, i.e. something like a control board, which would show publicly and in real time how many cases a particular official has processed and are in the process of, and how many have been contested. or annulled decisions.
At the same time, one has to agree with those who claim that all of the above is dealing with symptoms and disease prevention starts with the guide. Just as in a company, so too in an office, attitudes and culture are determined by the head of the office. Unfortunately, the previous recognition alone does not help to lead to better management quality.
Whether these are soft measures (trainings, seminars) or more drastic ones (dashboard and metrics) - focusing on the entrepreneur as a customer and the need to ensure that the public service is customer-centric is certainly one of the key factors, the improvement of which would remove the bitter taste caused by the tax increase from the mouths of many entrepreneurs. Here, the state has a lot of internal (off-budget) resources that can be realized and with which business can be significantly revived.
5. Increasing investment in innovation
In addition to all this, it is also important to be smarter than before. In addition to the public sector's contribution to innovation, the entrepreneurs themselves have an important and decisive role here. Although we are currently going through an AI hype period, which is or has been followed by a certain hangover, the fact is that AI is here to stay. The winners are those who can make it work for themselves as quickly and painlessly as possible: both at the level of the country, sectors and specific companies.
According to recent research, only 4.7% of US entrepreneurs use AI in their operations. Here, Estonia's small and flexible economy has a big advantage and a momentum that should not be lost: the creation of a new knowledge and artificial intelligence-based, digitized economy.
TAIE, or Estonian research and development, innovation and entrepreneurship development plan for the years 2021–2035, stipulates that the Estonian state invests 1% in research development and entrepreneurs 2%. Estonia's reputation as an e-country is strong, but fading. We have moved from paper to digital, but the possibilities of further applying this data for the benefit of the state and society are unlimited. We are at the tipping point of the AI-driven economy and the time is right to make the Tiger Leap 2.0. But is there an ambition for that?
Let's go back to the first thesis that the public sector should lead by example. The state could set an example here with public services. Could the personal state declared by Estonia 200 be something like that? Here, it is important to deal with the anxiety that comes with any novelty. Be it the fear of unemployment or the invasion of privacy, or simply the fear of having to communicate with a chatbot instead of a person.
Fears should not be underestimated, because overcoming them can be the key to making another tiger leap. Every ministry in its area of responsibility should realistically show the places where artificial intelligence can and is planned to be implemented, and then do it. In summary, the mentioned five inputs are only a part of what we need for business success. However, as already noted, it is not a matter of ideas, but of attitude. If we want a generous parental benefit, a solidary health care system, free education and a safe country, it is important to realize that all this comes with a bill that requires a functioning business and economy to pay.
It is not a question of radicalization – entrepreneurship does not have to be supported at all costs and at the expense of all other values. No, far from it. But in the same way, radically, entrepreneurship should not be cut either. Be it for nature or national protection or any other considerations currently in the "focus topic". Estonian entrepreneurship needs support, focus and ambition to restart, perhaps a little more than thoughts and prayers.