Employers’ leader urges Estonia to model business climate on US

Ain Hanschmidt, president of the Estonian Employers’ Confederation, said Estonia should look to the United States when shaping its economic environment, ERR reported. Speaking on the programme First Studio, he outlined steps he believes are needed to return the economy to growth.

Asked how much money is needed for a good life, Hanschmidt said: “Money does not make you happy, money makes you calm.”

Hanschmidt disagreed with former colleague Janek Mäggi’s claim that Estonians had rested on their laurels.

“Estonians are very good workers and act thoughtfully, but sometimes the political system becomes too complicated. That is the problem,” he said, recalling how difficult times in the 1990s produced many capable leaders.

He also disagreed with economist Mihkel Nestor, who has said that economic growth of two or three percent does not make people happy.

“It does, it does,” Hanschmidt said. “I think this dissatisfaction is our source of energy. You have to criticise and be dissatisfied if you want development and want to move Estonia forward. In any case, I think that in 2026 we are more satisfied than five years ago, when there was Covid, the war in Ukraine began, the threats were very serious and the economy was in decline. Today, the economy is already growing.”

The employers have published a manifesto setting out what Estonia’s economy should look like. One of its main recommendations to politicians was to focus on increasing productivity.

“We need more ambition. At the moment, when the economy is growing, we need greater ambition. I really liked it when Andrus Ansip, as prime minister, said that Estonia’s goal was to join the five richest countries. We need greater ambition,” Hanschmidt said.

He said that achieving annual productivity growth of five or six percent would require a strongly business-friendly economic environment.

“We should take an example from the United States. The state of Texas is one of the best economic environments in the world. Politicians there look at it this way: if a law or regulation obstructs business, they remove it or discuss how it should be rethought,” he said.

“It is the same in Estonia. Our economic environment must be such that politicians, entrepreneurs, employees and officials all move in the same direction and think about how to grow the economy. Since Estonia is a democracy, some people have thought that economic growth is not the most important thing, but in fact it is the source of our standard of living,” he said.

Hanschmidt also said that a stable security environment would bring more foreign investment.

He described the exposure of disorder in the defence sector as a positive development.

“There should be greater parliamentary or civilian control over the force structures that can use the money. You cannot say that this is a defence secret or a war secret,” he said.

Hanschmidt said the politicians’ introduction of so-called tax peace and the removal of the tax hump would give the economy momentum.

“People had significantly more money left in their hands, approximately 800 million euros, which increased confidence in consumption. If you look at payment card data, payments grew by about 12 percent. People can decide for themselves where to put their money. If we give decision-making power only to state officials, we have to put them under supervision everywhere, and things like 60 million euros going somewhere in India will happen,” he said.

Hanschmidt said it was still too early for the wealth tax proposed by Kristina Kallas, chair of the Estonia 200 party.

“Sweden has a wealth tax, but they have accumulated their wealth for a long time. There has apparently been no war on their territory for 400 years. We have been diligently and cleverly accumulating our assets here since 1991. I think Estonia’s economy, businesses and resources are too thin. If they are heavily taxed, they will not be able to…