Hiring foreigners will become easier in sectors facing labour shortages

On 4 May, the Riigikogu adopted amendments to the Aliens Act, giving foreigners the opportunity to obtain a temporary residence permit for employment in a sector facing labour shortages under more favourable conditions than before. The amendments will enter into force on 1 January 2027.

In the Chamber’s view, the adopted legislative amendments are a step in the right direction, as they will help alleviate the shortage of skilled workers, improve the competitiveness of the economy, create additional jobs and increase state tax revenues.

Residence permits will be available outside the quota and the salary requirement will be reduced

In the future, foreigners will be able to obtain a temporary residence permit for employment in sectors facing labour shortages — primarily manufacturing, transport and storage — outside the immigration quota and without the requirement for permission from the Unemployment Insurance Fund.

In addition, employers will not have to pay foreigners the Estonian average salary; it will be sufficient if the salary paid is at least 80 percent of the Estonian average. At present, this would be 1,674 euros per month.

The sectors facing labour shortages have not yet been determined

Hiring foreigners will become easier only for companies whose principal activity is included in the list of sectors facing labour shortages established by the Government. To date, the Government has not yet established such a list.

The act sets out the criteria for drawing up the list of sectors facing labour shortages. For example, the act provides that when drawing up the list, the Government must take into account the labour demand forecast, the share of exports in sales revenue in the sector, and the average annual gross salary in the sector. On the basis of these criteria, the list of sectors facing labour shortages could primarily include areas of activity in manufacturing, transport and storage.

The special rules for sectors facing labour shortages may not be used in the case of temporary agency work, in order to prevent the misuse of residence permits.

Approximately 1,300 residence permits per year may be granted under the special rules

The act establishes a limit on how many temporary residence permits may be granted for employment in sectors facing labour shortages. As a general rule, the number of residence permits must not exceed 0.1 percent of Estonia’s permanent population. This amounts to nearly 1,300 residence permits per year. If economic growth is at least 2 percent, twice as many residence permits may be issued.

The temporary residence permit for short-term employment will be abolished

Currently, a foreigner may be granted a temporary residence permit for short-term employment for up to two years if, immediately before applying for the residence permit, the foreigner has worked in Estonia for at least nine months on the basis of registered short-term employment, the employment continues with the employer that registered the short-term employment, the employer is reliable, and the employer has paid the foreigner remuneration that meets the requirements provided by law.

From January 2027, this option will be abolished. According to the Ministry of the Interior, this type of residence permit did not fulfil its purpose of facilitating the involvement of skilled labour. Temporary residence permits for short-term employment issued before the beginning of 2027 will remain valid until the end of their term or until they are revoked.

You can read more about the amendments to the Aliens Act adopted by the Riigikogu here.