Kaarel Tarand: A beggar's bag still has room for matches

Revised GDP figures showing Estonia's economy performed better than previously thought should prompt the government to reconsider past spending cuts and restore funding disproportionately taken from culture, Kaarel Tarand writes.
Statistics Estonia recently published revised national accounts figures for the past four years. With additional data incorporated, the results showed that Estonia's economy performed better than previously thought and that real gross domestic product is higher than had been estimated.
Predicting and rapidly measuring the impact of all manner of external influences, crises and shocks is a thankless task, as analysts have emphasized in commenting on the new figures. Things can go one way or another; this time, the result is encouraging.
Prime Minister Kristen Michal was also quick to seize on the message, saying that "this also changes the story we have been telling about the Estonian economy. It is no longer entirely accurate to speak of an economic downturn lasting nearly two consecutive years." The message is aimed primarily at his political opponents: It is high time they stopped the incessant complaining that the government has destroyed Estonia's economy, does not know how to manage it and has plunged the people into poverty, because the facts show otherwise — things are not rosy, but the heading is right.
Statistics Estonia's work proceeds according to schedule, but the timing of the release could hardly be more convenient for the government as it prepares next year's state budget. The new data will have to be reflected in the Ministry of Finance's summer economic forecast, on which the draft budget is based and which is traditionally released in late August.
If GDP is larger and growth faster, that means additional money becomes available to spend. Having that money on hand matters more in the run-up to a Riigikogu election than in other years, particularly for a coalition that has only just technically become a minority government and whose opponents in parliament can presumably be expected to use every means at their disposal to make life difficult for its bill.
A word problem simple enough for an elementary school student might go something like this: If the country's GDP turned out to be larger than previously thought and the indicator used as the basis for budgeting — the overall tax burden as a share of GDP — remained the same or actually increased, did the state, in retrospect, collect less or more tax revenue available for spending than had been projected in recent years' state budgets? This assumes that the Tax and Customs Board's collection capacity remained stable and that it did not simply sit on its hands after new taxes or tax rates were introduced. The answer is that there was more money, which means fiscal conservatism was taken too far.
As always, there is another side to the coin. If the better figures transformed the story of recession into a story of growth in the prime minister's eyes, they must at the very least also call into question the almost biblical tale of suffering that has come to be known collectively as "cuts."
At least the Parempoolsed party will undoubtedly continue marketing its obsession. The April version went like this: "Estonia's public finances are in such disarray that much more painful decisions lie ahead. That is true regardless of who forms the government after the 2027 election. Cuts will have to be made in every sector. The only questions are how and by how much."
Hopefully, competitive politics will nevertheless produce some who want to put an end to this fixation on cuts, which is sowing deep pessimism at least in the public sector. As a side effect, it also entrenches the utterly detached-from-reality myth of an efficient and frugal private sector and a lax and profligate public sector. The former is supposedly locked in an uncompromising struggle with the latter, to the point of amputating every last limb.
Ending the fanatical fixation on cuts that is holding the future hostage is one thing. But we also need to look back at the recent past and ask whether and how the suffering caused by reliance on poor data can be remedied, so that the injustice and inequality created by the cuts do not become permanently embedded in improved circumstances and future budgets.
If one area of government lost a larger percentage of its budget to cuts than others and therefore now has a correspondingly lower base, then giving everyone the same percentage increase will simply cause those losses to continue accumulating in the years ahead.
I am thinking first and foremost of cultural spending. As we may recall, the culture minister's zeal for cuts (or ineptitude in negotiations) resulted in the cultural sector accounting for more than 10 percent of the state's total cuts in 2025, even though cultural spending represented just 1.8 percent of the state budget.
This injustice led cultural workers to demonstrate on Toompea — even if the protests had no impact on the budget — and prompted many rather bleak statements about the bright future supposedly awaiting professional arts and culture. Even the current state budget provided cultural workers with a smaller percentage pay increase than employees in other areas of government.
To spell it out in the simplest possible terms: There was once an understanding in this country that education and cultural workers with higher education qualifications performed work of comparable complexity and should therefore receive comparable pay. But then their paths diverged. This year, the minimum starting salary for a teacher is €1,970, compared with €1,720 for a cultural worker, even though many cultural workers also do educational work.
The difference is €250 a month. On top of that, cultural work has no so-called career model, meaning there are no coefficients guaranteed by law or agreement to compensate for increasing experience and professional mastery, as there are for senior and master teachers.
If the minimum salary in both categories were raised by 10 percent next year, the gap would widen by €25 and with each subsequent year it would grow by ever larger increments.
Restoring fairness therefore begins by first putting back into the cultural budget the money that has been disproportionately cut from it over several years and only then multiplying that restored amount by whatever percentage increase may be possible. That is the minimum. It still would not provide managers of public-sector cultural institutions with a guaranteed way out of a wage-policy situation that has by now completely collapsed, while many institutions also need to restore budget lines for training, business travel and employer-provided benefits that were cut to zero out of sheer necessity.
I will skip the endlessly repeated defense of culture, which Maarja Kangro recently summed up nicely in Sirp. It cannot compete anyway with the public relations machinery of the more powerful ministries, which they use to garnish their slices of the budget pie at every opportunity.
When a defense industry company's building caught fire in Lasnamäe a week ago, everyone, starting with the prime minister, immediately pointed an accusing finger toward Russia. (The detectives Vera, Grace and Lynley, familiar to everyone from TV, not to mention the young Morse, would hardly be satisfied with such a simple explanation: It all seems a little too convenient, with a vigilant citizen and the main suspects apprehended and ready-made for the plot.)
Security officials offered recommendations on how companies could further improve their protection and increase security. And what that means, of course, is that defense spending must increase as well because companies can hardly be expected to fight a war against Russia with their own money.
During the Soviet occupation, Russia once attacked Estonia's cultural institutions with matches as well: Devastating fires broke out within a short span of time at St. Nicholas' Church (1982), the Estonian Drama Theater (1983) and the Sassi-Jaani farmstead at the Estonian Open Air Museum (1984). Regardless of the official findings of the investigations, people at the time were convinced that Moscow was behind them and that they were attacks on our national culture. This caused a nationwide sense of despair, although money and manpower were scraped together from wherever possible to compensate for the damage and restore what could be restored.
It is tempting to ask: If no defense of culture will do the trick, must we really stage a false-flag operation even in a free country and make a burnt offering to secure adequate funding for the cultural budget? Or is it possible to reach mutual understanding and agreement before it comes to that, knowing that, in retrospect, there has always been more money than the forecasts predicted?
--
Editor: Marcus Turovski











