03:00 - Source: CNN
Doing business in Estonia

Story highlights

Estonia joined the eurozone last year and is its fastest growing economy

Swiss group ABB says it has skilled workers and business-friendly government

The head of Estonian Cell is not confident about the future of the single currency

He says western Europe needs to adopt a stronger work ethic and farewell the welfare system

London CNN —  

More than 20 years after its independence from the Soviet Union, Estonia has become one of Europe’s rare economic success stories.

The Baltic state of 1.3 million people joined the eurozone last year, becoming the fastest growing economy within the single currency. Today it has the highest per capita GDP of any of the former Soviet republics.

Vesa Kandell is general manager of a plant for ABB, a Swiss industrial group which is one of Estonia’s biggest investors, operating four factories and employing 1000 people.

He told CNN’s Richard Quest Estonia has become an important high-tech production hub for ABB during its two decades in the country. This is partly due to having the highly skilled workforce required to produce the company’s generators, used to power everything from wind turbines to electric vehicle chargers.

“We need engineers to design the world class products, we need engineers to run the production, we need a very skilled people to run the operations here on the shop floor,” he said. “There [are] well-educated engineering people, but also well-educated hard working people for the factory operations.”

Companies operating in Estonia also received valuable support from the government, which imposed no tax on profits reinvested in businesses.

“The business environment here is very modern and liberal. It’s not as hard and slow as many other countries,” he said. The government here [has] a very strong focus on developing the business side.”

In Estonia’s capital, Tallinn, Artjom Sokolov, the chief executive officer of Estonian Cell, said that the company had felt the consequences of joining the eurozone during the Greek debt crisis.

The business, which produces pulp for the paper industry, had to pay close attention to the currency markets as its costs were in euros and its prices in dollars. The fluctuating exchange rates had been affecting the business.

Sokolov said he kept half his savings in dollars to mitigate the risk of the euro failing.

“I believe in a couple of years, maybe four to five years time, there is a likelihood that there is not such a euro as we currently have it,” he said.

He said western Europe had something to learn from the work ethic of Estonia and other eastern European countries. “The welfare state is over, people have to accept that the good life is over. They have to start working in western Europe, because strikes will not help,” he said. “What is good in the case of Estonia is people haven’t forgotten how to work.”