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Cooperation across the sea – the Helsinki-Tallinn example
The capitals of Finland and Estonia are without doubt decidedly close, both culturally and geographically. Separated merely by an 80 kilometre strip of the Gulf of Finland, it takes a Tallinn resident no more than a 1.5 hour ferry trip to reach ‘neighbouring’ Helsinki. This would suppose strong ties and constant exchange between the two cities.
The spatial, cultural, historical and linguistic proximity provides a strong incentive for economic and social cooperation and eventually stimulate the development of the area into a functional region. Belonging to the same Finno-Ugric group, the Finnish and Estonian languages are very close with approximately 60% of similar words. Furthermore Helsinki and Tallinn have traditionally strong historic and economic ties – both cities were founded by the Swedes and once belonged to the Hanseatic League.
Yet for the 50 years following World War II, relations between the kin regions had been severed by the communist Soviet regime, isolating also Estonia from Western Europe. Only in 1991, after Estonia had declared its independence, the once flourishing partnership saw a revival. Eventually the EU enlargement in 2004 created even stronger dynamics and great opportunities not only for Finnish-Estonian cooperation but for the entire Baltic Sea region.
The capitals as economic drivers for cooperation
The progressive economic and cultural cross-border cooperation between Helsinki and Tallinn is supported by the leading role the two capitals play in their countries’ economic and social development and by a series of complementary factors.
Helsinki is a major commercial and financial centre, with a strong development of culture and tourism. The driving force of the region’s economic growth is the high-tech information industry cluster led by Nokia. The Tallinn city region (Harju County) plays a major role in Estonia’s economy and attracts 80-90% of direct investments in the country.
Finland has actively participated in the successful economic reconstruction of Estonia and is today the second biggest investor in the Baltic country. The majority of Finnish investments are directed to the Harju Region. Only few Estonian companies have on the other hand entered Finland which is mainly due to a lack of capital and the prevailing saturation of the Finnish market.
A stimulus to the flow of cross-boarder workers
Estonia, like many other new EU Member States, has a high level of human capital. The Estonian economy is developing quickly, with constantly rising employment rates and a decreasing unemployment, largely due to the massive portion of the labour force, leaving to work abroad. At the same time there is a high rate of inactive persons and youth unemployment.
The situation on the Finnish labour market is quite different with a shortage of labour in certain sectors (construction, industry, services). The Helsinki region itself suffers form a relatively high unemployment rate and simultaneously shows a shortage of labour, due to the retirement of the baby boom generation. The debate on the possibility of filling labour shortages with foreign labour force has led to opening the Finnish labour market for citizens of the New Member States.
The Finnish labour market is today open to Estonian workers. The cultural, linguistic and geographic proximity facilitates their employment in and adaptation to Finland, while Finnish employers, for the same reasons, prefer Estonians to other host employees. These factors have contributed to an intense flow of workers towards Finland, turning Estonians into the second biggest foreign labour force in the country, after Russians. This is a solid basis for the creation of a common labour pool between the two neighbours.
The development of cross-border cooperation
The first attempts to promote cross-border cooperation between the Finnish and Estonian capitals were made in 1991 with the so called Twin City idea and in 1999 with the Helsinki-Tallinn EUREGIO.
EURES cooperation started in 2003, while official cross-border cooperation was launched in May 2004. This was followed by a series of round table discussions, recruitment and information events, study trips and joint trainings.
As a consequence of these and other initiatives, relations between the two cities have been intensified and the motivation on both sides to maintain collaboration activities is strong. There is a high potential of putting up a Twinning city project, due to the complementarities of their economic and social activities.
The main challenges for the establishment of a full cross-border partnership are rooted in the necessity of transport facilitation, the different wage levels and labour costs, the diversity of labour legislation and the role of trade unions. Furthermore both sides the partners are the low interest and participation level on the side of social partners and relatively limited human resources available on both sides.
Despite the above mentioned problems, the cultural and linguistic proximity, the economic and historical links between the two countries, act as strong facilitators of the Helsinki-Tallinn cooperation. Travelling between the two regions is increasingly easy with a constant decrease in transport costs. Studies have demonstrated that the Uusimaa (Helsinki) and Harju (Tallinn) regions already form a largely integrated economic area, with strong synergies in various sectors. The formation of a common labour pool between the countries is therefore just a question of time. This positive development is more than welcome and the public employment services in both countries are ready to strengthen their partnership and provide support for this unique mobility of labour in the North of Europe.