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Estonia: international students and grads add record €16m in taxes in 2020/21

The total contribution international students and graduates in Estonia made to the country’s labour taxes increased in the 2020/21 academic year, despite the country hosting fewer international students.

In 2020/21, working international students paid €3.6m in income tax and €7.8m in social tax in Estonia. Photo: Pixabay

While 15% of working international students were employed by start-ups, the same was true for only 3% of working local students

Estonia’s coffers gained a total of €16 million from the international cohorts for the year, according to Statistics Estonia, up from €13m in the year before. Researchers found that the number of working international students was smaller than in previous years, but their earnings were greater.

The PIE previously reported that there was a modest decline of 164 of international students in 2021/22 compared to the prior year. However, international students still account for 11.6% of the country’s total number of higher education students.

In 2019/20, international students added €10m to Estonia’s treasury, while international graduates contributed €3m. The contribution of international graduates has now increased to €4.5m. In 2020/21, working international students paid €3.6m in income tax and €7.8m in social tax, up from €3.1m and €7m, respectively, in the previous year.

The latest analysis also found that international students –most likely to work in information, communication and education – are more often employed in start-up enterprises when compared to their domestic counterparts.

While 15% of working international students did so, only 3% of working local students were employed by start-ups.

It also found a “considerable decline” in the number of international students working in accommodation and food service activities, largely as a result of pandemic-related restrictions.

The research also suggested that international students are “more vulnerable” in the labour market, when compared with local students. Their contracts tend to be less secure and the number of jobs they work is often higher.

Head of the Study in Estonia program at the Education and Youth Authority Eero Loonurm stated that the analysis also revealed that measures to help international students acquire internships in the public sector is important.

“In the developed world, international students are considered a part of the talent policies of central and local government institutions. We should seek solutions to make sure that the benefit provided by international students would extend across the whole country,” he said.

Until now, the most likely to benefit from the economic impact of international students and graduates are international businesses in Tallinn and to a lesser extent in Tartu where the working language is English, he continued.

There are also international students taking degree courses in Pärnu, Viljandi and Narva – three cities where University of Tartu colleges are based, he noted.

“[International students] clearly enliven the local group of students, contributing both to local internationalisation and academic quality,” he told The PIE.

“I see that all over the world, international students are seen as part of the talent policy of the state and local governments,” he said. “Smart countries see that benefit gained from international students must reach the whole country.”

“It would be good to let the state and society of Estonia benefit even more from the international experience gained with international students”

Writing recently for Postimees, Loonurm focused in on strategies in New Zealand, the UK, Australia and the Netherlands aiming to direct migration away from cities or capitals, and expand to more regional areas.

“There is a lot to learn from experiences of countries of the world, and it would be good to let the state and society of Estonia benefit even more from the international experience gained with international students,” he wrote.

Estonia could take inspiration from the ‘Make it in the Netherlands!’ campaign in the Netherlands, focusing on teaching international students the Dutch language to attract international talent to the regional labour market and New Zealand’s International Education Strategy 2018–2030, which explicitly states an aim to “share the benefits of international education with regions nationwide”.

“It would be good to let the society of Estonia benefit even more from the international experience gained with international students,” he told The PIE.

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