Doing Business Index Analysis: Estonia vs. Ukraine

Estonia is a comparatively small European country, however, it’s one of the world’s best places for doing business in or with. We would like to analyze and summarize the main advantages of the country, its economic state as well as compare it with Ukraine. Earlier in the Blog, we have also talked about Doing Business Indices of Poland, Hungary, Bulgaria, the Czech Republic and Ukraine.

Ease of Doing Business Index

The World Bank ranks Estonia 16th in the Ease of Doing Business Index Report 2016. Estonia is the countries that allow registering a business online (eight out nine required issues), making it easier for entrepreneurs, therefore promoting business development in the local area. Such simplified preregistration and registration formalities more available.

"Estonia began allowing minimum capital to be deposited at the time of company registration"
  • Starting a business in Estonia is taking 3.5 days, and requires only 3 procedures (in Ukraine this number may reach to 20-25 days, in the Czech Republic - 15 days, in Bulgaria – 18 days), which is very a short period if compared to other European countries;
  • Dealing with construction permit, getting electricity supply and registering property might 200 days and 18 different procedures;
  • Such aspects as getting credit, protecting minority investors, and resolving insolvency are most often not taken into consideration if we discuss, say, IT outsourcing market, since many companies have a lot of premises available for rent or ready built for purchase.

The main legislative requirements

  • Fixed-term contracts are prohibited for permanent tasks
  • Fixed-term contracts cannot last longer than 120 months; therefore it can be long lasting as well
  • Minimum monthly wages – $498
  • Max working days a week – 5 days
  • 25% of an hourly pay over the salary for night shifts, and no premium for working weekly rest day
  • Overtime work payment – 50%+ to the salary from an hourly rate
  • the Estonian legislation doesn’t envisage any restrictions on night works as well as there are no restrictions on overtime work
  • 24 working days of the paid annual leave
  • Maximum probationary period – 4 months
  • Dismissals due to redundancy are allowed by the law

Estonia vs. Ukraine: opinions

Both, Ukrainian and Estonian legislations require numerous procedures to go through before getting all the necessary permits for doing business. The main difference is the timing: since Estonian authorities allow vast number of procedures to be taken online, the time span for all the red tape has reduced, whilst in Ukraine, the number of electronic procedures is still quite low. However, the conditions for doing business in the two countries remain on top owing to the development of the high-tech industry. Besides that, many clients find cultural diversity with the Ukrainian very small, therefore it’s been very comfortable to speak the same language with barely any cultural barrier. Today, Ukraine is also a preference also owing to the presence of large international players on the local business market, which promotes the country’s business environment. Estonian government, in its turn, has done a lot to show the country’s openness to the international partnership as well as its high potential, which makes it extremely competitive to larger countries like Ukraine. Low corruption level and clear bureaucracy make Estonian market extremely attractive in terms of business cooperation.

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