International Students and Graduates Boost Estonian Tax Revenue, Yet Face Labor Market Challenges

According to a recent study by Statistics Estonia, international graduates and students’ tax contributions rose significantly in the academic year 2021–2022. Contributions from social tax, income tax, and labour tax came to €22.4 million, up from the €16 million reported the year prior. International students who stayed in Estonia after completing their studies paid €9.4 million in social taxes, €4.6 million in income taxes, and €8.4 million in labour taxes. It is seen that from the academic year 2020–21, employers in Estonia had paid €28.5 million in tuition fees to foreign students and €16.5 million as graduation fees to foreign graduates.

The analysis shows that 86% of local students work during their studies, compared to 56% of overseas students who worked at least one day. However, international students face more vulnerabilities in the labor market, often taking on less secure contracts and working more jobs on average. Their average pay of €1,273 is slightly lower than that of domestic students at €1,352.

International students frequently work in foreign-owned enterprises, but the report does not indicate increased vulnerability as a result. Data scientist Kadri Rootalu emphasises that international students work for longer periods, typically exceeding 90 days, dispelling the notion that they are only employed for short durations.

While the research indicates successful efforts to retain international graduates, with a significant increase in the proportion choosing to work in Estonia, challenges remain. The majority of international graduates are concentrated in Tallinn and Harju county, prompting calls for broader distribution of their contributions across all counties.

The study identifies information and communication technologies, engineering, manufacturing, construction, business, administration, and law as the fields in which international students are most likely to work while studying. The report also notes that graduates in ICT and engineering, manufacturing, and construction are more likely to stay and work in Estonia due to the abundance of companies with international working environments in these sectors.

Conversely, integrated studies students are the least likely to work, potentially influenced by the financial support provided by their home countries, particularly Finnish students. International bachelor’s students are also less inclined to work compared to students at other academic levels. Additionally, students from African and Asian regions are more likely to work during their studies, while those from Northern European countries, notably Finland, exhibit lower work participation.

Efforts should be made to ensure that the contribution of international graduates benefits all counties, not just Tallinn and Harju county. The study underscores the need for a comprehensive approach to leveraging the expertise and potential of international graduates across Estonia.