Growth of Ülemiste City Companies Produced Additional 26 Million Euros of Tax Revenue for Estonia during the Pandemic
A recent economic study indicates that Ülemiste City continued its fast development as a growth environment regardless of the effect of the COVID-19 pandemic. In addition, the Russian invasion of Ukraine is going to change the entire renewable energy sector in the near future.
The companies on the largest business campus in the Baltic countries have managed the effects of the COVID-19 waves better than the rest of the Estonian business sector which is demonstrated by the fast development of the IT sector, the creation of new jobs, and the continuing increase in the added value and the percentage of paid labour taxes. The Russian-Ukrainian war, which has plunged global economy into uncertainty and caused a supply chain crisis, is going to accelerate the green revolution and offer new possibilities for the companies in the energy sector.
An economic study shows that the companies in Ülemiste City provided an additional tax revenue of 26.7 million euros to the Republic of Estonia from the II quarter of 2020 until the IV quarter of 2021. The growth of the tax revenue exceeded that of the rest of the companies in Estonia by 15%. Instead of making their staff redundant or temporarily laid off, the majority of the companies at Ülemiste City were dedicated to the creation of new jobs – in total, an additional 1,035 people were hired.
It is also remarkable that the additional value per employee is almost twice that of the rest of the Estonian companies (61,000 euros in the large companies at Ülemiste City vs 36,000 euros in the rest of Estonia). At the same time, the average gross wages at Ülemiste City exceed the average Estonian gross wages by 50% (Estonian average – 1,446 euros; ÜC – 2,168 euros) and the wages of the IT sector at Ülemiste City are more than double the average Estonian wages (ÜC IT 3,311 euros).
„When assessing the competitiveness of an economy, low additional value per employee has been highlighted as the biggest problem of Estonia. This study shows that the technology and smart industry sector of our campus can continue growing even during hard times. The percentage of foreign specialists with university education who are employed at international companies is up to 90% here – almost three times the Estonian average. In fact, high added value and well-educated specialists create a lot of value for our entire society, “ stated Kadi Pärnits, the Chairman of the Management Board of Mainor AS which is responsible for the development of Ülemiste City.
Third largest economy in Estonia
Ülemiste City is steadily holding its position as the third largest payer of labour taxes in the Estonian economy which it achieved last year. In this regard, Ülemiste City (3.2% of the entire business sector of Estonia) is only exceeded by Tallinn (55.8%) and Tartu (6.45%).
When contributing to innovation, no compromises are made, particularly when compared to the companies of the rest of Estonia. According to this year’s data, as many as 89% of the Ülemiste City companies spend on sciences, development, and innovation (65% in the reference group from the rest of Estonia), 69% of them offer innovative products or services (30% in the rest of Estonia), and 52% cooperate with universities and scientific establishments (21% in the rest of Estonia).
War accelerates the green revolution
Adding future perspective, Marek Roostar, Director of Sales and Marketing of Elcogen, a producer of fuel cells operating in Ülemiste City, described the impact of the Russian invasion of Ukraine to the entire renewable energy sector.
„Our raw materials come from Asia and Central Europe which is also were our main clients are located, so the war has not affected our supply chains in the short-term. However, it has become clear how dependent Europe is on the Russian energy. The European Union has already stated that it is going to increase and accelerate investments into the production technologies of hydrogen and renewable energy solutions. I am sorry to say but Elcogen and the entire renewable energy sector in Europe are going to benefit from the war in Ukraine in the long-term perspective because it speeds up the green revolution in the energy sector, “ stated Roostar.
To date, about 14,000 people work, study, and live at Ülemiste City. If the current trend continues, the campus community is going to exceed 15,000 by 2023.
„The annual increase of talent has been affected mostly by the internal development of the companies because no new buildings have been completed on the campus during the last 12 months. Regardless of the difficult situation in economy and construction, the development of an international educational complex, a 6-storey health building for about 400 specialists, and the extension of smart production of Elcogen are about to begin on the campus in the near future. The Alma Tomingas green building is going to open its doors at the end of the year. Large technological companies as well as the new joint agency of Enterprise Estonia and Kredex are going to move there,“ stated Pärnits.
IT sector is continuing its fast growth
The IT companies of Ülemiste City are on a particularly fast track of growth. The increase in the number of employees to approximately 3,000 and their average salary of 3,311 euros (2,645 euros elsewhere in Estonia) have laid the foundation for the 13% growth of added value of the sector. Export still accounts for a significantly larger share of the sales revenue of the IT companies of Ülemiste City (74%) than other companies in Estonia (55%).
„Naturally, crisis affected us as well, except for us, it tended to provide new opportunities for growth.“ said Maris Viires, the Head of HR of Helmes, a creator of software solutions. „Our superpower is creating business critical software solutions very efficiently, so our work volume actually increased, leading to the fast growth of the company. At the same time, we worked hard with our clients and partners to find fast solutions to complex situations. At a normal speed of development, the project for developing a payment solution for the Estonian Unemployment Insurance Fund benefits would have lasted 3–6 months, but we managed to complete it in 23 days in the crisis situation.“
The Head of HR of the company, which was just awarded the title of Dream Employer in the business sector, emphasised: „Under the conditions of forced remote work, we learned a lot about managing hybrid work wisely, which is definitely going to benefit us in the future. In the area of smart work, the value created for the customer depends clearly and largely on the level of motivation and the great form of the employees. A company can do a lot to offer new professional challenges to its employees and help them maintain a healthy and sustainable balance.“
Homepage of Ülemiste City Radar: IT sector is continuing its fast growth
The IT companies of Ülemiste City are on a particularly fast track of growth. The increase in the number of employees to approximately 3,000 and their average salary of 3,311 euros (2,645 euros elsewhere in Estonia) have laid the foundation for the 13% growth of added value of the sector. Export still accounts for a significantly larger share of the sales revenue of the IT companies of Ülemiste City (74%) than other companies in Estonia (55%).
„Naturally, crisis affected us as well, except for us, it tended to provide new opportunities for growth.“ said Maris Viires, the Head of HR of Helmes, a creator of software solutions. „Our superpower is creating business critical software solutions very efficiently, so our work volume actually increased, leading to the fast growth of the company. At the same time, we worked hard with our clients and partners to find fast solutions to complex situations. At a normal speed of development, the project for developing a payment solution for the Estonian Unemployment Insurance Fund benefits would have lasted 3–6 months, but we managed to complete it in 23 days in the crisis situation.“
The Head of HR of the company, which was just awarded the title of Dream Employer in the business sector, emphasised: „Under the conditions of forced remote work, we learned a lot about managing hybrid work wisely, which is definitely going to benefit us in the future. In the area of smart work, the value created for the customer depends clearly and largely on the level of motivation and the great form of the employees. A company can do a lot to offer new professional challenges to its employees and help them maintain a healthy and sustainable balance.“
