Estonia

   

Policy Performance

#8

Economic Policies

#11
With a strong focus on fiscal discipline, Estonia scores well overall (rank 11) with regard to economic policies. Its score in this area has declined by 0.1 points since 2014.

Growth rates have been positive but moderate, echoing upturns in the global economy. However, high tax rates on labor and strict immigration have remained major obstacles to attracting needed foreign labor. Labor-market reforms have helped boost employment and decrease unemployment.

Addressing low wages is a next priority, primarily through tax credits and a rising minimum wage. One major reform is intended to bring a significant share of the country’s disabled population into employment, while another aims to help low-skilled workers upgrade their qualifications.

Companies pay income tax only on non-reinvested profits. The proportional income tax is being updated with income-related exemptions. Budgetary discipline is strong, with public debt consequently very low. However, pension funds and the health-insurance fund have accumulated long-term debt. R&D expenditures are declining, with outcomes comparatively poor.

Social Policies

#12
Despite gaps in some areas, Estonia receives high overall rankings (rank 12) with respect to social policies. Its score in this area has improved by 0.2 points relative to 2014.

While educational outcomes are very strong, policymakers are seeking to strengthen links between education and labor-market needs. Education in public institutions is free at all levels. Poverty and inequality rates are high. Increases in child benefits have failed to curb problematic child-poverty rates. Regional income disparities are significant.
The health care system produces good outcomes with limited resources, but coverage is tied to employment or education status, leaving some without free access. Despite low benefit levels, the pension system is not sustainable in its current form. A number of reforms are underway.

Parental benefits are generous, and women’s employment rates quite high. A new parental-leave act increases flexibility and employment incentives. Along with programs designed to improve integration of the large Russian-speaking population, new programs are aimed at helping refugees and other new immigrants integrate.

Environmental Policies

#8
With a strong record in recent years, Estonia receives high rankings in international comparison (rank 8) with regard to environmental policies. Its score in this area is unchanged relative to its 2014 level.

Environmental awareness rose sharply through the EU accession process. Greenhouse-gas emissions have been halved in 20 years, and the renewable-energy share is significant. However, the country is still dependent on energy-intensive technologies.

By 2020, the country aims to decrease greenhouse gas emissions by nearly 80% compared to the 1990 level. The country has ratified the Paris climate accord and other global agreements, but is not a leader in shaping international environmental regimes.
Water pollution has decreased, but deforestation and clear-cutting has increased in recent years, triggering protests and calls for more responsible forest management.

Democracy

#7

Quality of Democracy

#7
With transparency and access improving thanks to sophisticated online tools, Estonia receives a high overall ranking (rank 7) in the area of democracy quality. Its score in this area has improved by 0.2 points relative to 2014.

Internet voting has become common. Campaign information is increasingly available in Russian, seeking to engage ethnic minorities in electoral processes. While campaign-finance transparency rules and oversight powers have been periodically strengthened, loopholes remain. Citizen petitions can prompt parliamentary consideration of an issue, but only parliament can initiate referendums.

Civil rights are widely respected. Same-sex partners have only limited registration rights. Gender equality has been a long-standing challenge, reflected in a large gender pay gap. Courts are independent, with a transparent judicial-appointment process. Lawsuit-resolution times are swift by EU-wide standards.

The number of registered corruption acts has risen sharply in recent years, but the number of perpetrators involved has declined. While electronic media are very important, media ownership concentration is significant.

Governance

#18

Executive Capacity

#19
With a comparatively weak prime minister, Estonia receives a middling score in international comparison (rank 19) in the area of executive capacity. Its score in this area is unchanged relative to its 2014 level.

The analytical capacity of the Government Office’s Strategy Unit is improving. The Prime Minister’s Bureau separately provides expert advice to the prime minister. An effort to improve the prime minister’s formal coordinating role is underway. Proposals are discussed in the coalition council and in cabinet meetings, with formal and informal interministerial coordination playing an important role.

Though the RIA framework is well developed, practical implementation has been very slow. Stakeholders are consulted during policy preparation, but a corporatist tendency giving likely policy supporters precedence is emerging. Ministers in coalition governments sometimes make statements out of sync with the government’s general line.

The new government has proved more effective than its predecessor in achieving policy goals. A major municipal-merger reform has been underway, prompting tensions and opposition at the local level Adaptation to EU norms has been strong.

Executive Accountability

#20
With mixed strengths and weaknesses, Estonia falls into the middle of the pack internationally (rank 20) with regard to executive accountability. Its score in this area is unchanged relative to its 2014 level.

Citizens are avid news consumers, and internet penetration levels are high. While media offer considerable in-depth information, reporting tends to focus on decisions only after they have been made.

Parliamentarians have only modest resources, but strong formal oversight powers. The National Audit Office is independent of the parliament. The Legal Chancellor performs ombuds functions, but is not attached to the parliament.

Political-party decision-making is centralized. Trade union and employers’ associations are in the midst of expanding analysis and policy-proposal capacities. Other civil-society groups have also shown growing sophistication, and many now propose plausible concrete policies.
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