Policy Performance


Economic Policies

With a strong focus on fiscal discipline, Estonia scores well overall (rank 10) with regard to economic policies. Its score in this area has improved by 0.1 point since 2014.

Growth rates have been consistently strong in recent years, echoing upturns in the global economy. Employment levels have increased, and long-term unemployment rates have decreased. However, high tax rates on labor and strict immigration have remained major obstacles to attracting needed foreign labor.

Recent labor-market reforms have focused on bringing disabled people into the workforce. A new strategic plans aims to better balance labor supply and demand, increase labor-market flexibility, and transition to more remote work. The changes remain controversial, and will be debated through 2019.

The proportional income tax has been modified with a set of progressive income exemptions. Motor fuel and alcohol excise taxes have increased to well above the EU average. Budgetary discipline is strong, with public debt consequently very low. Anti-money-laundering bodies have played a prominent role in the financial sector in recent years.

Social Policies

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 0.1 point 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 by OECD standards. Low-wage earners have seen net wages increase substantially due to the rise in income-tax thresholds. Regional income disparities are significant.

Increases in child benefits have failed to curb problematic child-poverty rates. The health care system produces good outcomes with limited resources, but coverage is tied to employment or education status, leaving some without free access. Crime levels have dropped substantially in recent years.

Parental leave rules have been modified to reduce disincentives to women’s labor-force participation, and enhance fathers’ parenting roles. Working pensioners have seen incomes decline due to new rules taxing pension income. Unemployment rates are consistently higher among ethnic minorities than among ethnic Estonians.

Environmental Policies

With a strong record in recent years, Estonia receives high rankings in international comparison (rank 7) with regard to environmental policies. Its score in this area is unchanged relative to its 2014 level.

Greenhouse-gas emissions have been halved over the last 20 years, and the renewable-energy share is significant. However, the country is still dependent on energy-intensive technologies, and its reliance on oil shale for power production left it the most carbon-intensive economy in the OECD in 2017.

By 2050, 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.



Quality of Democracy

With transparency and access improving thanks to sophisticated online tools, Estonia receives a high overall ranking (rank 5) in the area of democracy quality. Its score in this area has improved by 0.4 points relative to 2014.

Internet voting has become common. Campaign information is increasingly available in Russian, as a means of engaging ethnic minorities in electoral processes. While campaign-finance transparency rules and oversight powers have been periodically strengthened, loopholes remain, and there appears to be little political will to increase accountability further.

Civil rights are widely respected. Same-sex partners have only limited registration rights. Gender equality has been a long-standing challenge, but new rules are aimed at monitoring and combatting the gender pay gap. Courts are independent, with a transparent judicial-appointment process. Lawsuit-resolution times are swift by EU-wide standards.

Corporate-ownership disclosure rules have been strengthened, improving transparency. However, lobbying remains unregulated. While electronic media are very important, media ownership concentration is significant. Online access to government information is very extensive.



Executive Capacity

With policy-development reforms bearing fruit, Estonia scores well in international comparison (rank 12) in the area of executive capacity. Its score in this area has improved by 0.3 points relative to its 2014 level.

A variety of strategy-development organs are improving long-range planning capacities. Proposals are discussed in the coalition council and in cabinet meetings, with formal and informal interministerial coordination playing an important role. Policymaking and policy monitoring are bolstered by highly advanced digital tools.

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 government has proved effective at implementing both minor and major goals, with progress tracked on a user-friendly website. A major municipal-merger reform, which included the abolition of county governments, has made funding more efficient and enhanced local autonomy. The aim is to improve the quality of public services throughout the country.

Executive Accountability

With its policy-oversight institutions improving their capabilities over time, Estonia scores well (rank 9) with regard to executive accountability. Its score in this area has improved by 1.5 points 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. Issues are often manipulated for party-political purposes.

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, while the Data Protection Inspectorate is responsible for protecting citizen privacy and personal data, and ensuring the transparency of public information.

Political-party decision-making is centralized. Trade union and employers’ associations have expanded their analysis and policy-proposal capacities in recent years. Other civil-society groups have also shown growing sophistication, and many now propose plausible concrete policies.
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