Estonia

   

Social Policies

#12
Key Findings
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.

Education

#1

To what extent does education policy deliver high-quality, equitable and efficient education and training?

10
 9

Education policy fully achieves the criteria.
 8
 7
 6


Education policy largely achieves the criteria.
 5
 4
 3


Education policy partially achieves the criteria.
 2
 1

Education policy does not achieve the criteria at all.
Education Policy
9
Estonians have traditionally placed a high value on education, which has been a driving force behind the country’s excellent educational outcomes and its recent educational reforms. Estonia has shown consistent improvements in its PISA rankings, and today is ranked in 2nd place in Europe and 4th place overall. Particular system strengths include the small number of low achievers and low school-level variance in student achievement. Enrollment rates at various education levels, including lifelong learning courses, are above the international average. Moreover, Estonia has already reached some of the EU’s Education and Training 2020 (ET 2020) headline targets and is close to achieving other targets.

Municipalities provide preschool education, which is accessible to the great bulk of the population (the enrollment rate is about 95%). Earlier concerns regarding a shortage of places in urban areas have diminished, but problems associated with a shortage of financial resources, including low salary levels for teachers, have yet to be solved. Education in public institutions is free at all levels. There are about 500 schools providing general education, 50 VET institutions and 24 higher-education institutions (HEI) including six public universities.

Interestingly, while higher education is generally associated with better employability and a higher salary, this appears less true in Estonia than elsewhere. Recent policy measures strengthening links between education and training and the labor market (e.g., involving companies and social partners in VET curricula development, including entrepreneurship skills in university curricula, and providing adults with low-level skills better access to lifelong learning) have sought to ensure that the provision of education keeps pace with the changing needs of the economy.

Social Inclusion

#21

To what extent does social policy prevent exclusion and decoupling from society?

10
 9

Policies very effectively enable societal inclusion and ensure equal opportunities.
 8
 7
 6


For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
 5
 4
 3


For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
 2
 1

Policies exacerbate unequal opportunities and exclusion from society.
Social Inclusion Policy
6
In general terms, the Estonian welfare system resembles the liberal welfare model. Levels of poverty and inequality have remained consistently high.

Since work-related income has significantly increased, the poverty of wage earners has decreased. Social transfers have not followed step with the wage increases, resulting in increased relative poverty levels among the retired, the unemployed and families dependent on social benefits. In the non-working population, poverty is highest among the elderly, but most severe among children. There are also gender disparities in poverty indicators. The risk of falling into poverty is higher for women (23.3% for women and 19.6% for men), but poverty among men is deeper (the relative median at-risk-of-poverty gap was 16.9% for women, and 28.3% for men).

Government policies have addressed some material deprivation issues through amendments to tax law. Since 2017, low-wage workers can claim income tax reimbursements; this measure is expected to apply to about 100,000 people. This is the first step in a broader tax amendment package, which aims to reduce significant income disparities. Yet, these measures do not address large regional disparities in average salary. The absence of effective regional policy measures has accelerated the exodus of the working-age population from rural areas. This in turn puts an additional burden on families and makes the formulation of sound social policy all the more difficult.

Subjective perceptions of poverty and inequality levels are also critical. In surveys, the majority of Estonians report that income disparities are too high and wages do not correspond to effort. Compared to ethnic Estonians, the ethnic minority population perceives greater inequalities in opportunity in all life domains.

Citations:
Integration Monitoring 2017. Fact sheet on perception of equality of opportunities /in Estonian/. https://wwwkul.rik.ee/sites/kulminn/files/7_vordsus.pdf (accessed 28.10.2017)

Health

#18

To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?

10
 9

Health care policy achieves the criteria fully.
 8
 7
 6


Health care policy achieves the criteria largely.
 5
 4
 3


Health care policy achieves the criteria partly.
 2
 1

Health care policy does not achieve the criteria at all.
Health Policy
8
In terms of health care quality, Estonia serves as a valuable example for how to achieve sound outcomes with scarce resources. Regular public opinion surveys commissioned by the National Health Insurance Fund reveal that most respondents are satisfied with the quality of health services (68%). Satisfaction with access is significantly lower (38%) and has been slowly but steadily declining since 2012.

Estonia has a social-insurance-based health system that includes some non-Bismarckian features such as general practitioners (GP). The insurance principle makes access to health service dependent on insurance status rather than universal. Working-age people who are not employed or in education are not covered by the national health insurance. As a result, about 7% of the total population does not have free access to health care and a further 7% have gaps in coverage because of non-regular work contracts. Supplementary private health insurance (medigaps) has been added to the government agenda, with debates expected to start in 2018.

Long waiting times to see specialists or receive inpatient care are another major problem resulting primarily from structural factors such as budgetary limits and a bias toward acute/hospital care. The ageing of medical personnel and the shortage of nurses also pose challenges. However, the most significant social problem is inequality across income groups in terms of unmet health needs and self-perceived health status. Here, Estonia ranks at the very bottom among OECD countries.

Citations:
http://www1.haigekassa.ee/sites/default/files/uuringud_aruanded/kuvandiuuring/arstiabi_uuringu_aruanne_2016_kantar_emor.pdf [in Estonian]

Families

#6

To what extent do family support policies enable women to combine parenting with participation in the labor market?

10
 9

Family support policies effectively enable women to combine parenting with employment.
 8
 7
 6


Family support policies provide some support for women who want to combine parenting and employment.
 5
 4
 3


Family support policies provide only few opportunities for women who want to combine parenting and employment.
 2
 1

Family support policies force most women to opt for either parenting or employment.
Family Policy
10
Estonia inherited a tradition of double-breadwinner families from Soviet times, when mothers typically worked full time. Despite huge social changes, this family pattern has continued, as evidenced by the high female employment rate. Family policy has persistently been high on the political agenda due to the country’s low fertility rate and labor market needs. Estonia has one of the most generous parental benefit systems in the OECD, entitling parents to benefits equal to her/his previous salary for 435 days. This system, in place since 2004, has come under attack due to its rigidity and negative impact on women’s labor market participation. In Spring 2017, the government initiated revisions to the Parental Leave Act with three objectives: 1) increased maximum paid paternal leave, 2) increased flexibility (by extending up to three years the period when parents can use the entitled 435 days of leave), and 3) encourage employment during parental leave (the monthly wage that a parent can earn without losing parental benefits will increase from €470 to €1,544). These changes are expected to be enacted by the end of 2017.

Pensions

#20

To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?

10
 9

Pension policy achieves the objectives fully.
 8
 7
 6


Pension policy achieves the objectives largely.
 5
 4
 3


Pension policy achieves the objectives partly.
 2
 1

Pension policy does not achieve the objectives at all.
Pension Policy
7
A three-pillar pension system has been in place since 2002. In terms of pension payments, the situation remains transitional, as only 8.5% of current pensioners benefit from the second pillar (mandatory individual accounts). Thus, current pension benefits depend mostly on the social-insurance contributions made by current employees to the first pillar. Voluntary privately funded pensions (third pillar) have remained marginal in terms of coverage and assets.

Old-age pension benefits are indexed, which guarantees slight annual increases based on social tax revenues and the cost of living. In 2017, this indexation resulted in an average pension-payment increase of 5.1%. Due to the low absolute level of benefits (€410 per month), elderly people still struggle to make ends meet. Because wages and salaries grow faster than pensions, the senior citizen poverty rate increased substantially in 2016. The rapid increase of wages also explains the continuous decline in the pension replacement rate since 2009, which in 2016 consisted of 41.6% of net average salary.

Despite modest pension expenditures (roughly 5.5% of GDP), the sustainability of Estonia’s pension system is at risk. Due to population ageing, the state pension-insurance expenditure persistently exceeds social tax revenues (by 25% in 2016). A 2016 OECD report revealed that Estonian pension funds performed worst among the OECD countries during a 10-year period (negative annual productivity of -2.2%). The average productivity of mandatory pension funds in 2016 was even lower than in 2015 (1.8% and 2.6% respectively). Furthermore, the present pension system does not encourage people to work longer – 12% of old-age pensioners took an early retirement.

In order to face these financial challenges, government proposed in 2017 a reform plan to make the retirement age flexible and revise the regulations for pension funds. If enacted, these new regulations will have an effect from 2020 onward.

Citations:
Ministry of Finance (2016). Statistics on public old age pension, mandatory funded pension and voluntary funded pension. (in Estonian) /Riikliku vanaduspensioni, kohustusliku kogumispensioni ja vabatahtliku kogumispensioni statistika/ http://www.pensionikeskus.ee/files/dokumendid/kogumispensioni_statistika_012017.pdf (accessed 23.10.2017)

Integration

#5

How effectively do policies support the integration of migrants into society?

10
 9

Cultural, education and social policies effectively support the integration of migrants into society.
 8
 7
 6


Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
 5
 4
 3


Cultural, education and social policies do not focus on integrating migrants into society.
 2
 1

Cultural, education and social policies segregate migrant communities from the majority society.
Integration Policy
7
Since the Soviet period, Estonia has had a large non-native population. Russians and other Slavic ethnic groups compose almost a third of the population, 16% of whom are foreign born. The national immigration policy has been regularly updated and monitored, with the government allocating substantial national and EU funds to various integration programs. All government activities are framed by the national development plan “Integrating Estonia 2020.”

All EU or Estonian registered citizens have the right to vote. Permanent residents without Estonian citizenship can vote in municipal elections, but are not allowed to stand as a candidate or vote in general or EU parliamentary elections. An increasing number of Russian-speakers who hold Estonian citizenship are employed in the civil service, belong among the political elite and stand as candidates in elections. However, the electoral turnout of Russian-speakers remains lower than the national average. Several public and private initiatives have sought to facilitate civil-society activism among ethnic minorities, yielding some visible progress. Nonetheless, the ethnic Estonian and minority populations continue to primarily live separately.

The number of non-citizen residents (currently about 12.4% of the total population) remains an issue. In recent years, the proportion of non-citizen residents who would like to obtain Estonian citizenship has been decreasing as they do not see the value of Estonian citizenship when living in Estonia. Despite improved language skills, the labor market outcomes of ethnic minorities has remained worse than that of ethnic Estonians. The former have a lower employment rate and salary levels. Thus, while institutionally well-established, the positive effects of integration policy remain weak and uneven.

Beyond policies on integrating immigrants from the Soviet period, programs to integrate refugees and new immigrants have been put in place. To help newly arrived immigrants settle in and acquire knowledge, skills and proficiency in the Estonian language, they can choose to participate in an introductory welcoming program. Additionally, the Ministry of the Interior supports and empowers public, private and third-sector organizations working on a day-to-day basis with newly arrived immigrants by building support networks and developing public services. Despite those attempts, more than half of the war refugees who came to Estonia as part of the European migration plan have left the country.

Citations:
Integration Monitoring of the Estonian Society 2017. http://www.kul.ee/en/integration-monitoring-estonian-society-2017 (accessed 23.10.2017)

Safe Living

#31

How effectively does internal security policy protect citizens against security risks?

10
 9

Internal security policy protects citizens against security risks very effectively.
 8
 7
 6


Internal security policy protects citizens against security risks more or less effectively.
 5
 4
 3


Internal security policy does not effectively protect citizens against security risks.
 2
 1

Internal security policy exacerbates the security risks.
Safe Living Conditions
7
Major crime indicators have steadily declined as a result of multiple factors. One is the decline in alcohol consumption, which had been a major cause of severe traffic accidents and violent behavior. Decline in alcohol consumption itself is a result of stricter alcohol policy, but also increased public awareness of healthy living.

The police forces enjoy high levels of public trust, which helps compensate for the scarcity of human and material resources. The Internal Security Development Plan 2015 – 2020 envisages a more efficient use of state resources and broadened cooperation with volunteers. This is of core importance since government funding is hardly sufficient.

Global Inequalities

#14

To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in developing countries?

10
 9

The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in developing countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
 8
 7
 6


The government actively engages in international efforts to promote equal socioeconomic opportunities in developing countries. However, some of its measures or policies lack coherence.
 5
 4
 3


The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in developing countries. Many of its measures or policies lack coherence.
 2
 1

The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in developing countries.
Global Social Policy
9
Estonia actively participates in international humanitarian interventions through the EU and UN. Between 2015 and 2017, Estonia served a second term of membership on the UN Economic and Social Council (ECOSOC), which has increased the country’s profile and visibility in the field of humanitarian aid.

A renewed 2016 – 2020 strategy on Estonian development cooperation and humanitarian aid takes the UN’s Millennium Development Goals (MDGs) as a starting point. The strategy contains objectives and main fields of activities, and identifies major partner countries. The priority partners are former Soviet Socialist republics (i.e., Georgia, Moldova, and Ukraine) and Afghanistan. Estonia is active in various fields, but special efforts are made in transferring knowledge in the policy areas of education, health and e-government. Dissemination of domestic expertise in implementing ICT in public administration and education are areas in which Estonia is a trendsetter. Between 2016 and 2017, Estonia actively participated in providing relief to war refugees in Syria and provided emergency assistance in Ukraine.

In parallel to government efforts, NGOs and private enterprises work in the field of international development. Awareness-raising campaigns in the fair-trade movement offer one example of NGO activity. Due to the country’s open economic policy and the absence of protectionist measures, fair-trade products can be found in most Estonian supermarkets.
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