Sustainable Policies


Economic Policies

With a strong focus on fiscal discipline, Estonia scores well overall (rank 7) with regard to economic policies. Its score in this area has improved by 0.2 points 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 fallen. Employers are increasingly concerned about labor shortages. However, high tax rates on labor and strict immigration rules have prevented the country from attracting foreign workers.

Recent labor-market reforms have focused on bringing disabled people into the workforce. A broad new plan aimed at increasing labor-market flexibility was put on hold by the change in government. A separate plan is seeking to boost employment rates in borderland regions.

The flat income tax has been modified by a set of progressive income exemptions. Motor fuel and alcohol excise taxes have been increased to well above the EU average, although alcohol taxes were subsequently reduced. Budgetary discipline is strong, with public debt consequently very low. A money-laundering case involving foreign-owned banks has prompted stricter oversight.

Social Policies

Despite gaps in some areas, Estonia falls into the upper-middle ranks (rank 13) 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 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 healthcare system produces good outcomes with limited resources, but coverage is tied to employment or education status, leaving some without free access. Access to specialist care and to services in rural areas are also viewed as problems. 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. A proposal to abolish mandatory pension funds is gaining support. Poverty among the elderly is an increasing concern. Unemployment rates are consistently higher among ethnic minorities than among ethnic Estonians.

Environmental Policies

With a generally strong record in recent years, Estonia receives high rankings in international comparison (rank 9) with regard to environmental policies. Its score in this area has declined by 0.3 points relative to its 2014 level.

The country has followed a series of emissions-reductions plans, targeting a 25% renewable-energy share by 2020, with emissions kept within 11% of 2005 levels. By 2030, the country aims to reach a 50% renewables share, and by 2050, it plans to decrease emissions by nearly 80% compared to their 1990 levels.

Water pollution has decreased in recent years thanks to renovation of the water infrastructure. Forest-cutting volumes have stabilized in recent years, but there is significant demand for more responsible forestry practices. Road construction and increasing traffic is a serious risk to biodiversity.

The country has reversed its position, and now supports the EU goal of achieving climate neutrality by 2050. It participates in most important global and European agreements.

Robust Democracy


Quality of Democracy

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 0.3 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. Gender equality has been a long-standing challenge, but new rules are aimed at monitoring and combatting the gender pay gap. Courts are independent, but the radical-right party now a part of the government coalition has attacked courts for recognizing same-sex marriages. 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 is increasingly concentrated. Economic hardship is forcing many media outlets to shut down or move to online-only content. Online access to government information is very extensive.

Good Governance


Executive Capacity

With past policy-development reforms bearing fruit, Estonia falls into the upper-middle ranks (rank 14) in the area of executive capacity. Its score in this area has improved by 0.2 points relative to its 2014 level.

Responsibility for the strategic-planning framework is being transferred from the Ministry of Finance to the government office, increasing the prime minister’s power. Proposals are discussed in the coalition council and in cabinet meetings, with formal and informal interministerial coordination playing an important role. Communication between ministries and the Prime Minister’s office has weakened.

Policymaking and policy monitoring are bolstered by highly advanced digital tools. The RIA framework is well developed, but assessments are not well communicated to the public. Stakeholders are consulted during policy preparation. The right-wing populist party currently in the governing coalition has frequently made statements out of sync with the government’s general line.

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. The government has elected to coordinate with the EU on the long-term plan for climate neutrality.

Executive Accountability

With its policy-oversight institutions improving their capabilities over time, Estonia scores well (rank 8) 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. Extensive use of social media by radical social movements increases the dissemination of fake news. 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, 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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