Estonia

   

Social Policies

#13
Key Findings
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.

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 (e.g., reflected in PISA results). 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. Estonia has already reached some of the European Union’s Education and Training 2020 (ET 2020) benchmarks and is close to achieving other benchmarks.

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 and low salary levels for teachers have been solved. Education at public institutions is free at all levels and there are various social support measures for students, such as free school lunches and transport through school buses. Vocational education and training (VET) students have access to subsidized dormitories and there are needs-based allowances for university students.

Interestingly, while tertiary-level education is generally associated with improved employability and higher salaries, 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, which includes entrepreneurship skills in university curricula, and providing adults with skill levels 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

#25

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 remain higher than the OECD average.

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. There are also gender disparities in poverty indicators. The at-risk-of-poverty rate (after social transfers) is higher for women than men (23.3% for women and 18.4% for men), but poverty among men is deeper (the relative median at-risk-of-poverty gap was 18.9% for women and 26.9% for men).

Government policies have addressed some material deprivation issues through amendments to tax law. In 2018, the rise in the income tax threshold increased the net wage by 15% for low-wage earners. Yet, these measures do not address large regional disparities in average salaries. The absence of effective regional policy 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.

Even though the social exclusion of ethnic minorities has decreased, partly owing to government integration programs, unemployment and poverty rates remain somewhat higher among minority groups. Subjective perceptions are also critical – 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. https://wwwkul.rik.ee/sites/kulminn/files/7_vordsus_0.pdf. Fact sheet on key findings https://wwwkul.rik.ee/sites/kulminn/files/9_kokkuvote_0.pdf (accessed 28.10.2017).

At-risk-of-poverty rate after social transfers by sex. Statistics Estonia. https://www.stat.ee/30002 (accessed 16.12.2018)

Health

#17

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
Estonia has a social insurance-based healthcare system, which includes some non-Bismarckian features such as general practitioners. The insurance principle makes access to healthcare services dependent on labor market status. Working-age people who are not in employment or education are not covered by the national health insurance. On average, 6% of the population are not guaranteed free access to healthcare due unemployment or irregular work contracts; the problem is worse among men, ethnic minorities and young people aged 26 – 30. The minister of social affairs started a discussion on universal healthcare in 2018, although the new government – which has been in office since spring 2019 – has not made any progress on the issue.

Another issue is decreasing public satisfaction with access to healthcare services in general and to specialist care in particular. Moreover, unmet healthcare needs differ across population groups, with low-income groups, the elderly and rural residents particularly disadvantaged. In 2017, 12.7% of Estonians reported having unmet healthcare needs due to cost, distance to travel or waiting times, which was the highest proportions in the European Union (HIT 2018). To tackle the problem of high out-of-pocket costs, compensation for prescription costs has been increased for people suffering from chronic illnesses. However, regional inequalities have increased, because austerity measures have centralized specialist care in larger hospitals.
In contrast to coverage and access issues, the quality of healthcare in Estonia is good, despite a level of expenditure well below the OECD average.

Citations:
Health Systems in Transition (2018). Estonia Health System Review https://www.sm.ee/sites/default/files/content-editors/Tervishoid/hit_-_estonia_-_web_version_01.06.2018.pdf (Accessed 13.10.2019)

Families

#5

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, was revised in 2018 and 2019. The amendments have extended the period in which parents can take parental leave from one and a half years to three years, and parental leave can now be divided over several periods according to the parents’ choice. Another important change was an effective increase in fathers’ parental role, as the joint parental leave period was extended to two months and paid leave for fathers was extended by 30 days.

Pensions

#28

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 existed in Estonia since 2002, which has been widely seen as a success. Recently, several inefficiencies and flaws in the system have become apparent, which has led to extensive political debate and several reform initiatives. Before the 2019 parliamentary elections, pension system reform was high on the political agenda. Debates concerning the mandatory second pillar were provoked by the poor performance of pension funds, high administrative costs and minimal choice for citizens. In September 2019, new investment rules came into force for second pillar funds, which relaxed investment restrictions and imposed reduced rates for administration costs. Despite that, conservative parties proposed making the second pillar voluntary and allowing people to withdraw funds before retirement. The idea gained significant support among the electorate and eventually legitimized the populist plan to abolish mandatory pension funds. At the time of this writing, it appears very likely that the government will implement its plan, despite criticism from opposition parties, the research community, the central bank and the OECD. Critics warn that the reform may destabilize country’s economy and in the long run increase poverty among the elderly.

Poverty among the elderly is already an increasing concern. The average level of benefits is modest (€485 per month) and annual indexation provides only a slight relief. Political promises to increase pensions beyond indexation will be hard to fulfill because public pension funds are already running an annual deficit close to 2% of GDP. As an intermediary financial remedy, the retirement age will be raised from 63.5 to 65 in 2027 and continue to increase in line with life expectancy thereafter.

Integration

#8

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. Russian speakers – ethnic Russians and other Slavs – 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.”

In national elections, only Estonian citizens can vote and register as candidates. Permanent residents without Estonian (or other EU) citizenship can vote in municipal elections but cannot stand as candidates. An increasing number of Russian-speakers who hold Estonian citizenship are employed in the civil service, belong to 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. Despite improved language skills, the labor market situation of ethnic minorities remains worse than that of ethnic Estonians with a persistently higher unemployment rate.

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

#17

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.
Internal Security Policy
8
Public safety has steadily increased and crime rates have declined over the preceding decade.

Multiple factors have contributed to greater public safety. Alcohol consumption – a major cause of severe traffic accidents and violent behavior – has declined as a result of stricter alcohol policy and increased public awareness of healthy living. Increased funding for the police and the border guard have been another positive change, which have enabled better human and technological resourcing, and more efficient policing. Placing greater emphasis on secure borders is particularly important in combating human and drug-trafficking, and terrorist threats. While alcohol consumption has decreased, drug-trafficking and use are an increasing challenge. Cooperation between tax authorities, border authorities, the police and preventive bodies (e.g., National Institute of Health Development) will be key to successfully tackling of this challenge. The border guard and police force enjoy high levels of public trust, which helps to address safety problems more efficiently as envisaged in the Internal Security Development Plan 2015 – 2020.

Citations:
Estonia Drug Report 2019. European Monitoring Centre for Drugs and Drug Addictions. http://www.emcdda.europa.eu/countries/drug-reports/2019/estonia_en (Accessed 14.10.2019)

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 European Union and United Nations. A 2016 – 2020 strategy concerning Estonia’s development cooperation and humanitarian aid takes the United Nation’s Millennium Development Goals (MDGs) as a starting point. The strategy details Estonia’s development objectives, main fields of activity and identifies major partner countries. The priority partners are the former Soviet Republics – Georgia, Moldova, Belarus and Ukraine, as well as Afghanistan. Estonia is active across various fields, although special efforts have focused on transferring knowledge in education, healthcare and e-government. Estonia is a world leader in the dissemination of domestic expertise in implementing ICT in public administration and education.

The total amount of Estonian development cooperation and humanitarian aid, which also take into account the development cooperation activities of other ministries, amounted to €37.9 million in 2017. The largest part (€18.4 million) involves bilateral developmental cooperation, while Estonia’s contribution to the European Union’s budget for the European Commission’s Development Cooperation Program is €16.8 million. Estonia also contributed €4.7 million to the African Peace Facility, an Africa-EU Partnership initiative, in 2017.

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.

Citations:
Ministry of Foreign Affairs (2018). Overview of Estonian Development Cooperation. https://vm.ee/en/overview-estonian-development-cooperation (accessed 23.10.2019)
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