Estonian Human Development Report

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References 1. Aaviksoo, A., G. Paat. (2007). “Tervishoiuteenuste kättesaadavus” (Editor, A. Purju). Sotsiaaltrendid 4. Tallinn: Statistics Estonia, pp. 78–86. 2. Aghion, P. and P. Howitt (1998). Endogenous Growth Theory, MIT Press, Cambridge, Mass. And London. 3. Bell, S.G. (1975). The Coming of Post-Industrial Society. New York, Basic Books. 4. Constitution of the Republic of Estonia. (1992). Tallinn. 5. Estonian Statistical Yearbooks 2004, 2007, 2008. Tallinn: Statistics Estonia. 6. El-Erian, A. and M. Spence. (2008) “Growth Strategies and Dynamics: Insights from Country Experience“, Working Paper No. 6, The Commission on Growth and Development, The World Bank, Washington. 7. European Commission (2005), Cohesion Policy in Support of Growth and Jobs: Community Strategic Guidelines, 2007–2013. (http://www. europa.eu. int/comm/cohesion_ policy guidlines/index_en. 8. Gereffi, G., J. Humphrey and T. Sturgeon, T. (2003), “The Governance of Global Value Chains”, Review of International Political Economy, No. 4, pp. 45–61. 9. Jessop, B. (2002). The Future of the Capitalist State, Cambridge, Polity. ble through education policy and the need to make the relevant measures a part of comprehensive political choices. Changing the educational system at the basic and upper secondary school level is significantly related to regional policies, including administrative reform. With regard to higher education, the sharp decline in the birth rate that took place in the 1990s means significantly lower enrolments in higher education schools as of 2010. A need for competition also develops and institutions that cannot compete internationally on the education market must inevitably merge with stronger universities. The state’s education policy is more critical to the direction of this process than in case of the current choices. The state’s policies and people’s economic and social behaviour are interrelated. This relationship is not limited to political mechanisms serving as the connection between the will of the electorate and political power under democratic conditions. There is also another aspect to adjustment, according to which people adjust their behaviour within the conditions set by policy. Sometimes this adjustment has a positive meaning for the society and sometimes it does not. For instance, under otherwise equal conditions, relatively modest social protection increases transfers between generations, while a poor ratio between treatment, services and prices increases pressure on the private sector for action or for the purchase of services from abroad. The existence of such possibilities reduces the resources for the financing of services provided in Estonia, although at the same time, the promotion of such development through political choice mechanisms should increase pressure on the government and lead to the corresponding adjustment of social policies. Estonia’s choices also considerably affect the EU background. Studies and comparisons confirm that Estonia’s percentage of costs for social protection is second to last among European countries (besting only Latvia) (Developments in the Social Field, 2007). On the one hand, this ranking proves the correlation between the ratio of relative social protection costs and the standard of living (at least in the European context). Despite the rapid economic growth of the previous years, Estonia is at the bottom of the GDP per capita ranking. At the same time, this correlation is also an opportunity, because economic growth and a small ratio of social protection costs should create conditions for greater contributions to this field of activity. This in turn has a positive effect in the long run on the development of an economy with a complicated structure. 10. Koppel, A., Lai, T., Aaviksoo, A. (2007). Tervishoiuteenuste kättesaadavust puudutavate valmislubaduste analüüs, Tallinn, Praxis. 11. La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert Vishny, 1998, “The Quality of Government”, NBER Working Paper Series, No. 6727. 12. Leibkonna eelarve uuring, (2006). Tallinn: Statistics Estonia. 13. Michalski, W., R. Miller, B. Stevens (2001), Governance in the 21 st Century: Power in the Global Knowledge Economy and Society, Paris: OECD. 14. North, D. (1990), Institutions, Institutional Change and Economic Performance, Cambridge, Cambridge University Press. 15. “Paying for Healthcare. A Survey”, (2004), Economist, 17–23 July. 16. Sotsiaalvaldkonna arengud 2000–2006, 2007. Sotsiaalministeeriumi toimetised nr.2. Tallinn: Ministry of Social Affairs. 17. The Growth Report: Strategies for Sustained Growth and Inclusive Development (2008), The Commission on Growth and Development, The World Bank, Washington. 18. The World Health Report 2000 – Health Systems: Improving Performance. (2000),WHO. 6.4. The labour market and the policies related thereto In dealing with problems related to the Estonian labour market in the following subchapter, we take two types of background information into account: the corresponding policies of the European Union and the trends predominant in the global economy. Since its creation the European Union has valued social aspects in the economy. The conclusion has been reached that certain common values exist that can be summarized under the concept of the European social model. The European social model includes people’s social security and the idea of cooperation, which is primarily expressed in the activities of social partners, and the topic of social cohesion, or the reduction of inequality. In the course of the Lisbon process, Europe has decided to increase the | 138
economic competitiveness of the EU and reduce its technological gap with the US. One possibility is to modernize the European social model, including increasing the flexibility of the labour market. By implementing certain concepts related to social and labour policies, the EU is attempting to find a balance between social security for the workers and the flexibility of the labour market. This new approach has started to be called flexicurity, which includes elements of labour market flexibility and social security 36 . The basic elements of flexicurity are a flexible labour market, active employment policy, social protection and lifelong learning. Another background element we must inevitably consider is the financial crisis, which began in the US in the autumn of 2008 and now affects the global economy, and the consequences thereof. The global economy is undergoing difficult and anxious times. The debt crisis that began in the real estate sector, also bankrupted commercial banks, and caused a wave of bankruptcies in investment banks as well. The investment bank crisis globalized the US crisis, because the projects of US investment banks are global in scope. This resulted in forceful governmental intervention, whereby the UK and the US governments essentially started nationalizing the financial sector; they were followed by the other EU member states. Banking was taken under strict government control and one can probably say that investment banking in the form we have known will never be restored. In 2009, it is still too early to tell what the global impact of the financial crisis will be on the real economy. As a rule, the labour market reacts to changes taking place in the economy with a time delay. An example is wage formation, where the established principle is that wages are agreed upon a year in advance. In other words, 2007 wages were agreed upon in 2006 and 2008 wages in 2007. Therefore, it is not surprising that in many Estonian industries wages increased by tens of percentage points in 2007, while at the same time, the economy was already starting to show obvious signs of slowdown in the middle of that year. The particularity of Estonia, and apparently the other Baltic countries, is that the role of trade unions is relatively marginal and employees usually agree on wages with their employers individually. The result is that employee salaries consist of relatively low basic wages and relatively high additional fees and bonuses. When the economy is booming, performance pay increases rapidly, but when things go badly, this may result in a rapid decline of gross wages in certain sectors. Are there grounds to compare the financial and economic crisis with the 1929 crisis in the US and the world, as some analysts have rushed to do? Probably not. In 1929, workers did not have the same social guarantees that we see in today’s market economy: starting from property and life insurance and ending with social guarantees in case of unemployment. At the end of the 1920s, the unemployment rate in the US climbed to 25%, people were ruined, social stratification and poverty increased sharply, and the same occurred in Europe. In today’s world, there is no basis for predicting a massive increase in poverty in developed countries. The governments have also reacted much more forcefully, intervening actively with measures to keep the financial system functioning. In any case, one can say that the economic crisis is a test for the aforementioned European social and labour market policies and will probably modify them to some degree. Before setting out to deal with individual aspects of flexicurity, we will pause briefly at changes in the Estonian labour market as a context for the processes that are taking place. General changes in the Estonian labour market Since the impact of the global financial crisis was just starting to affect the real economy at the end of 2008, the labour market situation in 2008 does not yet reflect the events that will start to occur. The cooling of the economy that began at the end of 2007 was accompanied by a notable wave of layoffs in the second half of 2008, the extent of which is yet to become clear. According to Ministry of Finance data, real wages increased in 2007 by 13% (nominal wages 20%) and productivity by only 5.6%. Although this gap has probably decreased during 2008, there is great economic pressure for layoffs. Many industries that rely on cheap labour have already laid off workers or even closed their companies (for instance, Narva Kreenholm). In 2006, the number of people that received special benefits as a result of collective layoffs was 1,595, whereas in 2007, the number stood at 2,567, and the number of people receiving relevant benefits in the first three quarters of 2008 reached 3,854. This is a relatively small number compared to the total number of unemployed individuals. Time-wise, the most exact picture of the number of unemployed is provided by the data on registered unemployment. At the beginning of October 2008, 20,000 unemployed people registered with the Labour Market Board, which is 54% more than at the same time in the previous year. According to the data of the Estonian Labour Force Survey, unemployment in the third quarter of 2008 was 6.2%. At the same time, we see that change in employment in the third quarter of 2008 was not especially affected by the economic recession. According to Bank of Estonia projections, the average unemployment indicator in 2009 will be 7%, and in case of negative growth, unemployment could reach 9–10%. In next few years an increase in unemployment based on the economic environment can be predicted, and therefore, people’s social protection, the effectiveness of active labour market policies and training for workers will become even more important. At the same time, the labour market should not forego its flexibility, because we are in a situation today, where fiscal policy in Estonia tends to be pro-cyclic, and amplify the growth phase during periods of economic boom and intensify the decline during a downturn. Active fiscal policies to stabilize the economy are 36 To read more about this in Estonian see the secondary school economic textbook dealing with the globalization of the Estonian economy (see Eamets, 2008). 139 |
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Estonian Human Development Report
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Estonian Human Development Report T
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4.2. Ethnic differentiations in sat
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Preface This year, the Estonian Hum
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CHAPTER 1 Estonian Human Developmen
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Figure 1.1.3. Life expectancy in co
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Figure 1.2.2. Life expectancy at bi
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to reality. The greatest inaccuracy
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Figure 1.2.9. Internal migration ev
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12. Marksoo, A. 1992. “Dynamics o
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Table 1.3.1. PISA 2006 study result
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Table 1.3.2. Number of students in
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1.4. The gross domestic product and
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Figure 1.4.3. Estonian GDP (right a
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1.5. Changes in the Estonian Human
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2.2. Health of Estonian residents i
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Table 2.2.4. Differences in life ex
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Figure 2.4.1. Healthy life years of
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Figure 2.4.4. Various accidents, tr
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2.5. Lifestyle and behaviour as a s
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Figure 2.5.5. Smoking in Estonia in
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Figure 2.6.1. Overview of the compo
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Table 2.6.2. Use of specialized med
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dren. The majority of services are
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Figure 2.8.2. How much a health dis
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2.10. Policy recommendations aimed
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CHAPTER 3 Quality of life and life
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Table 3.2.1. Characteristics of liv
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Table 3.2.4. An assessment of the e
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Figure 3.2.4. Difference in the job
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Table 3.2.6. Agreement with stateme
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Figure 3.3.1. Satisfaction with lif
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Figure 3.3.4. Percentage of people
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Figure 3.4.1. Types of quality of l
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Figure 3.5.1. Percentage of teenage
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Figure 3.5.4. Percentage of respond
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Arieh A., Conti C., Kutsar D., Nicg
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Figure 3.6.2. Subjective quality of
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Pieper, A. Sixsmith, Care related q
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Figure 3.7.1. The placement of Euro
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Figure 4.2.1. Life satisfaction by
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Table 4.2.1. Factors forming genera
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Annexes Annex 4.2.1. Socio-demograp
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Page 92 and 93: Figure 4.3.4. Attitudes of the Esto
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Page 102 and 103: mote equal opportunities. At the (e
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Page 122 and 123: Figure 5.4.6. Time spent on the con
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Page 154 and 155: have been underfinanced or are not
Page 156 and 157: Table 7.1. Factors that favour and
Page 158 and 159: Table 7.2. Potential economic devel
Page 160 and 161: Authors Chapter 1 Ene-Margit Tiit,
Page 162 and 163: Margit Keller (PhD) is a Senior Res
Page 164 and 165: Special prizes Estonian Human Devel
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Page 172 and 173: Honorable mentions Estonian Human D
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