Estonian Human Development Report

Figure 6.4.6. Ratio of the participation of 20–64-
year-olds in adult education during the last 12
months (total number of participants and non-participants
in adult education = 100), %
50
40
30
20
10
0
20–29 30–39 40–49 50–64
Source: Statistics Estonia
Figure 6.4.7. Companies organizing in-service
training (by size)
100
80
60
40
20
0
1999
2005
Source: Statistics Estonia
Men
Women
10–49 employees 50–249 employees 250 or more employees
strict. Therefore, in the context of the strictness of labour
legislation, Estonia is relatively regulated or a country
with a rigid labour market. At the same time, when we
examine enterprise statistics, we see that at the enterprise
level many new jobs are created and eliminated
each year. There are also relatively active flows of people
between various labour market states; however, it is
true that the flows have decreased during the last few
years. Another argument in defence of the flexibility of
our labour market is macroeconomic. In Estonia, neither
fiscal nor monetary policies are very active, i.e. they are
not used to adjust of cyclical fluctuations in the economy.
At the same time, there has to be a buffer for balancing
the economy, and according to the general logic of macroeconomic
models, this can only be the labour market.
At the end of last year (2008) we already saw how unemployment
increased in connection with the economic
recession. Today, average wages have yet to react but it
is probable that average wages in sectors will decline as
they did during the 1999 crisis.
The second component of flexicurity – an active
employment policy – has gotten effective support from
EU Structural Fund resources in the last few years, but
here too we must recognize our lag compared to average
EU levels. On average, Estonia expends 10 times less
than the EU on active labour policies (the comparison is
based on the percentage of GDP spent on active labour
policies). The primary reason is a very restricted target
group (only registered unemployed people) and the short
duration of the programs. In addition, a relatively large
number of unemployed people search for new jobs without
the help of the Labour Market Board; therefore it is
not possible to provide them with the relevant services. It
is also unclear whether the provided services have helped
to improve the prospects of the participants in the labour
market.
As far as the third component of flexicurity i.e. social
protection is concerned, Estonia is unfortunately among
the least developed EU member states. Our public sector
expenditures for social protection are among the lowest
in the EU. Our unemployment benefits are also among
the lowest. In addition, our unemployment insurance system
is relatively rigid – e.g. part-time employment is not
encouraged, because people lose all their benefits even
when working with very small workloads. Therefore one
of the principles of flexicurity – that a person should be
guaranteed as large an income as possible during the
unemployment period – is not always fulfilled in Estonia.
For instance, surveys show that those who have received
collective layoff benefits and those who have worked in
the public sector are in a better position in comparison
to the others. On the other hand, one can always argue
that low social expenditures encourage people to return to
the labour market. This is also conforms to the liberal economic
ideology that has dominated to date, which minimizes
the state’s intervention and values individual initiative.
However, this ideology is not in agreement with
Europe’s social model.
One of the components of social protection is the combination
of work and family life. In this regard, the greatest
problem lies in the deficit of flexible pre-school childcare
possibilities.
As far as adult education is concerned, relatively
few people participate in Estonia compared to other EU
countries. Generally, governmental support for adult
education only covers about three broader categories of
people. These include government officials, teachers, and
the registered unemployed, as well as some smaller target
groups that are financed in the framework of specific
projects. It is also common that more white-collar workers
and competitive worker groups receive more training.
Less-qualified and older workers as well as other
risk groups, who probably need more training, actually
receive less. Furthermore, it has not been assessed
whether the training provided corresponds to the needs
of the labour market.
Therefore, you could say that examining the four components
of flexicurity, one can only be more or less satisfied
with labour market flexibility. In the remaining flexicurity
components, Estonia still has much to accomplish
in order to feel on a par with the old EU member states and
to guarantee the flexible functioning of the labour market.
A step in this direction was taken by the new Employment
Contracts Act and the trilateral agreement accompanying
it, which increases the flexibility of the employment relationship
primarily by liberalizing the regulations related
to layoffs and thereby improves the position of Estonia in
the rankings based on various indices. On the other hand,
the new law increases the benefits paid in case of unemployment
(unemployment insurance, unemployment benefits)
and expands the circle of those receiving unemployment
insurance benefits. As a result, the social security of
the unemployed increases and reduces the current ine-
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