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of Estonia, and the other post-Communist countries. Although the low private contributions in the post-Communist cases have path-dependent historical consequences, it is still the lowest in Estonia (private voluntary and mandatory contributions in Estonia are 0.02%; 0.04% in Poland; 0.2% in Hungary; 0.9% in Slovakia; and 1.2% of GDP in Slovenia). As an illustration, Figure 3.1.6 also includes some liberal, or Anglo-American, welfare regimes, in order to emphasize the differences from the continental European model. In Japan, Canada, England, but especially the U.S., the private social spending comprises a large part of the total social expenditures (4%, 5%, 6% and 11% of GDP, respectively). Despite of the differences in private contributions Estonia and the Anglo-American countries are similar in terms of total expenditures – which stay below 20% of the GDP. Acknowledging the fact that the Estonian social policy simultaneously has low public and still non-existent current private contributions leads us to the conceptualising of welfare regimes typologies for realising future social policy alternatives. Although, during the last decade, social policy has been directed at increasing private share in social spending, moving toward Anglo-American social model has not been transparent and publicly recognized policy agenda. 3.1.3 Types of welfare states and their future The fundamental dilemma of a welfare state is the relationship between the market and the state. Public assistance and insurance are not the only objectives of the welfare state – it is rather the trade-off between efficiency and equity that is at the heart of many discussions addressing the attempts to classify welfare states. There is no single theoretical framework that gives justification to state intervention and its dimensions. . Without being exhaustive, one explanation for this is the concept of Table 3.1.2 Classification of welfare states Commodification Stratification Reference countries Liberal Conservative High Medium Low Dual: policies targeted at supporting markets USA, Great Britain, New Zealand, Ireland High: opportunities depend on status Germany, Switzerland, France, Austria Social Democratic Low: policies targeted at equality Sweden, Finland, Norway, Denmark Source: Table constructed by the authors, based on Esping-Andersen 1990 Figure 3.1.7 Esping-Andersen’s typology and the post-Communist welfare states Commodification index (USA=100) 110 100 90 80 70 60 50 40 30 20 10 0 LVA POL SLO LTU EST GRC USA ESP IRL HUN ITA PRT CZE social traps, i.e. a situation in which a group of people act to obtain short-term individual gains, which in the long run leads to a loss for the individual as well as for the group as a whole. The term “social traps” is the common generalised term for market failures. These failures are related to information traps (e.g. people underestimate the probability of becoming unemployed), externalities (e.g. the investments into the social and human capital of children, as future taxpayers, also benefit the childless) or the problem of “free riders”, where individuals lack the incentives to contribute to the provision of public goods. Since individual choices generally do not take social welfare into account, private spending in the markets with negative externalities is not efficient. However, these different arguments are not sufficient for government intervention, it has to be confirmed that the correction itself is not going to produce even worse outcomes. Therefore, the intervention of the state can be better justified by the social contract. It can be a Rawlsian veil of ignorance type of agreement – that relies on equality and justice as fairness principles. According to Rawls (1971), people would prefer the Difference Principle to regulate inequalities, which only permits inequalities that work to the advantage of the worst-off. Based on similar arguments, Dworkin’s (2000) justification for redistribution and egalitarianism is nested in the idea of an envy-free society (distribution of resources), which was briefly discussed above. In both cases, the interventions are justified, not only by lending a helping hand to the markets (protection of property rights, provision of law and order, correction of market failures), but also by the redistribu- GBR FRA DEU AUT BEL FIN NOR DEN SWE 30 40 50 60 70 80 90 100 Social protection index (SWE=100) Comments: the first two principal components have been used to compile indices from 16 different indicators that characterise welfare states. Pre-financial crisis data from 2000-2008, 22 countries. Source: Põder and Kerem 2011. 110 Estonian Human Development Report 2012/2013
tion agreed upon the social contract. Of course, such a social contract is only an ideal, which, in reality, is executed by the interests groups (social classes) in the political process of choice. In political economy, for instance, it has been argued that the “social contract” is more of a concession made by the ruling elite to the lower classes, in order to avoid major conflicts that could threaten the elite’s legitimate power. These concessions allow the elite to stay in power at the cost of redistribution. There is a general consensus that welfare states promote equity; but a similar consensus is lacking regarding economic growth and wealth. The main problem is – which parameters and criteria should be used to measure a welfare state. Starting with Esping-Andersen’s (1990) seminal typology three distinguished regimes are acknowledged which differ by the degree of decommodification and the kind of stratification they produce in society. Decommodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market (Esping-Andersen, 1990: 21-22). Stratification refers to the outcome of redistribution and the level of universality of solidarity that is imposed by the welfare state and it reflects inequality in society. Based upon these two dimensions Esping-Andersen distinguished between (a) liberal, (b) conservative-corporatist and (c) social-democratic welfare states (Table 3.1.2.) Esping-Andersen believed that divergent “post-communist regimes” would shift towards some of the main welfare regime types after 15 years of transition (Esping-Andersen 1996). This period was over for Baltics in about 2006. However, a puzzling phenomenon has emerged. Although “post-communist regimes” exhibit social expenditure well below those of the EU15, there has been no convergence (Draxler and van Vliet 2010), although the traditional social policy models in the West seem to be converging (Castles 2008; van Vliet 2010). Even if the transition period appeared to be longer than predicted due to some unanticipated path dependency, this phenomenon tends not to be present even in more recent studies (Ferge 2011, Põder and Kerem 2011, Draxler and van Vliet 2010, Fenger 2005). At the same time, Aidukaite (2006) and Rys (2001) have stated that the differences among the post-Communist states are too great for a separate type to be conceptualised. Our main finding (Figure 3.1.7) is that there is no convergence between the Nordic social-welfare system and the rest of the EU countries, including Estonia. According to two composite scores of “social protection” and “commodification” countries can be divided into two distinct ends: the Nordics with high ‘social protection’ and low “commodification” scores; and Liberals with the opposite characteristics. The Continentals and Mediterraneans are positioning somewhere closer to the lower left corner, having lower “social protection” and “commodification” scores than the Nordics. The Post-Communists have the lowest “social protection” scores, but at least, the Baltics have higher ‘commodification’ scores than Continentals-Mediterraneans. It can be said that the Post-Communists have two possible development paths: the Continental path or the Liberal (Anglo-American) path. Figure 3.1.8 Social expenditures (% of GDP) and life-satisfaction (% of the population that is satisfied with life) Satisfaction 100 90 80 70 60 50 40 30 CZE CYP MLT POL SVK EST LVA ROU BUL LUX LTU SLO HUN BEL DEU GBR AUT Estonia, along with Latvia and Lithuania, are in a specific position, having extremely low social protection scores and, as far as the risks related to the labour market are concerned, are more similar to such liberal welfare states like Ireland and Great Britain. Also, the literature refers to the fact that the initial historical context of the post-Communist states enabled them to build their welfare states based on solidarity, social dialogue and a striving towards greater equality (Hermann and Hofbauer 2007; Juhasz ESP IRL GRC PRT SWE NED DEN FIN ITA 15 20 25 30 Social expenditures Sources: Eurostat (2011) and Eurobarometer 76 (2011), author’s calculations Figure 3.1.9 The extent of the welfare state and pro-social behaviour Pro-social behaviour index 60 50 40 30 20 10 10 USA EST IRL GBR POL ESP PRT GRC SLO ITA FRA DEN DEU AUT NOR FIN SWE BEL HUN FRA CZE 20 30 40 50 60 70 80 Welfare state index Source: Põder and Kerem (2011) and OECD (2011) Estonian Human Development Report 2012/2013 111
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ESTONIAN HUMAN DEVELOPMENT REPORT 2
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Table of Contents 1 Human Capital /
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Dear Reader Since the moment when E
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1Human Capital Estonian Human Devel
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the HDI’s content has also been h
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Figure 1.1.1 The human development
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Figure 1.1.7 The income sub-index:
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The results of the Princeton Projec
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the hypothetical generation. The to
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Figure 1.2.3 Life expectancy. Eston
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Table 1.2.2 also presents the most
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The new trends that are appearing i
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Figure 1.2.8 Components of populati
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New features were introduced into E
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Initiation of Voluntary Birth Contr
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Table 1.3.1 Best-known educational
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(OECD 2012b). Therefore a certain r
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The reciprocal dependence of the pr
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Figure 1.3.8 Percentage of students
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Table 1.3.4 The quality of educatio
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1.4 Health Raul-Allan Kiivet Change
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Table 1.4.1 Usage of prescription m
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allude to the fact that approximate
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promote healthy lifestyles among th
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Figure 1.5.1 The World Values Surve
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Table 1.5.2 Estonia’s participati
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Figure 1.5.3 The percentage of the
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Figure 1.5.5 Percentage of the Esto
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The fact that Estonia’s position
Page 61 and 62: Summary Mati Heidmets The global vi
Page 63 and 64: 2People and Society Estonian Human
Page 65 and 66: Table 2.1.1 Structure of the Bertel
Page 67 and 68: tioning market economies (15 states
Page 69 and 70: 2.2 Freedom and democracy Martin M
Page 71 and 72: Table 2.2.1 Democracy indicators Po
Page 73 and 74: Figure 2.2.2 The distribution of th
Page 75 and 76: would be something that none of the
Page 77 and 78: political participation are general
Page 79 and 80: strongest, while a very small perce
Page 81 and 82: is concerned, Estonia is one of the
Page 83 and 84: Figure 2.4.2 Average circulation of
Page 85 and 86: 2.5 Corruption Jüri Saar In accord
Page 87 and 88: Lithuania, 61%; and in Russia, 69%.
Page 89 and 90: 2.6.2 Intentional homicides in Esto
Page 91 and 92: crime. And thirdly, there was a wis
Page 93 and 94: References 1. Ahven, A. & Tabur, L.
Page 95 and 96: states included in the EU Kids Onli
Page 97 and 98: 2.8 Public assessments of the state
Page 99 and 100: Figure 2.8.4 Changes releated to tr
Page 101 and 102: of the state’s development are en
Page 103 and 104: Table 2.9.1 The positions of Estoni
Page 105 and 106: 3. IEP (2011). Structures of Peace.
Page 107 and 108: 3Welfare and the Quality of Life Es
Page 109 and 110: choices made, not what people say t
Page 111: Figure 3.1.5 Public social spending
Page 115 and 116: References 1. Aidukaite, J. (2006).
Page 117 and 118: hand, to the “inequality of acces
Page 119 and 120: and explanations of the extent of i
Page 121 and 122: 5- much more than I deserve. Some d
Page 123 and 124: people in Estonia consider the inco
Page 125 and 126: Table 3.3.1 Experienced Well-Being
Page 127 and 128: at about 70%. In Latvia and Lithuan
Page 129 and 130: sign. It seems that the usual view
Page 131 and 132: 3.4 Quality of life Anu Toots 3.4.1
Page 133 and 134: a uniform composite indicator has n
Page 135 and 136: 3.4.6 The components of life qualit
Page 137 and 138: Figure 3.4.4c Perceived quality of
Page 139 and 140: Figure 3.4.5 Changes in the depriva
Page 141 and 142: 3.5 Environment dimension of well-b
Page 143 and 144: Figure 3.5.1.b Estonia’s position
Page 145 and 146: 3.5.4 Energy intensity The energy i
Page 147 and 148: productivity, which is defined as t
Page 149 and 150: perceive themselves as worse off th
Page 151 and 152: 4The Economy Estonian Human Develop
Page 153 and 154: vide a valuable connection for maki
Page 155 and 156: Figure 4.1.3 Components of economic
Page 157 and 158: ule of law, the sub-indicators for
Page 159 and 160: References 1. Acemoglu, D.; Robinso
Page 161 and 162: Development Report employs generali
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and pasture land, and this was capi
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Basing the total and net savings re
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4.3 Labour market Reelika Leetmaa,
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The problems include the very limit
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• Expenditures for active labour
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who lose their jobs. These ensure i
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4.4 Productivity and the economic s
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labour costs at the company level r
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Table 4.4.4 Comparison of the produ
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Figure 4.4.1 Annual average increas
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4.5 Innovation Erik Terk, Katrin M
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Table 4.5.2 Comparison of innovatio
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Table 4.5.4 Comparison of the indic
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in order to make the R&D potential
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It is characteristic of the South K
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mechanisms for increasing their sta
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Globalisation and Policy Patterns 5
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When Estonia regained its independe
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5.2 The impacts of globalisation an
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Table 5.2.2 Support of the differen
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5.3 Development policies Erik Terk,
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• C -the “Estonia-centred” su
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Figure 5.4.1 Support for the possib
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Summary Erik Terk Estonia is part o
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ehavioural patterns. Therefore, it
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EDR 2012/2013 authors Clemens Buche
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EDR 2012/2013 authors Alari Purju i
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Editor-in-Chief: Mati Heidmets Prod
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