Improving the provision of active labour market policies in Estonia.

Foreword
Acknowledgements
Table of contents
Acronyms and abbreviations
Executive summary
1 Assessment and recommendations
	1.1. Labour market challenges and the role of ALMPs
		1.1.1. Estonia has a strong labour market, but structural challenges persist
		1.1.2. A large share of people could benefit from active labour market policies
		1.1.3. Lack of skills and family-related obstacles are particularly widespread among people with weak labour market attachment
		1.1.4. People with weak labour market attachment need individual support
	1.2. Institutional set-up of ALMP provision
		1.2.1. The institutional set-up of ALMP provision produces good results and its key features should be maintained
		1.2.2. The division of responsibilities and co-operation practices of the Ministry of Social Affairs and the Unemployment Insurance Fund should be further defined and agreed on
		1.2.3. Employment policy could be co-ordinated better with social, health and education policies
		1.2.4. Strategic co-operation across policy fields could improve through adjustments in the working methods
	1.3. Regulatory set-up and financial framework for ALMP provision
		1.3.1. Estonia’s legal set-up of ALMP provision is unnecessarily complex, making its administration burdensome
		1.3.2. The Estonian legal set-up should be re-designed to decrease complexity and advance flexibility
		1.3.3. Complexity in the regulations of ALMP provision triggers complexity in financing and budgeting
		1.3.4. Sustainability of the ALMP financing framework is a potential issue
		1.3.5. The financing model does not systematically support accumulating reserves during good times for economic downturns
		1.3.6. In the context of central management of public funds, the low financial sustainability in the systems of health care, social services and social security undermines the financial sustainability of labour market policies
	1.4. Outreach of the public employment service
		1.4.1. Benefits and health insurance are strong incentives to contact the EUIF
		1.4.2. The EUIF has become more active to advertise its support
		1.4.3. People who are very far from the labour market are difficult to reach
	1.5. ALMP basket and coverage
		1.5.1. The EUIF should increase its outreach through further activities to raise awareness
		1.5.2. Estonia has boosted expenditures on ALMPs
		1.5.3. The composition of the overall ALMP package is appropriate
		1.5.4. The coverage of ALMPs is high once a jobseeker is in contact with the EUIF, but the share of people with weak labour market attachment in contact with the EUIF should be higher
		1.5.5. Job-search support and ALMPs targeting health and geographic obstacles reach many of the people in need
		1.5.6. ALMPs addressing skill obstacles need to be better targeted and re-designed
		1.5.7. The most vulnerable groups need better targeted employment incentives and follow-up support
	1.6. Networking and co-operation to provide services holistically
		1.6.1. The EUIF has the capacity to network with other organisations, but the wider system lacks holistic approaches
		1.6.2. Different institutions provide similar services, potentially causing gaps and overlaps in service provision
		1.6.3. While overlaps in service provision are rare in practice, gaps in services are a concern
		1.6.4. Institutions providing employment, social and health services need to co-operate to provide holistic support
2  Recent trends in the Estonian labour market
	2.1. Introduction
	2.2. The Estonian labour market made remarkable progress after the Global Financial Crisis
	2.3. Economic impact of the COVID-19 pandemic
	2.4. Despite solid labour market fundamentals, structural challenges persist
	2.5. Vulnerable groups require specific policy attention
	References
	Notes
3 Institutional and regulatory set-up of active labour market policy provision in Estonia
	3.1. Introduction
	3.2. The institutional set-up for the design and provision of ALMPs
		3.2.1. The key institutions to design and implement ALMPs
			Ministry of Social Affairs
			Estonian Unemployment Insurance Fund
			The Estonian institutional set-up for ALMP provision compared to other countries
		3.2.2. The key features of the institutional set-up should be maintained, but co-operation between the stakeholders could be improved
			The key stakeholders are generally satisfied with the institutional set-up of ALMP provision in Estonia
			The division of responsibilities and co-operation practices have to be further defined and agreed on
	3.3. The legal framework for active labour market policies
		3.3.1. The main regulations of ALMP provision
			The Labour Market Services and Benefits Act lacks flexibility
			The Employment Programme offers a flexible solution to introduce new and re-design existing ALMPs
			Piloting new ALMPs or new target groups using funding from the European Structural Funds adds to the number of regulations
		3.3.2. ALMP regulation in Estonia could be streamlined to increase clarity and flexibility
			The Estonian legal set-up of ALMP provision is more complex than the set-ups of other comparable systems
			The Estonian legal set-up could be streamlined to advance flexibility
			Drafting regulations for effective and efficient ALMPs requires co-operation between stakeholders
	3.4. The financing models for ALMP provision
		3.4.1. Sustainability of ALMP financing is a potential issue
			Unemployment Insurance contributions as the main financing source
			Funding from the European Structural Funds
		3.4.2. ALMP budgeting process
			The budgeting process for ALMPs involves inputs from the EUIF and allows some flexibility in implementation
			Germany and Iceland give more autonomy for PES to design budgets for ALMPs that correspond to the labour market needs
	3.5. Co-operation across policy fields
		3.5.1. Key fields of co-operation
			Co-ordination between health, social and employment policy could be improved
			The Ministry of Education and Research could be more involved in strategic decisions
			The interests of employers are generally well represented
		3.5.2. Strategic co-operation could be increased through some adjustments in the working methods
			Co-ordinate the use of inter-ministerial working groups to address common strategic challenges more systematically and effectively
			Involving additional stakeholders in the strategic management of the EUIF
	References
	Notes
4 Outreach activities and targeting of active labour market policies by the Estonian Unemployment Insurance Fund
	4.1. Introduction
	4.2. Outreach of the Estonian Unemployment Insurance Fund
		4.2.1. The share of unemployed using PES for job search is similar to the OECD average
		4.2.2. Benefits and health insurance are strong incentives to contact the EUIF
		4.2.3. The EUIF has become more active to advertise its support
	4.3. ALMPs provided by the Estonian Unemployment Insurance Fund
		4.3.1. Estonia is one of the few countries that spends more on active than passive policies
		4.3.2. The overall ALMP package of the EUIF has a good composition
		4.3.3. ALMP provision by the EUIF is based on an individualised approach and evidence on what works and for whom
		4.3.4. The individualised approach to target ALMP requires continuous investments in counsellors’ skills
		4.3.5. Empirical evidence suggests that ALMPs provided by the EUIF are effective and efficient
	4.4. Networking between the providers of employment, social and health services
		4.4.1. The EUIF has the capacity to network with other organisations, but the wider system lacks holistic approaches
		4.4.2. Divergences in capacity of institutions might cause gaps and overlaps in service provision
	References
	Notes
5 Groups in need of active labour market policies and their obstacles to labour market inclusion
	5.1. Introduction
	5.2. Population share with weak or no labour market attachment: International comparisons
	5.3. Microdata analysis of groups in need of active labour market policies in Estonia
		5.3.1. A considerable share of the Estonian population could benefit from ALMPs
		5.3.2. Numerous pensioners could benefit from ALMPs
	5.4. Microdata analysis of obstacles to labour market integration
		5.4.1. Methodology to define labour market obstacles
		5.4.2. People with a weak labour market attachment often face several obstacles to labour market inclusion
		5.4.3. ALMP needs are particularly widespread among the low-educated
		5.4.4. Even moderate health problems are associated with higher obstacles to labour market integration
		5.4.5. People weakly attached to the labour market face difficulties in transportation to work
		5.4.6. Labour market obstacles differ across population groups with weak labour market attachment
	References
		Annex 5.A. Supplementary statistics
	Notes
6 Active labour market policy coverage among people with weak labour market attachment
	6.1. Introduction
	6.2. Share of people with weak attachment to the labour market in contact with the Estonian Unemployment Insurance Fund
		6.2.1. There is scope for more contact with the EUIF for groups with weak attachment to the labour market
		6.2.2. The EUIF should increase its outreach by further activities to raise awareness
	6.3. Access to ALMPs among groups with weak labour market attachment
		6.3.1. The coverage of ALMPs is high once a jobseeker is in contact with the EUIF
		6.3.2. Labour market services, training and employment incentives are the most common ALMP categories across different groups weakly attached to the labour market
		6.3.3. Matching between ALMPs and labour market obstacles of persons weakly attached to the labour market
			Match between obstacles that ALMPs target and the obstacles people face is not always sufficient
			Targeting individual ALMPs is often driven by eligibility criteria
		6.3.4. The ALMP basket needs to be redesigned concerning training and wage subsidies
			ALMPs addressing skill obstacles need to be promoted directly and tailored to the needs
			ALMPs addressing people with social integration obstacles should be targeted, individualised and involve follow-up
			ALMPs addressing care obligations
	6.4. Gaps and overlaps in service provision with other service providers
		6.4.1. A small share of persons with weak labour market attachment receive services that are similar to ALMPs from other providers
		6.4.2. In total, half of people with weak labour market attachment participate in ALMPs and similar services, but more efforts are required to reach the most vulnerable
		6.4.3. The overlap between very similar services is very low
		6.4.4. Changes are necessary to ensure holistic approaches through networking
	References
		Annex 6.A. Detailed results of microdata analysis
	Notes