A National Audit Office report has criticised Estonia’s government for not offering enough support to the unemployed. The report looked at labour market services and benefits provided by the Estonian Unemployment Insurance Fund and its predecessor the Labour Market Board. The NAO said the system needed to improve as services and benefits reached only a small proportion of the unemployed. It also said issues of structural and long-term unemployment had to be tackled.
About the study
Research by Estonia’s National Audit Office (NAO) has investigated ways the state has tackled the issue of unemployment in the country. The report, State activity in bringing the unemployed to the labour market (in Estonian, 1,39Mb PDF), assessed the support provided by the Estonian Unemployment Insurance Fund (Töötukassa). The aim of the study was to find out if help was available to everyone in need and how efficient the state system was in supporting the unemployed.
- The report involved analysis of a number of data sources including:
- administrative data;
- 11 expert interviews;
- 19 in-depth interviews with unemployed people;
- a survey on the illegal employment of registered unemployed;
- relevant legislation.
The analysis of registry data by the Estonian Unemployment Insurance Fund covered unemployment services and benefits from the period 2007–2011, as well as statistics provided by other relevant institutions. These included the Estonian Tax and Customs Board (EMTA) and local municipalities.
Key findings
Proportion of unemployed receiving support is low
The research found that, with few exceptions, benefits and services are available only to those unemployed who are registered with the Estonian Unemployment Insurance Fund. In 2011, it was estimated that only about 63% of all unemployed who were searching for a job were registered. In addition, there were about 10,000 people who are classed as ‘discouraged’. This means they were neither registered with the Estonian Unemployment Insurance Fund nor actively searching for a job.
The report also found that not all registered unemployed receive benefits and services (see figure).. In 2011, only 18% of registered unemployed received income-related unemployment insurance benefit and 16% received flat-rate unemployment allowance. This was because most of the jobless did not meet the qualification criteria (EE1208019I, EE1206019I). On average 20% of unemployed received employment services.
As of January 2009, 45% of all those registered as unemployed and 37% of those classed as long-term unemployed had received at least one labour market service.
The expert interviews revealed that social problems often needed to be tackled before the labour market services could be provided. Issues needing to be dealt with included drug and alcohol addiction, lack of care for dependents and lack of transport.
The study showed that 9% of all long-term unemployed received at least one kind of service from the state between 2007 and 2009. They received social services such as housing, food assistance and the services of a care assistants.
A lack of financial support was reflected in poverty rates among the unemployed. Those registered as unemployed who were not eligible for either unemployment insurance benefit or unemployment allowance had very low income levels, often below €100 per month.
NAO says the Government of Estonia needs to provide support to all unemployed, according to need and income. The audit office specifically emphasised the need to provide better support to discouraged people and the long-term unemployed.
Skills mismatch and retraining
The NAO analysis points out that the skills of the unemployed do not match the needs of the labour market.
The majority of the jobless had previously been employed in elementary occupations. They worked in the craft sector and related trades, or were in the service or sales sector. Most would be in group 9 of the International Standard Classification of Occupations (ISCO). Since there are few vacancies for workers in these occupations, many simply become unemployed.
According to Estonia’s Ministry of Economic Affairs and Communications (MKM), the need for unskilled workers is decreasing. At the same time, the study points out that training and retraining are not sufficiently available to unemployed.
In 2011, only 3% of the registered unemployed received training from the government’s employment services. The study showed another 3% of the country’s unemployed received training through the Estonian Ministry of Education and Research (HTM), while 1% went to the Estonian Non-formal Adult Education Association’s training centre (ENAEA).
Commentary
The Estonian Unemployment Insurance Fund and the National Labour Market Board were merged in May 2009 to unite the provision of all unemployment-related services and benefits.
The NAO report includes comments and responses to its conclusions. It also makes recommendations to the Ministry of Social Affairs (Sotsiaalministeerium), which is responsible for the benefits and services referred to in the report.
The ministry has been critical of the report, pointing out that the work of the Estonian Unemployment Insurance Fund could not be assessed separately from other services. The ministry also said the NAO recommendations were too general to be useful and practical.
Marre Karu, Reelika Leetmaa, Praxis Centre for Policy Studies
