Estonia: Incapacity to work reform

The step-by-step reform by the government of the Estonian incapacity to work policy will transform the measures that activate people with partial loss of capacity for work and support their participation in the labour market. Although triggering considerable public debate, the government is willing to continue with the reform despite its alleged shortcomings.


In June 2013, the government proposed reform of the Estonian incapacity to work policy. The proposal was stimulated by the increasing number of people who receive a pension because of their incapacity for work and their low participation in the labour market. 

According to Eurostat, about 31% of the employed population and 32.4% of the unemployed in Estonia had a longstanding illness or a health problem in 2012. The corresponding proportions in the EU27 were 8.8% and 12%, respectively. As the absolute and relative number of people with a permanent incapacity to work had been increasing (see the statistics and discussion in Estonia: Employment opportunities for people with chronic diseases), the government launched a reform in 2013 of the occupational disability support. The inception of the reform is discussed in the EurWORK article,  Radical reform to work incapacity rules.

Two new acts

The first step of the reform was the drafting of a bill (Work Capacity Benefit Act) setting out new rules for evaluating applicants' work capacity and eligibility rules for the monthly financial social security benefit. Immediately after unveiling this bill, another bill(Act on Amendments to Social Welfare Act, Labour Market Services and Benefits Act and other Acts) which focuses on occupational and social rehabilitation services, was introduced into the debate. This second draft was arguably partially in response to criticism by stakeholders that, without the enabling services, the activation of the people with occupational disabilities would be futile.

The eligibility rules of occupational rehabilitation have been revised so that disabled people currently in employment would have access to services that could help them to stay at work. In addition, a number of revisions to the policy were proposed to increase the supply and quality of active labour market services and rehabilitation services for the people with an occupational disability.

Parliamentary debate

The two bills were debated in parliament in June 2014, were passed by parliament on 19 November and are scheduled to come into force on 1 January 2016.

The government’s plan to reform the incapacity to work policy triggered a comprehensive public debate, including a number of meetings across Estonia, organised by vocal representative organisations. Although the government and parliament had made efforts to involve stakeholders in the debate, including representative organisations of persons with disabilities and labour unions, consensus was not reached in the legislation adopted by the parliament. Consequently, the most vocal representative organisations of those with disabilities wrote to the President, Toomas Hendrik Ilves, asking him not to affirm the two items of legislation. In their letter (in Estonian, 532 KB PDF) they argued that:

  •  the legislation is unconstitutional as it supposedly violates fundamental rights;
  • it is of poor quality as several of their suggestions were rejected;
  • the discussion was overloaded with arguments not based on evidence;
  • there was no assessment of the impact of the legislation.

However, the president did not find that he could legitimately reject the legislation and affirmed the two bills early in December 2014.

Goodwill agreement

Both the government and stakeholders agreed that this first step of the reform should not be the last one. Because work capacity and disability policy is extensive, other areas of the policy need to be reviewed and possible amendments made.

The second step is a goodwill agreement (Disability, or damage to health and the protection of human social cooperation agreement​ (in Estonian, 306 KB PDF)) between the government, labour market and social services providers, trade unions and some representative organisations of persons with disabilities. However, the major representative organisations of people with disabilities that had been vocal in expressing their criticisms and points of view during the debate did not sign the agreement. They claim that the government had not taken into account the shortcomings they had pointed out and their suggestions made during the parliamentary debate.

Prevention of occupational disability

The overall aim of the agreement is to achieve consent on the social and employment policies/interventions required to increase the social inclusion and protection of rights of people with chronic health problems and disability. In particular it aims to:

  • increase the employment of people with reduced capacity to work by increasing their employment in the public sector and motivating private sector employers to employ people with an occupational disability;
  • improve the quality of social and occupational rehabilitation services;
  • increase public awareness of occupational disability.

The agreement outlines a number of targets and activities that will be the focus of occupational disability reform in Estonia over the next couple of years. It stresses the importance of preventing (chronic) health problems and occupational disability. Among other things, it proposes that occupational health and safety regulations should be reviewed to identify incentives to:

  • improve the working conditions and work environment of disabled people;
  • improve health promotion in organisations and society in general.

The introduction of occupational accidents and sickness insurance systems is proposed to motivate employers to prevent work-related health problems and to encourage improved occupational health and safety management. Estonia is one of the few countries in the EU where there is, as yet, no such insurance scheme.

The agreement also sets out improvements to the current education system to ensure equal opportunities for people with disability to learn and acquire the qualifications to increase their employability.

Action plan

To execute the agreement, the government and the parties have agreed to propose an action plan by spring 2015. Significantly, the reform emerged in the debates ahead of the parliamentary elections at the beginning of March 2015 and some of the key spokespersons of the representative organisations of persons with disability that have been critical of the reform participated in the election.

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