EMCC European Monitoring Centre on Change

Estonia: Joint public-private local partnerships to cope with recession

  • Observatory: EMCC
  • Topic:
  • Published on: 27 February 2011

Kirsti Nurmela

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.


Local employment development measures existed already before the crisis and have given a good opportunity to tackle the effects of the crisis on a local level. A variety of stakeholders have been involved in such initiatives, including the central and the local government, NGOs, employer and trade union organisations etc. Local initiatives supplement employment policies which are still mostly designed and implemented centrally. However, it has been referred that often such local initiatives are not innovative and rather copy services provided centrally. It is not possible to draw any conclusion on the success of the LED initiatives in total, while some good examples have been outlined in this report.

1. The context for local employment development (LED) and joint public–private partnerships

This section aims to collect information about the context for LED and public–private partnerships in place prior to the onset of the economic crisis. The aim is to provide a general impression of LED and public-private partnerships rather than a full picture of LED initiatives.

1.1 A description of local employment development in your country before the onset of the financial crisis

a) Please very briefly define “local” for your country? Please use the scope and definitions section of the briefing note to inform your answer.

The initiatives for local employment development are very different in their scope and so it is difficult to define "local" in terms of LED in Estonia. In general, LED activities mostly concentrate on even smaller regions than at NUTS 3 level.

b) The composition of local partnerships i.e. which public, private and third sector actors or stakeholders are normally involved in its delivery (e.g. national/regional/local governments, social partners, companies, NGOs, NPOs, etc.)?

In terms of partnerships involved, the scope is again very diverse across different initiatives. In the labour market, a common partnership is between local governments and NGOs (regarding public-private partnership (PPP) initiatives/outsourcing), but also between national governments/local governments and social partners or local employers. The composition of partnership mostly depends on the content of the LED activity.

c) What does LED comprise in your country? Please include the types of labour market measures or actions undertaken by local employment development partnerships? Please use the examples provided in Text Box 1 below to inform your response.

Some examples of the types of activities delivered through LED partnerships include: jointly offered activation service to the unemployed, cooperation between local government and employers to define skills, needs in the region, jointly offered career guidance and counselling to persons who have received notice of redundancy, activities to foster collaboration between local companies etc.

As the activities are often "very local" and small-scale, it is difficult to collect comprehensive information on the LED initiatives in Estonia. Thus, it is not possible to provide a complete list of activities carried out in the framework of LED. However, some examples may be provided.

Text Box 1: Examples of the types of activities delivered through local employment development partnerships

Skills development, including technical and / or thematic knowledge and / or transversal / key competences

Training / retraining for the unemployed (including internships and apprenticeships), e.g. social partners working jointly with employers and employees to support workers facing redundancy, or who have been recently made redundant in collaboration with public authorities

Training for disadvantaged groups, e.g. young or old persons, female detached persons, ethnic minorities/migrants, disabled

Learning / training voucher initiatives funded or facilitated jointly by partnerships locally

Support to education and training providers to help them respond to employers needs, e.g. through joint curricula development, or business / education projects to deliver training during down/quiet times

Jointly reviewing vocational education and training and adult education strategies and provisions re. local needs

Employer-led training networks

Promotional campaigns that promote education and training in growth sectors (less affected by the crisis, coming out of the crisis quickly, or sectors facing labour or skills shortages)

Jointly implemented short-time work arrangements, which allow employees to take up training

Labour market integration, delivered by local public-private partnerships

Mentoring and coaching initiatives by employers for the unemployed

Recruitment fairs and campaigns jointly designed/offered by public and private actors

Enhanced jointly offered career guidance and counselling services

Involvement of local companies or NGOs in the delivery of outplacement services

Support to businesses, delivered by local public-private partnerships

New business creation and/or support for start-up businesses, including for example business incubator activities

Joint mentoring/coaching schemes for aspiring and new entrepreneurs

Activities to foster and support collaboration between local companies with a view to creating new or additional job opportunities

Creation of a local / regional brand

Managing the effects of the economic crisis

Joint business development activities

Activities to support / facilitate structural change within the local context.

d) An assessment of whether LED in your country is rather:

In Estonia, LED is a mix of both top down and bottom up approach, i.e. different approach has been used in different LED initiatives. Examples of top down approach include implementation of national measures on the local level, e.g. measures of Estonian Unemployment Insurance Fund (EUIF) which are contracted out to local level or which are implemented locally in cooperation with local actors. Bottom up approach is mostly evident in case of EU financed small scale (local) projects (for instance projects financed from the European Social Fund, ESF). These projects enable more in-depth approach to the labour market risk groups in terms of time allocated to their activation in the labour market. However, it has been referred that the initiatives are often not innovative and rather a copy of national labour market measures (Mind Park, 2007; Mind Park, 2008; InterAct Projektid & Koolitus, 2009). Bottom up approach also includes some local government initiatives which are conceived and delivered locally. However, information is very scarce on such initiatives.

2. The effect of the economic crisis on local employment development

This section aims to gather information on the effects of the economic crisis on local employment development in your country and examples of current good practice. While the momentum for LED has increased since around 2000, this CAR is seeking to establish how the economic crisis has affected LED, in terms of the measures and actions undertaken, the nature of the partnerships delivering such activities and its relevance in the current economic climate.

2.1 How has the economic crisis affected LED in your country?

a) Which public-private stakeholders (e.g. national/regional/local governments, social partners, companies, NGOs, NPOs, etc.) are more or less likely to be involved in LED activities during the crisis?

b) How have public-private stakeholders’ roles and responsibilities changed concerning the (i) design, (ii) delivery and (iii) funding of local labour market measures and actions since the onset of the economic crisis? Previous research has shown that NGOs/NPOs have a particular important role in initiating and implementing LED initiatives. Having in mind that the recent recession was a very financial one: Has this somehow affected NGOs/NPOs and their potential to be involved in LED?

c) If public-private stakeholders’ roles and responsibilities have changed why has this happened?

d) Has there been any change (increase or decrease) in the relative importance of local employment development activities (“bottom-up”) relative to centrally conceived (“top down”) financial measures and actions that are simply delivered by public authorities?

e) Has there been any change in the types of measures and actions delivered by public-private partnerships since the onset of the economic crisis? If so, please describe.

f) How has the availability of funding for LED changed as a result of the economic crisis?

In general it is difficult to point out any changes in LED due to economic crisis since there is no respective research evidence. Some conclusions can be drawn from the financing of LED activities. For instance, the ESF budget for 2009 and 2010 was increased on the account of future expenses due to the rapid changes in the labour market. As a result, the budget allocated for health awareness measures was reduced by EEK 28 million (about €1.8 million as at 2 August 2010) and transferred to calls for proposals in framework of providing active labour market policy (ALMP) measures to support welfare measures. In addition, further EEK 5 million (about €320 thousand) was transferred from the national programme to open call for proposals in the ALMP measures supporting welfare measures. According to the monitoring report of 2009, the purpose of these changes was to support the provision of welfare measures with ALMP measures for different risk groups (e.g. disabled, long-term unemployed etc). Furthermore, the budget allocated for some national labour market measures implemented locally has been increased. For instance, the capacity to provide reaction service to collective redundancies has been increased – new positions of team managers have been introduced and an additional target group of employers with solvency problems is planned (see also 2.2 below). However, while the financing for some labour market measures has increased in the recession raising the scope for LED activities as well, it should be kept in mind that these are only a few examples and can not be extended to the whole practice of LED in the country.

In terms of PPP/ outsourcing, a recent report has shown that local governments are interested in outsourcing their activities to NGO-s due to difficulties with financing the public services on their own. The analysis also indicated that most (44%) of the public services outsourced are in the social sphere (PRAXIS, 2009). Thus, in the context of the current recession, it might be expected that outsourcing has increased due to the financial constraints of the local governments and the possibility to find additional funding for delivering public services.

It is difficult to bring out any other evidence of changes in LED activities in Estonia due to the lack of respective research evidence.

2.2 Please provide examples of local approaches implemented jointly by various public, private and third sector stakeholders to prevent or address the negative labour market effects of the current economic crisis.

Three examples of local partnerships are analysed below:

  • Example 1: reaction service to collective redundancies
  • Example 2: activation centre of the unemployed
  • Example 3: INNOACT II - innovative activation of the labour force

Location of the partnership, including the spatial level at which it operates

Example 1: the service concentrates on the company which is undertaking collective redundancies and the respective local government unit

Example 2: four local government units of Jõgeva county – Saare, Torma, Taivere and Jõgeva municipalities (i.e. small part of the NUTS 3 level Southern Estonia)

Example 3: city of Tallinn and Harju county (i.e. NUTS 3 level Northern Estonia)

Information on the partnership:

Example 1: partners involved in the reaction service to collective redundancies include the EUIF, Labour Inspectorate, local government, trade unions, employee and employer representatives etc. The variety of stakeholders involved depends on the specific case of redundancies (e.g. whether there is a trade union in the company or the specific need of the persons made redundant). Design and funding of the service come from the EUIF who is coordinating the implementation of the reaction service. At the same time, effectiveness of the reaction service is largely dependant on the participation of other stakeholders, especially other employers. An evaluation of the reaction service from 2007 pointed out that including potential new employers in the reaction service and arranging meetings between the potential employers and persons made redundant is the most effective activity in terms of reducing the period of unemployment (Võrk, Leetmaa, 2007). However considering the recession the number of employers looking for new employees has reduced since then. Trade unions/ employee representatives mostly have the role of mediating information between employees and the EUIF team. In addition, Labour Inspectorate introduces employees their rights and local governments introduce local government services and opportunities provided to the unemployed. Also, recently a financial counsellor from the private sector has been included to advise persons on using their savings to prevent them falling into debts.

Example 2: partnership includes 4 local government units and the NGO (created by the local governments) implementing the tasks. The local governments involved participate in the activities through a management body and are financing the operational expenditures of the NGO and co-finance project-based activities. Every-day activities are run by the NGO. (PRAXIS, 2009)

Example 3: the partnership is led by Harju Entrepreneurship and Development Centre and includes the local government, enterprises in the region, Labour Market Board, vocational education institutions and sectoral employer organisations. The initiative was co-financed by the ESF, local government and Labour Market Board. Enterprises and employer organisations participated in the identification of skills need, vocational education institutions provided vocational training to the unemployed and the Labour Market Board referred unemployed to specific training provisions. (INNOACTII)

Orientation of partnership activities

Example 1: top-down approach, i.e. the measure is financed and designed centrally while delivered by including local partners.

Example 2: bottom-up approach where services are conceived and delivered locally.

Example 3: bottom-up approach where services are conceived and delivered locally.

Duration the partnership has been operational (and the relative importance of sustainable partnership in securing outputs and outcomes)

Example 1: the reaction service to collective redundancies was piloted from March 2005 to September 2006. Now the service is provided in the framework of the ESF financed programme ’Increasing the supply of qualified labour force 2007-2013‘.

Example 2: the activation centre was created in 2002. Since then, the local government units included in the partnership has changed somewhat. (PRAXIS, 2009)

Example 3: the initiative was project based (March 2007-November 2008). It has been indicated that the partnership established in the project has continued to work after the end of the project as well (INNOACT II).

Partnership aims and objectives

Example 1: the aim of the reaction service to collective redundancies is to reduce the period of unemployment for persons made redundant. For this aim different labour market services are provided in which the inclusion of partners is important. For instance, potential employers are included to support connections with the available labour force as a result of restructuring. The main aim to include partners is to provide services that are in accordance with the needs of the persons made redundant, thus the composition of partnership depends on the case of restructuring.

Example 2: the NGO was created with a purpose to provide public services in the region, which is the most common way of delegating provision of services. In this case, however, more than one local government unit is involved due to the specific nature of the service provided – activation of the unemployed. Due to the lack of necessary resources (i.e. skills and finances) within one local government unit, an organisation was created to provide the service across several local government units. (PRAXIS, 2009).

Example 3: In general, the project aims at matching the skills of the unemployed to the needs of a specific sector in the labour market to provide qualified labour force and reduce unemployment (INNOACTII)

Activities provided/content of the measure

Example 1: reaction service to collective redundancies includes a variety of activities: informing employees, counselling, job mediation, supporting contacts with other employers if possible, local government, Labour Inspectorate about legal issues etc.

Example 2: the main activity of the NGO is the activation of the unemployed and preparing them for entering the labour market. Since the activities are mainly project-based, the content and design of the activities are described with each individual project. The services provided to the unemployed coincide across regions that are covered by the activation centre. However, details of the service may vary. (PRAXIS, 2009)

Example 3: the main activities in the project include sectoral research (skills, needs), developing an internet database, training of the target group (i.e. unemployed and persons who have received notice of redundancy) and issuing respective professional certificates, mediating labour force to the companies in the respective sectors (INNOACTII).

Success factors, preconditions for the effectiveness of the measure, lessons learned

Example 1: flexibility of the reaction service is possibly one of its success factors. It has been recognised that including all partners is not necessary in all cases of restructuring, but the composition of partnership and the need for different representatives is analysed case-by-case.

Example 2: the advantage of such NGO-local government partnership is that and NGO specialised in the provision of a specific service has better competencies and skills in their field of activity. The limited financial resources often do not allow local governments to create specialised officials in their structure. Also, NGO has better access to additional financing from the EU financial programmes (ESF) and national sources (programmes of the EUIF). In fact, additional financing forms a large part of the budget of the NGO. Also, such cooperation enables the local government to delegate services directly and avoid complicated and resource-demanding procedures of public procurement. Cooperation between different local government units is not commonly used in other regions of the country. (PRAXIS, 2009)

Example 3: an important precondition for the effectiveness of such measure is the inclusion of employers. Direct contacts with employers have proven to be successful in the case of national measures (Leetmaa and Võrk, 2007) and this is also an important part of the analysed case. An important aspect was also research activity to identify skills and needs in the sector. On national level policy development, the lack of respective information is often a problem in activating the unemployed. An important aspect is also applicability of the experience in other sectors and regions as well.

Challenges, barriers and bottlenecks (and how they have been overcome)

Example 1: the main challenge has been the difference of partners included in the reaction service. The partners included are often engaged in other activities as well while the reaction service to redundancies demands immediate action to be taken after the announcement of restructuring. Thus, it demands a certain amount of flexibility from the partners which is sometimes difficult to achieve.

Example 2: one of the problems with such partnership is project-based financing, which leaves a considerable amount of uncertainty on the future and sustainability of the initiative. Moreover, the NGO does not have financial reserves to cover expenses at low periods. A bottleneck is also the availability of qualified persons in small regions to provide the services within the NGO. Another important challenge is coordination of activities between partners as coordination procedures between different local government units are time consuming. The case is an example of the dependence of the sustainability of the initiative on local governments, i.e. in case the local governments are no longer interested in financing the initiative, the sustainability of the activation centre would be threatened. At the same time, the members of the analysed initiative feel that the service is necessary and are not planning on leaving the project. (PRAXIS, 2009)

Example 3: one of the main problems in the project turned out to be finding a balance between the demands of employers and interests (qualifications) of the unemployed. The training plan of the project identified 15 most needed qualifications while the actual training capacity remained smaller due to the lack of interest from the unemployed, lack of training institutions in the region and lack of organisations issuing professional certificates. (INNOACTII)

Any outputs or outcomes identified and impact

Example 1: as the main aim of the reaction service is to reduce the period of unemployment, the employability of individuals participating in the measure is important. According to Leetmaa and Võrk (2007), information mediation between the potential new employers and those made redundant improved the job prospects of the people laid off. The impact of the other measures did not prove to be significant. Analysis also showed that people who participated in the information services also had higher chances of becoming involved in counselling with the PES suggesting that the measure also enhanced contacts between those being made redundant and the PES. However, as the service was piloted during economic boom the measure should also be monitored during economic downfalls to see whether the effects are persistent. According to EUIF, during January to May 2010 90% of all restructuring cases were covered by the reaction service (i.e. 60 cases).

Example 2: There are no formalised ways of gathering information on the impact of the service on participants. However, it is pointed out that the need for such feedback is indicated by the local governments to assess the quality and effectiveness of the service provided (PRAXIS, 2009).

Example 3: research was undertaken in 5 sectors which was the basis for designing training schemes and professional suitability tests. The project proved to be successful as initially planned targets were exceeded. For example, total of 161 persons found employment during the project which is 51 persons more than planned initially. (INNOACTII)

3. Commentary

It is not possible to give a comprehensive overview of LED activities to tackle the crisis due to the lack of respective information. Still, there have been several good examples of LED that have contributed to dealing with the crisis, some of which are outlined above. It seems that a common success factor is the involvement of employers in labour market activities, especially in terms of reducing unemployment. Since local governments often lack the necessary resources and contacts with the target group, partnership initiatives give a good opportunity to reach the target groups to effectively implement labour market services. A challenge of partnership initiatives on the local level in Estonia is the lack of cooperation experience with NGOs and so local government are often reluctant to cooperate. Also, financing issues emerge since the local government units are often very small and the resources are very limited. In this respect, availability of EU financing has given a good opportunity to overcome these issues. Also, facilitating cooperation between local governments and NGOs would be important to support LED in Estonia.

Kirsti Nurmela, PRAXIS Center for Policy Studies


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