Improving the provision of Active Labour Market Policies in Estonia

The Commission supported the Estonian authorities on improving the institutional and regulatory framework for the provision of active labour market policies, and on identifying new measures for re-integrating non-employed in the labour market and upskilling those most at risk of becoming unemployed.

Context

Estonia’s labour market was performing well on most key indicators prior to the COVID-19 pandemic. However, labour shortages have started hampering growth potential and demographic projections are likely to add to these pressures. In response, Estonia’s government wants to further improve the provision of active labour market policies in order to increase labour supply and raise productivity.

Support delivered

Over 18 months, the Commission provided support to Estonia together with the Organisation for Economic Co-operation and Development (OECD) on:

• improvements to the institutional and regulatory set-up for the provision of active labour market policies;
• understanding the gaps in the coverage of active labour market policies;
• outreach strategies towards the non-employed;
• measures for the low-skilled and other vulnerable groups.

Technical support was informed by a novel approach of linking administrative data, a review of selected examples from other EU Member States, and consultations with Estonian stakeholders; these were supplemented with a series of knowledge events with broad participation.

Results achieved

A set of recommendations issued as a result of work will feed the reform process of the Labour Market Services and Benefits Act, which Estonia plans for 2021, as well as the development of future work programmes of the Estonian Unemployment Insurance Fund. Implementation of the recommendations is expected to results in the simplification and increased agility of the institutional and regulatory set-up, as well as in better targeting of active labour market policies. In turn, these improvements should lead to better labour market performance and higher economic growth.