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OECD Reviews of Labour Market and Social Policies: Estonia 2010

image of OECD Reviews of Labour Market and Social Policies: Estonia 2010

OECD's comprehensive 2010 review of labour market and social policies in Estonia. It finds that since Estonia regained its independence in 1991, its labour and social policies have been marked by a strong commitment to fiscal prudence, flexible markets, and work incentives. Labour market performance steadily improved during the mid-1990s and beyond, until the advent of the global economic crisis in 2008. Estonia was not well prepared for the slowdown and its economy has been hit especially hard. The downturn has required painful policy adjustments. Today, Estonia’s public social spending remains among the lowest in the OECD; its social programmes support persons in need, but the benefits they receive are usually modest and some of the jobless receive no benefits. However, the country offers one of the world's most generous parental-benefit programmes and has begun to phase in a three-tier pension system. 

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Flexibility with Limited Security

Estonia’s flexible labour market allows companies to rapidly adjust to changing market conditions, but income security for the unemployed and the protection against violations of labour law remain limited. Recent labour market reforms have addressed several institutional problems, but the public employment service still suffers from a number of shortcomings that hinder effective assistance to job seekers. Improved activation measures are needed to ensure that those who become unemployed do not lose contact with the labour market. This chapter reviews Estonia’s principal labour market policies against the benchmark of the Reassessed OECD Job Strategy.

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