Annex. Progress in structural reform

Augment the work on estimates of the structural balance. Publish more detailed information about the business cycle and the underlying fiscal position, reflecting associated uncertainties.

No action taken.

Align the tax assessment of land value more closely with the market value by regularly updating assessments and enlarging the tax base to include buildings.

No action taken.

Consider phasing out the tax deductibility of mortgages in the medium term to avoid further amplifying the cycles in the housing markets. Consider phasing out the loan guarantee programme to reduce distortions in housing investment.

The cap on deductible interest paid on housing loan was cut to EUR 300.

Family support should be more oriented towards better reconciling the obligations from parenthood and labour force participation, including through better provision of childcare services.

The revised Preschool Child Care Institutions Act introduces more flexibility for the provision of childcare services. Waiting lists for childcare services are being reduced, and new childcare places are being financed by EU funds.

Reform disability pensions as planned, in particular, increase access to activation measures and strengthen the assessment of the capacity to work.

A reform of disability benefits, the Work Ability reform, is being implemented, strengthening the assessment of the capacity to work and tying the receipt of benefits to the obligation to participate in activation programmes.

Introduce accident and occupation illness insurance with experience-rated employer contribution rates.

No action taken.

In the compulsory private pension system, reduce costs borne by workers, in particular marketing expenses. In the public pension system, phase out special occupational and sectoral pension regimes.

Management fees have been reduced to 1.1% following the introduction of a new regressive scale in 2015. From 2017 the limit of the unit redemption fee was lowered to 0.1% (from 1%).

Index the legal retirement age to changes in life expectancy once the retirement age of 65 years is fully phased in 2027. Improve incentives for continued work in the old-age pension system.

A pension reform, still under discussion, will tie retirement age to changes in life expectancy starting from 2028.

Consider a fundamental reform of the compulsory private pension system, along the lines of the Swedish system, including the introduction of a low-cost fund to which new contributors are assigned by default.

No action taken.

Improve disclosure of information on costs of the private pension system to the public in a standardised manner.

No action taken.

Remove limits on switching between pension funds. Abolish redemption fees.

The cut in the ceiling for unit redemption fee is likely to stimulate competition between pension funds by eliminating most of the switching costs. Also, from 2017, capital requirements of pension fund management companies were reduced to ease entry of newcomers.

Improve representation of contributors’ interests in pension fund governance.

No action taken.

Increase the effectiveness of activation programmes by allowing public procurement to take greater account of the quality of training courses, encouraging greater involvement of employers and targeting hiring subsidies to firms committed to net hiring.

No action taken.

Delay the face-to-face part of the Individual Action Plan to after 3 months for most newly unemployed. Meanwhile devote more resources to at-risk groups from the first month.

Spending on labour market policy, including for risk groups, has increased substantially.

Abolish the lump-sum minimum social tax.

No action taken.

Lower barriers for the integration of Russian speakers in the labour market for example by providing more help to prepare to pass exams required for Estonian citizenship.

No action taken.

Require both parents to take up parental leave in order for parents to qualify for the full leave entitlement. Identify and address barriers to female entrepreneurship. Consider requiring firms to identify and address pay inequalities between men and women.

An on-going reform of the parental leave system will increase the father-specific leave by one month. The Welfare Development Plan for 2016-23 sets targets to counter gender inequality, and policy measures including allowing the labour inspectorate to monitor the equality of pay and carry out audits on firms suspected of gender discrimination are under discussion.

Increase the permeability between different educational levels.

The School Network Programme includes the creation of state upper secondary schools, separated from basic schools, to offer equal opportunity for students to prepare for higher education.

Develop quality assurance for apprenticeship places and ensure that the time for instruction is sufficient relative to productive work.

At the end of 2015 a new ESF programme was initiated to improve the quality of apprenticeship studies and work-based learning.

Make lifelong learning more attractive for adults by ensuring that training leads to the acquisition of qualification and by providing information about the return from different programmes.

The providers of continuing education and training have an obligation to provide updated information on their activities (e.g. curricula, learning conditions and training providers) and to publish performance indicators.

Provide independent and professional career guidance at the end of lower secondary education, including short internships towards the end of compulsory school.

Youth guidance centres (called Pathfinder centres) were set up in all counties in 2014. For adults, the Estonian Unemployment Insurance Fund has expanded its career counselling services to all people of working or retirement age since 2015.

Ensure quality of care, and consider developing a wider system of quality indicators, also through international collaboration on establishing benchmarks and specialised care.

36 quality indicators set up in collaboration with medical specialities are in place to analyse the overall situation and to compare health care providers.

Increase the role and importance of primary care by boosting the responsibilities of family doctors.

A network of primary health care centres is being developed in all Estonian regions, financed by EU funds.

Reform local governments either by merging or requiring greater co-operation, also over a broad territorial area. Consider imposing minimum population requirements.

The on-going reform of local government is reducing the number of municipalities.

Strengthen the revenue-raising possibilities of local municipalities by giving them more autonomy over setting the land tax.

No action taken.

Consider tightening the equalisation scheme, for example by looking at real and normative costs set uniformly by the central government. Consider reviewing the existing earmarking and block grants to avoid overlaps.

No action taken.

Contain the threats to competition emanating from public monopolies and local authority sectors.

No action taken.

Consider introducing tax incentives for R&D.

No action taken.

Raise efforts to monitor the effectiveness and efficiency of infrastructure spending.

No action taken.

Review the need for a specialised bankruptcy court.

No action taken.

Give the existing court the power to require the creditor to pay for experts, particularly in more intricate corporate cases.

No action taken.

Develop a more detailed set of economic and financial principles for judges to take account of deciding whether a debt restructuring plan for individuals should be approved or not.

No action taken.

Continue efforts to identify and remove entry barriers in services that hold back competition and growth, including in professional and transport services. Consider relaxing restrictions on land purchases by non-EU citizens with a permanent residence permit. Promote the use of English in the administration.

No action taken.

Enhance effectiveness of evaluation of innovation policies by incorporating monitoring and evaluation already at the design stage. Test individual instruments through pilot projects.

Evaluations have been taken into account in the design of measures to support innovation, and regular monitoring of recent policy initiatives (clusters, innovative procurement) is in place.

Promote international and applied management skills and enhance the teaching of skills to run a business at school.

The Entrepreneurship Programme (2016-2018) aims at developing entrepreneurial skills in general, vocational and higher education.

Extend the impact assessment of regulations to systematically capture implications for trade and investment.

The creation of an institution in charge of a regular assessment of productivity challenges and of monitoring policies in the field of competitiveness is being discussed.

Strengthen policies to reduce energy and resource intensiveness through appropriate pricing and setting better incentives for energy-saving programmes.

A new resource efficiency measure focusing primarily on manufacturing industry has been introduced.

Continue efforts to process oil shale into lighter oil products instead of using it for electricity generation. Internalise all social and environmental costs of oil shale.

The “General Principles of Climate Policy until 2050“ approved by the Parliament on 5th April, 2017 set the long-term target to reduce the emission of greenhouse gas emissions by 80% in comparison with the emission levels of 1990 by 2050.

Consider engaging more in local policy trials and experiments to promote energy efficiency through behaviourally informed policies.

No action taken.