3. Institutional and regulatory set-up of active labour market policy provision in Estonia
The current system of ALMP provision in Estonia supports good outcomes in the labour market and the stakeholders tend to be satisfied with the broad set-up of the system. Nevertheless, the stakeholders should consider reducing some of the complexity in the regulations and revise the co-operation practices within the system of ALMP provision as well as with other policy fields.
This chapter assesses the institutional and regulatory set-up underpinning the provision of ALMPs in Estonia. The aim is to understand whether there are bottlenecks to policy setting and implementation that are rooted in the wider institutional set-up and prevent the formulation of state wide strategies across policy fields. In addition, the chapter highlights good practices from other countries that could be useful for Estonia. First, the analysis looks at the institutional set-up and division of responsibilities between the stakeholders for the design of policy and strategies development in the field of ALMPs. Second, the chapter maps the legal regulation of ALMP provision to assess whether the legal framework supports flexible and agile provision of ALMPs. Third, this chapter discusses the financing sources and budgeting processes for ALMP provision. Finally, the chapter looks at co-operation across policy fields to support the provision of ALMPs. The sections on institutional set-up, regulatory set-up and co-operation across policy fields conclude with sub-sections providing recommendations on how to fine-tune the system of ALMP provision.
In general, the current system of ALMP provision in Estonia supports good outcomes in the labour market and the stakeholders tend to be satisfied with the broad set-up of the system. For example, the necessary adaptions and innovations in the system to respond to the consequences in the labour market of the COVID-19 crisis were some of the quickest in the EU. Nevertheless, the stakeholders should consider reducing some of the complexity in the regulations and revise the co-operation practices within the system of ALMP provision as well as with other policy fields.
The chapter has benefited from discussions with the key stakeholders of the Estonian ALMP system in October 2019 and February 2020, as well as from the discussions with the participants in the webinar “Institutional and regulatory set-up of providing active labour market policies in Estonia: possibilities for improvement?” organised on 4 September 2020 in the framework of the same project as the current report.1 Furthermore, the chapter uses the information presented by international experts during the aforementioned webinar to identify good practices in other countries that Estonia could learn from.
The Ministry of Social Affairs and the Estonian Unemployment Insurance Fund (EUIF) are the two main institutions involved in the design and provision of ALMPs in Estonia. The Ministry of Social Affairs has the general responsibility for employment policy while the EUIF implements ALMPs. Good co-operation between these two institutions is necessary to design and implement effective and efficient ALMPs.
3.2.1. The key institutions to design and implement ALMPs
Ministry of Social Affairs
The Ministry of Social Affairs (SOM) is the main institution in charge of governing social issues in the country, including supporting good functioning of the labour market.
According to the Government of the Republic Act, SOM has the following competences:
Drafting and implementing plans to respond to the challenges in the social affairs;
Organising public health protection and medical care; organising fields of employment, labour market and working environment; organising social security, social insurance and social welfare;
Promoting equality of men and women, co-ordinating activities in this field, and preparing respective draft legislation.
The organisation of SOM is regulated in more detail in its statue, which is adopted by the government. The statute sets out, among other things, the competences and functions of the minister, the duties of the Secretary General, the organisation of the departments of the ministry and the main functions of the different structural units. The statute of SOM assigns it the same competencies as stipulated in the Government of the Republic Act. In addition, the statute assigns specific responsibilities regarding ALMPs to the Employment Department of SOM, stipulating that “the main task of the Employment Department is to plan labour market policy and organise its implementation in order to ensure a high level of employment of the working age population and the availability of the necessary labour force for employers. The department plays a leading role in developing labour mobility, work ability and employability, and in shaping ALMPs, expenditure, benefits and allowances related to these policy fields”.
In practice, the Employment Department consists of nine staff members as of 2020, seven of them focusing on ALMPs. The Employment Department together with the Deputy Secretary General on Labour support the Minister of Health and Labour in policy making regarding ALMPs, such as drafting regulations, co-ordinating employment policy with other policy fields and co-operating with relevant stakeholders.
Estonian Unemployment Insurance Fund
The Estonian Unemployment Insurance Fund (EUIF) is an autonomous public body that has the responsibilities of the public employment service since 1 May 2009. The EUIF has responsibilities related both to ALMP implementation and design (according to the Unemployment Insurance Act and the Labour Market Services and Benefits Act):
Drafting the Employment Programme in co-operation with SOM (one of the main regulations of ALMP provision in addition to the Labour Market Services and Benefits Act, see Section 3.3).
Analysing the impact and effectiveness of ALMPs in co-operation with SOM.
Participating in the planning of ALMPs and providing opinions concerning draft legislation related to ALMPs.
In addition, the EUIF is responsible for disbursing unemployment benefits, assessing work ability and paying work ability allowance, participating in the planning and designing of the unemployment insurance scheme and managing the register of jobseekers.
The highest body of the EUIF is the tripartite Supervisory Board that consists of six members. The Minister of Health and Labour is a member of the Supervisory Board by virtue of office. The government appoints one additional member of the Supervisory Board (in practice, this representative has been always from the Ministry of Finance). The Estonian Central Federation of Trade Unions and the Estonian Employees’ Unions’ Confederation appoint one member of the Supervisory Board each. The Estonian Employers’ Confederation appoints two members of the Supervisory Board. The board members are appointed for five years.
The competencies of the Supervisory Board include responsibilities related to ALMP design and ALMP funding (among others, according to the Unemployment Insurance Act):
Approving the Employment Programme (a regulation for ALMP provision using unemployment insurance contributions).
Making proposals regarding the level of the unemployment insurance premium (affects the resources available for ALMPs, see Section 3.4).
Making proposals regarding the funding allocated to ALMPs from unemployment insurance contributions.
Approving the budget of the EUIF, reporting on the receipt and use of funds and assessing the use of the financial resources of the EUIF.
According to the Unemployment Insurance Act, the Management Board of the EUIF manages the EUIF together with the Supervisory Board, filling the role of the executive management body. The Supervisory Board appoints and recalls the Management Board members (up to five members for five-year-appointments). The Management Board reports to the Supervisory Board.
The organisation and administrative procedures of the EUIF are regulated in more detail in its statute, which is adopted by the government. The statute lays out in more detail how the Supervisory Board and the Management Board operate, and what their respective responsibilities are. For example, it details that the Supervisory Board meets at least once every three months and that the Supervisory Board members elect their chairman publicly. However, the statute does not specify how the EUIF co-operates or interacts with SOM.
The Estonian institutional set-up for ALMP provision compared to other countries
The institutional set-up of ALMP provision in Estonia is broadly similar to many other countries in the EU/EEA. 84% of public employment services (PES) in the EU/EEA (26 out of 31 PES, i.e. including Iceland, Norway and three separate PES in Belgium and excluding the United Kingdom) are set up as separate public bodies (autonomous public bodies or executive agencies), with varying level of independence (European Commission, 2018[1]). The remaining five PES are part of the ministry responsible for employment policy in the country (Cyprus, Finland, Hungary, Ireland and Poland). About one-third of PES in the EU/EEA have tripartite management in the form of a supervisory board and a few others have a tripartite advisory board. About two-thirds of PES are in charge of granting benefits, either unemployment and/or additional benefits.
The analysis in this section aims above all to identify good practices from other countries with broadly similar institutional set-ups. As such, the analysis looks at the systems in place in Iceland and Slovenia, which have an autonomous PES with tripartite strategic management and are comparable countries to Estonia in size and general labour market performance in recent years. Germany is added to this list as, although not comparable in size, it has similarities with Estonia in the institutional set-up. Moreover, the German labour market has performed exceptionally well over the past years, including during the Global Financial Crisis. In addition, Denmark is included in the analysis. Denmark has a very different system for ALMP provision from the countries listed above, allowing a lot of autonomy, flexibility and responsibility on the local level (municipalities). Nevertheless, the labour market performs generally well and some good practices could potentially be transferable to Estonia despite the different institutional set-up.
Table 3.1 presents the key features of the institutional set-up of ALMP provision in Denmark, Germany, Iceland and Slovenia. The institutional set-ups in these countries are almost exclusively regulated by higher-level legal regulations (i.e. acts passed by the parliament).2
The models closest to the model used in Estonia can be found in Iceland and Germany. Like Estonia, Iceland and Germany have a relatively autonomous PES with tripartite strategic management and the PES can have a role in designing the details of ALMPs. In Iceland, the PES has more independence in ALMP design than in Estonia, as the main act regulating ALMPs (the Labour Market Measures Act) is very general and all details of ALMP design are decided by the PES executive management. In Germany, the PES has a fairly high degree of independence in designing ALMPs, too, as far as these are targeted to unemployed people (not for social assistance beneficiaries). While it can only provide ALMPs foreseen in the law, it can decide on the details of their design in most cases.
Social partners are more involved in both of these systems than in Estonia, as they have an advisory role also on the regional level through tripartite councils or strategic bodies. Germany, being a federal state, almost mimics the national level arrangement on the regional level (i.e. tripartite strategic bodies are advising regional directorates of the PES, involving regional level ministry and regional social partners). Iceland has tripartite regional councils to advise the PES on tailoring ALMPs to regional needs. However, the role of these tripartite labour market councils varies between regions and their role has in general decreased considerably in the last years.
The Slovenian system is somewhat similar to the Estonian one as the PES is also established as an autonomous public body and the strategic management body of PES involves social partners. Nevertheless, the PES in Slovenia has less autonomy than the PES in Estonia, Germany or Iceland. Firstly, the Slovenian PES has less autonomy regarding its operating model and ALMP design – it is reporting directly to the ministry, the ALMP design is regulated in higher detail by the regulations by the parliament, government, minister and ministry, and there is an annual contract drafted by the ministry that stipulates the PES tasks and staff levels. Secondly, the executive manager of the PES is politically appointed and dismissed, which has led to sudden and frequent changes in the past.3 An interesting feature in Slovenia is that there is one member in the PES strategic management body that is a representative of the workers’ council of PES elected by the PES staff. However, while the posts of the President and Vice-President rotate every two years among the three parties of social partners in the strategic management body, the PES staff representative cannot be elected to these roles.
The Danish system of ALMP provision is somewhat exceptional in the whole EU. The ALMPs are provided by the municipalities (job-centres managed by municipalities), which in most other EU countries (including Estonia) would be the task of the national PES. The municipalities in Denmark have a high degree of freedom to decide the operating models of the job-centres, the financing of ALMPs as well as the details of ALMP design.
The institution that is considered to be the PES in the Danish system, is an executive government agency, i.e. not an autonomous body. The PES supports the Minister for Employment in policy formulation and amending legislation. Essentially, the main role of the Danish PES is related to policy design. Following the past reforms over the recent years, the Danish PES has shifted from being a monitoring agency supervising municipalities’ activities in providing employment support, to a supporting unit for the municipalities. The Danish PES provides guidelines for the municipalities, encourages mutual learning and sharing good practices, provides the infrastructure for service provision and disseminates knowledge.
The social partners do not have a formal decision making role in the Danish system, but an advisory role on all different levels (national, regional, local). Furthermore, this advisory role is also well implemented, i.e. other stakeholders take these inputs into account in policy design and implementation. In total, the Danish system produces good labour market results. Nevertheless, it is not an easily transferable system as it stands on strong social partners, strong traditions and culture of involving social partners as advisers, a strong tradition of networking with practitioners and stakeholders, strong municipalities and a well-established accountability framework, standing on the overall labour market flexicurity model.
3.2.2. The key features of the institutional set-up should be maintained, but co-operation between the stakeholders could be improved
The key stakeholders are generally satisfied with the institutional set-up of ALMP provision in Estonia
The current system of ALMP provision performs well both in terms of outcomes, as well as its ability to adjust to labour market changes. For example, the introduction of the work ability reform is widely considered a success. Furthermore, the quick introduction of a new ALMP to address the challenges posed by COVID-19 has received a lot of positive feedback by stakeholders and employers, including publicly via the media. The sustained improvements on the labour market before the COVID-19 crisis also point to good outcomes of ALMP provision in Estonia and suggest that the system supports the Estonian labour market well.
The Estonian stakeholders agree that the high-level institutional framework should be maintained – i.e. how the EUIF is set up, its legal status and its management framework. It is considered beneficial that ALMPs are provided by an autonomous public body with a tripartite strategic management body (the Supervisory Board). The Supervisory Board functions as a buffer between the high-level political will, and the actual ALMP design and implementation. The tripartite system of the Supervisory Board functions well and takes into account the views of all three social partners. Furthermore, most stakeholders consider the working methods of the Supervisory Board to be appropriate, board members usually reach a consensus and their decisions are generally considered as good. SOM supports the work of the Supervisory Board by producing a summary note of the documents prepared by the EUIF for the Supervisory Board, to keep the preparations for meetings more efficient for the members of the Supervisory Board.
Generally, the current size, composition and balance between the three social partners in the Supervisory Board of the EUIF are generally considered to be very suitable by the stakeholders. The set-up of the EUIF Supervisory Board has been the benchmark for reforming the size and the composition of the Supervisory Board of the Health Insurance Fund. The number of members in the Health Insurance Fund Supervisory Board was reduced from fifteen to six in 2018, and was composed similarly to the EUIF (two ministers to represent the government, two representatives of insured people, two representatives of employers), to make it more efficient as well.
Furthermore, in case supplementary expertise is needed for decision making, the Supervisory Board of the EUIF can invite additional participants to its meetings. In practice, the Supervisory Board has invited additional participants from SOM (such as the Deputy Secretary-General on Labour as well as other officials), experts from the EUIF as well as external experts. This practice supports involving good expertise in the meetings and tightens the co-operation between SOM and the EUIF, while keeping the Supervisory Board meetings efficient. The stakeholders stress the need to keep the number of Supervisory Board members (participants with the rights to vote) as well as other participants (participants with the rights to observe only) at a level that does not jeopardise the efficiency of this institution.
The division of responsibilities and co-operation practices have to be further defined and agreed on
The current legal regulations for the institutional set-up of ALMP provision in Estonia can lead to two types of issues, namely a lack of clarity in sharing responsibilities and uncertainty about how the co-operation between the EUIF and SOM should be organised.
Overall, the legal regulation is not explicit on the division of responsibilities in designing and organising ALMPs as some of the tasks assigned to the ministry and the EUIF are similar. Furthermore, the legal regulation is not explicit on what the tasks related to ALMP design and organising implementation could mean in practice. The legal framework for introducing and designing ALMPs in Estonia assigns an important role to the EUIF, such as preparing the regulation on ALMP provision using unemployment insurance contributions in co-operation with SOM (the Employment Programme). Furthermore, the EUIF is responsible for organising the provision of ALMPs. The higher-level legal regulation does not explicitly state that SOM should take on responsibilities in designing ALMPs, although it confers to SOM the general competence to draft and implement plans to resolve social issues of the state. In addition, the Government of the Republic Act stipulates that SOM is responsible for “organising” the labour market, but does not clearly define what “organising” means in practice in terms of ALMPs. Nevertheless, the Statute of the Ministry states that the Employment Department in the ministry plans and organises the implementation of labour market policy and plays a leading role in shaping ALMPs, thus attributing tasks related to ALMPs to SOM more clearly.
Furthermore, the LMSBA stipulates that the EUIF and SOM should co-operate in ALMP design when drafting the Employment Programme, but does not specify how the co-operation should look like. The co-operation practices are a question of good will and good governance between the different institutions, i.e. requiring an on-going interaction between institutions to capture different points of view and interests. As co-operation between the two organisations is key to design effective and efficient ALMPs, the co-operation process to develop ALMPs on the working level of the EUIF and SOM could benefit from improvements. The current situation could potentially have negative implications for the staff in the two organisations as the division of competences and responsibilities within the process of developing ALMPs might not be clear.
To bring more clarity on the division of responsibilities, the key stakeholders should discuss and agree on the exact tasks. This option has the advantage that it implies a high degree of consensus and can lead to very flexible and efficient solutions which may not be achievable if competences are narrowly defined by regulation. The legal definitions can only be partial solutions as these might reduce the flexibility and efficiency of the system by overregulating aspects that can work in practice only if mutual understanding and good will are there.
The key stakeholders need also to discuss and agree on the co-operation principles. Co-operation is necessary throughout ALMP design, involving both the expertise gained from implementation as well as the strategic view of broader employment policy objectives in ALMP design. A continuous dialogue between the stakeholders is necessary to identify efficient channels for co-operation as well as to agree on the level of formality, regularity and other arrangements regarding co-operation. Achieving co-operation simply by further regulation might not produce as good and binding results as an actual agreement between the stakeholders. Therefore, it should be considered as a second-best or a complimentary option (i.e. some of the features of agreed co-operation practices are introduced in the regulation).
Co-operation practices between the core stakeholders is key in all ALMP systems (see Box 3.1). Furthermore, the most effective co-operation practices are as a rule informal agreements between the stakeholders and not regulated in detail in legal regulations or formal agreements. For example, the PES and the ministry in Germany have signed an official co-operation agreement in the past, but their good will and mutual respect defines their good co-operation, not the formal agreement. In addition, in all the international examples of ALMP provision presented in Table 3.1, there are several different core stakeholders in the system that need to co-operate to produce good results (i.e. to achieve the best outcomes for citizens and employers). The Estonian system is a comparatively simple one in this respect as other systems have often additional key stakeholders at regional/local level as well as additional advisory bodies. As such, it should be easier to find solutions for good co-operation between the limited number of stakeholders in Estonia.
In Iceland, tight co-operation takes place between the key stakeholders, most of this not regulated formally. Iceland is a small country with short communication channels and short chain of command. As such, legal prescriptions for formal co-operation are very limited. The management, as well as staff level, of the ministry and PES co-operate regularly without formal co-operation agreements on ALMPs. As for regulated co-operation, the Labour Market Measures Act stipulates that the executive manager of the PES is legally and operationally responsible to the minister. In practice, the executive manager meets the staff of the ministry and minister often to discuss the labour market developments and policy matters. In addition, reports are provided to the ministry upon request.
In Slovenia, the Labour Market Regulations Act stipulates co-operation between the ministry and the PES only in terms of reporting. The PES reports quarterly to the ministry on its activities, budget, assessment of the results, etc. Although the legal system does not foresee a role for the PES to contribute to policy design, the informal practices of the stakeholders aim to ensure that also PES expertise is taken into account in designing ALMPs. All regulations of ALMP provision are drafted by the ministry, but shared with the PES for consultation and inputs. The PES proposals are largely taken into account in the preparation of the documents, as the PES is the main institution that implements the policies and can identify which aspects of ALMP design need to be changed to increase effectiveness.
In Germany, several channels are favouring good co-operation between the PES and the ministry. The Ministry of Labour and Social Affairs and the PES agree annually on the broad objectives related to ALMPs and the PES reports to the ministry on their progress and outcomes. In addition, at a regional level, the regional directorates of PES co-operate with regional governments to ensure coherence with broader regional strategies and objectives. Furthermore, the PES publishes its projected and actual annual budget in detail, thus contributing to a high degree of transparency. The co-operation practices are supported by the legal framework, as the competences and roles of each organisation are clearly specified and respected in practice. The PES and the ministry have concluded a formal co-operation agreement in the past, but their experience is that the willingness to co-operate has had a stronger influence on the practices than formal agreements.
In Denmark, the PES is one of the key co-ordinators of co-operation between the stakeholders. The PES is in dialogue with the municipal job-centres, the regional labour market councils (regional tripartite advisory bodies) as well as the minister and the Centre for ALMPs in the ministry. On the one hand, the PES supports policy design, ensuring that the requirements and challenges regarding ALMP implementation are considered. On the other hand, the PES supports the municipal job-centres in policy implementation, by translating the regulations into guidelines and providing the platform to exchange good practices. Co-operation and inclusiveness are general features of the Danish system of ALMP provision, also beyond the PES activities.
Source: Kröning (2020[2]), Insights on the ALMP system in Germany: Institutional and regulatory set-up; Šarčevič and Vončina (2020[3]), Active Labour Market Policy in Slovenia; Pétursson and Sverrisdóttir (2020[4]), Institutional and regulatory set-up of ALMP provision in Iceland; interviews with officials from the respective countries.
This section maps the main legal regulations for ALMP provision, compares the regulatory set-up of ALMP provision in Estonia to that in other countries and proposes possibilities to streamline the regulations to increase clarity and flexibility.
3.3.1. The main regulations of ALMP provision
Table 3.2 summarises the key regulations concerning ALMP provision in Estonia. ALMPs are regulated mainly by the Labour Market Services and Benefits Act (LMSBA, adopted by the parliament) and the Employment Programme (adopted by the government). In addition, some measures and services are financed through EU instruments (e.g. ESF). In these cases, additional decrees by the Minister of Health and Labour (the ESF Programmes) establish further rules on how the services can be provided, considering the overall framework set by the Structural Assistance Act. The LMSBA together with the Unemployment Insurance Act (that regulates the unemployment insurance benefit scheme) are the main laws regulating the institutional set-up of ALMP provision in Estonia.
The Labour Market Services and Benefits Act lacks flexibility
The central role of the Labour Market Services and Benefits Act (LMSBA) as the key legal regulation of ALMP provision has decreased over the years. From 2006 until 2009, the LMSBA used to be the single legal act regulating the institutional set-up of ALMP provision and defining the list of main ALMPs.4 The LMSBA has been amended to accommodate the reforms in the system of ALMP provision over the years, although the more urgently needed changes have been introduced to lower-level legal regulations (most importantly the Employment Programme; for more information, see below).
The LMSBA has remained the single legal framework that establishes how people can register as unemployed, and sets their rights and obligations. The LMSBA regulates also the provision of the unemployment allowance, which is the second tier (low) unemployment benefit scheme. The unemployment insurance benefit scheme is regulated in another act, the Unemployment Insurance Act.
The LMSBA regulates also the institutional set-up of ALMP provision as it stipulates that the EUIF organises the provision of labour market policies and pays out labour market benefits (amendment in force since May 2009 when the EUIF took over the responsibilities of the public employment service). Nevertheless, the EUIF responsibilities are further regulated in the Unemployment Insurance Act and the EUIF statute that determine the legal status of the EUIF, its objectives, responsibilities, etc.
The LMSBA regulates the provision of some, but not all ALMPs provided in Estonia. The LMSBA provides a list of ALMPs (e.g. job mediation, career counselling and labour market training) and sets detailed prescriptions how these shall be provided (target groups, durations, channels, amounts, etc.). Furthermore, all types of ALMPs regulated by the LMSBA are regulated additionally by the Employment Programme and/or ESF Programmes allowing more favourable conditions or wider target groups. The only exception concerns the “provision of information on the situation of the labour market, and of the labour market services and benefits”, which is only in the LMSBA. In practice, this ALMP is provided in the framework of regular counselling and general activities of the EUIF, and not tracked as an individual ALMP.
The parliament amends the LMSBA, using the usual legislative procedure and there is no legal restriction on how long the legislative procedure may take. In practice, it takes often close to a year to make changes. Nevertheless, not all changes can bypass the LMSBA, such as changes in the rights and obligations of the registered unemployed). For that reason, the LMSBA has been frequently amended over the years, although the revisions are generally marginal.
The Employment Programme offers a flexible solution to introduce new and re-design existing ALMPs
A major change in the legal set-up took place in 2011 when the government decided to use the financial resources collected from unemployment insurance contributions for ALMP provision. To accommodate this change while minimising the changes in the main legal regulations, the LMSBA was amended to foresee the development of the Employment Programme. The process to draft and adopt the Employment Programme foresees a strong role for the EUIF and its Supervisory Board as this is the institution governing the financial resources collected from unemployment insurance contributions, which are used to finance the Employment Programme (see also Section 3.4).
The Employment Programme is adopted and amended by the government and enables to set additional ALMPs as well as to provide ALMPs on more favourable conditions than those stipulated in the LMSBA. The current Employment Programme (2017-20) contains some similar types of ALMPs as the LMSBA, but the exact criteria and target groups differ. In addition, the Employment Programme sets several types of ALMPs that are not covered in the LMSBA.
Similarly to the LMSBA, the Employment Programme describes the ALMPs in great detail. However, the LMSBA that prescribes the content of the Employment Programme, does not require such granularity. The LMSBA only requires that the Employment Programme sets the activities carried out in the framework of the Employment Programme, the duration of the Employment Programme and the volume of the Employment Programme (annual budgets and numbers of participants).
The Employment Programme provides the government with the flexibility to introduce quick changes to meet the labour market needs as a new Employment Programme is adopted every 2-4 years and adapted in practice at least once a year. Therefore, it can be viewed as a useful tool for governing the labour market situation in Estonia. A recent example that points to the system’s agility in an emergency situation is a new measure (a short-time working scheme to prevent redundancies) introduced in April 2020 to address the challenges posed by the COVID-19 crisis.5 The new measure was developed and adopted within a week, through an amendment to the Employment Programme.
The process to draft and amend the Employment Programme differs from the process to amend the LMSBA. Drafting the Employment Programme is led by the EUIF, which co-operates with SOM and involves other organisation in the processes as well. In the case of the LMSBA, SOM is the main actor initiating and drafting changes, co-operating with other stakeholders when deemed necessary. The quality and intensity of the co-operation is a question of good will in both cases.6
The social partners are strongly involved in adopting and amending the Employment Programme, contrary to amending the LMSBA.7 The Employment Programme has to be approved by the Supervisory Board of the EUIF, which is a tripartite body involving employers, trade unions and the government in equal representation. The Supervisory Board of the EUIF can approve the Employment Programme only if the Minister of Health and Labour (who is also a member of the Supervisory Board of the EUIF) is in favour of the Employment Programme. As the adoption of the Employment Programme requires prior approval of the tripartite Supervisory Board of the EUIF, it favours an adequate balance between the different stakeholders’ opinions, interest and points of view. The fact that the government adopts the Employment Programme makes the whole process of ALMP design slightly longer (unless there is a strong common political consensus), but ensures its political legitimacy as it implies that a political body takes responsibility for co-ordinating ALMPs.
Piloting new ALMPs or new target groups using funding from the European Structural Funds adds to the number of regulations
Estonia has covered a substantial part of its ALMP budget over the years using the European Social Fund (ESF) funding, which allows to pilot new ALMPs or extending ALMPs to new target groups. Furthermore, funding from the European Globalisation Adjustment Fund was used in 2016-17 to address the labour market challenges due to the contraction of the oil shale industry. Using funding from these sources requires developing additional regulations as in these cases, the changes cannot be introduced in the main national legislation (e.g. the LMSBA and Employment Programme).
The Structural Assistance Act is the main act enabling drawing up regulations to use the EU funds as it contains above all rules on the application for and use of different EU financial measures (e.g. ESF or EGF). According to this act, a ministry in charge of the specific policy area designs the services and measures to be provided as well as the monitoring framework of service provision. Similarly to the adaptions in the LMSBA, designing ALMPs in the framework of ESF/EGF funding is led by SOM, which co-operates with other key stakeholders (such as the EUIF) in case deemed necessary. The regulations of EU-funded ALMPs are adopted as ministerial decrees, the so-called ESF/EGF Programmes.8
Often, several different ESF Programmes are in place simultaneously to target different groups, adding to the number of regulations and ALMPs with slightly different designs in place. Currently, there are five ESF Programmes in place that regulate ALMP provision. All of these programmes display ALMP design in similar detail to the LMSBA and the Employment Programme. Three of them assign responsibilities for implementation on the EUIF, while two others aim to encourage ALMP provision by other organisations (e.g. municipalities or NGOs).
The ESF Programmes that are implemented by the EUIF contain in part similar types of ALMPs as prescribed in the LMSBA and the Employment Programme. However, there are no actual overlaps as the exact conditions and target groups vary across the different regulations. Some ALMPs are only in the ESF Programmes, such as some specific ALMPs to support people with health limitations. Regarding similar types of ALMPs in the ESF Programmes and other regulations, the conditions are set more favourable in the ESF Programmes as the aim is to pilot extending the existing ALMPs.
In theory, once a certain programming period is over (e.g. funds from the ESF 2015-20 programming period can be used up to 2023), those ALMPs that had a positive impact on labour market outcomes should be incorporated in the LMSBA and the Employment Programme.9 While this would decrease the number of regulations in place, new regulations could be introduced simultaneously to fund new ALMPs using ESF/EGF resources.
3.3.2. ALMP regulation in Estonia could be streamlined to increase clarity and flexibility
The Estonian legal set-up of ALMP provision is more complex than the set-ups of other comparable systems
As explained in the previous sections, different legal documents regulate similar ALMPs in Estonia, partly due to historic reasons.10 The duplication of ALMPs in the LMSBA, the Employment Programme and the several different ESF Programmes for slightly different target groups adds unnecessary complexity to the system, making it challenging for both stakeholders and clients to get a comprehensive overview of the set of ALMPs provided in the country. Sometimes ALMPs in different regulations have the same name, but differ in terms of target groups or implementation processes, thus adding to the confusion.
The complexity of the system is also reflected in the high number of ALMPs. There are about 50 ALMPs across all regulations. This complexity makes the work of job counsellors more challenging and might bear the risk that jobseekers cannot access the ALMPs that would be most appropriate for their situation. For example, there are seven different designs for wage subsidy programmes – e.g. targeting migrants, 16-24 year-olds, 16-29 year-olds without working experience, people with health obstacles, regions with high unemployment, long-term unemployed and ex-convicts – each programme with different eligibility criteria and conditions. Furthermore, a person could in practice fall into several categories simultaneously, adding to the complexity to match her/him with the correct wage subsidy programme.
The comparison of the regulatory set-ups that follows focuses on the systems’ complexity and flexibility and the level of detail in the regulations. The discussion also highlights the role of different institutions in the regulatory set-ups. Similarly to Section 3.2, this section compares the Estonian system to Iceland, Slovenia, Germany and Denmark. Table 3.3 presents the key features of the legal framework of ALMP provision in these countries.
The detail of regulations is the lowest in Iceland, which allows full flexibility for adapting the provision of ALMPs to prevailing labour market conditions (Table 3.2). The Labour Market Measures Act provides a very general framework for the institutional set-up and ALMP provision, encouraging the involvement of all relevant stakeholders.11 This act also highlights the broad categories of ALMPs and states that the PES sets the specific ALMPs. All ALMP design details are prepared annually by the PES, discussed with the tripartite PES strategic management body and the Ministry of Social Affairs and finally adopted by the PES executive management in the annual work plan. The same process can be applied also in case changes are needed at any point during the annual cycle. As such, it is possible to quickly and flexibly draw up new ALMPs or redesign the existing ALMPs when necessary. This requires only approval by the executive management of the PES.
Also the German and Danish legal frameworks are relatively straightforward and leave some scope for ALMP design details to the bodies that are responsible for ALMP implementation. In Germany,12 the main framework is regulated by the dedicated act passed by the parliament (Sozialgesetzbuch III). This act is more detailed than the similar act in Iceland. The main act in Iceland highlights only the six broad types of ALMPs, while Sozialgesetzbuch III provides a list of ALMPs displaying their general aims, target groups and conditions. Nevertheless, the finer details are still decided by the PES tripartite strategic management body in Germany. In Denmark, the main act (Act on Active Employment Efforts, passed by the parliament) defines ALMPs on a similar level of detail as in Germany. The Danish Minister for Employment publishes annually guiding employment policy objectives, which are binding for the municipalities, but are formulated rather broadly and generally.13 The PES supports the employment policy objectives with guidelines for municipalities and job-centres (not part of legal regulation, but supporting the translation of regulation into implementation) and the municipalities can still decide on the finer details.
Adapting ALMPs in the main legal act (Sozialgesetzbuch III) can be quick in practice in Germany when there is political consensus. In Denmark, the system of many stakeholders and advisory bodies (see Section 3.2) means on the one hand that a broad set of views is taken into account when amending the Act on Active Employment Efforts. On the other hand, changing the act involves a consultation process with a wide range of stakeholders and a parliamentary approval procedure. While any possible change in ALMPs is very inclusive, it can be time-consuming. Minor details of ALMP delivery design are up to the municipalities, which means that these changes can happen much faster.
In comparison to Estonia, the legal framework is relatively more regulated in Slovenia and provides for a much stronger role of the government and competent ministry. The main act that regulates ALMP provision (including ALMP content and institutional set-up) is the Labour Market Regulation Act (LMRA). The LMRA lists the ALMPs, discusses their aims, content and target groups. In addition, it puts the responsibility to adopt a (multi-annual) strategic plan for ALMP provision on the government (the Guidelines for ALMP Implementation), the annual plan on the responsible minister (the Plan for ALMP Implementation) and the annual implementation programme on the ministry (the Catalogue of ALMPs, which is an even more detailed annual implementation plan than the Plan for ALMP Implementation). In addition, there is an annual contract in place between the ministry and the PES that stipulates the PES budget, tasks and personnel (i.e. defining ALMP implementation further). Furthermore, the minister is tasked with setting the norms and standards for the provision of labour market services and the methodology for pricing.
As the LMRA in Slovenia is quite detailed, it takes time to make major changes, as these require a parliamentary process. Furthermore, the legal system has a cascade of regulations that need to be changed to introduce more fundamental changes. Hence, the legal system does not enable a quick response to major changes in the labour market. Regardless, some details of ALMP design are reviewed at least annually by the ministry (the Plan for ALMP Implementation and the Catalogue of ALMPs). The latter can be a quick process as no prior agreement by other stakeholders is required. Nevertheless, the Plan for ALMP Implementation is shared beforehand with the social partners for opinions.
In summary, none of the reviewed countries has as complex systems in place as Estonia in terms of duplicating similar ALMP content for different target groups or on different criteria, i.e. all the systems are leaner in this respect. Furthermore, the lower-level details of ALMP provision are often left for lower-level regulations and decisions, rather than high-level acts passed by the parliament (such as the LMSBA in Estonia). The cases of Iceland and Germany have the most promising elements that could inform the possible improvements of the regulatory system in Estonia, particularly regarding the more general provisions in the main acts regulating ALMP provision. The Slovenian system is potentially less agile and flexible than the Estonian system and the Danish system is not easily adaptable due to a very different institutional set-up.
In addition to Germany and Iceland, it is worth to look at additional countries for specific good practices that might be transferable to Estonia regardless of differences in the general framework. Furthermore, there are several other systems of ALMP provision that use broadly similar institutional framework for ALMP provision as Estonia (i.e. the PES is set up as an autonomous public body and steered by a tripartite strategic management body). These examples include Austria, Belgium (systems in Wallonia, Flanders and Brussels) and France. Austria and Flanders have also achieved relatively good labour market outcomes in the recent years (close to the outcomes of Estonia and the other countries discussed above) and hence could be the most potential sources of good practices for Estonia.
The Estonian legal set-up could be streamlined to advance flexibility
One way of addressing the complexity and duplication of regulations in Estonia would be to restrict the LMSBA to include only key aspects of ALMP provision (the general institutional set-up, a general description of the aim of ALMP provision and target groups of ALMPs), while setting the details in a more agile regulation, similar to the Employment Programme. In this way, two crucial features of ALMP regulation are addressed: 1) the rights for support in labour market integration are guaranteed and the general conditions for this support are regulated; 2) the flexibility to react to the changes on the labour market is ensured.
Consolidating the regulation and determining all ALMP details in the Employment Programme would simplify the system and make it leaner. A simpler and leaner regulation could decrease administrative burden in amending ALMP design and implementing ALMPs, for example regarding budgeting and bookkeeping (see Section 3.4). In addition, it would become more straightforward for the stakeholders and clients to get an overview of all ALMPs that are available. It would be easier for the stakeholders to communicate the ALMPs available (e.g. to reach out to the target groups). Furthermore, a leaner regulation would enable a clearer division of competencies.
The complexity of the legal set-up could be further reduced if ALMPs regulated by the ESF Programmes would be incorporated into the LMBSA (in case higher-level changes would be necessary) and the Employment Programme. This can be done once the programming period ends (in 2023) and for those ALMPs that are proven to be effective and efficient. For this, impact evaluations and cost-benefit analysis of the ALMPs financed from the ESF funds have to be conducted, as it is already planned. These evaluations should aim at comparing the slightly different designs of otherwise similar ALMPs, such as the different designs of wage subsidies or training programmes. The evaluations could take advantage of the cut-off points in eligibility for the different ALMP designs (e.g. making it possible to apply regression discontinuity design), enabling to continue with the most effective and efficient designs only.
For the next programming period, SOM and other stakeholders should consider the regulation of ALMPs financed via the ESF funding more carefully. The stakeholders should reconsider the necessity of introducing different designs for essentially the same ALMP or the necessity to regulate these in several different ESF Programmes. Consolidating the programmes reduces administrative burden also for ALMP implementers and adds flexibility in the budget, besides reducing complexity in the regulatory set-up.
In addition, the most granular details, particularly concerning the operating model of ALMP provision should be the responsibility of the organisation implementing the ALMPs, i.e. the EUIF, regulated in internal documents and guidelines. For example, the EUIF executive management under the supervision of its tripartite Supervisory Board could have some freedom to decide whether to outsource or provide in-house specific ALMPs, channel management, counselling frequency, etc. Leaving the operating model of the PES to be decided by the PES executive management is a common practice across countries, although the scope of decisions varies with the autonomy of PES. A higher degree of autonomy regarding PES operating models adds to the flexibility of the system to respond quickly to the labour market needs (OECD, 2020[5]). Yet, some of the details on the EUIF operating model are regulated by the high-level LMSBA in Estonia. For example, the 3-month-limit on using digital tools for counselling was dropped from the LMSBA only in Spring 2020, limiting the EUIF channel management up to that point. The limitations in which cases the EUIF could provide an ALMP in-house or use simplified pre-authorisation of providers are set in the LMSBA, leaving some people in need of ALMPs without access to support (e.g. for specific ALMPs it can be difficult to find providers in some regions).
Drafting regulations for effective and efficient ALMPs requires co-operation between stakeholders
In case the stakeholders agree to generalise and simplify the LMSBA, it should confer the authorisation to establish the detailed regulation of ALMPs either to the Minister of Health and Labour (after adoption by the Supervisory Board of the EUIF) or the Supervisory Board of the EUIF. In this set-up, the detailed regulation would have sufficient agility to respond to the labour market needs and, in addition, a consensus of the social partners would be backing it up.
The key stakeholders of the system of ALMP provision should discuss and agree on, whether the detailed regulation approved by the Supervisory Board of the EUIF or the minister, should be additionally adopted by the government. The adoption by the government makes a higher-level political body accountable for ALMP details. Nevertheless, this makes the process longer and less agile and, therefore, the pros and cons of this additional step have to be considered. In general, the objective should be to keep the detailed list and the description of ALMPs in the new regulation flexible, i.e. it should be possible to amend them easily to react to changes in the labour market.
Another agreement that the key stakeholders should make, is about which of the institutions takes the responsibility to draft the details of ALMP design – EUIF or SOM. In any case, SOM and the EUIF should co-operate tightly in drafting the regulation regardless of which organisation leads the process. The drafting process should involve expertise from the side of implementation (the knowledge what works, for whom and how) as well as from the political will and state strategies.
Even within the current regulatory set-up, good co-operation between SOM and the EUIF is necessary to develop ALMPs that are needed by the citizens, drawing from experience gained from implementation and working with the clients, the political will, high-level strategies and good international practices. Such co-operation is necessary for amendments in the law (LMSBA, Unemployment Insurance Act) as well as drawing up and adjusting the Employment Programmes and ESF Programmes.
Although currently, the legal framework does not determine how exactly the co-operation should look like, extensive co-operation and consultations between the two institutions exist in practice. For example, the new ALMP addressing the COVID-19 crisis was developed in April 2020 in tight co-operation between the ministry staff, the minister, the Supervisory Board of the EUIF and the EUIF staff. The close co-operation involving policy implementation expertise in the design of the new measure was instrumental: the new measure was designed in a week and implemented within two weeks.
The complexity of legal regulations of ALMP provision triggers complexity regarding financing ALMPs and budgeting. This section discusses first the sources used for ALMP provision and the sustainability of this financing model. Second, the process of drawing up the budgets for ALMPs is examined.
3.4.1. Sustainability of ALMP financing is a potential issue
Until 2011, ALMPs in Estonia were financed using ESF funding and the state budget. Due to the Global Financial Crisis, the ESF funding for the period 2007-13 ran out quicker than planned and the resources in the state budget were tight. The government considered the reserves accumulated from the unemployment insurance contributions sufficient to cover the gap in ALMP budget. As such, a major change in the financial and legal set-ups took place in 2011, when the government decided to provide ALMPs using the financial resources collected from unemployment insurance contributions and introduced the concept of the Employment Programme.
Figure 3.1 depicts the EUIF expenditures on ALMPs in 2016-19 and budget for 2021. The majority of ALMPs have been financed from unemployment insurance contributions and only marginally from the state budget through the past years.14
Note: ALMP categories 1-7: labour market services (including EUIF operating costs, except operating costs for work ability assessments), training, employment incentives, supported employment and rehabilitation, direct job creation, start-up incentives.
1. 2020 excluded as an exceptional year – EUR 256 million spent on short-time working scheme using unemployment insurance contributions, while the entire ALMP budget in previous years has been between EUR 50 to 100 million.
2. The figure does not include expenditures on social tax contributions for employers of people with no or partial work ability. This is a measure that is considered as an ALMP in category 5 by the EU/OECD LMP database since 2016 when the EUIF took over its administration, but is not considered to be an ALMP by the Estonian stakeholders. This measure is fully funded by the state budget and all employers hiring a person with reduced work ability using an employment contract are eligible (no additional targeting or conditionality).
Source: Estonian Unemployment Insurance Fund.
Unemployment Insurance contributions as the main financing source
Until 2011, the reserves collected from the unemployment insurance contributions were to cover the needs of the people who had paid the contributions (i.e. originally to cover their needs for income replacement during unemployment through unemployment insurance benefits). As ALMPs were needed also by those who had not paid unemployment insurance contributions, the agreement was to add a share to the ALMP budget from the state budget to make the new arrangement legally valid. However, since then the annual contribution from the state budget has been rather marginal, kept at the level of less than EUR 4 million per year (Eesti Töötukassa, 2020[6]), from which EUR 3 million to finance ALMPs in the Employment Programme for people not covered with unemployment insurance. The latter sum has been cut to only EUR 18 thousand since 2020. Moreover, in recent years there have been discussions to withdraw the financing from the state budget entirely.
Currently, the majority of ALMP expenditures in the framework of the Employment Programme, part of the co-financing of the ESF programmes and the EUIF (and ALMP) operating costs are covered using finances collected through unemployment insurance contributions. The resources of the unemployment insurance scheme are taken into account in the overall state budget balance, which implies that any shift of ALMP allocation has an impact on other expenses in the state budget. As a result, this dedicated funding source does not ensure full flexibility in allocating ALMP expenditures.
The social partners in the Supervisory Board make annually a proposal to the government on the level of the unemployment insurance premium and the share of unemployment insurance contributions for ALMP expenditures. However, the proposition of the Supervisory Board is not binding for the government, which can and has set different unemployment insurance premium based on concerns for the state budget rather than labour market needs.
The unemployment insurance premium is pro-cyclical in Estonia (Figure 3.2). The pro-cyclicality is partly due to setting the unemployment insurance premium based on the needs of the state budget balance. In addition, the pro-cyclicality is caused by the increasing responsibilities of the EUIF because of the recent reforms (on-going Work Ability Reform, introducing unemployment prevention measures in 2017, career services’ reform in 2019, etc.). This implies that the total tax burden on labour is higher during worse economic conditions and lower during better times. The system might have potentially not accumulated reserves to face longer economic downturns. The short-time working scheme introduced in Spring 2020 to address the labour market consequences of COVID-19 outbreak decreased the accumulated reserves of the EUIF within four months by EUR 256 million, i.e. by about 30%.
The stakeholders of the ALMP system and the government need to agree on new principles for setting the unemployment insurance premium to introduce counter-cyclicality and accumulate sufficient reserves before any economic downturns. For example, an automatic mechanism could be built in the system that takes into account the economic situation and/or forecasts and the current reserves, which would trigger changes in the unemployment insurance premium. Alternatively, the unemployment insurance premium could be kept at a constant level, optimised across business cycles. The unemployment insurance system would be in a deficit in worse economic conditions and in surplus in better times. In addition, automatic triggers for higher benefit generosity could be introduced in such a financing model (Andersen, 2014[7]).
Source: Government decrees on unemployment insurance premium in 2002-19.
Since 2012, the EUIF does not manage its reserves from the unemployment insurance contributions anymore. The Ministry of Finance manages the public sector funds centrally (i.e. makes the investment decisions for these funds). This consolidation of funds in the public sector made the Supervisory Board concerned about the accessibility of the reserves in the future and for a while, the representatives of employers and trade unions refused to co-operate with the government representatives, which led to the Supervisory Board not being operational for three months. Although the Supervisory Board became soon again operational, the concerns regarding the management of the unemployment insurance reserves have remained. While other funds under the central government (health insurance, pensions) have been in shortage of funding, the surplus from the unemployment insurance contributions has helped the government to balance the gaps and surpluses out. This makes the stakeholders concerned whether the funding for ALMPs and benefits would be actually available in case a crisis hits the labour market despite the significant reserves.
While a significant share of the reserves became quickly available to cover the short-time working scheme in Spring 2020, it is not guaranteed that using the reserves will be as easy in the future, as the net balance of the consolidated public funds has been at times lower than the total amount of unemployment insurance reserves. Estonia has to revise the systems of health care, social services and social security to make these systems financially sustainable, to ensure that the unemployment insurance reserves actually remain available for labour market needs.
Funding from the European Structural Funds
A large proportion of ALMPs is financed through the ESF funding (amounting to 22% of expenditures in 2019). The programme to fund ALMPs for people with reduced work ability is particularly extensive, representing about 80% of all funds from ESF for ALMPs provided by the EUIF (Eesti Töötukassa, 2019[8]). While not all of the ALMPs within the Work Ability Reform have been individually evaluated, the overall preliminary evaluations have been positive (see Masso et al. (2019[9])). Hence, those ALMPs should be introduced in the main national legislation and be financed from the national financial means.
The current ESF programming period lasts until 2020 and allows to use the allocated funding up to 2023. Nevertheless, as of September 2020, Estonian stakeholders do not yet have a plan on how to integrate the ALMPs currently financed by the ESF to the national framework or how to finance these ALMPs in the future. This undermines the sustainability of the system of ALMP provision.
Additional allocations from the state budget could cover the needs for ALMPs for jobseekers who have not paid unemployment insurance contributions and for measures that will be not financed from the ESF in the future, to avoid putting additional pressures on unemployment insurance scheme. However, an increase in the funding of ALMPs from the state budget would require a considerable political will and a re-prioritisation in strategic objectives.
3.4.2. ALMP budgeting process
The budgeting process for ALMPs involves inputs from the EUIF and allows some flexibility in implementation
The EUIF has some financial independence as its operating expenses as well as key ALMPs and benefits are financed from the dedicated unemployment insurance contributions. The EUIF budget is drafted by the Management Board, and approved and supervised by the EUIF Supervisory Board. However, the financial flexibility varies across the types of expenditures, their financing sources and which political institution approves the budgets.
The annual budgets of the Employment Programme are drawn up along with the development of the content of the Employment Programme. The budget is drafted by the EUIF (in co-operating with SOM), approved by the Supervisory Board of the EUIF (conditioning that the minister approves it as well) and adopted by the government. The government decree stipulates only an overall budget for ALMPs. The Supervisory Board of the EUIF approves a more detailed budget and can adjust it flexibly during the year.
SOM leads the budgeting process for the ESF Programmes, requiring significant inputs from the EUIF as well. The Supervisory Board of the EUIF discusses the ESF Programmes and the budgets within the drafting process, but only the minister adopts the programmes officially. The budgets of the ESF Programmes are more detailed than the Employment Programme, but allow still some flexibility for adaptations within the limitations set by the Structural Assistance Act.
The ALMPs described in the LMSBA do not have a dedicated budget. All types of ALMPs regulated by the LMSBA (except “the provision of information on the situation of the labour market, and of the labour market services and benefits”) are regulated additionally by the Employment Programme and/or ESF programmes allowing more favourable conditions or wider target groups. The provision of information on the labour market situation to jobseekers is covered in the general operating expenditures of the EUIF (drafted by the EUIF and approved by the Supervisory Board of the EUIF).
Germany and Iceland give more autonomy for PES to design budgets for ALMPs that correspond to the labour market needs
Table 3.4 displays the key stakeholders, which adopt the overall and detailed budgets for ALMP provision in Iceland, Slovenia, Germany, Denmark and Estonia. In general, budgeting decisions at a lower level (e.g. by PES management bodies rather than the government or the ministry) mean more financial independence for PES, but also more flexibility to swiftly adapt the budgets to the changing needs of the labour market.
Compared to the EUIF, the German PES has more financial independence as it manages its own financial resources and the strategic management body is fully responsible for the budget. This permits adapting ALMPs to changing labour market needs quickly.
In Iceland, the financial independence of the PES is also somewhat greater than that of the EUIF as a key role is on the executive management body. The first input to start the budgeting process is prepared by the PES executive board. The minister uses the inputs from the PES in the discussions to draw up the state budget in the government. The overall budget for ALMPs is passed by the government and the parliament in the context of the state budget. The detailed budget is prepared by the PES and approved by the executive management of the PES after discussing it with the strategic management body. Furthermore, there is an additional step in the process of assigning the overall budget for ALMPs as the executive management of the PES has an option to agree with the budget or disagree with it and send a proposal back to the government. The PES executive board can ask for an increase in the overall budget also in case a need arises in the middle of a financial year (e.g. labour market worsens). These proposals should be then approved by the minister and the government to become effective. As such, the PES can have relatively high influence to achieve appropriate funding for ALMPs.
The PES in Slovenia has less autonomy as well as fewer possibilities to adapt the budget as the ALMP budget is regulated in high detail by the parliament, government, minister and ministry, and there is an annual contract drafted by the ministry to fix the PES budget. The Slovenian PES cannot decide on its own operating expenditures, contrary to Estonia, Germany and Iceland.
In Denmark, the municipalities decide themselves on financial allocations to ALMPs, i.e. they have the autonomy and flexibility to design the ALMP budgets. Denmark has a national financial incentive system for the municipalities to provide ALMPs, which was extensively reformed in 2015 (see European Commission (2018[10])). This system aims to establish financial incentives for municipalities to actively support jobseekers and provide effective ALMPs, and thus to prevent individuals from receiving social benefits for long periods. In principle, the state reimburses municipalities’ social benefit expenditures based on the number of weeks jobseekers received social benefits.
This section discusses the higher-level division of responsibilities and co-operation between stakeholders concerning the ALMPs designing process. The co-operation between stakeholders within the ALMP implementation process is discussed in Chapter 4. The implementation of ALMPs requires that the different service providers view the clients holistically, network with each other, and exchange data and information. The co-operation regarding policy design needs co-ordination on a higher level to ensure the approaches consider state-wide strategies across policy fields.
3.5.1. Key fields of co-operation
Regarding ALMP design, the SOM and the EUIF need to co-ordinate and co-operate above all with stakeholders in the Ministry of Education and Research, the Ministry of Economic Affairs and Communications and the health and social policy fields in the Ministry of Social Affairs. Institutions in these policy fields provide some measures that have similar objectives as ALMPs or concern similar target groups (e.g. training provision in the education system, services aiming to integrate people into the society in the social policy field, subsidies promoting entrepreneurship by the Ministry of Economic Affairs and Communication). Co-ordination is needed to avoid gaps and overlaps in service provision and ensure that policies across the policy fields support the same national strategic objectives.
Besides the three ministries mentioned above, some co-operation with other policy fields is relevant as well, although the coinciding policy objectives are narrower. For example, co-ordination with the Ministry of Justice is required to support the re-integration of imprisoned people back into the society and the labour market. The integration of migrants to the labour market needs co-operation with the Ministry of the Interior, as well as potentially other ministries. Furthermore, co-operation with the governments of Municipalities is needed as they have some scope for policy making across policy fields, regardless of a highly centralised government system (European Commission, 2018[11]).
Good co-operation and co-ordination are essential with the Ministry of Finance for the financing of ALMPs. As described in the previous section, the Ministry of Finance co-ordinates drawing up the state budget and manages the consolidated public sector funds (including reserves of unemployment insurance contributions used for ALMP provision).
Co-ordination between health, social and employment policy could be improved
As people with a weak attachment to the labour market frequently face health and social integration obstacles (see Chapter 5), employment policy needs to be co-ordinated with social and health policy. Nevertheless, at present the people in need of support are not approached holistically (see Chapter 6), which is not only rooted in service implementation, but also in policy design and co-ordination. As employment, social and health policies are co-ordinated by one single ministry – the Ministry of Social Affairs – there is a good potential to improve the co-ordination of these policy fields. Furthermore, one minister is in charge of employment and health policy within SOM, increasing the potential to link these policy fields. Besides co-ordinating the employment and health policy within SOM, the Minister of Health and Labour has tools to co-ordinate the activities of the main institutions implementing these policies. He is a member of the Supervisory Board in both the EUIF and the Health Insurance Fund.
Significant improvements in co-ordination have been made in the framework of the Work Ability Reform. This reform introduced new ALMPs aiming both at labour market integration and removing health obstacles, increased funding for ALMPs and social services targeting health obstacles, and improved co-operation and information exchange between organisations implementing the reform. However, the reform caused also some divergence from the concept of one-stop-shops as work ability and disability assessments are co-ordinated by two different organisations (the EUIF and the Social Insurance Board) and services with similar objectives can be provided often by three or more different organisations (for example, technical aids can be provided by the EUIF, the Social Insurance Board and the Health Insurance Fund; see other examples in Chapter 6).15 Although the objectives and processes of the reform have been thoroughly communicated to the target groups, the set-up can be still potentially confusing for them. In addition, the vulnerable groups without long-term health limitations still receive little ALMP support or similar social services (see the quantitative analysis in Chapter 6).
To generate a strategic view and address the fields of social affairs more holistically, SOM has developed a Welfare Development Plan 2016-23, which was adopted by the government in June 2016 (Ministry of Social Affairs, 2016[12]). The Welfare Development Plan sets strategic objectives regarding the labour market, social protection, gender equality and equal treatment policies for 2016-23. However, this strategic plan does not include health policy, although it should be also tightly linked to other strategies, particularly considering the on-going Work Ability Reform.
Regardless of the improvements in strategic view and implementation of the recent reform, there might be room for improvement on co-ordinating policies across different fields within the Ministry of Social Affairs. A particular area that needs to be improved to enable holistic approaches to clients, is data and information exchange between the different institutions concerning employment, social and health policies. The existing exchange of administrative data is not sufficient to co-ordinate policy implementation. The most problematic is the data exchange between municipalities on social services (the dedicated information system developed by SOM and currently managed by the Social Insurance Board) and other organisations. The municipalities are not providing the necessary information on social services through the IT system to other relevant organisations and are not able to access all relevant information from the other institutions. Significant efforts are needed to increase the user-friendliness of the system and modernise it, potentially by substituting the IT system with a new one. Also, the data exchange between the Health Insurance Fund, Social Insurance Board and the EUIF could be improved enabling a more holistic view of their clients. Inserting data in the health care database (e-tervis) by health care providers has significantly improved since the Work Ability Reform was launched, but is still not sufficient to support an efficient process of work ability assessments. Missing data and low data quality in e-tervis can lower assessment quality and cause delays in the work ability assessments, and thus affect the access to benefits and ALMPs for the people in need.
Recommendations to strengthen the integration of registers in social, health and employment policy to implement the integrated care model in Estonia will be provided also in the forthcoming report of the project conducted in co-operation of the European Commission’s Directorate General for Structural Reform Support, the Ministry of Social Affairs and the World Bank. Implementing an integrated care model in Estonia would potentially require advancing an integrated data model and adding new functionalities in the IT architecture (dashboards for policy makers, providers and citizens, as well as an expanded e-consultancy system between stakeholders).
Improving information and data exchange could also support policy design. Better data exchange between the EUIF and SOM could improve co-operation between these organisations, particularly their joint efforts to design ALMPs. As the EUIF is developing a new data warehouse solution enabling user-friendly access to statistics for SOM and the public, access to information will be potentially well facilitated in the future.
Furthermore, good data are needed for ALMP impact evaluations, informing designing and re-designing policies. However, challenges in using data for impact evaluations relate to both legal regulations as well as the existing IT solutions, above all in the field of social and health services. For example, the implementation of the General Data Protection Regulation (GDPR) is not yet fully clear and this has put analytic and research activity on hold in many fields. Nevertheless, the first attempts to enable data access for researchers under the GDPR have already been put in practice (such as enabling access to data used in this report, Chapters 4 and 6), enabling to build on these for future research.
The Ministry of Education and Research could be more involved in strategic decisions
The Ministry of Education and Research and SOM have a substantial common strategic objective – ensuring that the population has sufficient skills and qualification to be employed on good jobs, matching their skill and qualification level. The common policies concern above all adult learning programmes and career counselling. The Ministry of Education and Research has drawn up a dedicated strategy for lifelong learning, including adult learning, called The Estonian Lifelong Learning Strategy 2020, which aims “to provide all people in Estonia with learning opportunities that are tailored to their needs and capabilities throughout their whole lifespan, in order for them to maximize opportunities for dignified self-actualization within society, in their work as well as in their family life” (Ministry of Education and Research, 2014[13]). SOM links the Estonian Lifelong Learning Strategy 2020 with the first objective of the Welfare Development Plan 2016-2023: “Correlation between the demand and supply of the workforce ensures a high level of employment and high-quality working conditions support long-term participation in working life” (Ministry of Social Affairs, 2016[12]).
The EUIF, SOM and the Ministry of Education and Research are the main co-ordinators of short-term training programmes for adults, although some training programmes, particularly the Estonian language courses, are partially co-ordinated by other ministries such as the Ministry of Culture or the Ministry of Interior (Kallas, Kallaste and Anspal, 2018[14]). Both the EUIF and the Ministry of Education and Research have increased the provision of these programmes over the last years. As a consequence, participation in adult learning has reached a record high level (European Commission, 2019[15]).
Despite the higher participation in adult learning programmes in recent years, the need for upskilling and reskilling remains high (European Commission, 2019[15]). Also the quantitative analysis in the current report (Chapters 5 and 6) shows that access to training measures is not sufficient.
Access to adult training programmes could be improved by better co-operation between the stakeholders of the system of ALMP provision and the Ministry of Education and Research. Although the co-operation practices have improved over the years, common efforts to reach out to people with low skills are rare and designing adult training programmes still takes place somewhat separately in the employment and education policy fields. Promoting up- and re-skilling together and through the networks of career counsellors, employment counsellors and training organisations could potentially lead to more effective and efficient results. Involving the stakeholders from both employment and education policy to design and implement adult learning programmes could help target the training programmes better, avoiding gaps and overlaps. In particular, the co-operation between the stakeholders could support adapting training programmes to fit better the needs of the low skilled, minimising discouraging aspects and preventing drop-out.
Furthermore, the targeting of adult learning programmes should take greater advantage of the national Skills Assessment and Anticipation exercise called OSKA (Sihtasutus Kutsekoda, 2020[16]). OSKA is a great example of a cross-policy initiative in Estonia and has been successful in creating practical and useful labour market intelligence (Melesk, Haaristo and Haugas, 2018[17]).
Currently, OSKA is used strictly and systematically by the EUIF when providing training programmes to prevent unemployment (i.e. targeting the low-skilled employed people). Since Spring 2018, the EUIF provides also guidelines to its employment counsellors called “The Principles for Skills development” that advise the counsellors to consider OSKA as well as the Occupational Barometer of the EUIF when referring a jobseeker to labour market training programmes. Nevertheless, the link in these cases between training and OSKA are weaker and not as systematically implemented in the regional offices in practice. In addition, training programmes are provided also within the Open Calls Projects managed by SoM, where no specific link to OSKA has been highlighted.
Although the OSKA initiative is in the policy field of the Ministry of Education and Research, its results are not used for the adult training programmes provided by this ministry as strictly as they should, particularly concerning the adult training programmes provided via ESF funding. OSKA results are used in the planning phase of formal and non-formal education, but the delivery of the programmes is strongly affected by the traditional supply by education providers and demand for courses by the participants. Due to this, the adult learning programmes provided by the Ministry of Education and Research are not supporting up-skilling the low-skilled population well (see Chapter 6) and are potentially less effective in supporting labour market outcomes than training programmes provided by the EUIF. Also a previous evaluation of the training programmes implemented by the Ministry of Education and Research using ESF funding shows a very low impact on labour market outcomes (Leetmaa et al., 2015[18]), although the situation could be currently better as the programme has been somewhat re-designed. Nevertheless, also more targeting has been called for regarding the adult learning programmes in the evaluation of the Lifelong Learning Strategy 2020 in a very recent report (Haaristo et al., 2019[19]). More co-ordination, co-operation and taking advantage of the existing tools are needed within the Ministry of Education and Research itself as well as wider in the field of adult learning.
Another key area of co-operation between SOM and the Ministry of Education and Research is the provision of career counselling. Traditionally, the EUIF provided career counselling to the unemployed people and the Ministry of Education and Research governed career services for youth. Other groups (employed people needing career advice and inactive people) had essentially no access to career services. The EUIF started to provide career services to all adults and youth entering the labour market in 2015, which created some potential overlap of target groups with the career services provided under the Ministry of Education and Research. Hence, since 2019, essentially all career services have been consolidated in the EUIF. Nevertheless, as the Ministry of Education and Research is still responsible for career education in general and vocational education,16 and as career services are tightly linked to training provision, co-operation is essential between the Ministry of Education and Research and the stakeholders of ALMP provision.
Based on stakeholder consultations conducted within this project, further co-ordination of employment and education policy could be desirable. The lifelong learning and vocational training activities of the Ministry of Education and Research could be potentially more thoroughly co-ordinated with the ALMPs of the EUIF, for example enabling to take more advantage of the vocational education system. The vocational education system has been continuously improved over the last years, involving substantial investments, although challenges remain in improving the image of the system of vocational education (Musset et al., 2019[20]). Nevertheless, some challenges to using the vocational education system in providing labour market training are beyond the competencies of SOM and the Ministry of Education and Research, particularly concerning the legal framework regulating public procurement. As such, any changes in this field require wider co-operation, potentially involving also the Ministry of Justice and Ministry of Finance.
The interests of employers are generally well represented
The main ministry encouraging entrepreneurship and supporting employers is the Ministry of Economic Affairs and Communication. The interests of employers are presented also by strong employers’ confederations, above all the Estonian Employers’ Confederation and the Estonian Association of SMEs.
Institutions in the policy fields of both SOM and the Ministry of Economic Affairs and Communication provide some measures to encourage entrepreneurship. In the policy area of SOM, the EUIF grants business start-up subsidies, as well as training and mentoring for the business start-up subsidy recipients. In the policy area of the Ministry of Economic Affairs and Communication, Enterprise Estonia provides subsidies, training and counselling. The activities of Enterprise Estonia are supported by the County Development Centres (counselling to new entrepreneurs regionally) and the Foundation KredEx (loans, loan guarantees and venture capital investments). Although the measures of the EUIF and Enterprise Estonia have similarities, the objectives, target groups and conditions of these two types of support are quite different and thus not overlapping (Villsaar et al. (2014[21]), Estonian Unemployment Insurance Fund (2020[22])). The business start-up subsidies of the EUIF target exclusively unemployed persons and non-employed people in retirement age, encouraging employment in cases and areas where job offers are scarce. The objective of the measures by Enterprise Estonia is to support economic growth by encouraging entrepreneurship and innovation, focusing particularly on more prospective economic fields and assuming initial capital investments also from the beneficiaries.
The ALMPs provided by the EUIF support employers also more generally, such as through mediating vacancies, supporting adapting premises and equipment when hiring a person with health limitations, or when staff needs re-training as the enterprise is going through a restructuring process. A relatively new ALMP supporting entrepreneurship is the regional support measure that aims to facilitate job creation and employment of unemployed persons in high unemployment areas, essentially via wage subsidies on certain conditions.
In designing ALMPs for employers, SOM and the EUIF have co-operated tightly with the Ministry of Economic Affairs and Communication. This has ensured that employers’ needs are viewed holistically across policy fields, avoiding gaps and overlaps. In addition, two representatives of the Estonian Employers’ Confederation represent employers in the Supervisory Board of the EUIF. As two out of the six Supervisory Board members represent employers’ interests, employers have a direct channel to contribute to the strategies and ALMP design discussed in the Supervisory Board.
Nevertheless, SMEs have fewer chances to feed into ALMP policy design. In 2017, 99.8% of enterprises in Estonia were SMEs (1-249 employees), employing 79% of the all employed and accounting for 79% of total value added (OECD, 2020[23]). However, there are no representatives of the Estonian Association of SMEs in the Supervisory Board of the EUIF and they are consulted ad hoc, either directly or via the Ministry of Economic Affairs and Communication.
The stakeholders of the system of ALMP provision should consider whether the two representatives of employers in the EUIF Supervisory Board could represent two different organisations – one member from the Estonian Employers’ Confederation and one member from the Estonian Association of SMEs. This would be better aligned with the current membership of the EUIF Supervisory Board where the government is represented by two different ministries and the trade unions are represented by two different trade union confederations.
3.5.2. Strategic co-operation could be increased through some adjustments in the working methods
Co-ordinate the use of inter-ministerial working groups to address common strategic challenges more systematically and effectively
The high-level co-ordination between policy fields should be the responsibilities of ministers and ministries via the discussions in the government as well as via involving experts from other ministries in the process of policy making.
To discuss the cross-policy issues, inter-ministerial working groups are often used in Estonia. For example, in the field of education and training, the representatives of SOM and/or EUIF take part in the meetings of the Adult Education Council and the Vocational Education Council (both led by the Ministry of Education and Research), OSKA Co-ordination Council (led by the Estonian Qualifications Authority), the Evaluation Council for Continuing Adult Education and the Evaluation Council for Vocational Education (both led by the Estonian Quality Agency for Higher and Vocational Education). Similarly, there are many working groups that are initiated by social and health policy areas, where also the EUIF and/or SOM representatives take part.
While there is an abundance of different working groups, the different initiatives are not strategically co-ordinated. The initiatives fulfil specific purposes without systematic approaches across working groups, which might lead to fragmentation of discussions, as well as gaps and overlaps in policy co-ordination.
A possibility to achieve more strategic co-operation practices is to co-ordinate the use of the inter-ministerial working groups and apply this working method more systematically and effectively than today. For example, this is a successful practice used in the system of ALMP provision in Iceland, where the coherence between national objectives is supported by agreed principles when to set up temporary inter-ministerial bodies to co-ordinate specific strategic issues across policy fields. For example, inter-ministerial bodies on employment and education measures are set up in times of economic crises. A co-ordination group was established on the initiative of both the Minister of Education and Culture and the Minister of Social Affairs during the Global Economic Crisis in 2008 and the current COVID-19 crisis. The currently established co-ordination group started working on their proposals to respond to the crisis already in April 2020 and this has enabled to re-structure the support to the unemployed people and people in threat of unemployment holistically and swiftly.
Furthermore, the cross-policy working groups tend to be set up by other parties than the key stakeholders of the system of ALMP provision in Estonia. The EUIF has more active co-ordination role only regarding career counselling via the Career Services Co-operation Council after the career services reform in 2019. As such, there is no active strategy management of labour market policies by involving other relevant policy fields systematically. SOM and the EUIF should consider whether simply participating in initiatives of other policy fields is sufficient or should the labour market policy field (i.e. SOM and the EUIF) should drive some of the inter-ministerial policy co-ordination.
The ministries as well as the institutions implementing policies have also the responsibility to generate awareness about their policy fields in the society. First, this would increase the accountability of their actions. Second, this would enable to prioritise the policy field on a wider political level.
To increase accountability in the system of ALMP provision and prioritise employment issues, the key Estonian stakeholders met in the consultation process of the project proposed that it could be beneficial if the EUIF reported not only to SOM but also regularly directly to the parliament. This is the practice of some other autonomous public bodies in Estonia, such as Eesti Pank (the central bank) and the National Audit Office. For example, the Chairman of the Management Board together with the Chairman of the Supervisory Board could present to the parliament a yearly report regarding ALMP provision in Estonia. Alternatively, the EUIF and SOM could present a joint report to the parliament. The Estonian key stakeholders should discuss and agree on the division of roles of SOM and the EUIF in case a practice like this was introduced.
Involving additional stakeholders in the strategic management of the EUIF
As the EUIF and its Supervisory Board have an important role in ALMP design and the strategy of ALMP provision, better co-ordination of policy fields could also be envisioned via the composition and activities of the EUIF Supervisory Board. For example, other key stakeholders, such as a representative from the Ministry of Education and Research or a representative of the Association of Organisations of People with Disabilities could be involved in the meetings.
Nevertheless, the current size, composition and balance are generally considered to be optimal by the stakeholders. The number of members is small enough to keep the work efficient, but high enough to represent well the three main social partners. The composition and working methods of the EUIF Supervisory Board have served as a role model to re-structure the Supervisory Board of the Health Insurance Fund, limiting the composition to the key stakeholders and increasing efficiency in its activities.
In case the stakeholders deem necessary to involve additional stakeholders as members of the EUIF Supervisory Board, they should consider the changes carefully and aim at keeping the balance between the three social partners. If possible, substituting some of the current members should be preferred over increasing the total number of members in the Supervisory Board to keep the working methods of the Supervisory Board efficient. For example, as proposed earlier in this chapter, a representative of the Estonian Association of SMEs could replace one of the current employers’ representatives. Involving a representative from the Ministry of Education and Research could be made possible by not involving a representative of the Ministry of Finance in the board. A representative from the Association of Organisations of People with Disabilities could potentially mean that only one of the presently represented trade union confederations could be involved.
A better alternative to changing fundamentally the composition of the EUIF Supervisory Board is to involve other stakeholders17 more systematically as observers, i.e. with limited rights to discuss the issues, but with no voting rights. Nevertheless, also the number of observers at the meetings of the Supervisory Board should be kept optimal and relevant to keep the working methods efficient. For example, a representative from the Ministry of Education and Research could be invited to those meetings that discuss addressing skill challenges in Estonia, but perhaps not to a meeting that discusses the unemployment insurance premium, etc.
Another way to co-operate and co-ordinate better with other stakeholders would be having discussions with relevant stakeholders before discussing and deciding strategies in the EUIF Supervisory Board. For example, the Slovenian system of ALMP provision has an additional body called the Expert Council that can comprise different key stakeholders, experts and researchers to advise the executive management of the public employment system (Box 3.2). Although the set-up of the Expert Council in Slovenia is defined in the main act regulating ALMP provision, it could operate also without further legal amendments in the legal system in Estonia. The Estonian approach could be more similar to the Icelandic model where the Executive Management of the PES involves other stakeholders flexibly. Another example from Estonia is the reform that reduced the number of members in the Supervisory Board of the Health Insurance Fund down to six that was also accompanied by establishing an advisory body to enable inputs from a wider group of stakeholders into strategy development (in addition to setting up advisory bodies for specific questions).
The advisory body of the EUIF could be operate informally. For example, the Management Board of the EUIF could systematically invite the stakeholders to discuss strategic questions and then present the results to the Supervisory Board. The range of stakeholders to be involved in the discussions could be adapted according to a specific policy question. Among other stakeholders, the EUIF Management Board should involve also the representatives of SOM in these meetings, as they are the main policy designers in the field. Alternatively, these systematic expert discussions could be held by SOM instead.
This approach could help overcome the gaps in policy co-ordination without needing to establish further inter-ministerial working groups per se or making changes in the composition of the EUIF Supervisory Board. The policy questions could cover strategy development (inputs for the Supervisory Board) as well as operating model (inputs for the Management Board). However, it is important that the advisory body discusses relevant questions systematically and that the discussions are driven by the needs of labour market policies.
According to the Labour Market Regulation Act (LMRA), the Expert Council is the professional advisory body of the Slovenian public employment service (ESS).
The main tasks of the ESS Council are:
Discussing and approving the methodology of working with jobseekers and employers
Providing opinions to the executive management of the ESS on the ESS operating model
Addressing interdisciplinary issues relevant to support the labour market
Addressing other labour market issues at the initiative of the executive management of the ESS
The Expert Council has above all an advisory role rather than a decision-making role. Most importantly, the Council advises the executive management of the ESS. However, it can also forward some recommendations to the ESS Council (the tripartite strategic management body of the ESS) as well as the Ministry of Labour, Family, Social Affairs and Equal Opportunities.
The Expert Council meets two to five times a year. The discussions during these meetings are very detailed and in-depth. The documents for the meetings of the Expert Council are mostly prepared by the ESS staff and are typically very detailed, particularly when they concern the needs to change the legislation, procedures or policies.
Source: Legal texts and regulations in Slovenia and interviews with Slovenian officials.
References
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[22] Estonian Unemployment Insurance Fund (2020), Business start-up subsidy, https://www.tootukassa.ee/eng/content/services/business-start-subsidy.
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[14] Kallas, K., E. Kallaste and S. Anspal (2018), Eesti keelest erineva emakeelega täiskasvanute eesti keele õpe lõimumis- ja tööhõivepoliitikas: kvaliteet, mõju ja korraldus, Estonian Centre for Applied Research (CENTAR) and Tallinn, https://centar.ee/wp-content/uploads/2018/07/1.-osa-sissejuhatus-ja-s%c3%bcntees_eng.pdf.
[2] Kröning, A. (2020), Insights on the ALMP system in Germany: Institutional and regulatory set-up.
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[12] Ministry of Social Affairs (2016), Welfare Development Plan 2016–2023, https://www.sm.ee/sites/default/files/content-editors/eesmargid_ja_tegevused/welfare_development_plan_2016-2023.pdf.
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Notes
← 1. https://www.oecd.org/els/emp/DG-Reform-OECD-Ministry%20Social%20Affairs%20Workshop_website.pdf.
← 2. Some advisory roles and possibilities to set up temporary committees can be regulated by decrees or implemented as a practice without formal regulation.
← 3. Labour Market Regulations Act of 28 September 2010, Text No. 4304 stipulates that The Director of the PES is appointed for 5 years directly by the government, following a proposal by the Minister responsible for the area (and the same process for dismissal).
← 4. The LMSBA was complemented by the ESF Programme for 2007-13 which extended the client groups and conditions of the ALMPs in the LMSBA and a small-scale testing of additional ALMPs.
← 5. In the Estonian context the new measure is considered to be an ALMP as its primary objective is to prevent unemployment and thus it also is regulated and financed as an ALMP. Nevertheless, according to the OECD-EC methodology for labour market policies, short-time working schemes are generally categorised as income support measures, i.e. passive labour market policies.
← 6. According to the legal framework, the EUIF should be the main driver for drafting the Employment Programme and SoM should be driving drafting amendments in the LMSBA. In practice, at times both organisations have initiated and drafted amendments for both the Employment Programme and the LMSBA.
← 7. Regulations for good legislative practice when preparing draft acts or regulations require involving interest groups in the process, which can mean also involving social partners. Nevertheless, this channel for involvement is not as explicit, strong and formal as the role of social partners in the Supervisory Board of the EUIF.
← 8. In this report, we refer to both the projects implemented by the EUIF as well as by NGOs (open calls) financed by the ESF as “ESF Programmes”.
← 9. In the past, some target groups and more favourable conditions regarding ALMPs in the ESF Programme for 2007-13 were introduced in the first Employment Programme for 2012-13.
← 10. One reason for this situation is that while the institutional set-up of ALMP provision was fundamentally changed in May 2009, the main act regulating the provision of ALMPs (the LMSBA) was only adapted marginally. A thorough revision of the legal framework was agreed between the government and the social partners, but due to the speed of the reform and the looming global recession, this thorough revision was postponed and only some critical elements of the law have been adapted. As a bridge to meet the necessity to provide additional ALMPs or ALMPs on different criteria, the framework of temporary Employment Programmes was implemented in 2011, which also enabled financing ALMPs from unemployment insurance contributions.
← 11. The Labour Market Measures Act stipulates that the PES arranges and organises ALMP provision and puts in place contracts with service providers to execute ALMPs.
← 12. Regarding ALMPs for unemployment insurance beneficiaries.
← 13. The three national objectives set by the Minister for 2020 are: 1) Businesses have to be ensured with sufficient and qualified labour; 2) More refugees and reunified families have to become self-sufficient; 3) More people with disabilities have to become employed.
← 14. This chapter does not consider under ALMP expenditures the reimbursements of social tax contributions for employers of people with no or partial work ability. This is a measure that is considered as an ALMP in category 5 by the EU/OECD LMP database since 2016 when the EUIF took over its administration, but it is not considered to be an ALMP by the Estonian stakeholders. This measure is fully funded by the state budget and all employers hiring a person with reduced work ability using an employment contract are eligible (no additional targeting or conditionality).
← 15. Nevertheless, the Work Ability Reform has been very well communicated, so that this slight divergence from the concept of one-stop-shop has not really become a challenge in practice.
← 16. https://www.innove.ee/en/teaching-materials-and-methodologies/career-education/.
← 17. Such as representatives from the Ministry of Education and Research, Social Insurance Board, Health Insurance Fund, the Association of Estonian Cities and Municipalities, the Estonian Chamber of Disabled People.