Country Brief - Estonia

ESTONIA PORTRAITS OF LABOR MARKET EXCLUSION

“Portraits of Labor Market Exclusion” sheds new light on the life situations and labor market experiences of individuals and households in the years of the financial, economic, and employment crisis between 2007 and 2011. In this joint project of the European Commission and the World Bank, profiles of the unemployed and inactive populations were developed via a clustering analysis of data from the European Income and Living Conditions Survey. The analysis takes a comprehensive view of policy making, focusing on both the labor market attachment of a country’s out-of-work population, their participation in social protection programs, as well as their poverty profile.

Figure 1: Classes of Out-of-Work Population in Estonia, 2011 3% 9% 21% Middle-aged educated disabled with previous work experience Prime-aged low income long-term unemployed

13%

Educated retirees Young inactive educated mothers with working partner 19%

Prime-aged educated unemployed Single NEETs without work experience

17%

Young low-educated and rural disabled

17%

High priority Medium priority

Source: World Bank staff analysis

The analysis for Estonia identified a total of 224,000 out-of-work individuals (unemployed and inactive) between ages 16 and 64 for the year 2011 (total population: 1.33 million). Of the seven profiles identified in Estonia, five emerge with a “high” or “medium” priority for action given their activation need, potential, and barriers (Figure 1). Prime-age low-income long-term unemployed, prime-aged, educated unemployed, and single NEETs without work experience are all rated as “high priority” and, together, accounted for 41 percent of the out-of-work population in 2011. Young inactive educated mothers with working partner and middle-aged educated disabled with previous work experience are considered medium priority, while educated retirees and young low-educated rural disabled are not prioritized for further action owing respectively to their officially achieved retirement status and extreme distance (via very low educational attainment and self-declared disability) from the labor market.

Figure 2 maps the activation types of the prioritized clusters given the labor and social barriers that they face. The prime-aged, educated unemployed are located in the bottom left ‘market ready’ quadrant of the figure given their work experience (17 years on average) and educational attainment (56 percent have completed upper or post-secondary education and 27 percent tertiary). Activation measures for these individuals should focus on market-based types of interventions such as providing information on job openings and assisting in job search, application, and job-matching intermediation—services that could be provided through public employment services (PESs) or private employment agencies.

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ESTONIA

PORTRAITS OF LABOR MARKET EXCLUSION |

Prime-age low-income long-term unemployed, on the other hand, face larger labor and social barriers than the previous cluster owing to their high exposure to poverty (66 percent belong to lowest income quintile) and long-term unemployment. Among the additional measures that may help in the ‘intensified activation’ of these individuals are those that help with job market re-entry, training, and mobility. Moreover, in order to combat any behavioral and attitudinal detachment from the labor market that may result after long periods of unemployment, programs that subject individuals to a (time-limited) public works requirement, combined with training, job search, and skills support could also be implemented.

For the single NEETs without work experience, adding practical skills (both generic and technical) to their education may help break the barrier of required work experience for many entry-level positions. For this group, job-start programs that offer placement through subsidized internships accompanied by professional and life-skills training should be considered. Mobility support within each country and the EU (including foreign language training) could also be helpful.

Young, inactive, educated mothers with working partner, although they have lower poverty risk, are considered medium priority because of their labor market contribution potential (52 percent have tertiary education). These mothers would probably benefit from greater access to social and public services near their home (such as childcare) as well as from job-search assistance and professional training. Moreover, improving flexibility in work schedules—including part-time and home-based work—would facilitate combining work with other responsibilities.

Lastly, middle-aged disabled with previous work experience are also considered medium priority even though they are a large group (21 percent of the out-of-work), with considerable previous work experience (22 years on average), and a relatively high educational status (78 percent have at least completed

Figure 2: Activation Types of Prioritized Clusters in Estonia High

Labor market barriers (education, skills, experience)

|

Hard-to-serve (skills, special support)

Intensified Activation (TVET, Skills)

Prime-age low income long-term unemployed

Single NEETs without work experience

Middle-aged educated disabled with previous work experience

Market Ready (job info, matching, search assistance) Young inactive educated mothers with working partner

Prime-aged educated unemployed

Special Support (care for dependents, transport, social, health) High

Social barriers (childcare, gender, poverty, disability)

Source: World Bank staff analysis and assessment

secondary education). Nevertheless, their relatively high share of benefit receipts and prima-facie work limitations (92 percent declare themselves disabled) indicate that their potential reinsertion into the labor market will most probably have to be achieved by reassessing their disability status.

Estonia could also benefit from setting general social protection and labor policy priorities to address the labor market barriers that the out-of-work population faces. Improving access to services such as childcare, broader labor market reforms that consider more flexible work schedules, policies that eliminate mobility barriers, and education reforms that ensure quality and relevance in expanding the tertiary education system could be considered in the policy agenda. Moreover, broader economic reforms that strengthen job creation and entrepreneurship are crucial in fostering labor market attachment. In this sense, all efforts need to be embedded into activities for economic growth and job demand creation.

Note: Base data for this analysis was harmonized EU SILC (Survey of Income and Living Conditions), released by Eurostat in 2013 with a time-lag of 2 years, referring to the year 2011.

Financed by the European Commission www.ec.europa.eu/social

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http://www.worldbank.org/en/country/ centraleuropeandthebaltics

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