Estonia spends less than most EU states on worker benefits, both per person and relative to GDP, found a joint study by the University of Tartu’s social science studies center and the political think tank, Praxis.
On the other hand, Estonia was found to have one of the most flexible job markets. “The fact that unemployment in six months jumped from 4 percent to 20 percent, shows that the job market is flexible. Unemployment could not grow that quickly if the job market was rigid, and if it was more difficult to let people go,” said Raul Eamets from the University of Tartu.
An important part of raising productivity in the workforce is monitoring the results of the policies, the study found. It concludes with policy recommendations, which focus on risk groups such as people working for minimum wage. The study suggests raising minimum wage and embracing part-time employment opportunities under the condition that employees continue to receive part of their unemployment benefits.
It also asserts that the current 65-euro unemployment compensation – which becomes active after an individual’s year-long unemployment insurance expires – is inadequate. Praxis analyst Andres Võrk said that unemployment compensation should increase by at least 35 euros to reach even half of the minimum cost of subsistence.
The analysis also suggested that potential employees, considering training or expanding their education to another field, need encouragement to overcome a psychological barrier because they are often not too well prepared to go back to school.