In 2005 Estonian Unemployment Insurance Fund launched a service reacting on collective redundancies. The purpose was to provide information and support to minimize the duration of unemployment. The aim of this study is to analyze the cost-efficiency and success of this service provided in 2005-2007 in Estonia.
Support service during job-search is one of the most successful and inexpensive active measures of labour policy. This is especially important in booming economic situation when organisations are not interested in cooperation with the Labour Market Board. The study shows that communication between unemployed people and employers is an effective measure. However, high cost for redundancy reduces the success rate of the service.
The service proved to have a positive impact on active participation in measures provided by Labour Market Board. However, recipients of job-search information in the service have a higher probability to receive redundancy benefits. Therefore, informing workers about their rights and possibilities and familiarizing them with the Labour Market Board the probability of them participating in future Labour Market Board services.
On the other hand, being aware of unemployment insurance benefit and various labour market possibilites reduces the motivation to return on labour market.
Society benefits up to 3,4 million kroons per year.
The study finds the service to be cost-efficient for the society as well as for the Unemployment Insurance Fund. Additionally, the service has a positive impact on future employment as well as decrease in unemployment duration ie. people return to labour market faster.
See also
Kirjutis “Kollektiivsed koondamised: rahvusvaheline praktika ja Eesti kogemus”
Redundancy explained on the Estonian Unemployment Insurance Fund website