The study gives an overview of the current situation and challenges of the Estonian labour market, social protection system and migration policy in the light of the accession to the EU. The report maps the labour market situation, institutions and policies; describes the social protection system with the emphasis on the aspects which could be important regarding migration; discusses potential migration push and pull factors; gives an opinion on possible migration flows after joining the EU; gives a brief overview of the negotiations with the EU and at the end of the report describes the policy issues in all three fields, which will arise in the context of the EU enlargement.
Since the beginning of the transition period, the Estonian labour market has been characterised by declining labour force participation and employment rates.
Generally, the Estonian labour market problems are the same as those within the EU Member States. Youth unemployment and unemployment of ethnic minorities are higher than average, and there are big regional differences in labour market performance. In addition, Estonia suffers from high levels of long-term unemployment and unemployment levels for women, which are lower than that of men. The reasons of the labour market problems can be largely attributed to fast economic and structural changes. People, as well as the public policies, have not been able to keep the skills and qualifications in-line with the labour market needs. Therefore there has been an emergence of structural unemployment and regional disparities in labour market performance.
The financial allocations for employment policies have been extremely low, lagging behind EU levels by around 8 times. Social partnership is also relatively weak in Estonia, mainly due to the low representation of employees and employers in social dialogue. As the Government is the strongest partner in any social dialogue, the final decision on implementation of negotiated issues rests with them. There may be an improvement in the unemployment situation if the financial aid (received after the accession to the EU) is used effectively.
The Estonian social protection scheme is characterised by almost universal coverage and the direct effect of accession upon social protection systems and policies will be rather limited, but there will be important indirect implications. For example, while currently pensions and other benefits are paid on the basis of residence, after accession pensions must be paid also to persons who have obtained insurance periods in Estonia, but reside in any other Member State. The EU coordination rules will also add a certain degree of financial constraint to existing schemes of pension and health insurance.
“Free movement of labour will put rather serious pressure on the Estonian labour markets due to the possible migration of a better-qualified and flexible labour force.”
The Estonian labour market is currently in a situation where several factors act as push factors for migration. The main features are high unemployment, high unemployment amongst young people, a relatively high educational level of the Estonian labour force and big income differentials. The migration flows are predicted to be quite low and their impact on labour market and economy is predicted to be low as well. The majority of migration is predicted to be temporary and short-term or seasonal, which could have positive effects on the Estonian labour market, mainly through new knowledge, skills and experience gained by the returning workers. At the same time, in some areas of economic activity or occupations, Estonia may face the shortage of qualified workers and therefore the careful monitoring of migration flows and the analysis of their impact on the labour market is needed. In the long run, migration will put additional pressure on population ageing and even more on financing social protection.
An article in Statistics Estonia blog about Estonian labour market after joining the EU (in Estonian)