Analytics, Economics, Estonia, EU – Baltic States

"Effective policies to address the risks associated with demographic decline and bottlenecks in Estonia's social protection system, as well as in research and innovation, would enable better use of resources, including of human capital thereby raising the country's growth potential," the European Commission says in its Country Report Estonia 2018.

According to the report, providing a more adequate social safety net supported by better service provision remains a major challenge for Estonia. Tax-cutting measures are creating employment incentives for the low income earners but will not significantly alleviate the inequality. Steps are being taken to provide more adequate pensions, subsistence allowances, and higher family allowances, yet an increasing share of the population is at risk-of-poverty. The areas with the most inadequate financing are pensions, disability benefits and long-term care services.

Estonia faces challenges in relation to occupational health and access to healthcare. The state of health of the working population suggests that working conditions do not entirely enable people to lead longer healthy working lives. Access to healthcare due to  waiting times for specialised medical care remains a challenge.

The gender pay gap remains one of the highest in the EU despite some measures. The parental leave and benefits system will be made more flexible and will provide one month of leave exclusively for fathers. This is expected to shorten women's long career breaks that contribute to the gender pay gap. The planned legislation to improve wage transparency would only apply to public sector entities. These measures appear to be steps into the right direction but their effectiveness remains to be seen, the Commission says   

On the upside, the report points out that Estonia is doing relatively well in ensuring equal opportunities among the different population groups. In comparison to other EU countries, in Estonia the link between the risk of child poverty and the educational background of parents is relatively weak. Likewise, the variations in students' school performance that are due to their socioeconomic background are the smallest in the EU.