Work Capacity Reform Approaches Estonia

Photo: Wikimedia Commons

Photo: Wikimedia Commons

Estonia is about to undergo a work capacity reform which will establish a new system to support capacity for work. The aim of the changes is to shift the attitude towards people with reduced work capacity and help them find and keep jobs.

There are more than up to 100,000 people with reduced work capacity in Estonia. It is estimated that 42.4% of them are currently employed and 63% (30,000 people) of persons receiving pension for incapacity for work are currently employed i.e. approximately ready to work 30,000 people are available for employment.

The crucial aspect of the work capacity reform is a shift in attitude – to assess a person’s capacity for work instead of their incapacity for work.

Each person with reduced work capacity will be approached individually. Their ability to be active members of society will be assessed and, based on this, they will be assisted in finding opportunities on the labour market. Furthermore, the future employers of such persons will be involved in finding solutions necessary for both parties in order to facilitate the employment relationship.

The system takes a comprehensive approach – each person will be provided a full package to support their employment – benefits, services, measures for assistance, rehabilitation – from one institution: the Unemployment Insurance Fund.

The Unemployment Insurance Fund will also provide services to employers and possess unique competence in connecting job-seekers with employers.

Studies show that 68% of employers are prepared ready to hire people with reduced work capacity. Indeed, a major part of the reform is to encourage employers to hire people whose capacity for work has been reduced. As a result of the work capacity reform, special needs will no longer result in additional expenses for the employer and people with special needs will be considered equal. The support offered by the state will create favourable conditions to hiring people with special needs.

The Unemployment Insurance Fund will advise employers, offer support during the transition period and help find solutions to any questions that may arise. For example, the state already pays social tax for employees receiving pension for incapacity for work up to the extent of the minimum wage and expenses borne by the employer to treat employees’ health issues resulting from work accidents or occupational illnesses are exempt from income tax.

Additional measures planned in order to support employers (e.g. the 12-month salary aid, the service of working with a support person) will help them hire and continue to employ people with reduced work capacity.

Additionally, local governments will be supported in launching the work capacity reform. European Social Fund resources will be used to facilitate cooperation between local governments in providing services. The Ministry of Social Affairs plans to provide local governments 50 million euros to support the development and implementation of social services.

Estonia is not reinventing the wheel in conducting the work capacity reform. For example, a similar system is in place in the UK, where the labour market institutions play a central role in helping disabled persons to get employed. The UK also provides aid to cover transport expenses and financial support for adapting the work place for people with reduced work capacity. The UK is also more and more involved in work with employers as keeping a person employed makes more sense than finding a new job for them. Instead of a pension for incapacity for work, the UK pays benefits with an activity requirement.

The work capacity reform will enter into force in Estonia on 1 January 2016.

Mihkel Lees