National Audit Office: Estonia’s system for training unemployed must change

Job ads at an Estonian Unemployment Insurance Fund office. (Arvo Meeks/Valgamaalane/Scanpix)
6/1/2016 7:16 PM
Source: BNS
Category: News

Current provisions in unemployment-related laws leave the unemployed in Estonia in an impossible bind. Despite employers citing lack of qualified labor in the country as the main obstacle to increasing turnover, the law prevents anyone studying full-time from officially registering as unemployed and limits labor market training, which often does not lead to any sort of certificates proving proficiency, to a maximum of one year. According to the National Audit Office, this situation needs to change.

One of the premises for reducing unemployment is the capacity to use training to increase the quantity of workers with skills and knowledge that meet the needs of employers, the National Audit Office of Estonia said in its newly released audit.

According to the audit office, at present, the main obstacle to achieving this is the state’s insufficient level of knowledge regarding how many people are needed, which qualifications they should have, and in which Estonian regions they are needed — in other words, there is not enough information regarding what skills and knowledge to teach to unemployed individuals in order to ensure that they would be the ones employers will need most in the future.

Opportunities for unemployed persons to acquire new qualifications or improve existing ones are currently restricted by the provisions in the Labor Market Services and Benefits Act, which stipulate that anyone who is studying full-time may not be registered as unemployed with the Estonian Unemployment Insurance Fund. The same act has also established a restriction on the Unemployment Insurance Fund which states that labor market training may not last longer than one year. In order to ensure that all of the conditions required for increasing people’s qualifications have been met, it is necessary to review such restrictions and agree upon the division of institutions’ functions in offering training opportunities for the unemployed.

The audit also indicated that many unemployed persons have received training, but a significant amount of such training lasts for only a short period and is aimed at providing general education opportunities (e.g. computer training, work-related motivation training), and unemployed persons who complete said training generally do not receive a professional certificate or certificate of proficiency. Comparing those who passed a professional examination with those who did not, we see that 6.7 of persons who passed the examination were subsequently employed, while only 6.5 of registered unemployed persons passed professional examinations.

Such a situation, wherein unemployed persons do not pass a professional or proficiency examination and receive no certificate indicating their skill level or knowledge, restricts the improvement of their competitiveness on the labor market. At the same time, however employers cannot otherwise be certain that unemployed persons have the knowledge and skills they need for a job.

Employers continue to cite the lack of qualified labor in Estonia as the main reason why companies find it difficult to increase turnover; the audit indicated that approximately 43 percent of unemployed persons have no professional qualifications.

Based on the above, the National Audit Office of Estonia has advised the state to develop a program by the end of 2017 which would guarantee the coordinated regional development of enterprise while considering the specific features of each region, the promotion of creating new jobs, and the provision of labor market services.

The National Audit Office also considers it necessary to initiate an amendment to the Labor Market Services and Benefits Act which would give unemployed persons with insufficient knowledge and skills as well as those needing retraining in order to find employment the opportunity to acquire the necessary education either via formal education or labor market training lasting longer than one year. The functions of the Estonian Unemployment Insurance Fund in offering long-term retraining should thereby be clearly defined.

Editor: Aili Sarapik

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