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National Audit Office: State only partially ready for work ability reform

Number of disability pensioners per thousand people by local government council, Dec. 2015.
Number of disability pensioners per thousand people by local government council, Dec. 2015. Source: (Statistics Estonia)

In the opinion of the National Audit Office, the state is only partially ready for the implementation of the work ability reform, and the changes it will bring about. The reform aims at increasing the integration and reintegration of people with a reduced ability to work into the labor market.

The state was now able to assess how much all those with reduced work capacity could actually work. It was also able to provide services and help to them. But the ultimate success of the work ability reform depended on whether or not employers were ready to hire people belonging in that category, and whether lowering the number of people losing their full capacity to work was possible, the National Audit Office wrote on Wednesday.

None of Estonia’s governments over the last 25 years had been able to establish an occupational accident and disease insurance system.

The Unemployment Insurance Fund and the Social Insurance Board managed to implement their plans regarding issues like rehabilitation and sheltered employment, and aid projects since 2016 had been going well. Training of officials had played a great role in this.

For example, all of the Social Insurance Board’s 232 officials working with people with reduced work capacity had passed basic training to qualify for this particular line of work. Moving services to the Social Insurance Board, and away from local government councils, had improved people’s access to services as well. Waiting lists were now widely gone, and people received help within the 30 days set out in the law.

The Unemployment Insurance Fund was ready to assess work capacity in all counties, as the necessary people had now been found everywhere, and enough doctors had been trained to use the new assessment methodology. 

Still, the audit also revealed several problems in the preparation of the reform.

Foremost problem: Employers’ lack of readiness to hire partially incapacitated people

Readiness of employers to hire people with reduced work capacity was low, the National Audit Office pointed out. Even once a person with reduced work capacity had received the necessary services and assistance from the state, their employment depended on the readiness of businesses to hire them.

According to the audit, this is only partially the case: 31 percent of employers are prepared to hire people with reduced work capacity, while 44 percent said it was impossible. The remaining businesses said they were not certain whether or not they could hire people with reduced abilities.

According to businesses, a first obstacle is the fact that the skills and qualifications of people with reduced work capacity don’t correspond to their needs. Also, those belonging to the current group of non-working disability pensioners often lost their work capacity completely or extensively, have complicated diagnoses (e.g. mental disorder) and aren’t used to working at all.

This meant that preparing them for work was difficult and took more time, the National Audit Office stated in its overview. Also, the working environment likely needed to be adapted more in the case of these people.

Support persons hard to find, paid low wages only

For local government it has turned out to be difficult to find individuals to support candidates, as the wages that could be paid are generally very low. A second significant obstacle to the success of the reform is the different capacity of local governments to provide social services that support finding jobs and going back to work. Many local governments were unable to provide the services to the necessary extent before the reform, while the real need for them is expected to increase further.

For example, a quarter of local governments are able to provide a personal assistant, while half of them can provide a support person when necessary. The need for such assistance is bigger and will keep increasing in the course of the work ability reform. The amount of people who need personal assistants is expected to increase by about 60 percent, while the amount of those who need support persons will increase by about 50 percent.

According to local government associations, finding personal assistants is a problem mainly in rural areas, because there are very few or no such persons at all in their parts of the country. The low wages paid to support individuals or personal assistants are another obstacle to finding suitable people.

Lack of efforts regarding prevention and insurance

The audit office also pointed out that a key factor was the prevention of the loss of work capacity. This included reducing the number of occupational accidents, and establishing a system of occupational accident and disease insurance. Although it was important that the state prepared people with reduced work capacity for going back to work, and helped them find jobs, this was typically fighting consequences of a previous bigger isse.

The National Audit Office is of the opinion that the work ability reform can be deemed a success if it includes the establishment of a system that prevents loss of work capacity as well.

No attention at all had been paid to the development of such a system in the course of the reform’s preparations, the audit stated. However, 2016 had been the year with the highest number of occupational accidents in the last decade. The main reason, in the opinion of the Labour Inspectorate, is that Estonian employers have little interest in meeting the requirements for work environments, and improving their quality.

The Labour Inspectorate also stated that if employers had to pay for making the changes themselves, they preferred not to make them even if the existing conditions may damage their health. Saving money would remain impossible if a prevention system was not implemented, and meanwhile the taxpayer would continue to pay for damage control through the health, pension, and unemployment insurance system.

Patchwork solutions and inadequate information systems in Estonia’s e-state

The audit also found that the present information system is inadequate. Data was missing, and the quality of some of it was poor, the report stated. Beyond that, the information system to assess work capacity had not taken up work as planned during the preparations, and neither had it been completed by the end of 2016, as projected.

A temporary solution for the old information system needed to be developed because of the delay. This required €1.2 million in extra funding, but did not solve all of the problems. For example, the solution couldn’t be applied to process the mass pension data requests that the Unemployment Insurance Fund needs in order to pay work ability allowances correctly. This again could result in unjustified payments.

Also, work capacity couldn’t be assessed using the health information system in almost half of all cases, because some data was missing from the information system, and the quality of existing data was poor. This meant that data had to be requested from healthcare institutions as well as doctors, which again increased the workload of the Unemployment Insurance Fund, and led to longer waiting times for people in the system.


The purpose of the work ability reform is to create the opportunity for people with reduced work capacity to be active in society and help them find jobs that meet their needs. There were 97,459 disability pensioners in Estonia at the start of 2016, and their number increased by 61 percent between 2005 and 2015.

14,490 people were declared permanently incapable of working for the first time in 2015. According to initial data, 4,919 occupational accidents occurred in 2016, of which 24 resulted in deaths. The circumstances of 160 cases are being investigated. The number of occupational accidents increased by 68 percent between 2009 and 2016.

More than €300 million per year is spent on social tax incentives of disability pensioners as well as working people with reduced work capacity.

Editor: Dario Cavegn

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