Responding to a question regarding why the social sector didn't see larger budget cuts, Sikkut pointed out that cuts at the Ministry of Social Affairs will amount to €220 million over the next four years, and will include caps on parental benefits and sick leave pay as well as changes to the Estonian Health Insurance Fund (EHIF).

"But if what you're asking about is the biggest cost driver, which is pensions, then indeed, that was blocked by the Social Democrats," she acknowledged. "Cutting pensions or reducing indexes is unthinkable for us. In any international comparison, we're at the bottom in terms of how well we're able to ensure the elderly's livelihoods or mitigate their risk of poverty."

Citing Estonia's northern neighbor as an example, Sikkut noted that the average monthly pension in Finland is about equal to the average monthly wage in Estonia – around €2,000. "Our pensioners' incomes are such that that is certainly not the place to balance the state budget," she underscored.

With indexation, pensions are slated to rise around 6 percent next April, Sikkut said, noting that pensions have consistently managed to be paid, despite the fact that the first pension pillar was in deficit in 2004 already.

"Most pensions are covered by the social tax, but the shortfall in the first pillar in recent years – that's been covered by general budget revenues, the burden of which is borne by working people and consumers," she explained.

The minister also stated that she doesn't think it's fair that the collection of taxes, which also covers that shortfall in pension payments, is skewed toward workers and consumers. "In international comparisons, people ask, 'Where are your property or capital taxes?'" she remarked.

Sikkut: State should start paying kids' social tax

In order to cover the deficit in EHIF funding, starting next year, many patients will be seeing higher appointment copays as well as bed fees during hospital stays. EHIF will likewise be tapping €168 million from its reserves.

"Since a 13 percent social tax long since hasn't sufficed, for the past four years, the gap between EHIF's revenues and expenditures has been covered from general budget revenues," Sikkut noted.

"Next year will be the first without such a remittance, but EHIF has accumulated reserves, and these reserves can cover revenue-expenditure gap in order to maintain the availability of services at at least this year's levels," she explained. "Part of the coverage for the shortfall will be coming from additional visit copays. This is a very painful decision, considering that the level of out of pocket payments in Estonia is exceptionally high."

Asked what will happen, then, when the Health Insurance Fund's reserves run dry, the health minister replied that the fund's reserves total just over €700 million, which will enable the funding of healthcare services for the next couple of years.

"But in the long term – right now we made a necessary decision regarding defense spending," she explained. "But while it's possible to postpone that decision in healthcare for a couple of years, then no longer than that. And of course there are similar concerns in other sectors."

According to Sikkut, one solution she has proposed is that the state start paying social tax for children, just as it has been paying the social tax for non-working pensioners since 2018.

"We didn't raise the social tax in 2018," she highlighted. "With the current size of the state budget, it's possible to set priorities, and [in 2018] it was possible to find that kind of additional funding for EHIF. If we set priorities, and we can put in the same effort we did for defense spending, then it's possible to find financial coverage for healthcare too. It definitely won't be easy, and it will ultimately lead to tax increases, if other sectors have funding needs too."

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