Social reform to touch 100,000

Photo: Elmo Riig

July, next year, should see the launch of work incapacity pension reform, directly touching the 100,000 persons receiving it. Their capacity to work will, thereafter, be assessed by Töötukassa (Estonian Unemployment Insurance Fund) trying to help as many as possible back to work.

Currently, Estonia has 99,400 work incapacity pensioners; their numbers are on the increase. Should the same system continue, in eight years they would be 119,000.

The initial bills of the reform are about to move from social ministry towards the government and Riigikogu; a goal being to halt mass increase of persons on incapacity pension.

«We have lacked a comprehensive, people-centred approach, to help the people with reduced capacity for work find a job,» noted social minister Taavi Rõivas, referring to the other central idea of the reform: to bring incapacity pensioners back to labour market.

What’s the real situation i.e. how many of the 100,000 should or could be helped back to work?

Many about to retire

Right now, about a half of the incapacity pensioners are working; according to studies, 63 per cent have expressed readiness to work. 

Those preparing the reform reckon that the 100,000 includes up to 28,000 persons totally incapable of working, whom Töötukassa will not «bug» by jobs-talk – should these show no personal initiative to participate in active labour market measures (in legalese). Adding incapacity pensioners already working (the partially incapable, in legalese), 15,000 currently are left over as unemployed.

Of these 15,000 a large part may be about to retire (there being 20,000 non-working incapacity pensioners aged 56–63), among whom there are many who, in addition to health-related reasons for not working, live in rural areas where there are not enough jobs for those totally able-bodied either.

While, to get to work at customer service, Töötukassa is already now helping people to get their missing teeth, for instance, they will still have to organise transport to job on their own, or as helped by local government or employer. By the reform planned, this will not change.

Who, then, will remain – for Töötukassa to deal with, prodding them back to work? These will probably be the people with mobility, sight, and hearing disabilities, who have been hindered by the very disability yet who sincerely desire to work and thus get on with life. For those, the reform promising solutions to problems – wheelchairs, contemporary hearing and seeing aids/compensators, workplace adjustments etc – might be an excellent opportunity. Provided the employers will indeed have them.

The largest category of incapacity pensioners come with mental disorders; probably, numerous of these do not work and Töötukassa would be hard pressed to come up with something.

Even so: should these who could be helped be less than the twenty thousand as hoped by the ministry, Töötukassa load will multiply. Basically, within six years they should reassess capacity of all 100,000 incapacity pensioners. At the moment, Töötukassa has 33,000 unemployed clients.

Starting July 2015, pursuant to current timetable of the reform, Töötukassa should stand ready to assess capacities of those freshly incapable. At the start of 2016, dates coming due, reassessment of all 100,000 should commence. In essence, for current incapacity pensioners the reform starts in two years. Probably, all work regarding the reform will soon be transferred from social ministry to Töötukassa.

«We understand that the old way no longer works and a new system is needed,» said Monika Haukanõmm, chairman of Estonian Chamber of Disabled People. «Even so, the people are quite afraid, while understanding the current system is not helpful.»

According to Ms Haukanõmm, people fear that, with the reform, they will lose their current income. Definitely there are also those who, after reassessment of capacity, will be declared totally capable to work i.e. not awarded any new support instead of current disability pension. The same, however, is possible under the existing system, if people have really recovered. 

Ms Haukanõmm rejoiced over the social ministry decision that, due to the reform, people should not be getting less money than before. Meaning: if the work incapacity pension is bigger that the future support, the current sum will continue to be paid.

People with partial incapacity to work will be receiving support of minimum €180 a month; with total incapacity, it will be €320. Depending on the incapacity percentage, the current pensions are rather smaller than that.

Reform adds costs

According to Gennadi Vaher, in charge of the Disabled People Fund, it is also positive that incapacity support will not remain fixed for years, rather undergoing indexation as old-age pension, which increases according to consumer price index and social tax payments. Would the principle be approved by government and Riigikogu, near future will tell.

While the reform was in preparations, originally it was intended to save money. Now, the ministry reckons that, in the reform years ahead, over €100m a year will be added on top of the current €250m. 

Right now, the pensions money comes from Estonian National Social Insurance Board, but basically not from social tax money but out of state budget, as, according to social ministry, pensions’ pot as a whole is €300m short. This means that state budget covers lack of incapacity pensions and, partly, also old-age pensions’ shortage.

In the future, the current incapacity part i.e. some €250m out of state budget will reach people via Töötukassa. On paper, the reform substantially cuts shortage of pensions’ pot.

«The trouble is: how will Töötukassa, over such a short time, manage to prepare everything and be able to help the disabled,» said Ms Haukanõmm. «This surely cannot be done in a hurry, as, with such a great reform there definitely will be the tough spots; these, however, will have to be minimised by pre-emptive work.»

«With such vast changes in the system there will be the problems and the troubles; even so, this is no reason to delay,» said Mr Vaher. «At least not with ratifying the law; it’s another matter if, should the need arise, the execution date could be postponed, if it becomes evident that all is not quite ready,» he added.

Töötukassa does have some experience with helping disabled people find jobs; by last year’s end, 1,700 disabled people were registered with them. Even so, Töötukassa’s tasks with incapacity pensioners will significantly increase by the reform, starting by the need to assess capacity to work. Right now, this is done by Social insurance Board experts, on basis of documents and without seeing the people concerned; in Töötukassa, expert opinions will be complemented by meetings eye to eye.

The money needed to cover special needs for working will come from EU social fund. These €180m, for six years while the reform is being gradually implemented, are key to it all. What will happen after 2020, should new money fail to come from Europe? This, says Mr Rõivas, is for the next government but one to see. A tangible version would be digging into Töötukassa reserves – by now half a billion euros. 

«110 per cent is to be invested into people who are motivated to get a job; it must start with them,» states Ms Haukanõmm.

Mr Vaher adds the reform’s success greatly depends on improvements regarding availability of medical rehabilitation. «Years ago, the rehabilitation bill was halted, in order to wait for the incapacity reform to come,» he recalls.