For 50 years after the 1940 annexation by the former Soviet Union, Estonia was politically and economically integrated into the Communist Bloc. It was not until 1991 that the country regained its independence and returned to democracy and a market economy. In the subsequent decade-and-a-half, Estonia has experienced profound reforms in all areas of politics, economy and society. These reforms included trade liberalisation, large-scale privatisation, the introduction of the kroon as national currency and an overhaul of labour market regulations. The economic transition brought about a substantial decline in employment and activity rates, accompanied by a rapid increase in unemployment. Although Estonia (along with the other Baltic states) suffered the longest and deepest recession of all the Eastern European transition countries in the 1990s (World Bank, 2002: 3), since 2000 Estonia has sustained high growth rates and now outperforms the rest of Europe in this respect. The Estonian labour market has proven to be very flexible, capable of large-scale structural changes during the 1990s; for example, changes in employment structure that generally took 15-20 years in most of Western Europe occurred two to three times faster in Estonia.

The dominance of liberal right-wing parties in all governmental coalitions since 1992 has contributed to the shift towards a minimalist state. Where labour market security is concerned, unemployment benefits are low, and unemployment insurance covers only a small share of the unemployed. Furthermore, the minimal expenditure on active labour market policies (ALMPs) reveals that the government is doing little to provide employment security.

The Estonian education system has been undergoing major changes since 1987. As of 2007, Estonia's secondary education system has been characterised by a high level of standardisation and a medium level of stratification. The 1990s saw a period of expansion of higher education in Estonia in which the number of both higher education institutions and students grew constantly.

Education system

Structure of the Estonian education system

Overview of the Estonian education system after the Second World War

During the socialist period, the Estonian education system was an integral part of the Soviet education system with its party-state institutional structure, main principles of centralisation and standardisation, and utilitarian and egalitarian goals. There was a clear link between each level of education and the future job for which it was meant to prepare the student (Helemäe et al, 2000).