This report analyses the main challenges for labour market and social policies in Estonia and considers the available policy options from the perspective of OECD countries' experience. It finds that Estonia’s labour market performance steadily improved until the advent of the global economic crisis in 2008. However, the country was not well prepared for the global economic crisis. Social programmes support persons in need, but the benefits they receive are usually modest and some of the jobless receive no benefits. The country has begun to phase-in a three-tier pension system and offers one of the world's most generous parental-benefit programmes.