Estonia's Social Affairs Ministry to make jobless benefits system more flexible

  • 2020-01-27
  • BNS/TBT Staff

TALLINN - The Estonian Ministry of Social Affairs has forwarded to partners a package of proposals to create a more flexible system of benefits to take into account changes in the labor market and labor relationships, see to better coping on the part of the unemployed and their reintegration into the workplace.  

Minister of Social Affairs Tanel Kiik said the state must take into account how modern life and work patterns have changed, and how people now require different forms of help.

For example, currently, if a person is employed in several jobs at the same time, such as several part-time positions, and the worker loses the job from which they are paid most of their income they will not receive the unemployment insurance benefit if they go on doing the smaller jobs.

"We want to encourage people to work and to provide better social protection regardless of their contractual relationship and to also encourage job market participation for people who have reached retirement age. We want to support people in better coping on the labor market, by allowing the unemployed to do short-time jobs, such as via online job platforms, and to receive income without the loss of access to unemployment benefits and labor market services," the minister said.

"Furthermore, we need to support old-age pensioners who want to continue working after reaching retirement age," the minister added.

The proposals include a plan to make unemployment benefits more flexible over the business cycle, in line with a recommendation by the Organization for Economic Cooperation and Development (OECD) and the European Commission. In this way, the state would provide greater protection in times of economic downturn when the need arises to alleviate rising poverty and keep people socially and economically active.

In order to mitigate the high risk of poverty for the unemployed, it is important to increase the coverage of these benefits, as only about half of the registered unemployed currently receive unemployment benefits.

The proposals fielded by the ministry concern a review of insurance eligibility period requirements and an increase in replacement rates, which means that in the future the amount of compensation would be higher, the minister said. 

The ministry said that as new and flexible work arrangements are becoming more widespread, the current system of benefits has become outdated. For people working under non-typical work arrangements the risk of poverty is higher and access to social protection lower than for people employed in traditional jobs. 

After getting feedback to its legislative intent and analyzing it, the ministry will start drafting the corresponding bill. The changes to the system of unemployment insurance benefits can take effect in 2022 the earliest.