Unemployment board on the verge of bankruptcy

  • 2009-04-02
  • By TBT Staff
TALLINN - Estonian Prime Minister Andrus Ansip has said that the country's Unemployment Fund is on the verge of bankruptcy as it struggles to make payments amid a climbing joblessness rate.
"If nothing is changed then practically all Unemployment Fund's reserves will be spent this year. There will be only 80 million kroons left of the current 2.7 billion kroons," Ansip told the Estonian-language daily Eesti Paevaleht.

Harri Taliga, the chairperson of the Unemployment Fund's supervisory board and the chairperson of the Central Union of Trade Unions, criticized the prime minister on the comments, saying that he is spreading panic by talking about the Unemployment Fund's reserves.
"Ansip is wrong if he says that if the unemployment insurance fees would have grown to 1.5 percent already in January, there would be no need to raise fees again this year. It would have given only 200 million kroons of additional money," Taliga said.

The supervisory board for the fund met on March 30 to discuss three options for securing more funding 's raising the unemployment insurance fee to 2 percent for employees and 1 percent for employers, raise taxes and postpone paying some benefits written in the new Employment Act, or keep the current situation.
Currently the unemployment insurance fee is 0.6 percent of gross salary for employees and 0.3 percent of an employee's gross salary for the employer. The government currently plans to increase this tax rate to 1.5 percent.

Social Affairs Minister Hanno Pevkur, meanwhile, said that in order to improve the financial position of the Unemployment Fund, it would be necessary to increase insurance payments to 3 percent 's the maximum level provided by the law.
Taliga said, however, that no matter what the result of the discussions, the government would not be able to unilaterally increase the tax without consulting with trade unions.
"If the government wishes to make amendments to the Law on the labor contract it should propose it officially. Trade unions are ready to discuss all offers but if they are not present, there is nothing to discuss," Taliga told Aripaev.

The government is also considering adjusting the terms and size of payments made to the unemployed.
This would involve altering the current system so that the first 100 days would be paid by the employer instead of the current level of 50 percent. In the first 260 days, the amount would be increased to 50 percent from the current 40 percent.

Additional payments for the unemployed have been approved by the Central Trade Union because the new labor contract gives employers more favorable conditions for the reduction and dismissal of workers.