Unemployed to float labor market

  • 2010-10-20
  • Staff and wire reports

TALLINN - In Estonia as of July next year, EU funds for providing labor market services will cease. The state is planning to start financing the labor market with funds meant for unemployment insurance compensations, reports Postimees.
The corresponding bill came as a major surprise to some parties of the labor market. The head of the Confederation of Trade Unions Harri Taliga was appalled that the Ministry of Social Affairs has compiled the relevant legislative proposal and taken it to the government without first consulting the trade unions of their position on the matter.

He was worried that this way the government will have too much authority over the use of Unemployment Insurance Fund finances. “If the training funds come from the unemployment insurance, the council must remain solely responsible for distributing and using them,” he said. The union confederation leader said the proportions of payments would also have to be reviewed.

If job market training were to be funded directly by the Unemployment Insurance Fund, unions caution that the fund must retain sole control on disbursements, and emphasizes that more people will have to pay into the system, including the executives of Estonian enterprises.

“Currently company board members are exempt from making unemployment indemnity payments – an estimate of about 50,000 people. It is essential that these people also start to fund job market services,” said Taliga.
The Estonian Trade Union Confederation also said that the payment rates established for employers and employees would have to be changed.

The ministry’s labor market department senior specialist Oie Jogiste explained that no approval from any social partners was sought because the development of the draft law was hurried due to it being linked with the draft state budget.
Forecasts that the money allocated to Estonia from the European Social Fund for 2007–2013 will run out in July next year, initiated the bill. The Social Fund money is currently the main financing for labor market services in Estonia.

The solution offered by the government is establishing a labor market services and subsidies foundation, which would get most of its money from unemployment insurance tax and some from the state budget. At the beginning of the year when the fund commences, 112 million kroons (7.15 million euros) from unemployment insurance funds and 66 million kroons from the state budget would be allocated. The government would decide on funding allocations individually each year.

The Riigikogu finance committee discussed the new bill last week and sent it to the first parliament reading.
According to the Unemployment Insurance Fund (UIF) data, the jobless rate in Estonia increased in September with more registered unemployed persons than in the preceding months. At the end of September, 69,829 people were registered as unemployed, 10.7 percent of the Estonian working age population.