Panel okays bill pegging terms of jobless benefit to labor market situation

TALLINN – The social affairs committee decided on Monday to put before the plenary of the Riigikogu a bill to amend to the Unemployment Insurance Act, according to which the period of payment of the unemployment insurance benefit will depend not only on the number of years of employment of the insured person, but also on the situation of the labor market at that moment.

Helmen Kutt, the chair of the social affairs committee, said the legislative amendment makes the unemployment insurance system more flexible and offers greater protection to unemployed people in a difficult labor market situation than before.

"At present, the length of the period during which a person receives benefits depends only on the length of their unemployment insurance record, whereas we know that it takes longer to find a new job in harder times and it makes sense to support people longer in difficult times. We are amending the law so that the state can start to take into account the overall number of unemployed when extending the benefits period, so that in times of high unemployment people have more time to find a suitable job," the Social Democrat MP said in a press release.

Kutt added that the document of legislative intent for the bill was on the committee's agenda back in January 2020, when the previous government coalition was in power, and that the new coalition was moving forward with the bill.

Siret Kotka, vice-chair of the committee, said that while helping people return to the labor market is very important, attention must also be paid to the fact that too long a period of unemployment makes it difficult to return to work. 

"For me, this clearly confirms that Estonia is facing a major economic crisis and that this bill is intended to reduce people's fear of losing their job. But alongside reassuring people, people need to be encouraged to return to work as soon as possible so that they don't lose the incentive to work. It is definitely necessary to encourage people who have been out of work for a long time to re-enter the labor market also in other ways, for example, by allowing work bites while they are on benefits," Kotka, MP from the largest opposition force Center Party, said. 

According to the explanatory memorandum to the bill, the period of payment of the unemployment insurance benefit to a person will be initially set at 180, 210 or 300 calendar days, depending on the length of the applicant's insurance record. Before the end of the period of payment of the benefit, the Unemployment Insurance Fund will compare the number of registered unemployed at that point to the average number of jobless in the previous period to determine whether the period of payment of the unemployment insurance benefit to the insured person is extended or not. If the unemployment indicator is low, the period of payment of the unemployment insurance benefit will not be extended.

Depending on the length of the unemployment insurance record of the insured person and the increase in unemployment compared to the average of the previous period, the unemployment insurance benefit payment period may be extended by up to 120 calendar days.

The committee forwarded the draft legislation to the plenary for the conduct of the first reading on Sept. 21 with the proposal to conclude the first reading.