Unemployment Premium Kept High as Government Predicts Uncertainty Ahead ({{commentsTotal}})

Source: Photo: Reuters/Scanpix

The unemployment insurance premium will remain at 3 percent next year, despite calls from the Unemployment Insurance Fund to lower the rate. The government says that the economic situation in neighboring countries is still too uncertain to allow a cut.

Social Affairs Minister Taavi Rõivas and Economic Affairs Minister Juhan Parts  both said that the economic situation in neighboring countries is worrying and exports to main trading partners have declined in the last year, uudised.err.ee reported today.

The Cabinet said that the meager economic growth means that reserves should be built up to avoid tax hikes, should the economy enter recession.

The unemployment premium currently consists of a 2 percent contribution from the employee and a 1 percent contribution from the employer. It was last reduced at the beginning of this year, having previously been at 4.2 percent. Before the economic crisis, it was at just 0.9 percent.

The Unemployment Insurance Fund proposed cutting the premium to 2.1 percent in 2014.

Advocates of lowering the premium rate - including employers and the opposition as well - have pointed to the massive Unemployment Insurance Fund reserves, which amounted to nearly 500 million euros in July.