Unemployment insurance premiums to remain unchanged until 2020
The government decided on Thursday to leave the rate of unemployment insurance premiums at the current level of 2.4% for the coming four years.
The premium of 2.4% is made up of a contribution of the insured person amounting to 1.6%, and a contribution of the employer, amounting to 0.8% of the employee’s gross pay.
According to an estimate of the Estonian Unemployment Insurance Fund, a combined rate of 2.4% means that premiums collected will total €166.8m next year, €178m in 2018, €189m in 2019, and €200m in 2020.
One of the reasons for the decision not to change the premiums is the Work Ability Allowance Act that entered into force this year. This law states that a person’s ability to work is to be assessed and the work ability allowance granted and paid by the Estonian Unemployment Insurance Fund using only unemployment insurance funds. This means that the availability of sufficient funds has to be guaranteed, otherwise the work of the Unemployment Insurance Fund to cover its targets wouldn’t be sustainable.
Unemployment insurance is compulsory in Estonia. The Unemployment Insurance Fund (Töötukassa) has the task to provide labor market services, pay labor market benefits, and pay unemployment insurance benefits to those looking for a new job.
The fund also has the task to help employees in the case of lay-offs, as well as to support employees’ claims upon the insolvency of their employer.