Ligi: Unemployment Insurance Reserves Not Excessive
The Unemployment Insurance Fund reserves have seen rapid growth in recent years and will likely amount to 580 million euros - more than 3 percent of the country's GDP.
Finance Minister Jürgen Ligi said today he doesn't agree with criticism that the reserves have swelled to an unreasonable level.
"There's no one single position on what the optimum level of reserves should be. Only oil producing states have such a thing as excessive reserves, probably. The recent Ecofin also sounded a call to amass reserves to prepare for crisis and the recent news about the first quarter GDP contraction reminds us that unemployment insurance is the most vulnerable part of public finances, and has the most fluctuation," Ligi told uudised.err.ee.
Since the last recession, the fund has taken on more obligations, and these will continue to broaden, he said.
"Certainly the unemployment insurance fund will be getting more obligations bearing in mind the reform of the criteria for disability ratings."
The Cabinet backs lowering the premium rate from 3 to 2.4 percent. Ligi says the drop should be gradual.
The opposition counters that the Cabinet is growing the reserves to improve the budget position.
"Go figure," said Ligi in response to this. "They talk out of the other side of their mouth about cancelling the drop in the income tax rate."
IRL's Finance Committee deputy chairman Sven Sester said he backed a stable rate that would remain consistent through all parts of the economic cycle, and that reserves should grow in proportion with increasing wages.
The Center Party's Finance Committee representative Kadri Simson backed lowering the premium to 2.1 percent.