Unemployment Fund Reserves Nearly Filled, Says Chairman

4/9/2012 3:32 PM
Category: Economy

Harri Taliga, chairman of the Unemployment Insurance Fund's supervisory board, has said that ample reserves for the jobless will be accrued by year's end at which time the tax rates should be drastically cut.

"This year the problem is that the unemployment fund's total expenses were less than the amount of money accruing into the reserves. In other words, the [4.2 percent] tax rate is more than twice what it needs to be. We want to put an end to that," Taliga told ERR radio in an interview.

"[From next year], the Fund's budget will have to balance out. Meaning the annual premium rate will be calculated so as to cover current expenses only," he said.

According to Taliga, the board had earlier agreed that the reserve level should not exceed 400 to 500 million euros, twice the amount paid out in the worst year of the crisis.

In the board's opinion, the unemployment insurance premium should be cut to the minimum required to meet annual costs once the reserve requirements are met at the end of the year, Taliga said. At today's meeting, the Fund's supervisory board decided it would make the proposal for lowering next year's premium by June 1. Taliga said neither the government nor the employers were now opposing the premium cut.

Currently, the unemployment insurance premium is 4.2 percent of the gross salary - 1.4 percent from the employer and 2.8 percent from the employee.

The government had earlier been resisting the idea of lowering the rate, but has recently expressed a willingness to reduce the premium payable into the fund to 3 percent of wages in 2013.

 

Steve Roman


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