Kiik: Flexible benefits system needed to tackle changing labor market

The Unemployment Insurance Fund's (Töötukassa) logo.
The Unemployment Insurance Fund's (Töötukassa) logo. Source: Priit Mürk/ERR

Plans to create a more flexible benefits system have been produced by the Ministry of Social Affairs which aim to take into account changes in the labor market, modern working patterns and reintegration into the workplace.

With the spread of new and flexible ways of working, the current unemployment benefit system has become outdated, the Ministry of Social Affairs believes. Non-traditional forms of work have a higher risk of in-work poverty and lower access to social protection for 'traditional' workers.

Minister of Social Affairs Tanel Kiik (Center) said the state must take into account how modern life and work patterns have changed, and how people now require different forms of help.

For example, currently, if a person is employed in several jobs at the same time, such as several part-time positions, and the worker loses the job from which they are paid most of their income they will not receive unemployment benefits.

Kiik said: "We want to encourage people to work and to provide better social protection regardless of their contractual relationship and to also encourage job market participation for people who have retired. We want to support people in coping with the labor market, by allowing the unemployed to work, and to receive income without the loss of access to unemployment benefits and employment services."

Minister of Social Affairs Tanel Kiik (Center). Source: ERR

He said there is also a need to support retirees who want to continue working beyond retirement age.

The proposals include a plan to make unemployment benefits more flexible over the business cycle, as recommended by the OECD and the European Commission. In this way, the state would provide greater protection in times of economic downturn when it comes to alleviating rising poverty and keeping people socially and economically active.

Kiik said: "In order to mitigate the high risk of poverty for the unemployed, it is important to increase the coverage of these benefits, as about half of the registered unemployed currently receive unemployment benefits. Proposals in this regard concern reviewing insurance record requirements and the increase of replacement rates, what this means, is that in the future the amount of compensation would be higher."  

The proposals are the starting point for a draft bill and the first consultation document for stakeholders. After receiving feedback on the proposals, they will be analyzed and the ministry will start drafting a bill.

At the earliest, changes to the unemployment insurance scheme may enter into force in 2022.


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Editor: Helen Wright

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