MP and deputy chair of the Social Democratic Party (SDE) Lauri Läänemets says the government should heed Unemployment Insurance Fund (Töötukassa) advice and initiate a borrowing process to extend the wage compensation measure implemented in the wake of the coronavirus pandemic. While insurance fund reserves could cope with the current rate of unemployment, he said, any significant uptick could empty the coffers within a couple of years.
The European Commission's Support to mitigate Unemployment Risks in an Emergency (SURE) is the primary source for this, BNS reports. SURE requires the submission of another supplementary budget to the Riigikogu, however.
"Today, workers, employers and the Ministry of Social Affairs, are of the opinion that without the extension of the wage compensation measure, a large number of jobs will be hit. Bankruptcy of the tourism sector must be prevented, and the crisis must not stretch to more sectors, especially industry and construction," Laanemets said.
The scheme was introduced in response to the economic fallout from the crisis, and provided up to 70 percent of an employee's wage, up to a maximum of €1,000, for a two-month period. Since that period is nearing its end, for companies which signed up to the scheme early on, other measures are being explored.
The Unemployment Insurance Fund should still have around €400 million in reserve at year end, which would last for up to two years for the provision of labor market services in effect today.
However, growing economic and employment problems would exacerbate that; for instance with 100,000 unemployed (a little under 50,000 were registered unemployed at the beginning of this week-ed.), one year would cost the unemployment fund €260 million, and labor market problems are likely to persist for several years after the downturn, depending on how long it lasts.
€100-€150 million needed
A figure of €100-150 million has been touted as an estimated sum that the unemployment fund will need.
"If we do not want the reserves of the Unemployment Insurance Fund to be exhausted before employment has recovered, we must not actually use the €45 million from the reserves that Minister for Social Affairs Tanel Kiik has talked about," the SDE MP said, according to BNS.
"Both the Ministry of Social Affairs and the Riigikogu are planning to increase unemployment benefits, which will lead to additional costs and there will simply not be enough money left," Läänemets added.
In order to prevent further redundancies, employers need more security before the beginning of June, which would the submission of a second supplementary budget to the Riigikogu this month, BNS reports.
Läänemets noted that the same generosity granted to large companies ought to reach workers too, including those who are self-employed.
"The government has borrowed for business support measures, and the same must be done now to help people. The money from the European Union's emergency fund is also intended to help the self-employed, who are still without support in Estonia," Läänemets said.
The government approved a €100-million loan to shipping line Tallink at the end of last week.
Editor: Andrew Whyte