Opinion: Unemployment insurance benefit not to reach people who quit

Huko Aaspõllu.
Huko Aaspõllu. Source: Siim Lõvi/ERR

While the Ministry of Social Affairs felt people who leave employment voluntarily or following an agreement by the parties should qualify for the unemployment insurance benefit in spring, the government has shelved the initiative following the coronavirus wave. At the same time, people whose employment contract ends under such circumstances have several simple schemes at their disposal to still qualify for the benefit, Huko Aaspõllu says in Vikerraadio's daily comment.

Under Estonian law, people only qualify for the unemployment insurance benefit on certain conditions. To qualify, the reason for the person losing their job must be beyond their control. This includes being laid off, the company going bankrupt or health reasons. If a person leaves voluntarily, following an agreement by the parties or due to mistakes made, they have no right to the benefit.

The benefit is up to 50 percent of previous salary over 100 days and 40 percent of salary for another 80 to 260 days, depending on time worked. Payments are discontinued if the person finds a new job. The system is a little more complex and nuanced in its entirely, while this is largely how it works in Estonia.

The Ministry of Social Affairs has been in favor of changing the system to include more people for some time. Earlier this year, the ministry sent out a document to indicate intent to formulate the proposal as draft legislation. This would cost approximately €80 million annually.

In its paper, the ministry notes that through making the benefit available to people who leave employment of their own volition, better coverage could help marry demand and labor supply more successfully. It would happen through supporting people who leave voluntarily in their efforts to find more suitable work.

The government has now abandoned this plan. Amendments to labor benefits approved by the government last week and sent to the Riigikogu this week no longer include the change. Instead, the coalition plans to hike unemployment insurance benefits and extend the support period for people who lose their job for reasons beyond their control. Which is rather sensible.

The benefit is not substantial or long-lived enough to allow one to live in comfort. Making it available to people who leave employment voluntarily might not be enough of a social guarantee for people to do so on a whim. Nevertheless, it could contribute to people quitting without carefully considering the decision.

Around half of EU member states pay unemployment benefits to people who quit voluntarily, while around half don't.

It would also allow people to find a more suitable job without having to fear being impoverished in the process. That said, I find our current solution more in line with Estonia's values and administrative logic.

Therefore, we have decided to boost resources made available to the unemployed instead of broadening the circle of people who qualify for benefits. It seems like a sensible solution, especially in light of growing unemployment.

However, this is where exceptions enter play. If a person knows the law or someone who does, the aforementioned logic does not apply. While people who quit do not qualify for the unemployment insurance benefit, this obstacle can be easily bypassed.

For example, a person can sign a one-day fixed-term employment contract with a company. To pick strawberries for a day, for instance. Once the workday ends, their fixed-term contract ends and if the person has worked long enough at their previous job, they still qualify for the benefit after their recent one-day contract. Working for however long with a probationary period contract also qualifies one for the benefit.

A person who is familiar with labor laws can still qualify for the benefit using simple schemes even if they leave employment voluntarily. Nothing is stopping people from using such tricks in Estonia. While an honest person would refrain from it, making ends meet might easily outweigh ethical conditions at one point.

The Unemployment Insurance Fund does not feel people take advantage of such schemes too often and is not monitoring the situation. Should it be done? Perhaps not yet, while we would do well to notice we have perhaps inadvertently created a system where people who are not up to speed on rules do not have equal access to social benefits.


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Editor: Marcus Turovski

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