Estonian economy ministry considers reducing unemployment benefit period

The Estonian Unemployment Insurance Fund (Töötukassa) office on Tartu's Vaksali tänav.
The Estonian Unemployment Insurance Fund (Töötukassa) office on Tartu's Vaksali tänav. Source: Aili Vahtla/ERR

The Estonian Ministry of Economic Affairs and Communications plans to cut €130 million from the budget previously earmarked for unemployment assistance, between 2025 and 2027. The precise steps to be taken are still being worked out. However, the economic affairs minister said that the period during which benefit payments are made could be reduced, while training provided by the Unemployment Insurance Fund may also be reorganized.

The Estonian Ministry of Economic Affairs and Communications is looking to make savings of up to €130 million over three years from the country's unemployment benefits system. According to Minister of Economic Affairs and Information Technology Tiit Riisalo (Eesti 200), the details related to the planned cuts have not yet been finalized. However, both the unemployment insurance system and unemployment benefits need to be reviewed.

There may be changes to both the benefits paid and the training provided by the Unemployment Insurance Fund (Töötukaasa).

"Of course, it is also possible to pay these benefits for a shorter period of time," Riisalo said.

However, Riisalo declined to comment on whether there are also plans to pay less benefits. "Above all, the idea of the Unemployment Insurance Fund system is that if a person gets into difficulties, then you can actually give them some support. So, it is unlikely that we will go down the road of reducing benefits. However, it will also depend on the situation at the time," he said.

Riisalo also said that the duplication of benefits has to be reduced. The minister added that we are now seeing a large number of people returning to the labor market as soon as their benefits end, although the aim should not be to keep claiming benefits until the last minute.

"The curve is kind of relatively even. Some people come in quicker, some come in six months, and then when both systems have at some point exhausted themselves, the number of people returning to the workforce skyrockets. That clearly indicates that there's a problem. Now, how we restructure this in more detail or where those optimization points come from there, the honest answer is that it's too early to say at the moment," Riisalo said.

Former social affairs minister Tanel Kiik, who is also the Center Party's Riigikogu chief whip, said the most important thing was that any changes should not mean the more vulnerable members of society end up losing out.

Estonia's unemployment benefit system is already relatively modest, Kiik said.

However, Kiik added that this could be a false economy if it leads to a greater burden falling on local governments.

"If we look at the Unemployment Insurance Fund's budget, the unemployment benefit and unemployment insurance part, then it is in the ball park of €200 million a year, and so to hope that €130 million can be saved from there sounds utopian," Kiik said.

Jaan-Hendrik Toomel, chair of the Confederation of Estonian Trade Unions (EAK) and member of the Estonian Unemployment Insurance Fund's management board, said the €130 million target had come as a surprise, as the board is constantly looking for ways to make its operations more efficient and therefore cut costs.

"Some of the services will perhaps be transferred from the state to the unemployment fund, so the nominal savings will probably not be that large. However, what exactly they are to be will become clearer in the coming days," Toome said.

On Friday, the Estonian Unemployment Insurance Fund was not prepared to comment on the plans for change.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Michael Cole

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: