Social partners not notified of plan to hike unemployment insurance premium

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

Estonia's state budget strategy (RES) includes a 0.9 point hike of the unemployment insurance premium which has not been negotiated with the government's social partners.

The RES document includes a revenue line for €114 million, which is precisely by how much the Unemployment Insurance Fund's revenue from the premiums is supposed to grow in 2025. The €114 million hike would require the premium to be hiked from the current 2.4 percent to 3.3 percent.

Minister of Finance Mart Võrklaev (Reform) said that it is part of a wider unemployment benefits reform that the government will be working on.

Võrklaev said that the decision has been included in the budget strategy, meaning it is something the government has agreed on.

While head of the Unemployment Insurance Fund Meelis Paavel said Monday that hiking the premium could be a last resort measure, he woke up to a new reality yesterday.

Paavel said he learned of the plans at a Finance Ministry press conference. "The finance minister talked about €115 million, which would require a hike of 0.9 percentage points," he said.

Provided the relative contributions remain the same, employees would have to part with 2.2 percent of their salary and employers 1.1 percent.

Paavel emphasized that the government cannot hike the tax without the consent of social partners – trade unions and employers. The Estonian Employers Confederation stressed the same thing.

"It is bad practice to put these things in writing without negotiating with employers and other social partners," the confederation's head Arto Aas said.

"Rather, I would describe it as an intellectually intriguing idea in the budget strategy, one that lacks deliberations, effects analysis or agreements. We're getting ahead of matters here."

Aas suggested that the unemployment insurance premium should rather be slashed during a time other taxes are going up.

"Right now, it comes off as certain politicians or officials looking to transfer a part of state budget expenses to the Unemployment Insurance Fund, which would not change the big picture in terms of public sector fiscal balance, but would make it easier to put together the budget and saddle others with hiking taxes," the confederation head said.

Minister of Economic Affairs Tiit Riisalo (Eesti 200), who is responsible for the unemployment insurance reform, said that nothing has been decided, despite additional revenue being written into the budget strategy.

"While it is a legal document, the budget strategy presents ideas and visions for the state budgets of the next three years," Riisalo clarified.


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Editor: Barbara Oja, Marcus Turovski

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