A bill drawn up by the Ministry of Economic Affairs and Communications (MKM) will abolish state-funded unemployment benefits (töötutoetus), leaving only the unemployment insurance benefit (töötuskindlustushüvitis) paid by the EUIF. The latter is funded via unemployment insurance premiums (töötuskindlustusmaksed) currently paid at a rate of 1.6 percent by employees and 0.8 percent by employers.

The new bill will partially expand the current range of recipients of this benefit to cover those previously receiving unemployment benefits, however, the fund currently doesn't have enough money to cover the results of the change.

EUIF CEO Meelis Paavel told ETV news broadcast "Aktuaalne kaamera" on Thursday that following this planned change, the fund would require an additional €23 million in funding in 2025 and around €45 million annually after that.

"And as a result, our options are to either review our expenses, namely the budget for benefits and services, or then increase [insurance] premiums or figure out some sort of other arrangements," Paavel acknowledged.

Estonian Trade Union Confederation (EAKL) chair and EUIF supervisory board member Kaia Vask confirmed that the supervisory board likewise estimates that the EUIF doesn't currently have enough money for this.

"The EUIF is currently in pretty good financial shape, but if it has to take on a larger number of those currently receiving unemployment benefits, then of course it will impact the EUIF's financial position," she acknowledged.

Thus the fund's supervisory board must come up with a solution for how to bridge this budget gap.

"We'll start discussing unemployment insurance premiums in August," Vask noted. "We still have some time until then, and hopefully other alternatives will still be found so that unemployment insurance premiums don't have to be raised to fund these additional costs. In light of all these tax hikes, we cannot be content with that."

Fellow EUIF supervisory board member and Estonian Employers' Confederation (ETKL) chief Arto Aas agreed that insurance premiums should not be increased.

Minister of Economic Affairs and IT Tiit Riisalo (Eesti 200), likewise a member of the supervisory board, says that the Ministry of Finance's summer economic forecast will indicate the need for cash.

"I'm not going to deny that based on the current spring forecast, as we're looking ahead now already, it may become necessary to raise unemployment insurance premiums, but things may not necessarily pan out that way," Riisalo noted.

"In fact, it would be possible to cover this [funding gap] from three sources," he continued. "In addition to hiking premiums, we could also utilize the EUIF's reserves, and on top of that we can also look at our so-called labor market services and training – perhaps it's more sensible to streamline some things there."

What kinds of new premiums the EUIF could be looking at in this case, however, is not yet known.

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