Employment, Estonia, Financial Services, Legislation, Taxation

Hence employees will start paying 2.8% of their pay and employers' share will be 1.4%.

In June, the unemployment insurance tax rate was raised to 3%, but according to the Government, this level was not enough to prevent financial hardships for the Unemployment Insurance Fund. Therefore the supervisory board of the fund made a proposal to raise the tax rate.

Before June, the tax rate was fixed at 0.9% – thus the increase this year will be more than four-fold.

It is projected that this year, the total cost of unemployment insurance compensations will be 1.867 billion kroons which will, according to estimations, be divided between 57,475 persons.

The Ministry of Finance calculated that if the tax rate would have remained at 3%, the Unemployment Insurance Fund would have fallen by 1.5 billion kroons into deficit.

The increase in the tax rate would bring nearly 0.5 billion kroons to the fund's budget and by the end of the year, the net assets of the fund with reserves ought to reach nearly 1.8 billion kroons.