Employment, Estonia, Financial Services, Legislation, Taxation

This means that those paying the unemployment insurance tax would take at least some of the state’s burden in paying the labour market measures targeted to unemployed persons.

Trade Unions Confederation head Harri Taliga says that this would also mean that the unemployment insurance tax rate would be kept at the current high level for a very long time. “Unemployment insurance tax rates have been designed so at the moment that they could be used to cover current expenses and save a bit. If they want to use that money to provide more services, then actually the tax rate has to be increased a bit even,” said Taliga.

Since the beginning of August last year, the unemployment insurance tax rate is 2.8% of wages for an employee and 1.4% of the payroll funds for employers. An employee who earns an average wage pays nearly 360 kroons a month to the Unemployment Insurance Fund (UIF) and his employers pays also 180 kroons.

According to the current law, unemployment insurance payments can only be used to pay unemployment insurance benefits, redundancy benefits, state taxes and UIF’s operating costs.

If the UIF financed labour market measures only from unemployment insurance payments in the future, nearly 800 million kroons would be needed for that. With the current 4.2% tax rate, the UIF gets a bit over 2.5 bln kroons, thus the tax would have to be raised by 1.2-1.5%.

Last week, representatives of parliament parties Päevaleht polled, announced all that they consider it necessary to reduce the unemployment insurance tax.