Madise lists shortcomings in unemployment insurance

Photo: Tairo Lutter

Chancellor of Justice Ülle Madise finds that a discussion to change the unemployment insurance system is necessary as the recent system is outdated and fails to meet the needs of the modern labor market.

The justice chancellor writes in a letter to the Riigikogu Social Affairs Committee and the health and labor minister that while the current unemployment insurance system has served recent needs, cases from the past few years suggest changes to the nature of work and the labor market call for more flexible solutions in unemployment insurance.

“Unfair, and in some cases unconstitutional, situations could be resolved by seeing the unemployment insurance benefit first and foremost as insurance for loss of income from work. Conditions and concepts tied to the benefit should be changed, including the concept of unemployed,” Madise wrote.

The justice chancellor also finds that the system should favor retraining to a greater degree.

“Following the example of the parent’s pay system, we should consider the possibility of retaining the benefit when a person has found a job that does not ensure recent level of income but makes it possible to keep up the habit of working and participation in working life. Accepting short-term work that pays little does not equal restoring one’s income from work. It could be weighed whether people working in sharing economy could also insure themselves against loss of income from work,” she said.

“The current unemployment insurance system leaves most people who have lost income from work without financial aid. The benefit has been made available to just one-third of registered unemployed for years. The remaining unemployed do not qualify for the benefit as they do not meet all requirements,” Madise added.

The chancellor finds that the law does not consider lack of income from working when registering people as unemployed. For example, in cases where people have services contracts or association agreements for which they are not paid.

Madise also believes that the current situation where an odd job is enough to leave a person without aid from the state in finding work is not justified. Registered unemployed must register as employed even if they find work for just a single day.

Income from work and the potential fusion of unemployment insurance, for example full taxation of parent’s pay in cases where parents earn some income, deserves broader discussion, the justice chancellor finds.