(ERR) Employers Willing to Return to Unemployment Fund in Light of Tax Break


The Employers Confederation decided at its meeting today to return to the board of the Unemployment Insurance Fund.

But it will do so only on the condition that the Cabinet moves to lower the unemployment insurance premium to 3 percent in 2013.

On Tuesday, Prime Minister Andrus Ansip said he would endorse such a reform, after having stubbornly rejected it for months.

Late last year, the Employers Confederation left the board of the Unemployment Insurance Fund in protest because the government borrowed money earmarked for benefits to cover expenses in the national budget.

Employers had given the government an ultimatum: lower the tax rate, since taxes paid into the unemployment fund were being used for non-earmarked purposes.

The government rejected the proposal - until this week, when the prime minister had a change of heart, which followed remarks that the government had "lacked empathy" for the individual.

Currently, the unemployment insurance premium is 4.2 percent of the gross salary - 1.4 percent from the employer and 2.8 percent from the employee.

The proposed premium cut is four times higher than what the government has previously put forward. The Finance Ministry's most recent economic forecast said the premium could be lowered by just 0.3 percent in 2013.

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