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COVID-19 EU PolicyWatch

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Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case EE-2020-10/325 Updated – measures in Estonia

Temporary subsidy programme

Ajutine töötasu hüvitis

Country Estonia , applies nationwide
Time period Temporary, 01 March 2020 – 30 June 2020
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g. short-time work)
Author Ingel Kadarik (Praxis Center for Policy Studies) and Eurofound
Case created 07 April 2020 (updated 06 January 2021)
Related ERM support instrument

Background information

Due to the need to temporarily close down some companies and due to some companies losing a lot of clients, several companies have (temporarily) no income and thus paying wages is challenging or impossible. In order to avoid bankruptcies and a high share of unemployment, the Government decided to support the companies to pay wages to their employees. The measure was added to the Employment Programme 2017-2020 (programme through which additional active labour market measures are provided by the Unemployment Insurance Fund). It was discussed and approved by the Council of the Estonian Unemployment Insurance Fund and put into effect by a Government decree. The applications are accepted as of 6 April 2020 until the end of July 2020.

Content of measure

The subsidy is paid by the Estonian Unemployment Insurance Fund (EUIF) when the employer is in a situation where they comply with at least two of the following terms:

  1. The employer must have suffered at least a 30% decline in turnover or revenue for the month they wish to be subsidized for, as compared to the same month last year;
  2. The employer is not able to provide at least 30% of their employees with work;
  3. The employer has cut the wages of at least 30% of employees by at least 30% or down to the minimum wage.

Subsidy is paid to employees who work on the basis of an employment contract and whose employers are not able to provide them with work or whose wages have been reduced. It must be applied for by the employer, but is paid directly to the employee.

The amount of the subsidy is 70% of the average monthly wage of the employee. The maximum amount of the subsidy is €1,000. The employment and social security taxes are also paid by the EUIF. The employer must pay additionally a wage of at least €150 to the employee (plus pay national taxes on the wage).

The subsidy is paid for up to two months for March, April or May 2020.

The subsidy provides dismissal protection. In case the employee is made redundant in the course of the same or the following calendar month they have received the temporary subsidy, the employer must return the subsidy.

Updates

The following updates to this measure have been made after it came into effect.

10 July 2020

The measure was prolonged, which means that it is possible to apply for the wage subsidy for June 2020 as well. However, the terms were changed. In June 2020, employers are eligible to applying for the wage subsidy to their employees if they suffered at least a 50% decline in turnover or revenue in June compared to June last year and comply with at least one of the following terms:

  1. they were not able to provide at least 50% of their employees with work and the work load of the employees has been cut by at least 30%
  2. they had cut the wages of at least 50% of employees by at least 30% or down to the minimum wage.

Use of measure

Uptake by month:

March

Employees of 6,738 companies received the subsidy in the total amount of €27.6 million

April

Employees of 16,064 companies received the subsidy in the total amount of €113.7 million

May

Employees of 10,489 employers received the subsidy in the total amount of €90.4 million

June

Employees of 4,106 companies received the benefit in the total amount of €24.8 million

Altogether more 17,644 companies who used the measure. This is around 12,5% of all economic units/orgamisations based on the Estonian Tax and Customs Board data. The total number of employees receiving ths ubsidy was 138,349, which is 20.3% of all employees.

Target groups

Workers Businesses Citizens
Employees in standard employment
Does not apply to businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Trade unions
Employers' organisations
Company / Companies
Public employment service
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Negotiated Negotiated
Form Any other form of consultation, institutionalised (as stable working groups or committees) or informal Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level

Involvement

Social partners are directly related to the design of the temporary subsidy program via the Estonian Unemployment Insurance Fund (EUIF) council as being one of the council members. The council must agree with the measures offered by the EUIF, thus the social partners are strongly involved in the process.

Views and reactions

The measure was discussed in and approved by the council of the Estonian Unemployment Insurance Fund. The council consists of the representatives of the government, companies, trade unions and employer's organisation. Though both social partners had their own specific views and needs, overall they were very supportive of the measure and the degree of debates was much lower than usually when negotiating measures.

Sources

Citation

Eurofound (2020), Temporary subsidy programme, case EE-2020-10/325 (measures in Estonia), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.