The age limit for the extension on unemployment benefit will rise by one year for those born in or after 1961.
In future, unemployed persons born in or after 1961 will be entitled to extended unemployment allowance at the age of 62 instead of 61, as is currently the case, informed the Ministry of Social Affairs and Health.
No changes will be made to this entitlement in older age groups. This legislative amendment is based on the pension agreement concluded by key labour market organisations in 2014. Its objective is to prolong working careers and thereby to reduce unemployment and increase employment.
The amendment is estimated to create an employment effect of 6,000 people by 2025, the Government says.
Usually employers participate in the financing of unemployment benefits by paying unemployment insurance contributions. Largest employers have a special responsibility for financing the benefits of the elderly unemployed through an experience-rating system. The purpose of the system is to encourage large participating employer organisations to take action that helps employees remain at work until they reach the retirement age.
The extended unemployment allowance is largely financed from the proceeds of the experience-rating system. The experience-rating system will now be applied until the employee turns 64 instead of previous 63. The objective is to keep the incentives and financial obligations of the system unchanged despite the rise in retirement age and in the age limit for the unemployment path to retirement.
At the same time, the upper age limit for eligibility for unemployment benefits and for the obligation to pay unemployment insurance contributions will be changed to reflect the rise in the lowest retirement age.
The Government submitted the acts for approval and the President of the Republic approved the bills on Thursday, 19 December. The amendments will enter into force on 1 January 2020.
