The Minister of labour offered to return in Russia, unemployment insurance

Maxim Topilin

Photo: Vladislav Shatilo / RBC

In Russia it would be expedient to consider the transition to a system of unemployment insurance, as is customary in most countries, RBC reported the Minister of labour Maxim Topilin. A change model is possible in the long term 7-10 years

In Russia in the future you can return to the insurance model of financing of unemployment benefits, said labour Minister Maxim Topilin. The institution of the unemployment insurance contributions of employers operating in Russia until 2001, but now unemployment benefits are financed from General revenues of the Federal budget, essentially as a form of state social support. The Ministry of labour did the calculations which came out that even a 1% deduction from the wage would be enough to protect those who have lost their jobs, said Topilin in an interview with RBC.

“Most countries are in the insurance system [of unemployment benefits]. And unemployment insurance we had until 2001. Again, it is the subject of discussion with business and trade unions. The unions are definitely “in”. But the question is what to set the rate”, — said the Minister. “It should not be large. We thought he might be about 1%”, — said Topilin.

In Russia since the early 1990s and 2001, there was the extrabudgetary employment Fund, which is filled by collecting contributions in the amount of 1.5—2% of the payroll. Such a model unemployment insurance is characteristic of most Western countries. Its economic sense to ensure compensation for loss of earnings. While, for example, first time job seekers after graduation or who wish to return to work after a long break, are not covered by insurance benefits, but can qualify for social assistance from the budget.

Now in Russia the social support for the unemployed included in the expenditure obligations of the budget that do not have a specific funding source. Funding is at the expense of the Federal budget provided as subventions to regional budgets. A substantial portion of beneficiaries are citizens, first time job seekers or long time no working.

According to Topilin, 1% of insurance contributions from salaries is of the order of 200 billion rubles per year. And now on benefits is spent only around 40 billion rubles. Hence, the insurance unemployment benefits would be significantly higher than current, to the Minister.

In 2016, the payment of unemployment benefits from the Federal budget it has been allocated 41 billion rubles, and in 2017 is scheduled to 43 billion rubles, follows from the data of the Federal Treasury and the law on the budget for 2017-2019.

But the transition to model of insurance protection against unemployment may not happen immediately, but beyond 2020-2022 years, said Topilin. “About a theoretical construct, no one questions. Employers <…> I believe that the insurance model of security of the citizens in the event of loss of work is more correct than the existing one. But the question is where to find this proportion so as to allow substitution of Federal money, which now go for benefits, insurance money,” — said the Minister.

Meanwhile, the Ministry of labor wants to reduce the number of benefit recipients so that resources are directed “to those who really looking for work right after her loss and is looking for as quickly as possible,” said Topilin. The bill now passes the coordination with the Ministry of Finance and the Ministry of justice. “We proceed from the premise that by reallocating existing funds, and that about 40 billion rubles per year, we can increase benefits to those who lost their jobs, for example, to reduce”, — said the Minister. The increase is possible due to the termination of benefits in a minimum amount (850 rubles) for those who long have not worked or have never worked. Unemployment in Russia has not changed for several years and ranging from 850 to 4900 rubles. “Regions have mechanisms for providing social assistance — you can contact local social protection if there are no revenues. Only it is not necessary to use the channel of unemployment, if you are looking for a job,” explained Topilin.

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