Unemployment benefits reserves exhausted

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The billions of euros held in the unemployment benefits fund have been completely exhausted in just a few years. At the end of 2008, the fund still had a positive balance of nine billion whereas today it is 1.9 billion euros in the red.

National daily Trouw on Monday published the above figures based on data provided by unemployment benefits agency UWV. In the past, unemployment benefits were paid out of the premiums both employers and workers paid into the fund, but the previous government under former prime minister Jan-Peter Balkenende scrapped workers’ premiums in 2009 to boost spending power. However, the economic recession has greatly increased the number of unemployed claiming benefits. The loss of workers’ premiums in combination with the rise in benefit claims has quickly drained the funds’ reserves.

No reserves Trouw writes that the steadily growing number of unemployed means the government will have to take a decision soon on how to deal with the billions of euros in extra expenditure. The cabinet can decide to raise employers’ unemployment premiums, reintroduce workers’ premiums or lower unemployment benefits.

Trade union federation FNV last week suggested reintroducing workers’ unemployment premiums. FNV Chair Agnes Jongerius argued that the government should invest in education and adequate unemployment benefits. "We are willing to ask workers to resume paying premiums if that will restore solvency.”

Budget talks The unemployment benefits issue is one of the subjects on the agenda of talks scheduled to start on Monday between Prime Minister Mark Rutte VVD, conservatives, Deputy Prime Minister Maxime Verhagen CDA, Christian democrats en Freedom Party leader Geert Wilders. The VVD-CDA minority coalition and its parliamentary backer the Freedom Party will discuss additional budget cuts to reduce the deficit from 4.5 percent to 3 percent.

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