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New bill proposes unemployment benefits for self-employed

August 16, 2009. Globes: Shay Niv and Merav Ankori

Minister of Industry, Trade and Labor Benjamin Ben-Eliezer and Manufacturers Association president Shraga Brosh intend to jointly submit a bill to extend unemployment benefits to the self-employed, in the event of bankruptcy.

MK Stas Misezhnikov (Israel Beiteinu) submitted a similar bill in the last Knesset, with the support of other MKs from the party, but the Ministry of Finance torpedoed it.

There is now a broad consensus both in the cabinet and the Knesset to extend unemployment benefits to the self-employed, although there is still strong disagreements between the Ministry of Finance and self-employed organizations. The Ministry of Finance Budget Department wants the unemployed to pay 1.25% of their earnings to the National Insurance Institute's unemployment department to become eligible for unemployment benefits. In contrast, salaried employees pay 0.1-0.2% of their salaries for this purpose. The Ministry of Finance further toughened its position, after previously demanding that the self-employed pay 1.15% of their salaries for unemployment benefits.

Lahav Israel Association of the Self-Employed president Yehuda Talmon has consistently argued that the self-employed should not pay more than 0.25% of their earnings toward unemployment benefits. He says that this is enough to enable the National Insurance Institute's unemployment department to reach operating balance, and that any additional payment is tantamount to an extra tax on the self-employed.

The National Insurance Institute is asking for 0.8% of the earnings of the self-employed for unemployment coverage.

Brosh has a strong interest is solving this problem, because Talmon has been leading the fight against the raising of the ceiling of National Insurance Institute's marginal tax rate, which was part of the ordinance in the economic package deal between Brosh, Minister of Finance Yuval Steinitz, and Histadrut chairman Ofer Eini. Talmon will reportedly only back off if he gets what he wants in unemployment benefits for the self-employed.

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