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Unemployment benefit

Unemployment benefit

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Unemployment benefits are payments made by the state
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...

 or other authorized bodies to unemployed
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

 people. Benefits may be based on a compulsory para-governmental insurance system. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs (thus a form of basic welfare
Welfare
Welfare refers to a broad discourse which may hold certain implications regarding the provision of a minimal level of wellbeing and social support for all citizens without the stigma of charity. This is termed "social solidarity"...

), or may compensate the lost time proportionally to the previous earned salary. They often are part of a larger social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

 scheme.

Unemployment benefits are generally given only to those registering as unemployed, and often on conditions ensuring that they seek work and do not currently have a job.

In some countries, a significant proportion of unemployment benefits are distributed by trade/labor unions
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...

, an arrangement known as the Ghent system
Ghent system
The Ghent system is the name given to an arrangement in some countries whereby the main responsibility for welfare payments, especially unemployment benefits, is held by trade/labor unions, rather than a government agency....

.

Argentina


In Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...

, successive administrations have used a variety of passive and active labor market interventions to protect workers against the consequences of economic shocks and the government's key institutional response to combat the increase in poverty and unemployment created by the crisis was the launch of an active unemployment assistance program called Plan Jefas y Jefes de Hogar Desocupados (Program for Unemployed Heads of Households).

External links

Australia


In Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, social security benefits, including unemployment benefits, are funded through the income tax system. There is no compulsory national unemployment insurance fund. Rather, benefits are funded in the annual Federal Budget by the National Treasury and are administrated and distributed throughout the nation by the government agency, Centrelink
Centrelink
Centrelink is the trading name of the Commonwealth Service Delivery Agency , a statutory authority responsible for delivering human services on behalf of agencies of the Commonwealth Government of Australia. The majority of Centrelink's services are the disbursement of social security payments...

. Benefit rates are indexed to the Consumer Price Index and are adjusted twice a year according to inflation or deflation.

There are two types of payment available to those experiencing unemployment. The first, called Youth Allowance, is paid to young people aged 16–20 (or 15, if deemed to meet the criteria for being considered 'independent' by Centrelink). Youth Allowance is also paid to full-time students aged 16–24, and to full-time Australian Apprenticeship workers aged 16–24. People aged below 18 who have not completed their High School education, are usually required to be in full-time education, undertaking an apprenticeship or doing training to be eligible for Youth Allowance. For single people under 18 years of age living with a parent or parents the basic rate is A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...

91.60 per week. For over 18 to 20 years olds living at home this increases to A$110.15 per week. For those aged 18–20 not living at home the rate is A$167.35 per week. There are special rates for those with partners and/or children.

The second kind of payment is called Newstart Allowance and is paid to unemployed people over the age of 21 and under the pension eligibility age. To receive a Newstart payment, recipients must be unemployed, be prepared to enter into an Employment Pathway Plan (previously called an Activity Agreement) by which they agree to undertake certain activities to increase their opportunities for employment, be Australian Residents and satisfy the income test (which limits weekly income to A$32 per week before benefits begin to reduce, until one's income reaches A$397.42 per week at which point no unemployment benefits are paid) and the assets test (an eligible recipient can have assets of up to A$161,500 if he or she owns a home before the allowance begins to reduce and $278,500 if he or she does do not own a home). The rate of Newstart allowance as at the 12th January 2010 for single people without children is A$228 per week, paid fortnightly. (This does not include supplemental payments such as Rent Assistance.) Different rates apply to people with partners and/or children.

The system in Australia is designed to support citizens no matter how long they have been unemployed. This has been criticised by some conservative commentators , who allege that welfare generates a 'culture of welfare dependence' . In recent years the former Coalition government under John Howard
John Howard
John Winston Howard AC, SSI, was the 25th Prime Minister of Australia, from 11 March 1996 to 3 December 2007. He was the second-longest serving Australian Prime Minister after Sir Robert Menzies....

 has increased the requirements of the Activity Agreement, providing for controversial schemes such as Work for the Dole
Work for the dole
Work for the Dole is an Australian federal government program that is a form of workfare, work-based welfare. It was first permanently enacted in 1998, having been trialed in 1997....

, which requires that people on benefits for 6 months or longer work voluntarily for a community organisation regardless of whether such work increases their skills or job prospects. Since the Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...

 government under Kevin Rudd
Kevin Rudd
Kevin Michael Rudd is an Australian politician who was the 26th Prime Minister of Australia from 2007 to 2010. He has been Minister for Foreign Affairs since 2010...

 was elected in 2008, the length of unemployment before one is required to fulfill the requirements of the Activity Agreement (which has been renamed the Employment Pathway Plan) has increased from six to twelve months. There are other options available as alternatives to the Work for the Dole scheme, such as undertaking part-time work or study and training, the basic premise of the Employment Pathway Plan being to keep the welfare recipient active and involved in seeking full-time work.

For people renting their accommodation, unemployment benefits are supplemented by Rent Assistance, which, for single people as at the 12th January, 2010, begins to be paid when the weekly rent is more than A$49.70. Rent Assistance is paid as a proportion of total rent paid (to be precise, 75 cents in the dollar over $49.70 up to the maximum). The maximum amount of rent assistance payable is A$55.90 per week, and is paid when the total weekly rent exceeds A$124.24 per week. Different rates apply to people with partners and/or children, or who are sharing accommodation.

External links

Canada



In Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

, the system now known as Employment Insurance was formerly called Unemployment Insurance. The name was changed in 1996, in order to alleviate perceived negative connotations. In 2011, Canadian workers pay premiums of 1.78% of insured earnings in return for benefits if they lose their jobs. Employers contribute 1.4 times the amount of employee premiums. Since 1990, there is no government contribution to this fund. The amount a person receives and how long they can stay on EI varies with their previous salary, how long they were working, and the unemployment rate in their area. The EI system is managed by Service Canada
Service Canada
Service Canada is part of a Government of Canada-wide service transformation initiative aimed at responding to Canadians' expressed desire for better, more responsive, less cluttered service from Canadian governments...

, a service delivery network reporting to the Minister of Human Resources and Social Development Canada.

A bit over half of EI benefits are paid in Ontario and the Western provinces but EI is especially important in the Atlantic provinces, which have higher rates of unemployment. Many Atlantic workers are also employed in seasonal work such as fishing, forestry or tourism and go on EI over the winter when there is no work. There are special rules for fishermen making it easier for them to collect EI. EI also pays for maternity and parental leave
Parental leave
Parental leave is an employee benefit that provides paid or unpaid time off work to care for a child or make arrangements for the child's welfare. Often, the term parental leave includes maternity, paternity, and adoption leave...

, compassionate care leave, and illness coverage. The program also pays for retraining programs (EI Part II) through labour market agreements with the Canadian provinces.

An unemployment insurance program was first attempted in 1935 during the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

 by the government of R.B. Bennett. It was, however, ruled unconstitutional by the Supreme Court of Canada
Supreme Court of Canada
The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...

 as unemployment was judged to be an insurance matter falling under provincial responsibility. After a constitutional amendment was agreed to by the provinces, a reference to "Unemployment Insurance" was added to the matters falling under federal authority under the Constitution Act, 1867
Constitution Act, 1867
The Constitution Act, 1867 , is a major part of Canada's Constitution. The Act created a federal dominion and defines much of the operation of the Government of Canada, including its federal structure, the House of Commons, the Senate, the justice system, and the taxation system...

, and the first Canadian system was adopted in 1940. Because of these problems Canada was the last major Western country to bring in an employment insurance system. It was extended dramatically by Pierre Trudeau
Pierre Trudeau
Joseph Philippe Pierre Yves Elliott Trudeau, , usually known as Pierre Trudeau or Pierre Elliott Trudeau, was the 15th Prime Minister of Canada from April 20, 1968 to June 4, 1979, and again from March 3, 1980 to June 30, 1984.Trudeau began his political career campaigning for socialist ideals,...

 in 1971 making it much easier to get. The system was sometimes called the 10/42, because one had to work for 10 weeks to get benefits for the other 42 weeks of the year. It was also in 1971 that the UI program was first opened up to maternity and sickness benefits, for 15 weeks in each case.

The generosity of the Canadian UI program was progressively reduced after the adoption of the 1971 UI Act. At the same time, the federal government gradually reduced its financial contribution, eliminating it entirely by 1990. The EI system was again cut by the Progressive Conservatives in 1990 and 1993, then by the Liberals
Liberal Party of Canada
The Liberal Party of Canada , colloquially known as the Grits, is the oldest federally registered party in Canada. In the conventional political spectrum, the party sits between the centre and the centre-left. Historically the Liberal Party has positioned itself to the left of the Conservative...

 in 1994 and 1996. Amendments made it harder to qualify by increasing the time needed to be worked, although seasonal claimants (who work long hours over short periods) turned out to gain from the replacement, in 1996, of weeks by hours to qualify. The ratio of beneficiaries to unemployed, after having stood at around 40 percent for many years, has recently reached close to 50% (end of 2009). Many unemployed persons are not covered for benefits (e.g. the self-employed), while others may have exhausted their benefits or did not work long enough to qualify. However, it is noted that 80 percent of insured job-losers do initially receive EI benefits in Canada. The length of time one could take EI has also been cut repeatedly. The 1994 and 1996 changes contributed to a sharp fall in Liberal support in the Atlantic provinces in the 1997 election
Canadian federal election, 1997
The Canadian federal election of 1997 was held on June 2, 1997, to elect members of the Canadian House of Commons of the 36th Parliament of Canada. Prime Minister Jean Chrétien's Liberal Party of Canada won a second majority government...

.

In 2001, the federal government increased parental leave from 10 to 35 weeks and allowed workers to take EI for compassionate care leave while caring for a dying relative. Total EI spending is projected at $22.7 billion for 2010 (figures in Canadian dollar
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...

s).

A significant part of the federal fiscal surplus of the Jean Chrétien
Jean Chrétien
Joseph Jacques Jean Chrétien , known commonly as Jean Chrétien is a former Canadian politician who was the 20th Prime Minister of Canada. He served in the position for over ten years, from November 4, 1993 to December 12, 2003....

 and Paul Martin
Paul Martin
Paul Edgar Philippe Martin, PC , also known as Paul Martin, Jr. is a Canadian politician who was the 21st Prime Minister of Canada, as well as leader of the Liberal Party of Canada....

 years came from the EI system. Premiums were reduced much less than falling expenditures - producing, from 1994 onwards, EI surpluses of several billion dollars per year, which were added to general government revenue. The cumulative EI surplus stood at $57 billion at March 31, 2008, nearly four times the amount needed to cover the extra costs paid during a recession. This drew criticism from Opposition parties and from business and labour groups, and has remained a recurring issue of the public debate. The Conservative Party
Conservative Party of Canada
The Conservative Party of Canada , is a political party in Canada which was formed by the merger of the Canadian Alliance and the Progressive Conservative Party of Canada in 2003. It is positioned on the right of the Canadian political spectrum...

, after voicing much the same criticism while in opposition, chose not to recognize existing EI surpluses after being elected in 2006
Canadian federal election, 2006
The 2006 Canadian federal election was held on January 23, 2006, to elect members of the Canadian House of Commons of the 39th Parliament of Canada. The Conservative Party of Canada won the greatest number of seats: 40.3% of seats, or 124 out of 308, up from 99 seats in 2004, and 36.3% of votes:...

. Instead, the Conservative government adopted in 2008 and 2009 legislation freezing the EI surplus indefinitely and putting EI premiums on a pay-as-you-go basis, so that - starting in 2011 - they will fluctuate in line with changes in unemployment levels. On December 11, 2008, the Supreme Court of Canada
Supreme Court of Canada
The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...

 rejected a court challenge launched against the federal government by two Quebec unions, who argued that EI funds had been misappropriated by the government.

External links

China


The level of benefit is set between the minimum wage and the minimum living allowance by individual provinces
Province (China)
A province, in the context of Chinese government, is a translation of sheng formally provincial level divisions, which is an administrative division. Provinces, municipalities, autonomous regions, and the special administrative regions, make up the four types of province of administrative division...

, autonomous regions and municipalities.

Greece


Unemployment benefits in Greece are administered through OAED (Labor Force Employment Organization) and are available only to laid-off salaried workers with full employment and social security payments during the previous two years. The self-employed do not qualify, and neither do those with other sources of income. The monthly benefit is fixed at the "55% of 25 minimum daily wages", and is currently 454 euros
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

 per month, with a 10% increase for each under-age child. Recipients are eligible for at most 12 months; the exact duration depends on the collected number of ensema ένσημα, that is social security payment coupons-stamps collected (id est days of work) during the 14 months before being laid off.

Ireland


People aged 18 and over and who are unemployed in the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

 can apply for either the Jobseeker's Allowance (Liúntas do Lucht Cuardaigh Fostaíochta) or the Jobseeker's Benefit (Sochar do Lucht Cuardaigh Fostaíochta). Both are paid by the Department of Social Protection and are nicknamed "the dole".

The standard payment is €188 per week. Payments can be increased if the unemployed has dependants. For each adult dependent, another €124.80 is added; and for each child dependent, another €29.80 is added.

There are more benefits available to unemployed people, usually on a special or specific basis. Benefits include the Rent Supplement, the Mortgage Interest Supplement, Fuel Allowance and the Smokeless Fuel Allowance, among others. People on a low income (which includes those on JA/JB) are entitled to a Medical Card (although this must be applied for separately from the Health Service Executive
Health Service Executive
The Health Service Executive is responsible for the provision of healthcare providing health and personal social services for everyone living in Ireland, with public funds. The Executive was established by the Health Act, 2004 and came into official operation on January 1, 2005...

) which provides free health care, optical care, dental care, aural care, and prescription drugs (as opposed to subsidised services like non medical-card holders). Education (at all levels) is free to all, not just the unemployed.

To qualify for Jobseekers Allowance, claimants must satisfy the "Habitual Residence Condition": they must have been legally in the state (or the Common Travel Area
Common Travel Area
The Common Travel Area is a passport-free zone that comprises the islands of Ireland, Great Britain, the Isle of Man and the Channel Islands. The area's internal borders are subject to minimal or non-existent border controls and can normally be crossed by Irish and British citizens with only...

) for two years or have another good reason (such as lived abroad and are returning to Ireland after become unemployed or deported). This condition does not apply to Jobseekers Benefit (which is based on Social Insurance payments).
More information on each benefit can be found here:

Italy



Unemployment benefits in Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

 consists mainly in cash transfers based on contributions (indennità di disoccupazione), up to the 40 percent of the previous wages for up to seven months. Other measures are:
  • Redundancy Fund (Cassa integrazione guadagni, CIG
    CIG
    CIG could stand for:* Certified Interpretive Guide, credentials earned by participating in a training course by the National Association for Interpretation , which leads to certification....

    ): cash benefits provided as shock absorbers to those workers who are suspended or who work only for reduced time due to temporary difficulties of their factories, aiming to help the factories in financial difficulties, by relieving them from the costs of unused workforce
  • Solidarity Contracts (Contratti di solidarietà): in the same cases granting CIG benefits, companies can sign contracts with reduced work time, to avoid dismissing redundancy workers. The state will grant to those workers the 60 percent of the lost part of the wage.
  • Mobility allowances (Indennità di mobilità),: if the Redundancy Fund does not allow the company to re-establish a good financial situation, the workers can be entitled to mobility allowances. Other companies are provided incentive
    Incentive
    In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...

    s for employing them.

In the Italian unemployment insurance system all the measures are income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...

-related, and they have an average decommodification
Decommodification
Decommodification as a concept comes from the idea that in a market economy, individual persons are commodified. Given that labor is the individual's primary commodity in the market, decommodification refers to activities and efforts that reduces individuals' reliance on the market for their...

 level. The basis for entitlement is always employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...

, with more specific conditions for each case, and the provider is quite always the state. An interesting feature worthy to be discussed is that the Italian system takes in consideration also the economic situation of the employers, and aims as well at relieving them from the costs of crisis.

Japan


Unemployment benefits in Japan are called "unemployment insurance" and are closer to the US or Canadian "user pays" system than the taxpayer funded systems in place in countries such as Britain, New Zealand, or Australia. It is paid for by contributions by both the employer and employee.

By law, workers ask their employer to enroll them. If they have been enrolled for at least 6 months and are fired or made redundant, leave the company at the end of their contract, or their contract is non-renewed, the now-unemployed worker will receive unemployment insurance. If a worker quit of their own accord they may have to wait between 1 to 3 months before receiving any payment.

The length of time that unemployed workers can receive benefits for depends on the age of the employee, and how long they were employed for.

New Zealand



In New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

, these benefits provide income support for people who are looking for work or training for work through Work and Income, a service of the Ministry of Social Development

To qualify, a person needs to be aged 18 or over, or aged 16–17 and living with a partner and children they support and:
  • have continually lived in New Zealand for two years or more
  • not working full-time, but actively looking for a full-time job and able to start work now.
  • a person may still qualify if he/she is a full-time trainee on an approved work related course. The course must usually be less than 12 weeks long to qualify. People must still take steps to meet the job search requirements.


A person who applies for the benefit may be asked to develop a Job Seeker Agreement with Work and Income where he/she agrees to look for work or prepare for work

If the applicant has a partner they may be included in the benefit and may also be asked to develop a Job Seeker Agreement with Work and Income. They may also need to:
  • look for full-time work (30 hours a week or more) if applicant has no children at home or applicant's youngest child is aged 14 or older or
  • look for part-time work (15 hours a week or more) if applicant's youngest child is aged 6–13 or come to annual planning meetings and perhaps do things to help prepare for work if applicant's youngest child is less than six years old.


In New Zealand the benefit is $167.83 weekly after tax for single person who is 20–24 years. Single persons 25 years or over get $201.40 per week after tax.A married, de-facto or civil union couple with or without children receive $335.66 per week after tax ($167.83 each). The benefit payment can reduce due to any income the person or their partner earns.

External links

Sweden



Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....

 uses the Ghent system
Ghent system
The Ghent system is the name given to an arrangement in some countries whereby the main responsibility for welfare payments, especially unemployment benefits, is held by trade/labor unions, rather than a government agency....

, under which a significant proportion of unemployment benefits are distributed by unions
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...

. Unemployment benefits are divided into a voluntary scheme with income related compensation up to a certain level and a comprehensive scheme that provides a lower level of basic support. The voluntary scheme requires a minimum of 12 months membership and a certain degree of employment during that time before any claims can be made. Employers pay a fee on top of the pre-tax income of their employees, which together with membership fees, fund the scheme (see Unemployment funds in Sweden
Unemployment funds in Sweden
In Sweden, an unemployment fund is an economic association tied to a trade union .Since July 1, 2002, an unemployment fund is to some extent equal to a government agency, and is as thus comprised by the Freedom of the Press Act of the Swedish constitution...

).

The maximum unemployment benefit is (as of July 2007) SEK
SEK
SEK may stand for:*Swedish krona, the currency of Sweden*Federation of Swiss Protestant Churches *SEK Studio, a North Korean animation studio* Stagecoach in East Kent...

 680 per day. During the first 200 days the unemployed will receive 80 percent of his or her normal income during the last 12 months. From day 201-300 this goes down to 70 percent and from day 301-450 the insurance covers 65 percent of the normal income (only available for parents to children under the age of 18). In Sweden tax is paid on unemployment benefits, so the unemployed will get a maximum of about SEK 10,000 per month during the first 100 days (depending on the municipality
Municipality
A municipality is essentially an urban administrative division having corporate status and usually powers of self-government. It can also be used to mean the governing body of a municipality. A municipality is a general-purpose administrative subdivision, as opposed to a special-purpose district...

 tax rate). In other currencies this means a maximum of approximately £730, $1,650, or €1,100, each month after tax. Private insurance is also available, mainly through professional organizations, to provide income related compensation that otherwise exceeds the ceiling of the scheme. The comprehensive scheme is funded by tax.

Saudi Arabia


Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...

 is an economic welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...

 with free medical care and unemployment benefits. However, the country relies not on taxation but mainly oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....

 revenues to maintain the social and economic services to its populace.

External links

Jobseeker's Allowance rates


JSA for a single person is changed annually, and at June 29, 2009 the maximum payable was £65.45 per week for a person aged over 25, £53.45 per week for a person aged 18–24. The rules for couples where both are unemployed are more complex, but a maximum of £102.75 per week is payable, dependent on age and other factors. Income-based JSA is reduced for people with savings of over £6,000, by a reduction of £1 per week per £250 of savings, up to £16,000. People with savings of over £16,000 are not able to get IB-JSA at all. The British system provides rent payments as part of a separate scheme called Housing Benefit
Housing Benefit
Housing Benefit is a means tested social security benefit in the UK that is intended to help meet Housing costs for rented accommodation. The primary legislation governing Housing Benefit is the Social Security Contributions and Benefits Act 1992. Operationally, the governing Regulations are...

.

History and etymology


Unemployment benefits were first instituted in 1911. Ten years later over two million people were relying on the payments, as the United Kingdom experienced economic hardship after World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

.

Unemployment benefit is commonly referred to as "the dole"; to receive the benefit is to "be on the dole". "Dole" here is an archaic expression meaning "one's allotted portion", from the synonymous Old English word dāl.

United States


Unemployment compensation is money received from the United States and a state by a worker who has become unemployed through no fault of their own. In the United States, this compensation is classified as a type of social welfare benefit. According to the Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...

, these types of benefits are to be included in a taxpayer's gross income.

Federal-state joint programs


The idea of unemployment insurance in the United States originated in Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...

 in 1932. In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, there are 50 state unemployment insurance programs plus one each in the District of Columbia, Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...

 and United States Virgin Islands
United States Virgin Islands
The Virgin Islands of the United States are a group of islands in the Caribbean that are an insular area of the United States. The islands are geographically part of the Virgin Islands archipelago and are located in the Leeward Islands of the Lesser Antilles.The U.S...

. Through the Social Security Act of 1935, the federal government of the United States
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

 effectively encouraged the individual states to adopt unemployment insurance plans.

Unemployment insurance is a federal-state program jointly financed through federal and state employer payroll taxes (federal and state UI taxes). Generally, employers must pay both state and federal unemployment taxes if:
(1) they pay wages to employees totaling $1,500 or more in any quarter of a calendar year; or,
(2) they had at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether the weeks were consecutive. However, some state laws differ from the federal law.


To facilitate this program, the U.S. Congress passed the Federal Unemployment Tax Act
Federal Unemployment Tax Act
The Federal Unemployment Tax Act is a United States federal law that imposes a federal employer tax used to help fund state workforce agencies. Employers report this tax by filing an annual Form 940 with the Internal Revenue Service...

 (FUTA), which authorizes the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...

 (IRS) to collect an annual federal employer tax used to fund state workforce agencies. FUTA covers the costs of administering the Unemployment Insurance and Job Service programs in all states. In addition, FUTA pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits. As originally established, the states paid the federal government.

The FUTA tax rate was originally three percent of taxable wages collected from employers who employed at least four employees, and employers could deduct up to 90 percent of the amount due if they paid taxes to a state to support a system of unemployment insurance which met Federal standards, but the rules have changed as follows. The FUTA tax rate is now 6.2 percent of taxable wages of employees who meet both the above and following criteria, and the taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax on a timely basis receive an offset credit of up to 5.4 percent regardless of the rate of tax they pay their state. Therefore, the net FUTA tax rate is generally 0.8 percent (6.2 percent - 5.4 percent), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000 = $56.00). State law determines individual state unemployment insurance tax rates. In the United States, unemployment insurance tax rates use experience rating
Experience rating
Experience rating is a method used by insurers to determine pricing of premiums for different groups or individuals based on the group or individual's history of claims...

.

Within the above constraints, the individual states
U.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...

 and territories raise their own contributions and run their own programs. The federal government sets broad guidelines for coverage and eligibility, but states vary in how they determine benefits and eligibility.

Federal rules are drawn by the United States Department of Labor
United States Department of Labor
The United States Department of Labor is a Cabinet department of the United States government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. Many U.S. states also have such departments. The...

, Employment and Training Administration. For most states, the maximum period for receiving benefits is 26 weeks. There is an extended benefit program (authorized through the Social Security Acts) that may be triggered by state economic conditions. Congress has often passed temporary programs to extend benefits during economic recessions. This was done with the Temporary Extended Unemployment Compensation (TEUC) program in 2002-2003, which has since expired, and remained in force through June 2, 2010, with the Extended Unemployment Compensation 2008 legislation. In July, legislation that provides an extension of federal extended unemployment benefits through November was signed by the President. The extension restored unemployment benefits to the 2.3 million unemployed Americans who had run out of basic unemployment benefits. However, the current extensions in place expire on November 30 unless legislation is passed by Congress providing for an additional extension. Congress is considering extending the Temporary Extended Unemployment Compensation program again.

The federal government lends money to the states for unemployment insurance when the states run short of funds. In general, this can happen when the unemployment rate is high. The need for loans can be exacerbated when a state cuts taxes and increases benefits. All loans must be repaid with interest.

Congressional actions to massively increase penalties for states incurring large debts for unemployment benefits led to state fiscal crises in the 1980s.

Because it is a joint federal/state program run by the states, taxing business for the benefit of labor, the politics of unemployment insurance are very complex.

Macroeconomic function


The Unemployment Insurance (UI) program acts as an automatic stabilizer
Automatic stabilizer
In macroeconomics, automatic stabilizers describes how modern government budget policies, particularly income taxes and welfare spending, act to dampen fluctuations in real GDP....

. When employment grows, UI program revenue rises through increased tax revenues while UI program spending falls as fewer workers are unemployed. This creates a surplus of funds for the UI program to draw upon during a recession. In a recession, UI tax revenue falls and UI program spending rises as more workers lose their jobs and receive UI benefits. The increased amount of UI payments to unemployed workers puts additional funds into the economy.

Eligibility and amount


Americans out of work who do not qualify for unemployment insurance include part-time, temporary, and self-employed workers.

Generally, the worker must be unemployed through no fault of his/her own (generally through lay-offs). The unemployed must also meet state requirements for wages earned or time worked during an established period of time (referred to as a “base period”) to be eligible for benefits. (In most States, the base period is usually the first four out of the last five completed calendar quarters prior to the time that the claim is filed.) Unemployment benefits are based on reported covered quarterly earnings. The amount of earnings and the number of quarters worked are used to determine the length and value of the unemployment benefit. The average weekly payment is 36 percent of the individual's average weekly wage.

As a result of the American Recovery and Reinvestment Act passed by Congress in February 2009, many unemployed people can receive up to 99 weeks
99ers
99ers is a colloquial term for unemployed people in the United States, mostly citizens, who have exhausted all of their unemployment benefits, including all unemployment extensions. As a result of the American Recovery and Reinvestment Act passed by Congress in February 2009, many unemployed...

 of unemployment benefits; this may depend on State legislation.

Application process


It generally takes two weeks for benefit payments to begin, the first being a "waiting week", which is not reimbursed, and the second being the time lag between eligibility for the program and the first benefit actually being paid.

To begin a claim, the unemployed worker must apply for benefits through a state unemployment agency. In certain instances, the employer initiates the process. Generally, the certification includes affected person affirming that they are "able and available for work", the amount of any part-time earnings they may have had, and whether they are actively seeking work. These certifications are usually accomplished either by internet or via an interactive voice response telephone call, but in a few states may be by mail. After receiving an application, the state will notify the individual if they qualify and the rate they will receive every week. The state will also review the reason for separation from employment. Many states require the individual to periodically certify that the conditions of the benefits are still met.

Disqualification


If a worker's reason for separation from his last job is due to some reason other than a "lack of work,” a determination will be made about whether he is eligible for benefits. Generally, all determinations of eligibility for benefits are made by the appropriate State under its law or applicable federal laws. If a worker is disqualified or denied benefits, he has the right to file an appeal within an established time-frame. The State will advise a worker of his or her appeal rights. An employer may also appeal a determination if he does not agree with the State's determination regarding the employee's eligibility.

Current data


Each Thursday, the Department of Labor
United States Department of Labor
The United States Department of Labor is a Cabinet department of the United States government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, re-employment services, and some economic statistics. Many U.S. states also have such departments. The...

 issues the Unemployment Insurance Weekly Claims Report. Its headline number is the seasonally adjusted estimate for the initial claims for unemployment for the previous week in the United States. This statistic, because of its timeliness, is an important indicator of the health of the labor market, and more broadly, the vigor of the overall economy.

UI outlook


Twice a year, the Office of Management and Budget delivers an economic assessment of the unemployment insurance program as it relates to budgetary issues. As it relates to the FY 2012 budget, the OMB reports that: the insured unemployment rate (IUR) is projected to average 3.6% in both FY 2011 and in FY 2012. State UI regular benefit outlays are estimated at $61 billion in FY 2011 and $64.3 billion in FY 2012, down somewhat from Midsession estimates. Outlays from state trust fund accounts are projected to exceed revenues and interest income by $16.0 billion in FY 2011 and $15.1 billion in FY 2012. State trust fund account balances, net of loans, are projected to continue to fall, from -$27.4 billion at the end of FY 2010 to -$62.7 billion at the end of FY 2013, before starting to grow again. Net balances are not projected to become positive again until well beyond FY 2016. Up to 40 states are projected to continue borrowing heavily from the Federal Unemployment Account (FUA) over the next few years. The aggregate loan balance is projected to increase from $40.2 billion at the end of FY 2010 to a peak end-of-year balance of $68.3 billion in FY 2013. Due to the high volume of state loans and increased EB payments, FUA and EUCA are projected to borrow $26.7 billion from the general fund in FY 2011 and an additional $19.4 billion in FY 2012, with neither account projected to return to a net positive balance before 2016. The general fund advances must be repaid with interest.

Economic rationale and issues


The justification for government and not the private market providing unemployment insurance program can be explained using public economics and the concepts of adverse selection
Adverse selection
Adverse selection, anti-selection, or negative selection is a term used in economics, insurance, statistics, and risk management. It refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information : the "bad" products or services are more likely to be...

 and moral hazard
Moral hazard
In economic theory, moral hazard refers to a situation in which a party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party insulated from risk behaves differently from how it would if it were fully exposed to the risk.Moral hazard...

. The problems of these issues make it very unlikely that a private insurance would provide unemployment insurance. “A compulsory government program avoids the adverse selection
Adverse selection
Adverse selection, anti-selection, or negative selection is a term used in economics, insurance, statistics, and risk management. It refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information : the "bad" products or services are more likely to be...

 problem. Hence, government provision of UI has the potential to increase efficiency. However, government provision does not eliminate moral hazard
Moral hazard
In economic theory, moral hazard refers to a situation in which a party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party insulated from risk behaves differently from how it would if it were fully exposed to the risk.Moral hazard...

.”

Adverse selection


“The workers who have the highest probability of becoming unemployed have the highest demand for unemployment insurance (adverse selection).” Adverse selection
Adverse selection
Adverse selection, anti-selection, or negative selection is a term used in economics, insurance, statistics, and risk management. It refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information : the "bad" products or services are more likely to be...

 causes profit maximizing private insurance agencies to set high premiums for the insurance because there is a high likelihood they will have to make payments to the policyholder. High premiums work to exclude many individuals who otherwise might purchase the insurance.

Moral hazard


“At the same time, those workers who managed to obtain insurance might experience more unemployment otherwise would have been the case.” The private insurance company would have to determine whether the employee is unemployed through no fault of their own, which is difficult to determine. Incorrect determinations could result in the payout of significant amounts for fraudulent claims or alternately failure to pay legitimate claims. This leads to the rationale that if government could solve either problem that government intervention would increase efficiency.

UI effect on unemployment


In the Great Recession, the “moral hazard” issue of whether Unemployment Insurance (UI)-- and specifically extending UI past the maximum 99 weeks -- significantly encourages unemployment by discouraging workers from finding and taking jobs, has been expressed by Republican legislators. Conservative economist Robert Barro found UI raised the unemployment rate 2%.. Disagreeing with Barro's study were Berkeley economist Jesse Rothstein who found the “vast majority” of unemployment was due to “demand shocks” not “UI-induced supply reductions.” A November report by the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....

, found that even if UI benefits convince some unemployed to ignore job opening, these openings were quickly filled by new entrants into the labor market. A Survey of studies on Unemployment Insurances’s effect on employment by the Political Economy Research Institute found that unemployed who collected UI did not find themselves out of work longer than those who didn’t have unemployment benefits; and that unemployed workers did not search for work more or reduce their wage expectations once their benefits run out.

One concern over unemployment insurance increasing unemployment is based on experience rating UI uses which can sometimes be imperfect. That is, the cost to the employer in increased taxes is less than the benefits that would be paid to the employee upon layoff. The firm in this instance believes that it is more cost effective to layoff the employee, causing more unemployment than under perfect experience rating.

Alternative policy


An alternative to unemployment insurance intended to reduce the moral hazard costs would introduce mandated individual saving accounts for workers to draw on after being laid off. The plan, by Martin Feldstein
Martin Feldstein
Martin Stuart "Marty" Feldstein is an economist. He is currently the George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research . He served as President and Chief Executive Officer of the NBER from 1978 through 2008...

 would pay any positive account balance at retirement to the employee.

Effect on state budgets


Another issue with unemployment insurance relates to its effects on state budgets. During recessionary time periods, the number of unemployed rises and they begin to start drawing benefits from the program. The longer the recession lasts, depending on the state’s starting UI program balance, the quicker the state begins to run out of funds. The recession that began in December 2007 and ended in June 2009 has significantly impacted state budgets. According to The Council of State Governments, by March 18, 2011, 32 states plus the Virgin Islands had borrowed nearly $45.7 billion. The Labor Department estimates by the fourth quarter of 2013, as many as 40 states may need to borrow more than $90 billion to fund their unemployment programs and it will take a decade or more to pay off the debt.

Insurance funds


Possible policy options for states to shore up the unemployment insurance funds include lowering benefits for recipients and/or raising taxes on businesses. Kentucky took the approach of raising taxes and lowering benefits to attempt to balance its unemployment insurance program. Starting in 2012, a claimant’s weekly benefits will decrease from 68% to 62% and the taxable wage base will increase from $8,000 to $12,000, over a ten year period. These moves are estimated to save the state over $450 million..

Taxing or exempting UI


The argument for taxation of social welfare benefits is that they result in a realized gain for a taxpayer. The argument against taxation is that the benefits are generally less than the federal poverty level.

Unemployment compensation has been taxable by the federal government since 1987. Code Section 85 deemed unemployment compensation included in gross income. Federal taxes are not withheld from unemployment compensation at the time of payment unless requested by the recipient using Form W-4V.

In 2003, Rep. Philip English
Phil English
Philip Sheridan "Phil" English served as a Republican member of the United States House of Representatives from 1995 - 2009 from the U.S. state of Pennsylvania, representing the state's 3rd Congressional district....

 introduced legislation to repeal the taxation of unemployment compensation, but the legislation did not advance past committee
United States House Committee on Ways and Means
The Committee of Ways and Means is the chief tax-writing committee of the United States House of Representatives. Members of the Ways and Means Committee are not allowed to serve on any other House Committees unless they apply for a waiver from their party's congressional leadership...

. Most states with income tax consider unemployment compensation to be taxable.

Prior to 1987, unemployment compensation amounts were excluded from federal gross income.

For the US Federal tax year of 2009, as a result of the signing of the American Recovery and Reinvestment Act of 2009
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009, abbreviated ARRA and commonly referred to as the Stimulus or The Recovery Act, is an economic stimulus package enacted by the 111th United States Congress in February 2009 and signed into law on February 17, 2009, by President Barack Obama.To...

 signed by Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

 on February 17, 2009 the first $2,400 worth of unemployment income received during the 'tax year' of 2009 will be exempted from being considered as taxable income on the Federal level, when American taxpayers file their 2009 IRS tax return paperwork in early 2010.

Job sharing


Employers have the option of reducing work hours to part-time for many employees instead of laying off some of them and retaining only full-time workers. Employees in 18 states can then receive unemployment payments for the hours they are no longer working.

International Labour Convention


International Labour Organization
International Labour Organization
The International Labour Organization is a specialized agency of the United Nations that deals with labour issues pertaining to international labour standards. Its headquarters are in Geneva, Switzerland. Its secretariat — the people who are employed by it throughout the world — is known as the...

 has adopted the Employment Promotion and Protection against Unemployment Convention, 1988
Employment Promotion and Protection against Unemployment Convention, 1988
Employment Promotion and Protection against Unemployment Convention, 1988 is an International Labour Organization Convention to promote employment especially vocational guidance, training and rehabilitation, offr the best protection against the adverse effects of involuntary unemployment, but that...

 for promotion of employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...

 against unemployment and social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

 including unemployment benefit.

See also

  • Job sharing
    Job sharing
    Job sharing is an employment arrangement where typically two people are retained on a part-time or reduced-time basis to perform a job normally fulfilled by one person working full-time. Compensation is apportioned between the workers, thus leading to a net reduction in per-employee income...

  • 99ers
    99ers
    99ers is a colloquial term for unemployed people in the United States, mostly citizens, who have exhausted all of their unemployment benefits, including all unemployment extensions. As a result of the American Recovery and Reinvestment Act passed by Congress in February 2009, many unemployed...

  • Unemployment
    Unemployment
    Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

  • Unemployment extension
    Unemployment extension
    Unemployment extension is when regular unemployment benefits are exhausted and extended for additional weeks.Unemployment extensions are created by passing new legislation at the federal level often referred to as an "unemployment extension bill". This new legislation is introduced and passed...

  • Social rights
    Social rights
    Economic, social and cultural rights are socio-economic human rights, such as the right to education, right to housing, right to adequate standard of living and the right to health. Economic, social and cultural rights are recognised and protected in international and regional human rights...

  • Hartz concept
    Hartz concept
    The Hartz concept is a set of recommendations that resulted from a commission on reforms to the German labour market in 2002. Named after the head of the commission, Peter Hartz, it went on to become part of the German government's Agenda 2010 series of reforms, known as Hartz I - Hartz IV...

  • HIRE Act
  • Parental leave
    Parental leave
    Parental leave is an employee benefit that provides paid or unpaid time off work to care for a child or make arrangements for the child's welfare. Often, the term parental leave includes maternity, paternity, and adoption leave...

  • Reserve army of labour
    Reserve army of labour
    Reserve army of labour is a concept in Karl Marx's critique of political economy. It refers basically to the unemployed in capitalist society. It is synonymous with "industrial reserve army" or "relative surplus population", except that the unemployed can be defined as those actually looking for...

  • Labour power
    Labor power
    Labour power is a crucial concept used by Karl Marx in his critique of capitalist political economy. He regarded labour power as the most important of the productive forces of human beings. Labour power can be simply defined as work-capacity, the ability to do work...

  • Compensation of employees
    Compensation of employees
    Compensation of employees is a statistical term used in national accounts, balance of payments statistics and sometimes in corporate accounts as well...

  • Lorenz curve
    Lorenz curve
    In economics, the Lorenz curve is a graphical representation of the cumulative distribution function of the empirical probability distribution of wealth; it is a graph showing the proportion of the distribution assumed by the bottom y% of the values...

  • Social security
    Social security
    Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...

  • J. S. Woodsworth
    J. S. Woodsworth
    James Shaver Woodsworth was a pioneer in the Canadian social democratic movement. Following more than two decades ministering to the poor and the working class, J. S...

  • Social insurance
    Social insurance
    Social insurance is any government-sponsored program with the following four characteristics:* the benefits, eligibility requirements and other aspects of the program are defined by statute;...

  • Kurzarbeit
    Kurzarbeit
    Kurzarbeit is a short-term, recession-related program operating in several European countries in which companies have entered into an agreement to avoid laying-off any of their employees by instead reducing the working hours of all or most of their employees, with the government making up some of...


External links