(Un)employment protection schemes Ariel Pino

(Un)employment protection schemes

28 May 2021

Ariel PinoSocial Protection and OSH SpecialistDecent Work Team and Office for the [email protected]

Summary

IntroductionPolicy mattersDesign matters

Introduction

Universal Social ProtectionComprehensive, Adequate, Sustainable, Responsive

USP entails actions and measures to realize the human right to social security by progressively building and maintaining nationally appropriate social protection systems, so that everyone has access to comprehensive, adequate, sustainable and responsive protection over the life cycle, in line with ILO standards.

USP can be provided through a range of mechanisms: cash or in-kind benefits, contributory or non-contributory schemes, and programmes to enhance human capital, productive assets, and access to jobs.

Social Protection Floor: security income or children; people of working age in case of maternity, disability, work injury or for those without jobs ; and pensions for all older persons.

Advancing social justice, promoting decent work

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• Human right• Reduce poverty and inequality• Supports domestic demand• Supports inclusive growth• Facilitates structural transformation• Boosts human capital and productivity• Crates cohesions and better societies

SOCIAL, ECONOMIC &

POLITICAL NECESSITY

WE ALL NEED SP - NOT JUST THE POOR AND VULNERABLE

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Multiple responsesto multiple challenges

Source: World Bank

A long way to achieve Universal Social Protection – SDG 1.3


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Latin America & Caribbean

39.2%Vulnerable covered by non-contributory schemes

Social Protection Coverage

9.7%SP expenditure as % GDP

60% Sectors more affected:

- Hospitality- Retail- Manufacturing

Reduction on employment

37.3%↑ in poverty231 million poor

20%Reduction of working hours

Source: ILO

7Change in # of active employees by size of enterpris e (per month - compared with previous year)BELIZE

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

1 2 3 4 5 6-10 11-20 21-50 51-100 100+

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20

8Change in # of active employees by size of enterpris e (per month - compared with previous year)TURKS AND CAICOS ISLANDS

-100%

-80%

-60%

-40%

-20%

0%

20%

1 2 3 4 5 6-10 11-20 21-50 51-100 100+

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

9Change in # of active employees by size of enterpris e (per month - compared with previous year)ANTIGUA AND BARBUDA

-100%

-80%

-60%

-40%

-20%

0%

20%

1 2 3 4 5 6-10 11-20 21-50 51-100 100+

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

10Change in # of account workers/SE (per month - compared with previous year)

-100%

-80%

-60%

-40%

-20%

0%

20%

January 2019/2020 February 2019/2020 March 2019/2020 April 2019/2020 May 2019/2020 June 2019/020

ATG - Male own account workers/self employed insured

ATG - Female own account workers/self employed insured

BLZ - Male own account workers/self employed insured

BLZ - Female own account workers/self employed insured

TCI - Male own account workers/self employed insured

TCI - Female own account workers/self employed insured


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• Focus to preserve the employment relationship in a difficult context for enterprises’ economic activity through wage subsidies, tax concessions, access to credit

• Income support to the unemployed (SS reserves and Gov’t funds)

• Income support to the poor and vulnerable (new and more benefits)

• In-kind support to populations (throughout the life cycle)

• Relaxing requirements in social security

• Adapting governance structures to reach those affected

• Linking skills development with support to the unemployed

SOCIAL SECURITY ORGANIZATIONS = FISRT RESPONDETS


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Responses to COVID-19 on SP in the Caribbean

12Unemployment protection measures in selected Caribbean countries # Benefits**

* Has unemployment insurance branch in the social security scheme - ** latest date available; Aug-Nov 2020 Source: ILO, Q3 2020 report

Anguilla • Temporary COVID-19 Unemployment Assistance Benefit 10,792

Aruba• Salary allowance

• Financial support for SMEsn.a.

Bahamas*• Unemployment insurance*

• Government Unemployment Program for Self-Employed Workers

36,813

7,183

Barbados* • Unemployment insurance* 23,500

Belize • Unemployment Support Program 46,652

British Virgin Islands • Unemployment Support Program 1,738

Dominica • Unemployment benefit for dependent workers

• Unemployment benefit for self-employed workersn.a.

Grenada • Unemployment assistance benefit 7,000

St. Kitts and Nevis • Emergency Support Fund 21,517

Santa Lucia • Economic Relief Grant 18,853

St Vincent and the

Grenadines

• Temporary unemployment benefit

• Additional program for sea workers2,596

Trinidad and Tobago • Salary Relief Grant 74,549


Policy matters

What do UI schemes protect?

In times of crisis … and not

Economic activity affected leading to:

reduction in working hours

temporary and permanent lost of jobs

Specific groups of interest

self-employed

workers in the informal economy

non-standard forms of employment


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The contingency covered shall include suspension of earnings, as

defined by national laws or regulations, due to inability to

obtain suitable employment in the case of a person protected who is capable of, and available for, work

(Article 20, C102)

HOW?

(Un)employment protection schemes: much more than $ $

(Un)employment protection schemes provide income se curity to workers who are at risk of losing their jobs or who are effecti vely unemployed.

employment retention benefits to provide income security in case of a partial or full loss of earnings due to a temporary reduction in the normal or statutory hours of work or a temporary suspension of work, without any break in the employment relationship .

unemployment benefits compensating lost of income due to job loss and benefits for part-time workers seeking full time employment.


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38.6 %Global labour force covered by law

21.8%Effective coverage

9 countries with UIArgentina, Brazil, Chile, Colombia, Ecuador, Uruguay, Anguilla, Barbados & The Bahamas

(Un)employment protection schemes must be coordinated with active labour market policies

essential in achieving full, protective and freely chosen employment.

Holistic approach to (Un)employment protection


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Source: ILO


Design matters

International Labour Standards - unemployment protec tion

Provide guidance on how to design unemployment protection schemes, together with employment promotion schemes, including in crisis situations

Social Security (Minimum Standards) Convention, 1952 (No. 102)

Social Protection Floors Recommendation, 2012 (No. 202)

Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168) and accompanying Recommendation No. 176

Employment and Decent Work for Peace and Resilience Recommendation, 2017 (No. 205

Employment Policy Convention, 1964 (No. 122)

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Set out common rules of collective organization, financing and administration, as well as principles for the good governance of national systems

• the general responsibility of the State for the due provision of benefits and proper administration of social security systems

• solidarity, collective financing and risk-pooling

• participatory management of social security schemes

• guarantee of defined benefits

• adjustment of pensions in payment to maintain the purchasing power of beneficiaries

• the right to complain and appeal.

International standards on (Un)employment protectio n


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Source: ILO

Convention No. 102 Convention No. 168

Qualification rules

Art. 20: The benefit is provided in case of suspension of earnings due to inability to find a suitable employment for those who are capable of, and available for, work.

Art. 20&21: Refusal, suspension or reduction if the unemployed (i) is absent from the territory of the Member; (ii) had deliberately contributed to his or her own dismissal; (iii) has left voluntarily without just cause; (iv) has stopped working during the period of a labour dispute; (v) has attempted to obtain or has obtained benefits fraudulently; (vi) has failed without just cause to use the facilities available for placement, vocational guidance, training; (vii) has refused a suitable employment; (g) is receiving other income support benefits.

Duration of benefit

Art.24: Limited to 13 weeks in a periodof 12 months, or 26 weeks within aperiod of 12 months where theprotection covers all resident whosemeans during unemployment do notexceed a prescribed limit.

Art. 19(a): Limited to 26 weeks in each spell of unemployment, or to 39weeks over any period of 24 months.

Benefit levels Art. 67: the amount of benefits for a standard beneficiary (man with wife and two children) should attain at least 45 per cent of the reference wage.

Art. 15.1: Benefits must attain 50 per cent of previous earnings, or be fixed at not less than 50 per cent of the legal minimum wage or the average wage, or at a level which provides the minimum essential for basic living expenses, whichever is the highest.

Examples in the Caribbean


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Source: ILO

Qualification rules Duration of benefit Benefit levels

Bahamas Younger than age 65 years of age and able to satisfy the Department of Labour’s conditions for registration as job seeker.At the date unemployment began:- paid at least 52 contributions; and- paid and/or been credited with at least 13 contributions in the 26 weeks immediately before the week in which the worker was last employed, and- paid and/or been credited with at least 7 contributions in the 13 weeks immediately before the week in which the worker was last employed.

Paid so long as unemployment continues to a maximum period of 13 weeks within a 52 week period.

50% of the unemployed worker’s average weekly insurable income. Paid weekly.

Barbados - have been insured by NIS for at least 52 weeks before becoming unemployed- have at least 20 contributions paid in the 3 consecutive quarters ending with the quarter before that in which became unemployed - have at least 7 contributions paid in the quarter before the quarter in which became unemployed

The benefit is payable for each day of unemployment except Sundays for a maximum of 26 weeks in a continuous period of unemployment; or for an aggregate of 26 weeks in the 52 weeks immediately before the current week of unemployment.

Daily rate of unemployment benefit is 60% of average insurable weekly earnings divided by 6. This also applies to someone who has been laid off or kept on short time (working a reduced number of hours).

Financing of (un)employment protection schemes

Financing can be assured by employers, workers or general government revenues, sometimes by all three under a tripartite cost-sharing arrangement

Benefit and administration costs are be borne collectively either by insurance contributions or by taxes, in such a way as to avoid hardship on low income workers. Individual accounts also exist.

Responsibility for sound governance, which could include required calculations and periodic actuarial reviews

Consult and involve employers and workers in the design and operation of these schemes

21Country Employee (%) Employer (%) Government

Argentina 0.89 to 1.50

Bahamas 0.5 0.5

Barbados 0.75 + 0.5 for

training levy

0.75 + 0.75 for

training levy

Canada 1.58 (1.18 Quebec) 1.4 times of

employee premium

Chile 0.6 (ISA)

0 fix term

1.6 (ISA) & 0.8 (SF)

2.8 (ISA) & 0.2 (SF)

Annual contribution

to the Sol. Fund

China Up to 1 Up to 2 Ad-hoc

contribution

Denmark (voluntary) 8 (also for SE) also

for early retirement

Subsidy

France

2.4 for artists

4,05 + 0.15 (WGS)

9.05 artists

Germany 1.5 1.5 (3 for SE vol.)

Republic of Korea 0.8 0.8 + 0.25 (<150)

to 0.85 (>1000)

Thailand 0.5 0.5 0.25

United States 1.78 (average

2020)

Viet Nam 1 1 1

Switzerland 1.1 up to 148,200

1 >148,200 no cap

1.1 up to 148,200

1 >148,200 no cap

Key parameters of (un)employment insurances (1)

Coverage: private & public sector workers, part-time workers, seasonal workers, migrant workers

Possible exclusions: self-employed, voluntary contributors, agricultural workers, household workers

Sources of funds: distribution of contribution rate between employer and employee (and Government as employer), minimum and maximum earnings for contributions, general revenue

Qualifying conditions: period of insurance, paid contributions, reasons for termination, waiting period, compatibility/coordination with other termination benefits, e.g. severance/redundancy, Labour Department conditions (e.g. active search of jobs) & employability (e.g. skills development)

Benefit rate: 45% (Convention 102), 50% (Convention 168), frequency of payments, possibility of a lump-sum payment (e.g. if a project exists), average earnings, calculation of the benefit, may be reduced over time

Benefit duration: 13 or 26 weeks is common, payments in each unemployment spell, reasons for disqualification/reduction in the duration of the benefit

Entitlements while receiving UB: maternity, funeral grant, UB period considered for qualifying conditions for other social security benefits (e.g. old-age work injury)


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Key parameters of (un)employment insurances (2)

Start of operations: how the UI scheme would become operational, initial funding options (e.g. transfer of ST/LT/EI reserves, transfers from the Government), transition period for the UI, consider less costly options to start

Active job seeking: linkages with existing Active Labour Market Programs, e.g. job matching, TVET, entrepreneurship, employment services


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Coordination of Benefits:co-existence of unemployment benefits with the other termination benefits (e.g. severance, redundancy)

Thank you!

Ariel PinoSocial Protection and OSH Specialist

Decent Work Team and Office for the [email protected]

(Un)employment protection schemes Ariel Pino

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