Unemployment benefits
Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by governmental bodies to unemployed people. Depending on the country and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.
Unemployment benefits are generally given only to those registering as becoming unemployed through no fault of their own, and often on conditions ensuring that they seek work.
In British English, unemployment benefits are also colloquially referred to as "the dole", or simply "benefits"; receiving benefits is informally called "being on the dole". "Dole" here is an archaic expression meaning "one's allotted portion", from the synonymous Old English word dāl.
In Australia and New Zealand, a "dole bludger" is someone on unemployment benefits who makes no effort to find work. In the United Kingdom, the equivalent word used to describe the same thing is "layabout" and in the United States, "slacker" is most commonly used to describe someone who chooses not to work for a living.
History
The first modern unemployment benefit scheme was introduced in the United Kingdom with the National Insurance Act 1911, under the Liberal Party government of H. H. Asquith. The popular measures were introduced to stave off poverty inflicted through unemployment, though they also gave the Liberal Party the added benefit of combatting the Labour Party's increasing influence among the country's working-class population. The Act gave the British working classes a contributory system of insurance against illness and unemployment. It only applied to wage earners, however, and their families and the unwaged had to rely on other sources of support, if any. Key figures in the implementation of the Act included Robert Laurie Morant and William Braithwaite.By the time of its implementation, the benefits were criticised by Communist parties, who saw such insurance as a means to prevent workers from starting a revolution, while employers and Tories sometimes saw it as a "necessary evil".
The scheme was based on actuarial principles and was funded by fixed amounts from workers, employers, and taxpayers. It was restricted to particular industries, particularly more volatile ones like shipbuilding, and did not make provision for any dependants. After one week of unemployment, a worker was eligible to receive 7/- per week for up to 15 weeks in a year. By 1913, 2,300,000 were insured under the unemployment benefit programme.
Expansion and spread
The Unemployment Insurance Act 1920 created the dole system of payments for unemployed workers in the United Kingdom. The dole system provided 39 weeks of unemployment benefits to over 11,000,000 workers—practically the entire civilian working population except domestic service, farmworkers, railway men, and civil servants.Unemployment benefits were introduced in Germany in 1927, and in most European countries in the period after the Second World War; with the expansion of the welfare state. Unemployment insurance in the United States originated in Wisconsin in 1932. Through the Social Security Act of 1935, the Federal government of the United States effectively encouraged the individual states to adopt unemployment insurance plans.
Processes
Eligibility criteria for unemployment benefits typically factor in the applicant's employment history and their reason for being unemployed. Once approved, there is sometimes a waiting period before being able to receive benefits. In the US, there is no waiting period on a temporary basis currently due to the COVID-19 pandemic, but in many states there is a waiting week. In Germany and Belgium, there is no waiting week. The current waiting period in Canada is seven days. Countries implement varied potential benefit duration, which is how long an individual is eligible to receive benefits. The PBD may be a sliding scale function of the applicant's past employment history and age, or it may be a set length for all applicants. In Argentina, for example, six months of work history results in a PBD of two months, while 36 months or more of work history can result in a PBD of a full year, with an extra six months of PBD to applicants over the age of 45.Most countries calculate the amount of unemployment benefit as a percentage of the applicant's former income. A typical replacement percentage is 50-65%. Some countries offer much higher levels of wage replacement, such as the Netherlands, Luxembourg, and Denmark. There are often caps on the maximum benefit level, ranging from 33% of a country's average wage to 227% of its average wage. The average maximum benefit level is 77% among OECD countries. Most benefit payments are constant over the course of the PBD, though countries such as the Netherlands, Sweden, Hungary, Slovenia, Spain, and Italy have a declining benefit path, in which the wage replacement percentage decreases over time.
Most countries require those receiving unemployment benefits to search for a new job, and can require documentation of job search activities. Benefits may be cut if the applicant does not fulfill the search requirements, or turns down a job offer deemed acceptable by the unemployment benefits agency. Agencies may also provide resources, training, or education for job seekers. Some countries allow beneficiaries to accept part-time jobs without losing benefit eligibility, which can counter the disincentive of unemployment benefits to accepting jobs that do not fully replace the former wages.
Unemployment benefits are typically funded by payroll taxes on employers and employees. This can be supplemented by the government's general tax revenue, which can occur periodically or in response to economic downturn. Contribution rates are usually between 1 and 3% of gross earnings, and are usually split between the employer and employee.
Systems by country
Across the world, 72 countries offer a form of unemployment benefits. This includes all 37 OECD countries. Among OECD countries for a hypothetical 40-year-old unemployment benefit applicant, the US and Slovakia are the least generous for potential benefit duration lengths, with PBD of six months. More generous OECD countries are Sweden and Iceland ; in Belgium, the PBD is indefinite.Armenia
's has been in force since 1991. In 2005, Armenia adopted the law on Employment of the Population and Social Protection in Case of Unemployment, which provided a legal framework to the Unemployment Insurance and active labour policies. Armenia's UI is a contributory program, which is obligatory for public and formal private sectors, as well as the self-employed. To be eligible for benefits, the claimant must be unemployed as a result of business reorganization, staff reduction, or the termination of a collective bargaining agreement. To be eligible, applicants must have contributed for at least 12 months prior to unemployment or be actively looking for work after a long period of unemployment. The UI is also available to first-time job seekers. Those who do not qualify for the monthly payment are nonetheless eligible for the UI scheme's capacity building programs. Those who qualify for the monthly unemployment benefit will get a payment of 18,000 AMD per month for a minimum of 6 months and a maximum of 12 months.The UI also includes a scheme to help employers hire people who are unemployed with at least 35 years of UI contributions but have not reached retirement age; unemployed for more than three years; returning from corrective or medical institutions; returning from mandatory military service; disabled; refugees; or are 16 years of age and newly eligible to work. Employers who hire these groups are eligible for a benefit of 50% of the minimum wage to supplement the employee's income. The UI also provides financial assistance and capacity-building programs for unemployed or disabled individuals who want to start their own businesses. Armenia also has a Paid Public Works program that provides jobseekers and the disabled with temporary public employment for three months.
Australia
In Australia, social security benefits, including unemployment benefits, are funded through the taxation 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. 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. 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$91.60 per week. For over-18- to 20-year-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 'JobSeeker Payment' and is paid to unemployed people over the age of 21 and under the pension eligibility age. To receive a JobSeeker Payment, recipients must be unemployed, be prepared to enter into an Employment Pathway Plan by which they agree to undertake certain activities to increase their opportunities for employment, be Australian Residents and satisfy the income test and the assets test. The rate of allowance as of 12 January 2010 for single people without children was A$228 per week, paid fortnightly. Different rates apply to people with partners and/or children.
Effectively, people have had to survive on $39 a day since 1994, and there have been calls to raise this by politicians and NGO groups. On 22 February 2021, the Prime Minister of Australia, Scott Morrison, announced that the JobSeeker base rate would be increased by A$50 a fortnight from April 2021. It is also intended to increase the threshold amount recipients can earn before their payment starts to be reduced.
The system in Australia is designed to support recipients no matter how long they have been unemployed. In recent years the former Coalition government under John Howard has increased the requirements of the Activity Agreement, providing for controversial schemes such as Work for the Dole, which requires that people on benefits for six months or longer work voluntarily for a community organisation regardless of whether such work increases their skills or job prospects. Since the Labor government under Kevin Rudd was elected in 2008, the length of unemployment before one is required to fulfill the requirements of the Activity Agreement has increased from six to 12 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 20 September 2021, begins to be paid when fortnightly rent is more than A$124.60. Rent Assistance is paid as a proportion of total rent paid. The maximum amount of rent assistance payable is A$139.60 per fortnight, and is paid when the total weekly rent exceeds A$310.73 per fortnight. Different rates apply to people with partners and/or children, or who are sharing accommodation.