Module 2: Learning from countries’ experiences in implementing unemployment insurance Celine Peyron Bista ILO, 2013

Content Comparative review of unemployment/ employment insurance systems across the world Lessons learnt

14 schemes across the world, all unique USA Canada Chile Argentina France Germany Bahrain Denmark Viet Nam Thailand China Japan South Korea Mongolia 14 social insurance systems exception of Chile

Unemployment benefits, often emerging after a shock Global economic crisis Asian financial Crisis Great Depression 30s’ Opening Reform of the communist block Second World War Free market reforms in several countries Denmark (1907) Japan (1947) US (1935) China (1986) Thailand (2004) Viet Nam (2009) France (1958) Chile (2002) Argentina (1995) South Korea (1995) Mongolia (1997)

Unemployment situation in 14 countries * For Canada, Japan, South Korea and USA figures are from 01/2012; for Mongolia, Source: Harmonised Unemployment Rates (HURs), OECD - Updated: February 2012 for OECD countries, CIA- the World Fact Book for other countries.

Coverage EmployeesPublicMigrantDomestic workers Part-timeTemporary/ home-based Self- employed New entrants Argentina Bahrain Canada Chile China Denmark(vol.) France (vol.) (EU) Germany (EU) (vol.) Japan Mongolia n/a Korea Thailand US n/a Viet Nam

Qualifying conditions MonthsVol461224Period of reference Argentina 36 months Bahrainor 1 st time jobseekers for UA Canada ChileSA SISA: 6 or 12 months depending if temporary or permanent; SI: 12 months in last 24 months (3 cont.) China DenmarkWP36 months FranceWP28 months if younger than 50, or i36 months if older GermanyWP36 months JapanWP24 months Mongolia R(last 9 continuous) (adjusted to 6 during 2009) KoreaR15 months Thailand R15 months US15 months Viet Nam 24 months

Level and Duration of Benefits Level of benefitsDuration of benefits Argentina50% for 1st 4 months, lower afterwards4 to 12 months (18 for > 60) Bahrain60% and flat amount for 1st-time jobseekers6 months Canada50%3.5 to 11 months ChileIUSA & SI: Decreasing monthly rate (50 to 20%) for permanent workers, SI: 35 to 30% for temporary workers 5 months (2 for temporary) ChinaFlat rate (< mini. wage)12 to 24 months Denmark90%24 months France75% at low income, grading down to 57% at high income 4 to 24 months Germany60% (higher if with children)6 to 24 months (age) Japan50 to 80% (digressive with level of past earnings).3 to 11 months (reason) Mongolia45 to 70% depending on contribution length2.5 months (increased to 4 months after 2009 crisis) Korea50%3 to 8 months Thailand50% (30% for voluntary quitters)6 months (8 during 2009) US50%6 months Viet Nam60%3 to 12 months

Contribution rates Contribution level Less or at 1%Mongolia, Argentina Between 1 and 2%Thailand, Denmark, Japan, Korea Between 2 and 3%Viet Nam, Bahrain, China, Germany More than 3%Chile, France, US, Canada

Comparison between unemployment rate and cost (contribution rate & % of GDP) (2010) If includes expenditures for ALMP

Active labour market policies All schemes: - are equipped with employment service centers which offer job counseling and placement services, - provide VT and skills development grants. Examples of ALMPsCountries Integrated systemJapan, Rep. of Korea, Canada VT, job support beyond entitlementsFrance, Mongolia, Japan Work sharing programmesCanada, Denmark, France, Germany Labour mobility allowanceGermany, Japan Re-employment lump-sumJapan, Rep. of Korea, Viet Nam Employment stabilization programmes (re-training/wages subsidies) Japan, Rep. of Korea, Support to create own-businessFrance Preventive counselingUnited States

Two distinct objectives, two separate funds… Two sources of contribution Unemployment benefits Employment stabilization /promotion programmes EmployeesEmployersEmployeesEmployersGovernment Japan % of payment Republic of Korea ( 1000) Funding ALMPs

The Korean system Employment insurance Unemployment benefits Job-seeking benefits Employment promotion allowance Employment stabilization Subsidy to employ jobseekers - Job creation - Grant for priority firms - Works-sharing - To start-up business Grant to retain employment - Subsidy to wages - Paid leaves - VT grant for staff reassignment Loan for facilities to employ disabled and senior jobseekers Vocational training For SMEs employees For jobseekers Financed by workers and employers’ contributions Financed by employers’ contributions only Loan is only for a very specific programme

The Japanese model Employment Insurance Unemployment Benefit Two Services Job Applicants’ Benefit Employment Promotion Benefits Study &Training Benefits Employment Continuation Benefits (Older persons, Childcare leave) Service for employment stability Service for developing workers' capability Service for employees’ welfare (Repeal in 2007) Financed by workers and employers’ contributions Financed by employers’ contributions only

Severance payment provisions Diversity of situations: -Thailand: kept both -Viet Nam: Progressive phasing out -France, US, Canada… on the basis of collective agreement. Will delay or reduce the amount of UI (no overlapping) C. 168 (Art. 22) – where severance pay also granted, allows for corresponding reduction of the unemployment benefit

Lessons-learnt from the comparative review One country, one model! Should be included: temporary/seasonal workers, domestic workers, migrant workers, new entrants (young, women and informal eco. workers), SME, self-employed. Certain flexibility to adjust parameters during crisis Denied or reduced benefits for voluntary quitters (insurance) Case management services (closer support to unemployed)