The origin of unemployment insurance dates back to 1953. The unemployment insurance schemes proved to be extremely helpful for the millions of unemployed individuals who lost their jobs following the Great Depression. These insurance schemes turned out to be a great source of financial relief for the families of the unemployed workers. The unemployment insurance schemes also help the business organizations, disadvantaged group of population and less developed economies to tackle the financial crises to some extent.
The stock market collapse on 29th October 1929 initiated the Great Depression in the US economy. The unemployment insurance acted as a cushion to ease the immediate effect of massive job loss in the US economy. In the later years many other economies in the world resorted to unemployment insurance programs to support the families of the job less section of the population.
Objectives of Unemployment Insurance
The unemployment insurance schemes are aimed to fight a number of social obstacles. However, the main objective of these programs is to minimize the adverse effect of unemployment. The principal objectives of unemployment insurance are as follows:
To retain the purchasing capacity of the workers. It prevents the effects of unemployment from spreading across the different layers of the society.
To lower the burden of debt of the unemployed mass of population.
To keep the experienced and skilled section of the unemployed workforce to be absorbed by the local employers.
Unemployment Benefits at a Glance
Unemployment benefits are described as transferred payments to the jobless people made from the government accounts. Normally, people who register themselves as unemployed are entitled to get unemployment benefits. These benefits come under the purview of a system of para-governmental insurance that is compulsory by nature.
The unemployment insurance schemes may be of different types. Some of the common varieties of unemployment insurance are described below:
The Federal-State Unemployment Insurance Program is designed to help the qualified workers who satisfy the eligibility criteria set by state law; however not engaged in any work due to some reason, which is beyond their control.
The Unemployment Compensation for Federal Employees caters to the requirements of the eligible unemployed who used to serve as civilian federal workers.
Disaster Unemployment Assistance is offered to meet the financial requirements of those who have registered themselves as unemployed due to some disaster announced by the US president.
Self-Employment Assistance provides financial assistance to the dislocated workers to be re-employed fruitfully.
Extended Benefits are especially designed for the unemployed workers who have used up the benefits of regular unemployment insurance schemes during the phase of severe unemployment.
More on Unemployment Benefits
The unemployment benefit schemes are offered in different forms in different countries across the world. In Canada, Employment Insurance is the term that is used for Unemployment Insurance. The workers in Canada are supposed to contribute a certain amount for a central fund. When unemployed they can take out that amount to meet their financial crises.
In Australia, the system of unemployment insurance is somewhat different. Here, the unemployed workers get the benefits of the unemployment insurance through the system of income taxation.
In Italy, the system of unemployment insurance runs on the basis of the cash transfer system. The money transfer here depends on the contributions that can be a maximum of 40% of the earlier earnings of the workers and can be offered for seven months.
In Ireland, anyone who is 18 years and above and not involved in any productive activity is eligible to apply for Jobseeker’s Allowance.