The global economic crisis has served as a stark reminder of why unemployment insurance matters. But the reality is that fewer than half of almost 200 countries monitored by the ILO offer such protection.
To support this proposed goal, Ryder said the ILO would also push for well-designed national social protection systems to protect the most vulnerable groups.
The ILO recently announced that more than 70 per cent of workers worldwide have no statutory access to unemployment insurance or any type of unemployment assistance. Unemployment insurance schemes exist in 72 countries out of 198 monitored by the ILO, most of them being middle- and high-income countries.
According to the UN agency, the proportion of unemployed workers without any such income security is even higher (86 per cent) if one includes those who haven’t paid social security contributions long enough to qualify for unemployment benefits, as many unemployment insurance schemes are based on contributions.
“This means that more than 86 per cent of the almost 40 million people who dropped out of the labour market since 2008 found themselves without a regular income from one day to the other,” ILO social protection expert Florence Bonnet said.
The ILO described social protection (social security) as “a very fundamental” tool for crisis-recovery efforts, while highlighting the “enormous” social costs and tensions created by hastily-adopted austerity plans.
It stated that only 20 per cent of the world’s population has adequate social security coverage and more than half lack any coverage at all. It also underscored the “multidimensional” impact of social protection measures, saying that they serve as economic stabilisers.
According to the ILO, social protection for the most vulnerable makes an immediate impact on people’s lives and the economy – contrary to tax cuts – which mainly benefit the wealthier and better off but do not create demand.
The conclusions of the recurrent discussion on social protection, adopted by the ILC at its 100th Session in 2011, emphasised “the need for a Recommendation complementing the existing standards that would provide flexible but meaningful guidance to member States in building Social Protection Floors within comprehensive social security systems tailored to national circumstances and levels of development”, and set out elements of a possible Recommendation on social protection floors in the appendix to these conclusions.
The report was prepared on the basis of the replies received from governments and organisations of employers and workers to the questionnaire and contains the substance of their observations together with the Office’s commentary on the replies and proposed text of the recommendation.
In June 2012, the ILO’s International Labour Conference adopted Recommendation No. 22 national floors of social protection, which called on all ILO member countries to provide, as one of the basic social security guarantees to all in need, basic income security.
“The guarantee should reach at least a nationally defined minimum level for persons unable to earn sufficient income, including in particular those not able to find sufficiently paid employment. This may be provided through different means like unemployment insurance or assistance or through employment guarantees or other public employment programmes,” the ILO stated.
It noted that unemployment social security coverage varies widely between world regions.
According to the ILO, the proportion of unemployed receiving unemployment benefits can be as high as 80 per cent or more in Western Europe, North America, and Central and Eastern Europe, while it can drop to less than 10 per cent in Africa.
These variations, the ILO stated, reflect the different shares of employees in formal employment as a proportion of the total employment.
“With higher levels of economic development, many middle-income countries have realised the need to introduce systems of unemployment protection in order to facilitate structural economic transitions and respond to shocks,” Bonnet said.
She cited the Republic of Korea as an example where the country introduced unemployment insurance in 1995, shortly before the Asian financial crisis of 1997. “The scheme has also helped the country absorb the repercussions of the recent global economic crisis in a more systematic and effective way,” she noted.
According to Bonnet, it was not only in South Korea that unemployment benefits played a key role during the crisis.
“Countries with unemployment protection and similar schemes, ideally combined with active labour market policies, have been able to react to the crisis quicker and in a more effective way than countries without such automatic stabilisers. Unemployment benefits also made it easier for unemployed workers to look for a job,” she added