Transcript Document
ILO Standards for
Employment Promotion and Protection against Unemployment
Ho Chi Minh City, 21 March 2012
Celine Peyron Bista Chief Technical Advisor, UI ASEAN Project ILO Regional Office for Asia and the Pacific, Bangkok
Structure of the presentation
ILO Standards for unemployment protection • Objectives and Principles • ILO Convention No.168 for benchmarks Conceptual considerations on UI and EI Comparative analysis of UI/EI schemes Conclusions: in the ASEAN?
Protection against Unemployment in ILO Standards (up-to-date)
Employment Promotion and Protection against Unemployment Recommendation, R. 176 Convention concerning Employment Promotion and Protection against Unemployment, C. 168 Convention concerning Minimum Standards of Social Security, C. 102 (Part IV – Unemployment Benefit)
Objective: To protect workers and their family against loss of employment and income
Maintaining the unemployed and their family in
healthy and reasonable living conditions
(C168, art.16) UI benefits
1. providing income security 2. upgrading skills and matching labour supply/demand
Promoting active labour market policies for
full, productive and fully chosen employment
(C168, art.2&7) ALMP
Major Ideas around which the Convention No. 168 was built (1988)
Economic growth :
best cure against unemployment with a flexible response to change; lead to creation and promotion of all forms of productive and freely chosen employment (Art. 2 C. 168) including small undertakings, cooperatives, self-employment and local initiatives for employment (e.g. paras. 7-8 R. 176); Social security = a means to promote employment and increase capability & employability (larger concept of social protection= SPF) Need for Active
coordination, integration and consolidation
of the different means ( employment assistance and economic support ) serving the goal of employment promotion By establishing a national “system of protection against unemployment”.
Particularity of Convention No. 168
looks beyond the internal organization and functioning of the traditional social security system (Conv. No.102) into the
external socio-economic environment
where social security interacts with the labour market, human resources development and the economy at large; Employment policy Social security Human resources development
Contingency covered & Principles
Social dialogue Social insurance Cash benefits and employment support services
Capable of working, available for work and seeking work
Periodical payment, limited in time Equality of treatment
Benchmarks recommended by ILO C.168 & R.176
Coverage:
1. all employees, including public employees, apprentices (art.11), part-time (art.10), seasonal workers (art.17) 2. New entrants (art.26) 3. Excluded: Misconduct, voluntary leaving without good reason (art.20) 4. Special provisions for seasonal workers-qualifying and waiting periods, benefits duration (art.17, 19) 5. Suspension/exclusion: fail to use employment and VT services, refuse suitable employment (art.20)
Benchmarks recommended by ILO C.168 & R.176
Benefits :
1. Income replacement (not less than 50% of the reference wage= previous earning, minimum wage, or minimum guarantee for living (art.15)) 2. Allowances: vocational training and retraining, travel costs to claim benefits (R176, GP.4.) 3. Services: job placement and counseling (art.8) 4. Benefits for part-time workers seeking for full-time job (art.10) 5. Benefits/ severance pay complementary but no overlapping (art. 22) 6. Acquisition of rights to medical care & sickness, pension, maternity and family allowances (art.24)
Structure of the presentation
ILO Standards for unemployment protection • Objectives and Principles • ILO Convention No.168 for benchmarks
Conceptual considerations on UI and EI
Comparative analysis of UI/EI schemes Conclusions: in the ASEAN?
11
The ILO’s Perspective
The Provision of Unemployment Benefits on the basis of – Periodical payments, and – Social Insurance is optimal in most cases, for reasons including: – – – – It is well-suited to ensuring the rights of participants; Periodical payments best meet the livelihood needs of individuals and families (limitations of the severance pay); The social insurance mechanism allows for “pooling” of risks and costs on an equitable basis; and Allows for protection of workers even when an employer becomes insolvent or individual savings mechanisms fail (as in recent economic crisis).
Limitations of the Social Insurance, informal economy
• • • • Insurance schemes often
fail to work well for workers in the informal economy
: – even though contributions can be proportional for those with low incomes, – it may be difficult to ascribe adequate benefits for those who can only contribute on an irregular basis.
It has been suggested that where informality predominates in national labour markets, unemployment protection should be provided through individual savings accounts .
The
ILO
does not agree with this view, as the evidence to date shows that Unemployment Savings Accounts generally fall far short of providing adequate benefits, especially for workers with low earnings.
A better approach is probably to strengthen
social assistance
provisions and develop programs to increase
capability & employability
of workers. 12
13
UI, EI is there any difference?
• • • National schemes may have the title: – “
Employment Insurance
Scheme” (e.g. Korea, Japan, Canada, proposal for Sri Lanka and Viet Nam) or – “
Unemployment Insurance
Scheme” (e.g. Thailand, France) In most cases, the title may not affect the scheme substantively, BUT It can be useful for the title to convey the national policy approach to the subject
A typology of Passive and Active Labour Market Policies
Passive LMP Active LMP
Provides temporary ‘income security’ for the unemployed: contributory Unemployment Insurance Benefits
Severance/compensation
payment (under Employers’ liability) • Employment-related social assistance that steps in when the unemployed are no longer eligible for UI, or for new entrants (tax-funded) •Unemployment Saving
Accounts
Provides active support to unemployed workers in making ‘transitions’ to new employment: • Job search assistance •Training or re-training to increase employability (apprenticeships).
• Promotion of SME through business management training, mentoring, access to credit access, tax incentives, etc.
• Wage subsidies to encourage hiring of unemployed or maintaining in employment.
•Employment guarantee schemes •Employment through public investments
Emphasis on UI or EI
ALMP
High Low High Cash benefits + Job placement & counseling + skills development and VT + Employment guarantee schemes + Employment stabilization + Employment restructuration Low
PLMP
Structure of the presentation
ILO Standards for unemployment protection • Objectives and Principles • ILO Convention No.168 for benchmarks Conceptual considerations on UI and EI
Comparative analysis of UI/EI schemes
Conclusions: in the ASEAN?
Comparative analysis among 14 UI/EI schemes
Canada USA Denmark Germany France Bahrain Mongolia South Korea China Japan Viet Nam Thailand All 14 schemes are social insurance systems, for the exception of Chile (Individual Unemployment Saving Accounts IUSA) Chile Argentina Population
UI, often emerging after a shock
1900 First World War Great Depression 30s’ Second World War Opening Reform of the communist block Free market reforms in several countries 1997 Asian financial Crisis Global economic crisis 2008
Denmark (1907) Germany (1927) USA (1935) Canada (1940) Japan (1947) France (1958) China (1986) Argentina (1991) South Korea (1995) Mongolia (1997) Chile (2002) Thailand (2004) Bahrain (2006) Viet Nam (2009)
Unemployment situation in 14 countries
Unemployment rates in December 2011*
14 12 10 8 6 4 2 0 Argentina Bahrain Canada Chile China Denmark France Germany Japan Mongolia South Korea Thailand * For Canada, Japan, South Korea and USA figures are from 01/2012; for Mongolia, 2009. Source: Harmonised Unemployment Rates (HURs), OECD - Updated: February 2012 for OECD countries, CIA-the World Fact Book for other countries. USA Viet Nam
Argentina Bahrain Canada Chile China Denmark France Germany
Employe es Public employees/ civil servants Foreign workers
Coverage
Voluntary termination
(IUSA* only)
Domestic workers
Currently working Part-time Temporary /seasonal/ home based workers
Self employed New entran ts
(vol.) (vol.) (EU) (EU) (vol., wait.
per.) (wait. per.) (wait. per.) (vol.) (vol.) (vol.) (vol.) (vol.) (vol.) Japan Mongolia South Korea Thailand USA Viet Nam (not federal) (pub. empl.) (reduced) (wait. per.) (reduced) (reduced) n/a n/a
Legal vs. Effective Coverage
100 90 80 70 60 50 40 30 20 10 0
Legal coverage:
percentage of EAP legally covered by UI scheme Legal coverage Effective coverage Effective coverage: percentage of unemployed receiving unemployment benefits Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation) Source for data prior to 2010: ILO World Social Security Report 2010/11
Contribution rates
Employee Employer Gov. Remarks
Argentina Bahrain Canada Chile China Denmark France Germany Japan 1 1.83
0.6
1 Flat fee 2.4
1.50
0.6
0.89 to 1.11
1 2.56
2.4
2 4 1.50
0.6 + 0.35
1 7.9% of Employers’ contributions Ad-hoc contribution 70% of expenditures 25% of payment Temporary employee: 3% from employer Typical fee between 70 to 80 USD Only employers contribute to Two Services Total contribution rate Viet Nam USA Thailand South Korea Mongolia Japan Germany France Denmark China Chile Canada Bahrain Argentina 0 Mongolia South Korea 0.5
0.55
0.5
0.55 + 0.25 (<150) to 0.65 (>1000) Employers’ contribution only to Employment Security and VT Fund Thailand 0.5
0.5
0.25
USA 3.2
Varies from 1.4% to 6.7% across States Viet Nam 1 1 1 Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation) 1 2 3 4 5 6 7
Eligibility criteria and Benefits
Qualifying period Level of benefits Duration of benefits
Argentina Bahrain Canada Chile China Denmark France Germany Japan Mongolia South Korea Thailand USA Viet Nam 12 months in last 36 months 12 months or 1 3 to 4 months during 2009) st time jobseekers ISA: 6 or 12 months depending if temporary or permanent SI: 12 months in last 24 months (3 cont.) 12 months 12 months in last 36 months 4 in last 28 months if younger than 50, or 4 in last 36 months if older 12 months in the last 36 months 6 months in the last 24 months 24 months (last 9 continuous) (adjusted to 6 6 months in last 15 months 6 months in last 18 months 12 months in last 15 months 12 months in last 24 months 50% for 1st 4 months, lower afterwards 60% and flat amount for 1st-time jobseekers 50% IUSA & SI: Decreasing monthly rate (50 to 20%) for permanent workers, SI: 35 to 30% for temporary workers Flat rate (< mini. wage) 90% 75% at low income, grading down to 57% at high income 60% (higher if with children) 50 to 80% (digressive with level of past earnings). 15 to 17% depending on contribution length 50% 50% (30% for voluntary quitters) 50% 60% Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation) 4 to 12 months (18 for > 60) 6 months 3.5 to 11 months 5 months (2 for temporary) 12 to 24 months 24 months 4 to 24 months 6 to 24 months (age) 3 to 11 months (reason) 18 months (increased to 24 months during 2009) 3 to 8 months 6 months (8 during 2009) 6 months 3 to 12 months
1 0 3 2 10 9 8 5 4 7 6
Comparison between unemployment rate and cost (contribution rate & % of GDP) (2010)
Unemployment rate Contribution rate % of GDP If includes expenditures for ALMP Denmark Canada France Chile USA South Korea Germany Source: ILO comparative analysis of 14 UI/EI schemes, 2012 (draft report- not for quotation)
•
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.
Integrated ES under the UI/EI fund: • • • • • • - Japan: Two Services, - South Korea: Vocational Competency Development & Employment Stabilization, - Canada: Employment Benefits and Support Measures .
Support to skills development beyond the UB entitlement limit: Mongolia, France, Japan.
Work-sharing subsidized by UI/EI Fund: Canada, Denmark, France, Germany.
Labour mobility assistance (equipment allowance, travel allowance, household allowance and relocation allowance): Germany.
Re-employment lump-sum: Japan, South Korea, Viet Nam.
Employment stabilization (loans to enterprises to maintain wages and employment): Japan, South Korea.
Preventive case management prior to lay-off: USA.
Lessons-learnt from the 14 UI/EI schemes
• • • • • It does not exist a “one-fit-all” model.
Should be included: temporary/seasonal workers, domestic workers, foreign workers, new entrants (young, women and informal eco. workers), “forced” part-time employed, home 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)
Structure of the presentation
ILO Standards for unemployment protection • Objectives and Principles • ILO Convention No.168 for benchmarks Conceptual considerations on UI and EI Comparative analysis of UI/EI schemes
Conclusions: in the ASEAN?
Relevance for the ASEAN
Informal employment increased in South East Asia as a consequence of laid offs in formal sector 10.0
9.5
9.0
8.5
8.0
7.5
7.0
Example of Indonesia 9.8
2007 Feb 63.5
63.0
62.5
9.1
2007 Aug 8.5
2008 Feb 8.4
2008 Aug 62.0
8.1
61.5
61.0
60.5
60.0
2009 Feb Informal employment, right scale Unemployment rate, left scale After the crisis, job creation was mainly in vulnerable employment Uncertainty persists due to Eurozone debt crisis and low US recovery….
Unemployment benefits & other income security measures facilitate recovery
Existing measures in the ASEAN
• Only Thailand and Viet Nam have introduced UI schemes • Limitations of the severance pay systems • Majority of the working population in informal economy • Fragmented or no measures to protect the informal economy workers