Mid-Year Budget: Implement unemployment insurance for workers – ISSER’s Prof Quartey
Ghana must introduce an insurance policy to cushion workers who lose jobs due to unforeseen tragedies, a Professor of Economics, Peter Quartey, has admonished.
He said such interventions would lessen the burden of employees rendered redundant in times of challenges such as the COVID-19 pandemic.
The pathogen has halted production and operations of several companies, leading to the loss of jobs, slash in salaries, and increased economic challenges.
The Director of the Institute of Statistical, Social and Economic Research (ISSER), is expecting such insurance interventions in the Mid-Year Budget Review that will be presented to Parliament by Finance Minister, Ken Ofori-Atta on Thursday, July 23.
He told theghanareport.com in an interview that: “Going forward we need to have some insurance scheme or benefit scheme whereby when people lose jobs there is some support, at least for a year, as it is done in other countries”.
Such packages will ensure that as employees are in active service, they would pay a premium so that when they are out of a job, they can have some stable income.
“In some cases, about 70% of your income could be guaranteed for about a year. That can cushion people.”
His proposal differs from regular unemployment benefits given to citizens who don’t have jobs.
The unemployed benefits are regular stipends and allowances allocated by the state. However, the insurance will be a monthly premium contribution to be utilised in times of need.
Both serve as unemployment securities for citizens.
The government announced consideration for employment benefits common in advance countries, but the economist is proposing the insurance as a sure way of planning for difficult times.
A publication by World Bank in April 2020, identified Cape Verde, Mauritius and South Africa as countries that offer unemployment protection in Sub-Saharan Africa
All programmes are new: Cape Verde introduced it in 2016, Mauritius in 2008, and South Africa significantly expanded it in 2002.
Even in countries with unemployment protection programmes, not all workers or enterprises benefit from such measures.
For the 2 billion workers, around 60% of the world’s employed population, who are in informal employment, reduced working hours and constrained social mobility means loss of income with no unemployment benefits.
The most vulnerable face an impossible dilemma – stay at home jobless or try to earn money and create a health risk in the time of COVID-19.
Across the globe, Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden and Switzerland provide the most generous unemployment protection systems of all International Labour Organisation (ILO) member countries.
An ILO report identifies Australia, Canada, Ireland, Japan, New Zealand, the United Kingdom and the United States as belonging to “medium-level type systems”.
Fewer of the unemployed in these countries receive benefits, and the compensation that is provided is lower than those available in the first tier of countries.
Countries offering unemployment benefits
Benefit payments, which the report defines as “net wage replacement rates” range from 23% of wages in New Zealand to 58% in Canada and the United States, among these “medium-level” countries. In contrast, “top-level” countries such as Finland and Spain provide 63% and 77% respectively of national average earnings in their unemployment insurance, the report says.
The report also states that the United States, Canada and the United Kingdom are also rated low because “the duration of unemployment benefit payments is short, with benefits payable for less than 12 months.”
Some 1.6 billion people employed in the informal economy – or nearly half the global workforce – could see their livelihoods destroyed due to the continued decline in working hours brought on by lockdowns to curb the spread of COVID-19, the International Labour Organization (ILO) said in April.
The agency said 1.6 billion people in the informal economy “had suffered massive damage to their capacity to earn a living” as a result of the economic meltdown created by the COVID-19 pandemic.
Due to lockdowns, or because they work in hard-hit sectors, these workers globally have seen a 60% drop in income during the first month of the crisis, according to ILO estimates.
A U.S. jobs report from the Labour Department shows nearly 30 million positions being shed-off with other data suggesting up to 40 million, with only about 20 million tapping unemployment benefits.