Unemployment Insurance

1
Unemployment Insurance

• The Barbados Experience
• National Insurance Department
• Barbados
• July 2005

2
OUTLINE

• The Beginning How it all started
• The Framework
• The Early Years
• Surviving Recession
• Claims Control-ExperienceAdministration
• New Developments Worldwide
• New Directions For Barbados Caribbean?

3
The Beginning

• Workers Campaign
• High Unemployment Some Reduction in Periods of
  Economic Growth
• Volatility in GDP Growth
• Moral Hazard - Scope for Abuse
• Existence of Severance Scheme National
  Insurance Scheme
• Ultimately - Proposal for Modest Scheme

4
The Framework

• Target Only Temporary Unemployed - Not Long
  Term
• Not a Welfare Scheme
• Clearly Defined Exclusions Restrictions
• Joint (employeremployee) Contribution Rate of
  1.50 Initially
• Benefit 40 Earnings for 13 Weeks in 1 Yr
• Economic Objective Sustain Purchasing Power

5
The Early Years

• First Full Claim Year 1983 Coincided with
  increasing Unemployment Rate
• - Following 1981 Negative Growth (-2.7)
• Claims 2.2m vs. Contributions 8m
• By 1986 Claims 16.1m vs. Income 8.4m -
  But by then Contr. Rate reduced to 1.00 and
  Benefits improved to 60 for 26 weeks -
  Encouraged by surpluses 1983 onwards

6
Surviving Recession

• Severe Recession - 1990,1991,1992

7
Claims Control Experience Administration

• Use of UI as Vacation Pay However purpose
  included Down-Times/Lay-Offs
• Short-Time Provision (topping up benefit) proved
  difficult to administer
• Seasonal Workers
• Tourism no discernible effect
• Agriculture few claims
  Except during Recession when both were high
• Major Shortcoming failure to sign up with
  Employment Service not too surprisingly !

8
New Developments Worldwide

• OECD and Others have Reformed their Unemployment
  Schemes UK,US,Canada
• Emphasis on Rapid Return to Work
• OR Re-training
• One-Stop Resource Centers or similar provide
  Hands-on Help and Counseling
• Example- UK requires Claimant to draw up plan of
  action for agreement and approval

9
New Directions for Barbados

• Upgrading Administrative practice to remove
  restrictive rules for full-time study/re-training
• Upgrade of Employment Bureau Services
• New One-Stop Resource Centre, Jan 2001 sponsored
  by US Dept of Labor
• Improved Job Search Information
• Joint Seminars Dialogue with Employers

10
The Future of Labour in the Caribbean

• All except a very few facing falls in fertility
• Like Barbados but Later - all will eventually
  experience Labour Shortages
• Barbados expects this to intensify from 2012
  falling fertility rates for 30 years
• Some Caribbean Countries are 10 or 15 or 20 years
  away from this phenomenon
• Plan Now !