Unemployment insurance efficiency as a social policy

Unemployment Insurance

Purpose of unemployment insurance

Unemployment insurance is schemes under which people that have the capacity to be employed and are out of employment because of reasons that they can control or simply not their fault. It is meant for people that are available for work and they continue to seek paying jobs actively.

In order for one to get the unemployment compensation they should meet unemployment eligibility requirements for what they were earning or the time they worked at an established over one year.

On the other hand there are circumstances that might disqualify a person from getting the unemployment benefits, these include when one quits without a good cause, when they are fired due to misconduct, if they have resigned due to some illnesses, if they are involved in some labor dispute and so on (Oregon State Bar, 2013).

Unemployment insurance ensures that people falling in the above brackets are compensated for a stipulated period of time or until these people are able to find new jobs. There is also room for extended unemployment benefit that ensures that unemployment compensation is given for a longer period of time for people that have exhausted the regular unemployment insurance they were getting during periods of long unemployment.

Different countries have different strategies in place for people that are in a range of circumstances one of them being the unemployed. The purpose for creation of unemployment insurance is to provide assistance financially for workers that have lost their employment during periods perceived long enough for them to secure another job or be rehired in the place they had been employed before. In countries like Britain and Canada unemployment insurance does not cover workers that are disabled permanently or are unemployed for a long period of time.

Unemployment insurance is meant for people in any occupation and does not discriminate on any job groups or levels of employment, indeed even covers self-employed people in some countries like the U.S.

In Germany unemployment insurance is meant to not only help the entitled people with finances but they also help people in getting jobs or offer them with training that can be useful when it comes to job searching. Unemployment insurance is meant to be an automatic stabilizer in that when employment grows, unemployment insurance program gets more revenue due to the increased taxes and at the same time there is less spending by the program since only few workers are unemployed.

Therefore there is a surplus of funds created that can be used during recession. During recession periods the unemployment benefit tax revenue goes down and there is a lot of spending by the program since more workers are out of employment and hence access the benefits. The increase payments to the unemployed put more funds into the economy.

Unemployment insurance and achievement of its goals

Unemployment insurance achieves its goals in the countries that the program exists. This is because workers that are out of employment can continue to sustain themselves and their families when they are out of employment from the benefits they get from the program. People tend to rely on the payments they get from the unemployment insurance program, for instance in America, millions of workers depend on the benefits they get from the program. Therefore unemployment insurance is of great benefit especially when countries are struggling with the high rates on joblessness.

The benefits from unemployment insurance provide a lifeline to those that are without jobs particularly at a time when they need it most. The unemployed use the money they get from the programs to get basic things such as food, shelter and clothing and hence they continue to survive and due to the existence of the program.

The impact of unemployment insurance on jobs

Unemployment insurance impacts jobs in various ways. In great times of recession the issue of whether or not unemployment insurance or specifically the extension of benefits that are achieved from the program encourages unemployment by discouraging people from looking for or taking job is debatable.

Unemployment insurance makes people rely on the payments from the program and hence they might not have interest in seeking further employment. It is also often argued that extending of the benefits from unemployment insurance discourages people from seeking jobs. Continuing to pay benefits to people is a form of disincentive fort seeking employment. For instance in Germany the rate of unemployment has gone up from 5.3% in December 2012 to 5.9% in January. This is attributed to the fact that people are continuing to get benefits from the unemployment insurance program and hence more and more of them continue to stay out of work. More and more people stay out of work since they have a surety of getting benefits from the program. Unemployment benefits are thought to be a convincing factor when it comes to ignoring any job openings that come their way. This kills jobs since people are laid back in seeking jobs (Fletcher & Hedgpeth, 2010).