Unemployment Benefits and Passive Policy
Passive Unemployment Policy and Benefits
Passive policy involves the protection of the unemployed through economic benefits designed to ensure coverage of their needs as they seek to re-enter the labor market. Currently, the main objective of this policy is not merely to provide income during unemployment. The primary goal is for the unemployed to find jobs and be reintegrated into the labor market during the time they receive unemployment benefits.
Interrelationship Between Active and Passive Policies
To achieve this objective of employment search and reintegration, receiving benefits requires the unemployed to register as unemployed, actively seek employment, participate in training programs established by the public employment service, and accept suitable job offers. Thus, there is a strong interrelationship between passive and active policies: unemployment protection mechanisms are accompanied by reintegration efforts.
However, passive policies can have potential negative effects, such as providing an incentive to remain unemployed for longer periods. This reduces the opportunity cost of leisure time. The opportunity cost of being unemployed can be viewed as the lost salary (without benefits) or the lost salary minus the benefit received (resulting in a lower cost).
Unemployment protection is important because it provides income for basic needs, allowing for a more effective and better job search. It helps cover job search costs (such as travel expenses, telephone, and clothing). In general, it allows the unemployed person to find a job that fits their abilities instead of being forced to accept the first job offer they receive.
The challenge is that the benefit level can influence the acceptance of job offers. Factors influencing this decision can be seen as being on a scale:
- Factors reducing the incentive to accept a job: The amount of the benefit, the duration of eligibility, and the leisure time enjoyed.
- Factors encouraging job acceptance: The possibility of reintegration into the labor market, age (being close to retirement may discourage seeking new work), dependents, and the wages and type of contract offered.
The first group of factors reduces the opportunity cost of being unemployed. The unemployed person will only accept a job that compensates for the loss of unemployment benefits. Since the benefit reduces the opportunity cost of unemployment, individuals may hold out for a job with better salary and contract terms than they might otherwise accept, potentially leading to longer periods of unemployment. For this reason, it is necessary to actively seek employment as a condition for receiving the benefit.
Beneficiaries of Passive Policies
The beneficiaries are unemployed individuals who have previously worked and contributed to the social security system, or who have left employment involuntarily (even if the dismissal was appropriate). First-time job seekers or those who have voluntarily left their jobs typically do not benefit.
Measures of Passive Policies
Measures include unemployment protection through the social security system, primarily via:
- Contributory benefits
- Assistance benefits
- Potentially, income support for long-term unemployed or minimum insertion income schemes.
Contributory Benefit
This provides economic benefits for unemployment to which you are entitled based on contributions paid into the social security system. It is wage replacement income, granted if the unemployed person has previously worked, provided they:
- Register as unemployed.
- Actively seek employment.
- Participate in insertion itineraries (training/support programs).
- Do not refuse suitable job offers.
The granting of the contributory benefit is not dependent on whether the unemployed person is in financial need. The amount is calculated according to contributions made during the 180 days prior to becoming unemployed. There is a minimum and maximum amount, which depends on whether the unemployed person has dependent children. It includes the economic benefit paid to the worker and covers social security contributions (the state pays the employer’s contribution and part of the worker’s contribution).
Assistance Benefit
This is the economic benefit received by unemployed individuals who do not qualify for the contributory benefit. The assistance benefit represents the next level of protection. It covers:
- Unemployed individuals who have exhausted their contributory benefit (and meet certain criteria, such as having family responsibilities or being over 45).
- Unemployed individuals not covered by the contributory benefit because they did not meet the minimum contribution requirements.
Examples of individuals who might fall into the latter category include those with certain training contracts or intermittent work history. Unlike the contributory benefit, it is necessary to demonstrate financial need to receive the assistance benefit.