LewisUnempEE - Unemployment Insurance Reform In Eastern...

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Unformatted text preview: Unemployment Insurance Reform In Eastern Europe Gina Lewis March 10, 2005 Outline Eastern Europe Countries History What is Unemployment Insurance? Comparisons Poland UI Hungary UI Czech Republic UI Conclusion Eastern Europe Includes Bulgaria, Croatia, Czech Republic, Hungary, Moldova, Poland, Romania, Slovakia, Slovenia, & Yugoslavia. Unemployment Insurance A social insurance program that provides unemployment compensation for a limited period to involuntarily unemployed workers. Something to Ponder 75% of 150 million people unemployed worldwide to not benefit from any unemployment insurance protection according to the International Labor Office Richest countries reduced protection since the 1990's Eastern Europe and UI "Unemployment" was virtually unknown prior to collapse of State-controlled economies in 1989. In early transition years, regions began to aid those who were out of work Unemployment began to rise which led to stricter eligibility rules , lower levels of replacement, shorter duration of benefits and lower beneficiary rates History/Background In the early 1990's, reforms began to improve unemployment insurance, health care, pensions etc. as a need for social programs was emphasized Eastern Europeans were experiencing deterioration in living conditions Eastern Europe's social assistance programs were not unknown, but needed to be reorganized to cope with economic transition. History/Background Initially, unemployment benefits were generous and duration was 2 years or longer! Today, less generous due to financial strain and duration does not exceed 12 months For example: Poland's replacement rates went from 79% in 1991 to 48% in 1993 and Hungary's dropped from around 80% to 40%. POLAND Population is 38.6 million Labor force is 16.92 million Unemployment rate is 20% (2003) HUNGARY Population is approx. 10 million Labor force is 4.164 million Unemployment rate is 5.9% (2003) CZECH REPUBLIC Population is 10.3 million Labor force is 5.25 million Unemployment rate is 9.9% (2003) Conditions for Receipt of UI POLAND *Registered as unemployed *Able and ready to work full time *Between 18 and Retirement (60 for women/65 for men) *Minimum of 180 days worked in past year HUNGARY *Under 60 for men and 55 for women *Actively searching for a job *At least one year of insured work in last 4 years CZECH REPUBLIC *No age conditions established *At least one year of work in the past 3 years Calculation of Benefits POLAND Receive 36% of the national average wage from previous year HUNGARY Receive percentage of average gross earnings from the past four quarters. Divided into 2 phases each 3 months long. Phase 1 receives 75% and Phase 2 receives 60% CZECH REPUBLIC Receive 60% in the first three months and 50% in following three months of last earned net income. Maximum benefits not to exceed 1.5 times minimum wage. UI & Young People POLAND School leavers can receive 28% of the national average wage in the past quarter for a maximum of 9 months HUNGARY School leavers can receive 75% of the minimum wage for a maximum of 6 months. CZECH REPUBLIC There are no special conditions UI & Older People POLAND Workers within 2 yrs of retirement (60 for women and 65 men) are eligible if they hold a work record of at least 30 yrs for women and 35 for men. They receive 52% of the national average wage until they reach retirement age HUNGARY No special treatment/conditions CZECH REPUBLIC Benefits are paid to worker until they reach average retirement age which is 57.5 years old. Then the worker may receive pension. Unemployment Assistance Unemployment assistance is available to those who do not qualify for UI or have reached the maximum duration and can no longer receive UI Unemployment assistance does not exist in Poland, Hungary or Czech Republic Conclusion Since the 1990's, Eastern Europe, including Poland, Hungary, and the Czech Republic, have began reforming unemployment insurance. Like all transitions, there have been advances and set backs but progress has been made and will continue. Goal: keep involuntary unemployed to a minimum and aid those until they regain employment. Conclusion Poland is the most advanced of the three countries in outlining and organizing UI. However, Poland's unemployment rate is twice that of Hungary's and 4 times that of the Czech Republic! Hungary should consider setting up special conditions with respect to their older population. Czech Republic should consider setting up special conditions for its younger generation. ...
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