Definition

Unemployment benefits are income-replacement transfers provided to individuals who have lost their employment and are actively seeking work. Unemployment benefits are often integrated with employment and job placement services (Job placement/intermediation), enabling job seekers to find a suitable employment rather than being forced to taking up under-skilled jobs or ones in the informal economy.

As of 2024, unemployment protection schemes are implemented in 96 countries and territories, through a social insurance mechanism (85 countries), alone or in combination with social assistance. In six countries and territories, unemployment protection is provided only by tax-funded schemes.

Rationale

By mitigating the loss of income, unemployment benefits play a fundamental role in preventing individuals and households from falling into poverty and vulnerability when they become unemployed. They also play an important role in mitigating the impact of climate change and economic shocks, building resilience of societies and economies (e.g., during the 2009 financial crisis and the COVID-19 pandemic). As such, unemployment benefits represent not only an important instrument for income security and poverty reduction, but also at a macro level for smoothing consumption, acting as an automatic stabilizers in times of economic downturns.

Key Features

• Legal anchoring and international standards: Schemes should be anchored in national legislations that will specify the population protected, qualifying conditions, duration and levels of benefits. In accordance with international social security standards, contributory benefits should replace at least 45 per cent of past earnings, and all benefits should, in any case, be sufficient to maintain the family of the beneficiary in health and decency.
• Qualifying conditions: Contributory unemployment insurance schemes typically require a minimum period of contributions to access benefits. Non-contributory schemes in the form of social or unemployment assistance benefits should be for all residents under a certain level of means.
• Linkages with active labour market programmes and services: both contributory and non-contributory unemployment schemes benefits should be integrated with programmes and services to facilitate return to work and economic inclusion.
• Shock-responsiveness and economic resilience: Unemployment benefit systems contribute to building societal and economic resilience by providing a reliable, rapid income support mechanism in response to systemic shocks, including those driven by climate change or global economic crises.

Key Interventions

Unemployment benefits are provided through different schemes and mechanisms, including:

• Unemployment insurance schemes funded by workers' and employers' contributions;
• Social or unemployment assistance (see [[Unconditional cash transfer|Unconditional cash transfers]]) funded by State revenues;
• Employment retention schemes; and
• Public employment programmes where the State guarantees employment (see Public works, employment guarantee schemes and direct job creation including community development programmes).