Study of Unemployment Insurance in different countries and the feasibility of its implementation in India

Abstract

This study focuses on the unemployment insurance scheme in India and its weakness. The study also underlines the importance of unemployment insurance and is particularly relevant in 2009 as the world reels through a recession. The objective of the study is to explore the feasibility of unemployment insurance in India. The study attempts to understand the nature of unemployment insurance in various nations and had drawn some lessons in India. The study covers the unemployment insurance scheme in the following nations; Australia, Ireland, United Kingdom, France, Germany, Finland, Sweden, United States and Belgium. The important lessons that can be learned from the schemes in various nations are a) Most of the nations have more than one level of social security for the unemployed. b) The funding for 1st level of assistance is generated from contribution by employers, employee or tax directed at employers/employees and the 2nd level is generally funded by the state c) A unique id to all citizens is basic necessity for efficient implementation. In India, though there is no comprehensive system or policy for unemployment benefits., many state governments provide unemployment allowance and the ESIC provides unemployment insurance. The study is of the conclusion that the major hurdle in the successful implementation of unemployment insurance is the lack of unique id to citizens and their employment data. Hence it is very difficult to identify the targeted beneficiary and the leakages in the current state government schemes are very high. The study also covers how the unique id that is being planned by the National unique identity authority of India can be used to improve the current schemes. The study dwells into the current role of the employment exchanges in India and recommends ideas to increase their scope in collecting, maintaining and updating unemployment data. The study comes out with novels ideas of unemployment insurance for students and a group insurance for employees. The study concludes that there is definite possibility of introducing unemployment insurance by both govt as well as private players, if unique id is created for all citizens and linked to private sector employment data and is of the view that govt. should play the lead role and as a facilitator.