Jobless insurance scheme proposed

Post date: Mar 31, 2010 5:40:12 AM

Wednesday March 31, 2010

AN unemployment insurance scheme is needed to cater to a likely increase in unemployment rate during the teething period of the economic transformation process, the National Economic Advisory Council (NEAC) proposed.

The insurance benefit should, however, be given only upon re-employment to serve as an incentive to those affected to quickly seek new jobs.

The insurance benefits would be determined as a share of the difference between previous and current wage to be paid for a fixed period of time, the NEAC said.

This would encourage individuals to get hired quickly, even if at a lower wage, rather than holding out for higher salary.

The proposed unemployment insurance scheme would complement initiatives to build a well-structured social safety net to help the people cushion the impact during the economic transformation period, the NEAC added.

The Government must be prepared to tolerate a moderate degree of frictional unemployment during the initial stages, as firms would be undergoing restructuring exercises to boost productivity and efficiency.

With increased competition and restructuring, unemployment was likely to rise in the future.