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Unemployment benefits

society Maturity 11-13 Next article →

Unemployment benefits are payments made by governments to people who do not have jobs. These payments are also called unemployment insurance or unemployment compensation. The amount of money a person receives can vary quite a bit. Some payments are small and only cover basic needs. Other payments are larger and match a part of what the person used to earn. Usually, these benefits are for people who lost their jobs through no fault of their own. Most systems also require people to look for new work to keep receiving the money.

Unemployment-benefit-generosity-and-unemployment-rates-across-the-oecd
Unemployment-benefit-generosity-and-unemployment-rates-across-the-oecd

How these systems work depends on the rules of each country. Most places calculate the payment as a percentage of a person's former income. A common amount is between 50% and 65% of their old pay. Some countries like Denmark offer even more, up to 90%. There are often limits, or caps, on how much money a person can get. In Turkey, the cap is 33% of the average wage. In France, the cap can be as high as 227% of the average wage. Some countries also have a waiting period before payments start. In Canada, this waiting period is seven days.

Unemployment rate map of the united states
Unemployment rate map of the united states

The history of these benefits began in the United Kingdom. The first modern scheme was the National Insurance Act of 1911. This was started by the Liberal Party government under H. H. Asquith. It helped workers pay for illness and job loss. By 1913, about 2,300,000 people were insured. Later, the Unemployment Insurance Act of 1920 created a system called "the dole." This system provided 39 weeks of benefits to over 11,000,000 workers.

National-insurance-act-1911
National-insurance-act-1911

Other parts of the world created their own systems later. Germany introduced unemployment benefits in 1927. In the United States, the system began in Wisconsin in 1932. The Social Security Act of 1935 helped encourage all U.S. states to use these plans. In Armenia, a similar system has been used since 1991. In Australia, benefits are funded through the national tax system. They are managed by a government agency called Centrelink. Australia has different payments, like the Youth Allowance for young people.

National-insurance-act-1911
National-insurance-act-1911

These systems help keep society stable when the economy changes. Most benefits are paid for by taxes from employers and workers. These are often called payroll taxes. They are usually between 1% and 3% of what a person earns. Some countries also use general tax money to help during hard times. These rules help people find training or education for new jobs. By providing a safety net, these programs help people manage while they search for work. This connects the history of labor to how we live today.

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