Unemployment Insurance The Barbados Experience National Insurance Department Barbados July 2005

OUTLINE The Beginning – How it all started The Framework The Early Years Surviving Recession Claims Control-Experience&Administration New Developments Worldwide New Directions For Barbados &Caribbean?

The Beginning Workers Campaign High Unemployment – Some Reduction in Periods of Economic Growth Volatility in GDP Growth Moral Hazard - Scope for Abuse Existence of Severance Scheme & National Insurance Scheme Ultimately - Proposal for Modest Scheme

The Framework Target – Only Temporary Unemployed - Not Long Term Not a Welfare Scheme Clearly Defined Exclusions & Restrictions Joint (employer+employee) Contribution Rate of 1.50% Initially Benefit 40% Earnings for 13 Weeks in 1 Yr Economic Objective : Sustain Purchasing Power

The Early Years First Full Claim Year – 1983 …Coincided with increasing Unemployment Rate - Following 1981 Negative Growth (-2.7%) Claims $2.2m vs. Contributions $8m By 1986 Claims $16.1m vs. Income $8.4m - But by then Contr. Rate reduced to 1.00% and Benefits improved to 60% for 26 weeks - Encouraged by surpluses 1983 onwards

Surviving Recession Severe Recession ,1991,1992 Year Unemp. Rate 15.6%15.0%17.3%23.0%24.3% Contr. Rate 1.00% 1.00%- 5.50% Contrs.10.8m10.4m14.0m55.6m58.1m Claims11.2m14.5m18.9m27.0m19.5m

Claims Control Experience & Administration Use of UI as Vacation Pay – However purpose included Down-Times/Lay-Offs Short-Time Provision (topping up benefit) proved difficult to administer Seasonal Workers – Tourism … no discernible effect Agriculture … few claims Except during Recession when both were high Major Shortcoming – failure to sign up with Employment Service – not too surprisingly !

New Developments Worldwide OECD and Others have Reformed their Unemployment Schemes – UK,US,Canada Emphasis on Rapid Return to Work OR Re-training One-Stop Resource Centers or similar provide Hands-on Help and Counseling Example- UK requires Claimant to draw up plan of action for agreement and approval

New Directions for Barbados Upgrading Administrative practice to remove restrictive rules for full-time study/re-training Upgrade of Employment Bureau Services New One-Stop Resource Centre, Jan 2001 sponsored by US Dept of Labor Improved Job Search Information Joint Seminars & Dialogue with Employers

The Future of Labour in the Caribbean All except a very few facing falls in fertility Like Barbados – but Later - all will eventually experience Labour Shortages Barbados expects this to intensify from 2012 – falling fertility rates for 30 years Some Caribbean Countries are 10 or 15 or 20 years away from this phenomenon Plan Now !