From: bernie@metapro.DIALix.oz.au (Bernd Felsche)
Subject: Compulsory unemployment insurance (was: Youth wages)
Organization: MetaPro Systems, Perth, Western Australia
Date: Sun, 26 Jul 92 03:37:49 GMT

In <miw.711701766@cc.uq.oz.au> miw@cc.uq.oz.au (Mark I. Williams) writes:

>Sounds strange in the Australian context, but in countries where people
>have to pay for unemployment insurance and other things
>that just get paid out of consolidated revenue here (e.g. Germany), this
>is what happens. Having a working spouse is no barrier to receiving
>unemployment benefits. Of course, not looking for a job is!

Perhaps this is one approach to ensuring that people can
look after themselves in a way in which they determine. If
the government legislated that all employees maintain
unemployment insurance to provide a reasonable income for
the initial 12 months of unemployment, then unemployment
benefits would no longer have to come from consolidated
revenue.

Private insurance companies could provide a variety of
benefits including substantial income maintenance over the
initial months of unemployment (80% to 90% of income prior
to becoming unemployed). Premiums and benefits would have to
be by mutual agreement of the insurer and the insured
(within legislated bounds; discussed later). Insurance
companies can assess risks on a case-by-case basis,
adjusting risks and offering premium discounts (no-claim
bonus) for the long-term employed or those who they rate as
highly employable.

The government would still be required to provide benefits
for those looking for their first job, and those long-term
unemployed whose benefits from private insurance have run
out. There would also have to be legislation providing for
maximum and minimum levels of income (probably between
(social security + 20%) and (95% of full employed income)),
and the minimum length of the contract (as a minimum: at
least 1 month, plus one month for every one continuously
employed to a maximum of 12 months)

One advantage which I can see in this is that those
receiving an income from employment, have their expenses
"balanced" against their income. So when they become
unemployed, there is a rapid decline in income, leading to
great financial and psychological stress. Private insurance
can provide a sliding scale of reducing benefits so that
income in the initial period of unemployment is close to the
expenses which the insured *has* to meet.

The employee contributions to unemployment insurance must be
refundable via a full tax rebate, providing an incentive to
to the individual maximise it, and a means to reduce the
taxes which would otherwise go to those who are unemployed.
The incentive to work is that income is reduced to close to
the social security benefits over the term of the insurance
agreement.

I have no statistics as to what proportion of unemployment
benefits get paid to the short-term unemployed. I do know
that all the unemployed have been short-term unemployed, and
about $5000 million could probably be saved every year.

Of course, that money is not necessarily saved by the
employees because some proportion of it would go to paying
for their insurance. There are flow-on effect of this, as
the money paid to the insurance companies is invested,
resulting in more capital available to start ventures.

Why hasn't this been done before?

Could it be because it reduces the power of government?
-- 
+-----+ Bernd Felsche                     _--_|\  #include <std/disclaimer.h>
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