3 training and placement programs. The portion of the payroll tax that finances unemploymentrelated charges is paid by the employer, typically with no worker contribution. The level of benefits is set proportionally to the salary earned while employed, at a replacement rate ranging from 50-75 percent. A uniform duration of benefit eligibility is common, although some systems use length of experience to determine duration. The maximum caps that apply to duration range from 6 to 12 months in most CEE countries, with the longest duration found in Slovenia, up to two years (see Table 1). Despite the variety of system parameters, the bias toward worker protection is apparent in the generosity of benefit duration. Considering the highly regulated labor markets in socialist economies, it is not surprising that the newly implemented Ul programs exhibit similarly protective features.

5. Comparing Algeria. In many ways Algeria's system is similar, but with notable differences. Benefits are financed by payroll contributions shared by employers and employees, but also by a mandatory entry fee paid by firms. The entry fee is proportional to the worker's salary and work tenure, up to maximum equivalent to 12 months' salary, thus representing a significant additional cost to firms. In terms of benefit structure, duration eligibility is generous relative to the CEE countries, ranging from a one year minimum to a 3 year maximum, and averaging 23 months. These parameters clearly favor the worker, reflecting the social priorities of a centrally planned economy. In fact, Algerian workers benefit from a high degree of labor market regulation. Unlike the Ul programs found in Central and Eastern Europe, however, Algerian firms incur a financial burden elsewhere borne by the state (i.e. the Social Fund). The benefit level in the Algerian system is determined by a declining replacement rate of the "reference salary", calculated as the mean of the actual and minimum wages (see para. 24 and Table 3 for a detailed discussion). This formula leads to a compression of benefits, but the minimum and maximum levels relative to minimum wage are comparable to those found in other transitional economies.

|6.<br>Early results in Central and|Eastern Europe. It is instr|uctive to e|valuate the|success of|
|---|---|---|---|---|
|the above mentioned UI system|s in obtaining the desired|objectives|in an effe|ctive and|
|financially viable way.<br>Because<br>general since 1990-1991, it is parti<br>well as the performance of the eco<br>a period of several years, on the|the Ul systems have been<br>cularly beneficial to study t<br>nomy. Industrial productio<br>order of 40 percent, and u|operating<br>he effects o<br>n suffered s<br>nemployme|for several<br>n the labor<br>ignificant l<br>nt steadily|years, in<br>market as<br>osses over<br>increased|
|from negligible unemployment<br>to levels from 11-16 percent by|**Table 2: The CE**<br>%**Ab**|**E Experien**<br>% A|**ce1989-19**<br>**Unenmp**|**93**<br>**.**Average|
|1993 (see Table 2).<br>The<br>declines in output may be<br>|Ind. VA<br>Bulgaria<br>-39.5%<br> <br>|GNP/cap.<br>-46.2%<br>|<br>(1993)<br>16.4%<br>|Inflation<br>104%<br>|
|explained by both aggregate<br> <br>|Czech Republic<br>-31.5%<br> <br>|-22.5%<br>|3.5%<br>|23%<br>|
|and relative shocks.<br>Initial<br>|Slovak Republic<br>-43.5%<br>|-3.5%<br>|14.4%<br>|25%<br>|
|shocks at the aggregate level,|Hungary<br>-9.0%|19.3%|12.1%|27%|
|such as<br>liberalizing prices,|Poland<br>-25.4%|na|16.4%|116%|
|currency<br>devaluations,<br>and|Romania<br>-37.1%|-49.7%|10.9%1|143%|
|credit constraints, led to higher|Source: World Bank|1|/1994||