Surviving the COVID-19 era: how governments around the world help the unemployed
Experience of Poland, Belarus, USA, Sweden, countries of South Caucasus and Ukraine
Valeria Zolotaryova, VoxUkraine
In Poland, the unemployed were paid €300, in the USA — $1,200 and additionally $600 per week, in Armenia — $140. In Ukraine, they paid from $35 to $300 and promised to create 500,000 jobs in a month, but never did.
Let’s find out how the world fights unemployment and helps those who have lost their jobs, and whether soft quarantine has helped in keeping jobs in Sweden.
Ukraine: unemployment benefits and registration at the Employment Service
The number of unemployed in Ukraine has increased compared to 2019. In January-October 2020, the State Employment Service reported more than 1 million unemployed, and for the same period in 2019 — about 860 thousand. Instead, the number of vacancies has decreased. In January-October 2019, there were about 1 million of them, and for the same period in 2020 — only about 755 thousand. An increase in the number of unemployed and a decrease in the number of vacancies means that the unemployment rate should increase.
However, not all unemployed people apply to employment centers. Therefore, the data on unemployment collected according to the ILO methodology are more accurate. According to these data, in the first half of 2020 the number of unemployed increased by 102 thousand people — up to 1.6 million, compared to the same period in 2019. The unemployment rate increased from 8.5% to 9.2% of the economically active population over 15 years.
Denys Shmyhal, Prime Minister of Ukraine, has promised to create 500,000 jobs in May for those who have lost their jobs due to quarantine. However, in May, the Employment Service employed only 40.9 thousand people, and from January to October 2020 — about 539 thousand people, 390 thousand of which were employed during the quarantine period. During the same period in 2019 (January-October) almost 727 thousand people had been employed. However, the employment of a certain number of people does not mean that these jobs were created, because it is possible to replace one employee with another. We could not find official information about job creation.
The minimum amount of unemployment benefits has also increased. During the quarantine period and for 30 days after its end, it was raised from UAH 650 to UAH 1000. You can get a maximum of 8788 UAH per month (four subsistence wages for non-disabled people). The amount of assistance depends on the length of the insurance period. From March to October 2020, about 482 thousand unemployed ones received help, which is almost twice as much as in the same period last year.
How to get help from the state
Instructions for entrepreneurs
The government has introduced partial unemployment benefits during the quarantine. It can be obtained by employers (small and medium-sized enterprises) who have been forced to suspend or limit their activities due to quarantine. Another prerequisite is that employers had to pay SSC for the last six months for employees with who the employment relationship was not terminated on the date of application to the employment center.
The assistance is paid for each lost hour of working time (it is calculated as 2/3 of employee’s salary) and cannot exceed the minimum wage in the country.
To receive assistance, the employer must apply to the Employment Center at the place of payment of SSC and submit the necessary package of documents within 30 days after the suspension or reduction of activities.
These are an application, a copy of the redundancy order, information on the employees who will receive assistance, and a certificate of payment of SSC during the last six months.
Within a few working days, the Employment Center will check the documents, make a decision on assistance and invite the employer to sign a contract. Then the employer will be able to receive funds and pay them to employees.
Instructions for dismissed employees
During quarantine, you can register as unemployed online. To do this, you need to have the electronic signature or issue it free of charge through Privatbank, the Ministry of Internal Affairs or the information and reference department of the State Tax Service. You can register at any Employment Center, regardless of the registered or actual place of residence.
The application is submitted through the “Diia” portal in 10 minutes. You need to provide personal data, account number to receive payments and upload documents — passport (or residence permit), a document of the last type of employment, documents on education, VAT identification number. The application is signed with an electronic signature.
Consideration of the application, registration and appointment of assistance are carried out on the day of application. If it was submitted during non-working hours, weekends or holidays, the application will be considered on the next working day.
From August, you can register in person when visiting the Employment Center. You can choose the date and time of the visit to the EC online. You will need to present a passport or other proof of citizenship (or residence permit), a document of education, a document of termination of employment and other documents on-site. It is necessary to wear a mask and to keep distance in the premises of the Center.
Unemployment status and benefits occur on the first day after submitting the application and documents.
How are the neighbors doing? Experience of Poland and Belarus
In Poland, persons who had been fired after 15 March 2020 received PLN 1400 (approximately EUR 300) per month for three months. This is 54% of the minimum wage in Poland, which is 2,600 zlotys (about 580 euros). Foreigners with a temporary residence permit could also apply for this assistance.
Payment holidays have also been introduced in Poland — all people, who lost their main source of income after March 13, can apply for a deferral of credit payments for three months.
In Belarus, the unemployment rate has even decreased compared to 2019 — primarily because most workers are employed in state-owned enterprises. However, the number of terminated contracts exceeded the number of new ones by 9,000.
In Belarus, workers who could not return home on time due to a pandemic or were isolated due to illness received at least ⅔ of their salaries.
In late May, the Belarusian government also offered subsidies to businesses to keep wages for workers who were forced to work fewer hours from May to July (a period when specific restrictive measures were in place, as there was no official quarantine in Belarus).
Fight against unemployment in Azerbaijan, Armenia and Georgia
To save jobs in Azerbaijan, a one-time allowance was paid to 600,000 people, and 50,000 jobs were created in the public sector.
In Armenia, companies received one-time wage grants for every fifth employee. Low-income people who lost their jobs from March to June due to COVID-19 were paid a one-time compensation in the amount of the minimum wage (about $140). Pregnant women, low-income families, students and workers of the most affected sectors of the economy (hotel and restaurant business, tourism, retail) also received financial assistance. One thousand temporary jobs were created in agriculture.
In Georgia, the government offered government subsidies to employers who retained jobs. About 350,000 people who have lost their jobs or are on holiday at their own expense have been receiving a monthly allowance for six months.
Abuse of payments in the United States?
Americans with incomes of less than $99,000 (or $198,000 per family) received up to $1,200 in one-time benefits each year and another $500 per child, or up to $3,400 per family of four.
During the pandemic unemployment rose significantly in the USA. Back in 2019, the unemployment rate in the United States was the lowest for the last 50 years — 3.6%. Though in March it rose to 4.4%, and in April it reached 14.7%. However, the number of people who lost their jobs may be much higher than the unemployment figures show, as many people did not start looking for employment after being fired.
In just four weeks in March-April 2020, nearly 17 million Americans applied for unemployment benefits. As of the end of April, about 30 million people had applied for help, which is 18.6% of the US workforce.
After the lockdown had been eased, the economy began to recover rapidly: according to the latest available data (October 2020), the unemployment rate in the US is 6.9%.
Also, from the end of March to July 31, people who lost their jobs were paid an additional of $600 per week in addition to unemployment benefits. Most states offer further assistance from August — $300 or $400, depending on the state.
For a long time, Republicans have proposed reducing additional unemployment benefits from $600 to $200. They said such payments do not encourage people to return to work. But a Bloomberg study shows that people returned to work as soon as the opportunity arose, so there is likely to be no massive abuse of unemployment benefits.
The Economist study also states that people will not abuse unemployment benefits even if they exceed their potential wages. First of all, because health insurance and pensions are closely linked to employment.
Sweden: soft quarantine and unemployment
Unlike most European countries, Sweden has not introduced a hard lockdown. However, there were restrictive measures in it (see this and this). As Sweden is a small open economy, it has not been able to avoid an economic downturn and rising unemployment, even with mild restrictive measures. At the beginning of the pandemic, the number of unemployed increased by about 100,000 in just three months, about 1% of Sweden’s workforce. In 2019, the number of unemployed increased by only 14 thousand people in the same period.
To save jobs, the Swedish government partially covered the salaries of employees of private companies. The amount of financial assistance to the unemployed has also been increased. Besides, funding for professional training courses designed to help people find work is expected to be increased.
A study of four countries — Sweden, Norway, Finland and Denmark — found that unemployment trends in these countries are similar, even though other Scandinavian countries have imposed much stricter restrictions than Sweden. From January to September 2020, the unemployment rate in Sweden rose by 1.7 percentage points. (from 7.2% to 8.9%), in Finland — by 1.5 percentage points. (from 6.9% to 8.4%), in Denmark — by 1.2 percentage points (from 4.9% to 6.1%), and in Norway by 1.6 percentage points. (from 3.7% to 5.3%).
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