The importance of unemployment insurance.

Unemployment insurance plays an important role in the lives of workers and the country, having benefited more than 8 million unemployed people last year, equivalent to 8,7% of the economically active population. With this benefit, workers dismissed without just cause can look for new jobs while maintaining a minimum standard of living. The insurance also benefits the economy as a whole by acting as an automatic stabilizer during times of crisis, preventing a sharp slowdown in consumption during periods of high unemployment. To give an idea of ​​the economic dimension of the benefit, this year alone, unemployment insurance is expected to inject more than R$ 34 billion into the economy.

Unemployment insurance was first adopted in England in 1911, and subsequently spread to the rest of the world. In Germany, the benefit was adopted in 1927, in the United States in 1935, and in France in 1958. The Brazilian Constitution of 1946 makes the first reference to this provision in the country, but it was only in 1986 that the program assumed its current form of providing temporary assistance to workers unemployed without just cause or in the case of job closures. The 1988 Constitution guaranteed the right to unemployment insurance and defined a source of funding, the PIS/PASEP, even providing for an additional contribution from companies that lay off many workers, which has never been regulated.

The Unemployment Insurance Program was consolidated with two new laws between 1990 and 1994 that created CODEFAT as the managing body for the policy and resources, and defined the amounts and conditions of access. The main modifications to the rules for obtaining unemployment insurance since 1986 have increased the program's coverage, the benefit amount, and extended the period of entitlement. Current regulations grant the worker 3 to 5 installments depending on the period worked in the 36 months prior to dismissal, which in critical cases can be extended by 2 installments provided the request is approved by CODEFAT and there are sufficient funds. Furthermore, it stipulates a 16-month waiting period between one access and another.

Although unemployment insurance has provided assistance to workers in their job search and professional qualification since 1990, in 2001 the law also began to include assistance in maintaining employment. The latest changes to the insurance rules came in 2013, when it began to be adjusted by the INPC (National Consumer Price Index) and no longer by the minimum wage rule. Between 2012 and 2013, workers became obliged to attend Pronatec qualification courses from the second time they applied for the benefit within a ten-year period, and only if the course was available in their field of work.

Recent changes have been driven by concerns about spending and the creation of mechanisms that link receiving benefits to professional qualifications, in order to increase workers' chances of finding employment. There is still much room for these and other improvements, such as fraud control, with the prime example being unemployment insurance for fishermen during closed seasons. However, fraud in unemployment insurance has a marginal impact on spending. The significant increase in spending on unemployment insurance in Brazil is primarily a result of the growth of the formal labor market, allowing millions of previously excluded Brazilians to access this right, and the real increase in the minimum wage. Even so, it is important to note that Brazil spends relatively little on unemployment insurance compared to other countries.

We also need to look at other types of improvement, and this should be done along two lines. On the one hand, the benefit must adapt to the Brazilian labor market, characterized by great heterogeneity, high turnover, short job tenure, and delays in finding new jobs. On the other hand, it must seek a more effective integration between unemployment insurance and policies for training and job placement.

In this sense, it is urgent to reformulate the current model of the National Employment System, allowing for better service to workers in their search for employment and qualification. The last external evaluation of the benefit, carried out in 2009 by UNB, shows that 72,5% of unemployment insurance beneficiaries received no support in finding a new job, and only 2,1% received support from SINE (National Employment System). Greater integration and coordination between the policies of the public employment system and between the entities responsible for the service should contribute to reducing unemployment time and raising the qualification of workers, contributing to the country's development on more inclusive, fair, and higher quality bases.

[1] The proportion of insured persons in relation to the stock of formal workers has remained constant since 1995, when it peaked at 20%, ending 2013 with a coverage of 16,9%.

[2] This amount includes unemployment insurance for formal workers and also the closed season insurance for artisanal fishermen, the insurance paid to workers rescued from slave-like labor, and the qualification grant.

[3] Decree Law no. 2.284/86 and regulated by Decree no. 92.608/86

[4] Law no. 7.998/90 and Law no. 8.900/94. Provisional Measure 2.164-41 of 2001.

[5] In 1986, beneficiaries accounted for 25,6% of those dismissed without just cause, in 1990 this rate rose to 39,3%, and in 1993 to 66,7%. The coverage rate has practically stabilized since then, and according to data from the first 3 months of 2014, it is around 72,6% of those dismissed.

[6] Among OECD countries, average spending is 0,71% of GDP, being 2,31% in Spain, 1,31% in France, 1,07% in Germany, 0,81% in Italy, 0,52% in the USA, and 0,25% in the United Kingdom.

[7] In the last two cases, it is necessary to emphasize the progress made in recent years. The length of time spent in employment increased from 6,6 years in MAR/2002 to 7,9 years in MAR/2014. With regard to the time spent looking for work, the proportion of workers who found employment within six months of searching increased from 57,7% in DEC/2002 to 75,5% in DEC/2013. But the insurance fails to cover a significant number of workers whose delay is more than 6 months.