Working Paper Series Macroeconomic Policy and Financing for Development Division
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Working Paper Series Macroeconomic Policy and Financing for Development Division Strengthening the Capacities of Asia and the Pacific to Protect Workers against Unemployment WP/16/01 February 2016 Working Paper Series Macroeconomic Policy and Financing for Development Division STRENGTHENING THE CAPACITIES OF ASIA AND THE PACIFIC TO PROTECT WORKERS AGAINST UNEMPLOYMENT This paper was prepared by John Carter for the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) For more information, contact: Macroeconomic Policy and Financing for Development Division (MPFD) Economic and Social Commission for Asia and the Pacific United Nations Building, Rajadamnern Nok Avenue, Bangkok 10200, Thailand Email: [email protected] Series Editor Dr. Aynul Hasan Director Macroeconomic Policy and Financing for Development Division The views expressed in this Draft Discussion Paper are those of the author(s) and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations. Draft Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This publication has been issued without formal editing. Please cite this paper as: Carter, John (2015). Strengthening the capacities of Asia and the Pacific to protect workers against unemployment. MPFD Working Paper, WP/15/14. Bangkok: ESCAP. Available from www.unescap.org/our- work/macroeconomic-policy-development/financing-development. i Contents Acronyms ............................................................................................................................. iv Executive Summary .............................................................................................................. 1 I. Introduction ................................................................................................................... 6 A. International Labour Organization (ILO) Conventions and recommendations ... 7 B. Asian economy ....................................................................................................... 9 C. History of unemployment protection schemes throughout the world ................ 12 II. Unemployment Protection Schemes in Asia ............................................................. 15 A. Mandatory unemployment insurance schemes ................................................... 17 B. Unemployment Savings Schemes (USS) (Unemployment Insurance Savings Accounts - UISAs) ................................................................................................ 27 C. Severance Pay programs ...................................................................................... 30 D. Non-contributory unemployment protection schemes ........................................ 32 E. Impact of unemployment protection schemes on the labour market ................. 37 F. Advantages and disadvantages of the unemployment protection schemes ....... 38 III. Options to Improve Existing or Proposed Schemes .................................................. 41 A. Existing schemes .................................................................................................. 41 B. Proposed schemes ................................................................................................. 48 IV. Further Issues on Unemployment Protection ............................................................ 54 A. Informal economy ................................................................................................. 54 B. Obstacles face by women and youth to benefit from unemployment protection schemes ................................................................................................................. 57 V. Conclusion ...................................................................................................................... 62 Annex 1. International Standards on Unemployment Protection ................................... 64 Annex 2. Severity ratings of UI eligibility criteria for selected OECD countries ......... 65 Annex 3. Classification of Labour Market Policies ........................................................ 66 Annex 4.1. Severance Pay Programs in Asia - 2013 ......................................................... 68 Annex 4.2. Severance Pay Programs in Asia – 2013 ........................................................ 69 Annex 5. “Once-and-for-All Chance” ............................................................................. 70 References ........................................................................................................................... 71 ii Boxes Box 1. Social protection defined ................................................................................ 8 Box 2. The evolution of unemployment insurance ................................................... 12 Box 3. Unemployment insurance and employment insurance ................................. 17 Box 4. Job sharing and part-time work..................................................................... 27 Box 5. Pre-funded unemployment savings accounts in Colombia ........................... 27 Box 6. Chile's Hybrid Unemployment Insurance Savings Scheme (UISA) ............ 28 Box 7. Provisions of interest concerning the Jordan UB scheme ............................. 30 Box 8. Origins of severance pay programs ............................................................... 31 Box 9. Conditional cash transfer: Mexico's Progresa and Colombia's Familias en Accion programs ...................................................................................... 33 Box 10. Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) ................................................................................................ 36 Box 11. Coverage under Viet Nam UI system ........................................................... 42 Box 12. Direct support to employers for employee training ...................................... 43 Box 13. Bahrain "Aids" benefits ................................................................................. 45 Box 14. Examples of IMF supported-programs ......................................................... 47 Box 15. Retrenchment benefits in Malaysia ............................................................... 48 Box 16. Options for the proposed UI system in Malaysia .......................................... 49 Box 17. Pillar 3: acknowledgement of tenure ............................................................ 51 Box 18. Myanmar UI scheme (Social Security Law, 2012) ....................................... 53 Box 19. Historical Perspective of Informal Employment .......................................... 55 Box 20. Formalization of the informal economy: a comprehensive approach ........... 56 Box 21. Occupational segregation .............................................................................. 58 Box 22. Five gender gaps in the labour market .......................................................... 60 Box 23. Labour market transitions of young women and men in Eastern Europe and Central Asia ............................................................................................ 62 Tables Table 1. Economic statistics for selected countries in Asia ........................................ 10 Table 2. Unemployment rate statistics of selected Asian countries ............................ 10 Table 3. Overview of unemployment protection Schemes anchored in national legislation by type of scheme and benefit, 2012/13 ...................................... 14 Table 4. Comparison of pre-2015 and 2015 benefit durations for UI in Viet Nam .... 22 Table 5. Informal employment as a per cent of total non-agricultural employment .. 55 iii Acronyms ABND Assessment Based National Dialogue CCT Conditional Cash Transfer(s) ECLAC Economic Commission of Latin America and the Caribbean/Economic Development Division ECLAC/EDD Economic Development Division of ECLAC EGS Employment Guarantee Schemes EI Employment Insurance ESCAP Economic and Social Commission of Asia and the Pacific ESCAP/MPFD Macroeconomic Policy and Financing for Development of ESCAP ICLS International Conference of Labour Statisticians ILO International Labour Organization IMF International Monetary Fund ISA Individual Savings Account LFPR Labour Force Participation Rate LMP Labour Market Policy ILC International Labour Conference MGNREGS Mahatma Gandhi National Rural Employment Guarantee Scheme NEM New Economic Model –(Malaysia) NGO Non-Government Agencies NIEs Newly Industrializing Economies NREGA National Rural Employment Guarantee Act OECD Organization for Economic and Co-operation Development PEP Public Employment Program(s) PES Public Employment Service PRC People’s Republic of China PWP Public Works Program(s) SDGs Sustainable Development Goals SOCSO Social Security Organization (Malaysia) SPF Social Protection Floor SWTS School-to-Work Transition Survey TPC Tripartite Project Committee UB Unemployment Benefits UDHR Universal Declaration of Human Rights (1948) UI Unemployment Insurance UISA Unemployment Insurance Savings Accounts UN United Nations USS Unemployment Savings Schemes WIEGO Women in Informal Employment Globalizing and Organizing WTO World Trade Organization iv Executive Summary This report provides an overview of the various existing and proposed unemployment protection schemes in Asia. These schemes play a key role for women and men of working age by stabilizing their incomes in