Financial Times

Unemployment insurance scheme soon

By Dilshani Samaraweera

The Ministry of Labour is proposing a permanent scheme to provide limited unemployment insurance coverage for working people. Currently Sri Lanka provides no social security at all for people who suddenly lose their jobs and this year thousands working in the export sectors, have lost jobs due to impacts of the global recession.

“We have prepared a report on providing unemployment insurance for people who lose their jobs. The report will be presented to His Excellency the President for a decision after we discuss it with all the stakeholders,” said the Secretary to the Ministry of Labour, Mahinda Madihahewa.

The scheme proposed by the Ministry of Labour provides limited unemployment insurance coverage to protect already low income earners. Under the proposed scheme, people with salaries of less than Rs 20,000 per month, that have been employed for at least one year, will be eligible for unemployment insurance.

The scheme will make a payment of 50% of the salary, for a maximum period of up to 24 months. However, the payments will stop if the beneficiary finds employment before this period. But employers say the ETF should be used to finance the scheme, as the ETF is entirely made up of contributions by employers.

“We are informed that a contribution of approximately Rs.700 million is received by the ETF monthly, and the current composition of this fund is approximately Rs.93 billion. This is an enormous amount of money, a portion of which could easily be considered to fund an Unemployment Benefit Insurance Fund,” said the Director General of the Employers Federation of Ceylon, Ravi Peiris.

The Ministry is also trying to minimise misuse of the scheme by using JobsNet, the employment network under the Ministry of Labour, to register people and to monitor them. JobsNet will use its job bank to match job seekers with vacancies and laid off workers will also be given training for new skills development.

“People who want to apply for the unemployment benefit will have to register with the JobsNet and they will have to report in every month. JobsNet will also help them find a new job. Until they find a new job, they will also be given training and career guidance,” said Mr Madihahewa.

The Ministry has also proposed different sources of financing for the scheme. For the short term, one option proposed, is to get funds from the Employees' Trust Fund (ETF) by making the unemployment insurance scheme one of the ETF’s benefit schemes. The ETF already has seven benefit schemes operating and the unemployment insurance scheme could be the eighth benefit scheme. Another option is to use a percentage of the Employees Provident Fund (EPF) to finance the insurance scheme.

However, for the long term, the Ministry is proposing an employer-employee contributory scheme, where both the employer and the employee will make a payment to the Unemployment Benefit Insurance Fund.

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