Managing unemployment risks in Asia and the Pacific


Managing unemployment risks in Asia and the Pacific

While unemployment protection schemes are scarcely developed in Asia and the Pacific, as elsewhere in the world, important developments are taking place to expand and improve coverage. Certain developments have been accelerated by the COVID-19 pandemic. This article presents overall trends and concrete good practices of member institutions in the region.

The objective of unemployment protection is to guarantee income security against job losses and to promote decent employment (ILO, 2021a). It involves unemployment insurance or assistance and is usually linked with active labour market policies (ALMPs). ALMPs consist of different forms of employment promotion measures such as job counselling service to find a new job, support towards preparing a curriculum vitae (CV) and for job interviews, referrals or information on available jobs, or assistance in re-skilling and up‑skilling (Bedard, Carter and Tsuruga, 2020). The international labour standards of the International Labour Organization (ILO) include three major instruments for the design of unemployment protection. The Social Security (Minimum Standards) Convention, 1952 (No. 102) defines minimum standards for unemployment benefits; while the Employment Promotion and Protection Against Unemployment Convention, 1988 (No. 168) and the Employment Promotion and Protection against Unemployment Recommendation, 1988 (No. 176) set higher standards and implementation guidelines in detail.

Globally, unemployment protection remains the least widely implemented branch of social security (ILO, 2021a). As of 2020, its legal coverage was limited to 36.6 percent in the Asia and the Pacific, compared to 64.2 percent in the Americas and 82.0 per cent in Europe and Central Asia, and 11.6 percent in Africa. Effective coverage was even lower, only 14 percent of unemployed persons in Asia and the Pacific received cash benefits, compared to 16.4 percent in the Americas and 51.3 percent in Europe and Central Asia, and 5.3 percent in Africa (ILO, 2021a). The labour market structure in low- and middle-income countries in Asia and the Pacific presents a formidable challenge for the extension of unemployment protection. High levels of informality and underemployment, the prevalence of short-term, seasonal, part-time and multiemployer employment, and of self-employment, especially among women, hinder effective and sustainable unemployment protection (Bista and Carter, 2017). It is welcome therefore that attention to unemployment protection has increased recently in the region, with 10 of the 18 schemes set up in 2005 or after (Table 1). These developments were responses to regional and global economic shocks, but they are mainly concentrated in Southeast and Western Asia, with social insurance dominating most countries in the region except Australia and New Zealand (social assistance) and Jordan (social insurance and/or individual account) (ISSA, 2022). The COVID-19 pandemic has led to an increased interest beyond these subregions.

Table 1. Introduction of unemployment protection in the Asia and the Pacific
Country Year of introduction Type of programme
New Zealand 1930 Social assistance
Australia 1944 Social assistance
Japan 1947 Social insurance
China 1986 Social insurance
Iran 1987 Social insurance
Thailand 1990 Social insurance
Rep. of Korea 1993 Social insurance
Mongolia 1994 Social insurance
India 2005 Social insurance
Bahrain 2006 Social insurance
Viet Nam 2006 Social insurance
Jordan 2010 Social insurance / Individual account
Myanmar 2012 Social insurance
Kuwait 2013 Social insurance
Laos 2013 Social insurance
Saudi Arabia 2014 Social insurance
Malaysia 2017 Social insurance
Indonesia 2021 Social insurance
Source: ISSA, 2022.

Experiences in unemployment protection from Asia and the Pacific

As social security systems mature and implementation capacity evolves, the number of social security institutions in Asia and the Pacific launching unemployment protection schemes is growing (ILO, 2021a and Bedard, Carter and Tsuruga, 2020). The job losses and economic slowdown caused by COVID-19 reinforced unemployment-related vulnerabilities facing many low- and middle-income countries in the region, including those workers engaged in the informal economy. This has led to tripartite discussions to assess the feasibility of establishing unemployment insurance schemes in countries such as Bangladesh and Indonesia (ILO, 2021a). The ISSA has been convening member institutions to brainstorm solutions to this complex challenge and to share good practices through webinars, at the Virtual Social Security Forum for Asia and Pacific 2022, and other activities. This article hopes to stimulate thinking around this topic in the region by summarizing member institutions’ emerging experiences, challenges, and lessons learnt.

Ministry of Human Resources and Social Security, China

The Chinese Ministry of Human Resources and Social Security (MoHRSS) rolled out several initiatives to mitigate the impact of the COVID-19 crisis on enterprises, maintain employment levels, and protect livelihoods. The strategy comprised of a number of elements (MoHRSS, 2021; ISSA, 2020). First, micro, small and medium-sized enterprises (MSMEs) – which make up 90 per cent of the total employment – were refunded their past contributions to unemployment insurance if they limited layoffs to predefined levels based on firm size, contribution history, service duration, and so on. Second, MSME employer contributions were waived, reduced and deferred at different stages of the pandemic over two years.

In addition to changes to the existing schemes, unemployment insurance was expanded considerably. Unemployment subsidies were extended until December 2020 to those who had remained unemployed even after their eligibility had expired. Distinctions between the local and migrant workers – a cornerstone of the Chinese social security system – were temporarily relaxed, as domestic migrant workers were granted temporary living allowances based on the subsistence allowance standards in the cities where they paid contributions.

National Social Security Administering Body for Employment (BPJS Ketenagakerjaan), Indonesia

Indonesia introduced the country’s first ever unemployment benefit programme in 2021. The programme only covers those workers who are already registered with two public social security programmes: the Social Security for Health under the Social Security Administering Body for the Health Sector (BPJS Kesehatan) and the Workers Social Security under BPJS Ketenagakerjaan. The BPJS Ketenagakerjaan manages the cash benefit payment while training and access to labour market information is delivered by the Ministry of Manpower (ILO, 2021b).

In addition to career counselling and online and offline training, the eligible workers can also receive cash benefits for up to six months, including 45 per cent of the monthly wage for the first three months and 25 per cent for the following three months. Employers who fail to register their employees will have to pay cash compensation to the employees as a lump sum in addition to providing job training.

The programme is financed by a total contribution rate of 0.46 per cent of the monthly wages, of which 0.22 per cent is contributed by the government and the remaining 0.24 per cent by the employer. It is important to note that the employer’s contribution to the unemployment insurance is taken from the re-composition of the life insurance and work compensation component of the pension programme, without entailing any additional financial burden to the employers (Medina, 2021). In 2022, the total number of beneficiaries under the unemployment benefit programme is expected to reach 629,000 (Cabinet Secretariat, 2022).

Social Security Corporation, Jordan

The Government of Jordan launched the 200 million Jordanian Dinar (JOD) Istidama programme to protect workers during the pandemic (SSC, 2021). The Social Security Corporation (SSC) was guided by the ISSA Guidelines on Contributions Collection and Compliance (ISSA, 2019a) and the ISSA Guidelines on Service Quality (ISSA, 2019b) in designing timely and effective responses to the unprecedented rise in unemployment. The programme applied to the workers of two categories of firms from December 2020 to December 2021. First, workers employed in establishments not authorized to work due to the pandemic restrictions were allocated 50 per cent of their net wages. The workers’ contributions to applicable insurances were also made by the programme subject to a ceiling. Second, workers in sectors and firms most impacted by the pandemic were allocated 75 per cent of their net wages, jointly financed by the government and the employer. The SSC also supported employers to manage the liquidity impacts of the pandemic by reducing total contributions to social security from 21.75 percent to 5.25 percent from March to May 2020, and by allowing them to postpone contributions for these months to a later date.

Social Security Organization, Malaysia

Since 2019, all private enterprise workers – regardless of firm size – in Malaysia are guaranteed employment protection under the Employment Insurance System (EIS) Act 2017. The EIS provides five types of benefits through the Social Security Organization (SOCSO): The Job Search Allowance, the Early Re-Employment Allowance, the Reduced Income Allowance, the Training Allowance, and the Training Fee. Employees and employers are mandatorily required to contribute 0.2 per cent of the wages each into the EIS. All employees who have made contributions for at least 12 months over 24 months are eligible for the EIS upon unemployment (SOCSO, 2020). As of May 2022, 6.4 million workers are covered. In the financial year 2021/2022, 449 million Malaysian Ringgit (RM) was paid in benefits to 77,603 workers. Further, SOCSO has helped 384,000 unemployed job seekers return to work through employment services to date (SOCSO, 2021).  

With the roll-out of the EIS, the scope of services provided by SOCSO has expanded considerably. In 2020, SOCSO was given the mandate of the National Employment Services Provider, resulting in a surge in demand for SOCSO’s employment brokerage services. This expanded role required building mechanisms to effectively collaborate across the fragmented ecosystem of public and private entities offering employment services. To rise to this challenge, the SOCSOset up a single window digital platform. The MyFutureJobs portal is a unified platform for the integrated delivery of employment services. It contains information on jobseekers, who are in turn connected to tailored job opportunities, active labour market programmes across ministries, and SOCSO’s career counsellors for individualized support. It also provides real-time labour market information to enable better policy making.

The EIS and the MyFutureJobs portal were pivotal during the pandemic as jobseeker registrations increased by 167 per cent. SOCSO designed several programmes, delivered via the MyFutureJobs portal, with a total allocation of more than RM 27 billion (2.45 per cent of GDP).

General Organization for Social Insurance, Saudi Arabia

The Kingdom of Saudi Arabia enacted the Unemployment Insurance Law (SANED) in 2014 to provide transitional income support to unemployed private sector workers (GOSI, 2018). At present, all employees and employers are each required to contribute 0.75 percent of the wages towards the SANED fund (Saudi Gazette, 2022). The benefit design follows a sliding structure to incentivize faster transition into re-employment: The unemployment insurance is paid at the rate of 60 per cent of the average monthly wages for the first three months, followed by 50 per cent of this average for the subsequent months, subject to a maximum of 12 months. Further, the General Organization for Social Insurance (GOSI) – the implementing organization for SANED – works closely with the Ministry of Labour and Social Development and the Human Resources Development Fund to provide training and professional development assistance to those unemployed. A key innovation of SANED is that eligibility determination and exit are both managed automatically through seamless data exchange across relevant institutions.  

The SANED was instrumental to mitigating the impacts of the COVID-19 crisis particularly on small and medium enterprises. The programme was temporarily modified to provide wage support for three months to all companies with less than 5 workers and 70 per cent for the bigger ones (Fusco, 2020). The SANED programme spent around 6.2 billion Saudi Riyals to support 478,077 workers across 84,377 establishments (GOSI, 2021). The core objective was to maintain the rate of unemployment at 12 per cent while minimizing fraud. The efforts to scale-up the programme were substantial. GOSI re-engineered the programme design and workflows; set up new communication channels; and developed new models of fraud detection. The number of customer service employees were increased by 700 per cent and more than 2 million text updates were sent to customers.  

Ministry of Employment and Labor and National Pension Service, Republic of Korea

The Employment Insurance scheme is the main instrument in the Republic of Korea that protect unemployed workers. Backed by the Employment Insurance Act 1993, it was rolled out in 1995. The Ministry of Employment and Labor (MoEL) provides general supervision, pays benefits, and administers the programme. The Korea Workers’ Compensation and Welfare Service (COMWEL) sets the contribution rates, and the National Health Insurance Service (NHIS) collects contributions. While the scheme was initially limited to formal sector employees, it has been progressively expanded during the pandemic in an effort to extend unemployment protection to all workers, and especially the dependent self-employed (Ministry of Employment and Labor, 2021), which are own account workers that are dependent in their work on another economic unit. The employment insurance’s coverage scope was extended to artists and various categories of dependent contractors through legal amendments in December 2020 and July 2021 (see ILO, 2021c for more details about the employment insurance scheme).  In 2020, 14.1 million people were insured and nearly 1.8 million received unemployment benefits (Statistics Korea).  

While the core employment insurance programme covers the working-age population, the Republic of Korea also faces the challenge of financing the adequate pensions with an ageing population and declining birth rates. To reduce pressure on the pension funds, job creation for older workers aged 50 to 60+ who comprise 14.6 per cent of the population is important and are in the local context called the “new middle-aged”. (NPS, 2021). The National Pension Service (NPS) established a “new middle-aged project taskforce team” in July 2017 to provide customized training and consultations to support this population group in finding employment. Since 2018, the NPS has established a system to match the new middle-aged with jobs in the public and private sector using big data techniques. The NPS has set up a dedicated team to foster collaborations and develop projects aimed at the employment of this target population group. Since the inception of the new middle-aged employment policy, the NPS has linked 1,181 participants with employment opportunities through 51 programmes.  As at 2021, there are 20 designated employees across seven regional offices working to establish networks with local governments, actively pursuing joint projects in identifying and linking regional social resources related to the new middle-aged.


Table 2 summarizes the results that these institutions have been able to achieve through their unemployment protection programs.

Table 2.
Institution Results obtained
MoHSS, China
  • 104.2 billion Chinese yuan (CNY) in subsidies granted to 6.08 million enterprises (5 times higher compared to 2019), benefiting 156 million employees who avoided being laid off due to these subsidies
  • 13.37 million people received unemployment insurance benefits under various programmes in 2020 – 2.7 times higher compared to 2019
  • CNY 150.9 billion in unemployment insurance contributions refunds and reductions
SSC, Jordan
  • 131,000 firms able to reduce their operational costs worth JOD 180 million through wage subsidies financed by the government and the SSC
  • 90,000 employees benefitted from wage subsidies
SOCSO, Malaysia
  • Processing capacity increased from 18,988 registered cases in 2018 to a cumulative 793,626 job seekers registering to MYFutureJobs up to mid-2021
  • In 2020, 160,554 individuals secured employment through MYFutureJobs
  • As of May 2021, 64,724 employers registered with MyFutureJobs (15% of all employers in Malaysia)
  • As of May 2021, 104,380 average daily active vacancies published
GOSI, Saudi Arabia Pre-COVID
  • 100% coverage of the intended population reached right after programme launch
  • Payment of benefits within 10 calendar days of accepting the benefit request
  • 4 complaints received per 1,000 transactions
  • A score of 4.43 out of 5 received in the quarterly customer satisfaction survey
COVID expansion
  • Unemployment rate maintained nearly at pre-COVID levels (12.6% in 2020 compared to 12% in 2019)
  • Expansion executed in 14 days
  • Less than 0.01% fraud recorded
MoEL, COMWEL and NPS, Republic of Korea
  • Nearly 1.8 million received unemployment benefits in 2020
  • Jobs created for middle aged workers (50s-60s) after one training course:
    • ­2.5 in 2018 → 3.9 in 2019 → 5.5 in 2020
    • ­­5.5 jobs created per training course in 2020, an increase of over 100% compared to 2018
  • 8.3% job matching rate achieved in 2020

Critical success factors

Coordination of unemployment insurance schemes with ALMPs is key to maximize their efficiency, as these act in complementary ways to protect vulnerable segments of the population that are in, or at risk of slipping into, poverty and informality. In Saudi Arabia, GOSI works closely with other government agencies to complement financial aid with psychological and training support to drive faster re-employment. In Malaysia, outreach, training and job matching are integral to the EIS.

Providing comprehensive unemployment support requires high capacity. The financial, technical and administrative capacity required to provide efficient labour market information and placement services are often lacking especially in low- and middle-income countries. In the Republic of Korea, the Government has introduced the concept of universal employment. In addition to paying unemployment benefits through its 133 Employment Welfare Plus Centres nationwide, the Ministry of Employment and Labour established a road map in December 2020 aiming at gradually extending employment insurance coverage to all workers by 2025, and implemented an employment support for “all jobseekers” programme in January 2021 (ILO, 2021c).

Institutional preparedness and administrative flexibility are crucial for expanding unemployment insurance during crises. The Chinese social security response was facilitated by a unified social insurance platform launched in 2019. By enhancing the availability of e-services on this platform, in-person services were reduced considerably. Application processes were simplified and eligibility criteria were minimized to fast-track applications. For instance, online unemployment insurance benefits claims were accepted in 297 cities, which temporarily replaced the regular mandatory practice for the unemployed to register in public service agencies and to prove their job-search efforts.

Administrative integration is crucial to efficiently implementing comprehensive employment support. In particular, ALMPs in developing countries often suffer from programmatic and institutional fragmentation, leading to duplication of services and inefficiency (Bird and Silva, 2020). The substantial effective coverage achieved by Malaysia is attributable to the MyFutureJobs portal that consolidates different public and private players to provide integrated client-focused employment services.

Advanced data analytics can improve the quality of employment support. In Malaysia, data collected through the MyFutureJobs portal has been used to develop new interventions. For instance, user behaviour on the portal is routinely analysed to design short- or long-term active labour market interventions. Similarly, the NPS in Korea uses algorithms to match the new middle-aged to companies’ requirements and thereby improve match quality.

Fraud control remains an important concern for unemployment insurance, especially during crises when applications surge, making automatic data-driven eligibility checks crucial. For instance, GOSI was able to automatically exchange data with several institutions to credibly verify unemployment claims. SOCSO in Malaysia also relies on integration with other relevant institutions (e.g. tax department, banks) to mitigate the risks of fraud. The National ID is an important asset in enabling the programme to ensure the uniqueness of applications and track actual unemployment status.

While many institutions successfully expanded unemployment insurance in response to the pandemic, financial sustainability remains an open question. The successful response in Jordan received considerable additional support from the government, which was supplemented by surplus insurance funds with the SSC. In China, the accumulated balance of unemployment insurance funds in some regions have been depleted disproportionately, which will eventually impact their ability to finance future unemployment crises. Policy interventions to recover financially and circumvent future deficits are still emerging.


Nearly half of all workers, or more than 900 million people, are affected by vulnerable employment in the region, ranging from 31 per cent in Eastern Asia to 72 per cent in Southern Asia (ISSA, 2018). Yet, the Asia and the Pacific region accounts for less than 20 per cent of the unemployment protection schemes in the world (ISSA, 2022). Most programmes do not have benefits for first-time jobseekers and exclude people in non-standard forms of employment. Economic downturns tend to affect employment rates among younger workers more than older workers, and as such, the protection of younger workers is identified by the ISSA as among the top 10 social security priorities in the region (ISSA, 2018).

Encouragingly, an increasing number of countries are preparing to roll out unemployment insurance schemes in the region. In the Philippines, for example, the bill on expanding unemployment insurance was adopted by the House of Representatives in early June 2021, and is awaiting approval by the Senate (Cator, 2021).

In an effort to help ISSA member institutions respond to the new challenges and constantly adapt to changes and transformations in the labour market, the ISSA published its Guidelines on the Promotion of Sustainable Employment in 2016 (ISSA, 2016). An updated version of these Guidelines will be presented at the forthcoming World Social Security Forum to be held in Morocco in October 2022. These ISSA Guidelines aim at assisting ISSA member institutions in making informed strategic choices in the design and delivery of programmes and services intended to help people access employment and remain employed, to improve their employability through ongoing access to lifelong learning and to facilitate the return to work.

The ISSA member institutions’ recent experiences described in this article concretely demonstrate the implementation of the content of the ISSA Guidelines on the Promotion of Sustainable Employment. They shed light on ways to pursue meaningful employment promotion and unemployment protection despite the structural challenges facing the region.


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