Unemployment benefits during COVID-19


Unemployment benefits during COVID-19

The COVID-19 outbreak has disrupted world economies and social security systems for over a year now. This article focuses on measures taken to secure the livelihoods of those whose employment relationship was cut.

As per the latest estimates from the International Labour Office (ILO, 2021), an equivalent of 255 million full-time jobs were lost in 2020 and working-hour losses have been four times higher than during the global financial crisis in 2009. The International Social Security Association (ISSA) has already discussed measures to prevent job losses through a wide range of job retention programmes, such as partial unemployment, short-time work or wage subsidy schemes. In the face of massive job losses, social security institutions have introduced new temporary emergency unemployment assistance and increased benefit levels and duration for existing provisions. Some countries are providing subsidies for reinstitution of dismissed workers to companies in the hardest-hit sectors as complementary measures.

Unemployment benefits provide compensation for the loss of income resulting from involuntary unemployment. In some countries, unemployment protection functions independently from other social security programmes, often being the sole income protection for some workers (ISSA, 2021a). The International Labour Office estimates that only 38.6 per cent of the global workforce enjoy unemployment protection set in law, but only 21.8 per cent actually receive unemployment benefits (ILO, 2017). Although there are large regional differences, when comparing with old-age pensions (67.9%), child benefits (34.9%), maternity benefits (41.1%), disability benefits (27.8%), and social assistance for vulnerable persons (24.7%), unemployment programmes have the lowest effective coverage levels of eligible persons (21.8%) (ibid) worldwide. As per the latest ISSA country profiles, Figure 1 below shows that less than 50 per cent of countries include social insurance programmes in their legislation in case of unemployment.

Figure 1: Unemployment programmes throughout the world

Figure 1: Unemployment programmes throughout the world

Source: ISSA country profiles 2018 and 2019.

Note: 182 countries and territories were taken into account. For the purpose of simplicity, complementary social assistance programmes to social insurance are not shown. In this case, only the social insurance programme was counted. The figure above takes into account only unemployment programmes, and does not reflect the complete social security scheme e.g. there could be a comprehensive social insurance scheme for old age, disability and survivors, but only severance pay in case of unemployment).

One of the main distinctions between the different unemployment programmes is whether they provide a periodic defined benefit (i.e. though social insurance schemes) or if the protection is limited to a flat-rate compensation or own savings (defined contribution) as in the case of schemes with only individual accounts for unemployment. Countries classified with only severance payment do not provide any unemployment benefits anchored in any legislation other than the labour code, making it difficult to enforce payment, especially in times of economic crisis (ILO, 2017). This type of unemployment compensation is paid directly by the employer. In the case of social assistance provision only, unemployment programmes under this category vary greatly. Unemployment benefits may be granted regardless of previous employment duration, thus effectively being non-contributory programmes (e.g. Australia), or in other cases, granted depending on an income test (e.g. Brazil). In any case, the latter are non-contributory programmes from the perspective of the employee, since they do not contribute to unemployment schemes, but they are financed by the government from general tax revenue.


The impact of the crisis has been massive and uneven across economic sectors: most job losses have been in accommodation, food services, arts and culture, retail and construction services, whilst there has been job creation in high-skilled services sectors, such as information and communication, financial and insurance activities (ibid). The following measures have been observed in some countries:

  • Higher unemployment benefit levels: Higher unemployment benefits were introduced especially during the second half of 2020.
  • Introduction of complementary temporary unemployment benefits: As additional, complementary benefits, either as a percentage of existing unemployment benefits, or as flat rates.
  • Social assistance grants in countries without unemployment insurance of any kind: In the absence of social security schemes, some countries introduced social assistance grants for certain unemployed persons.
  • Subsidies to companies in hard-hit sectors to rehire dismissed workers: As a complementary measure, subsidies were provided to employers in certain hard-hit sectors to reinstate workers, and to foster new hires.
  • Relaxation of income tests: For the extension of some temporary unemployment benefits, the income-loss threshold was lowered, thus allowing more unemployed persons access to emergency benefits.
  • Provision of health insurance coverage for the unemployed: Extended health coverage subsidized by the state for up to six months for unemployed insured workers.
  • Withdrawals of private pension accounts: Persons who experience a decrease in monthly income could request to have access to their private pension savings, including in case of unemployment.
  • Overdraft in unemployment accounts: Overdraft in unemployment accounts has been allowed up to a limit.

Austria: Extension of higher emergency unemployment assistance

Due to the ongoing COVID-19 crisis, the government extended the initial emergency assistance (Notstandhilfe) for the unemployed until December 2020, and then extend once again until March 2021. This benefit was increased to between 92 and 95 per cent of the usual unemployment benefit, which is 55 per cent of the insured’s net earnings. Around 200,000 people per month have benefited from the increased emergency aid. In addition, unemployed persons received two one-time benefits of 450 Euros (EUR) each.

Colombia: Emergency flat-rate benefit and extended health insurance coverage

Employees and self-employed persons who lost their jobs on or after 12 March 2020, were entitled, from November 2020, to a financial compensation of 160,000 Colombian pesos (COP) for up to three months. Benefits would be awarded to insured persons who had been insured with the Colombian Family Allowances Fund  (Caja de Compensación Familiar – COMPENSAR) for at least six consecutive months in the last five years. Coverage under health insurance was extended for up to one year under the subsidized programme to not lose contribution months; after this period, insured persons who return to work can return to their regular contributory health insurance programme. An earlier measure introduced by decree 488 from 27 March 2020 allowed withdrawals from private pension accounts for workers with reduced monthly income.

Dominica: Temporary social assistance unemployment benefits

Dominica launched a financial assistance programme on 1 April 2020 at the amount of 600 and 400 East Caribbean Dollars (XCD) respectively for three months. Payments were made to the head of households with at least one child under age 18, and to individuals who had either been laid off or whose employment had been terminated as a result the COVID-19 pandemic or the Emergency Powers Curfew Order, Statutory Rules and Order No. 15 of 2020. Further conditions include a cap in monthly household income of up to 4,000 XCD and not receiving any other income support. Self-employed persons, referred to as small business owners, are also eligible.

Jordan: Five different programmes to both insured and uninsured workers

Defense Order No. 9 of April 2020 introduced five programmes to support unemployed workers during the pandemic. The Tadamun I and Tadamun II (“solidarity” in Arabic) programmes are work suspension allowances targeted to both employers covered under social security (Tadamun I) and for those excluded from it (Tadamun II). Tadamun I applies to employers that have contributed for at least 12 months to the Social Security Corporation (SSC). Employees are entitled to 50 per cent of their gross monthly salaries between 165 Jordanian Dinars (JOD) and 500 JOD (for lower salaries, the SSC will pay the difference up to the lowest amount of 165 JOD). Employers will contribute with 20 per cent of the employees' salaries up to a contribution of 250 JOD. For the Tadamun II programme, employers could enrol their employees for work suspension insurance from May 2020 to December 2020. A pre-condition was that all employers and employees enrol to all other available social insurance schemes by January 2021. The monthly benefit amount is 150 JOD, of which 100 JOD are covered by SSC, and 50 JOD by the employer. The other three programmes, namely Musaned I, Musaned II and Musaned III (“supporting” in Arabic) include two cash benefits depending on income level, and one that allows for the withdrawal of employees’ unemployment accounts up to 450 JOD over a period of three months.

Spain: Unemployment emergency benefit for the self-employed

In February 2021, access to the emergency unemployment aid for the self-employed was extended until 31 May 2021. The benefit was already in place during the first semester of 2020. Along with the extension, the required drop in income was lowered from 75 per cent to 50 per cent. In addition, the Government suspended during the same period the increase in the social security contributions that was to be applied since January 2021.

United States: Higher unemployment benefits and increased duration

Approved on 11 March 2021, as part of the American Rescue Plan Act of 2021, unemployment benefits will be extended through 6 September 2021. Under the new Pandemic Emergency Unemployment Compensation (PEUC) programme, unemployment benefits can be extended to up to 13 more weeks, In addition, automatic, additional payments of 300 US dollars (USD) per week will be paid.

For self-employed and gig workers, there is an extension of the Pandemic Unemployment Assistance (PUA) programme, depending on personal circumstances and State implementation of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act. States are permitted to provide pandemic unemployment assistance to individuals who are self-employed, seeking part-time employment, or who otherwise would not qualify for regular unemployment compensation. The PUA programme provides up to 39 weeks of benefits, which are available retroactively starting with weeks of unemployment beginning on or after 27 January 2020, and initially having ended on 31 December 2020.

Uruguay: Cash benefit for companies in the tourism sector that reincorporate workers on furlough

In order to promote the conservation and creation of employment in the tourism sector, the Social Insurance Bank (Banco de Previsión Social – BPS) provides a subsidy to companies in the tourism sector that, between 1 December 2020 and 31 March 2021, reinstate dismissed workers covered by unemployment benefits, or if they incorporate new workers. The subsidy consists of a non-refundable monthly amount of 8,000 Uruguayan pesos (UYU), paid for a maximum of four months for each worker that the company reinstates or hires in the said period. Reintegrated workers must have been receiving unemployment benefits as of 30 November 2020.


Unemployment benefits are one of the most important measures to mitigate the economic and social impact of shocks and extreme events. Yet, the majority of countries lack social security arrangements to cover the risk of unemployment and effective coverage is low.

While the main focus of this article is on the array of measures taken by countries during the recent crisis in order to ensure the livelihood of dismissed workers through cash benefits, unemployment benefit systems also have key functions to maintain employment, facilitate economic transformations, support re-integration and facilitate skills development.

The establishment and further development of unemployment insurance programmes that prevent unemployment, provide adequate benefits to dismissed workers and promote return to work is one of the key lessons of the crisis to strengthen resilience for future shocks. The ISSA Guidelines on the Promotion of Sustainable Employment and other ISSA knowledge products support this global trend in social security.


Department of Labor. 2021. Unemployment Insurance Relief During COVID-19 Outbreak. Washington, DC.

Federal Ministry of Labour. 2021. Kocher: Anhebung der Notstandshilfe auf das Niveau des Arbeitslosengeldes wird verlängert. Vienna.

Government of Colombia. 2020. Decreto 801 de 2020. Bogota.

Government of Dominica. 2020. “Covid-19 response: Employees and small business programme”, in Notices, 18 June.

ILO. 2017. Universal social protection to achieve the Sustainable Development Goals (World Social Protection Report 2017–19). Geneva, International Labour Office.

ILO. 2021. ILO Monitor: COVID-19 and the world of work. (7th Edition). Geneva, International Labour Office.

ISSA. 2021a. Country profiles. Geneva, International Social Security Association.

ISSA. 2021b. Meeting the employment challenges of the second wave of COVID-19: the case of Europe. Geneva, International Social Security Association.

ISSA. 2021c. Coronavirus Monitor. Geneva, International Social Security Association.

Olías L.; Plaza A. 2021. “Así es la prórroga de los ERTE, las ayudas para autónomos y los alquileres aprobada por el Gobierno”, in El Diario, 26 January.

Prime Ministry. 2020. Defence Order number (9) of 2020 issued under provisions of Defence Law No. 13 of 1992. Amman.

Social Insurance Bank. 2021. “Incentivos económicos para empresas del sector turístico”, in Novedades, 8 January.