Adequacy

What constitutes adequate social security benefits and services?

What constitutes an adequate benefit or service? And against which benchmarks can adequate benefits and services be defined and eventually measured? The ISSA Adequacy Project enables an assessment of the degree to which social security programmes are meeting their objectives by defining, measuring and analysing a multi-variable definition of benefit adequacy.

An unemployment insurance system has two major objectives, namely to guarantee an income substitution for unemployed people and to stimulate their return to employment. Unemployment benefits should therefore guarantee an income to workers deprived of a job and an income allowing them to maintain a certain standard of living and to look for an appropriate job under good conditions.

In most countries, unemployment systems are operated on a mixture of insurance and solidarity principles. The insurance element covers a risk, namely income loss, and aims at guaranteeing a certain substitution rate of that income. Solidarity comes into play in the absence of income or low income and guarantees a minimum income enabling the beneficiary to cope with expenditures related to their needs. It is however important to avoid the situation when unemployment benefits deter beneficiaries from looking for a new and satisfying job. This is one reason why unemployment systems are accompanied by incentive mechanisms and employment services that aim at facilitating the return to employment as soon as possible. Unemployment schemes play a role in ensuring that valuable skills to the economy are not lost and therefore close coordination with other stakeholders in the labour market is crucial.

A tool for assessing these different objectives and measuring the adequacy of unemployment benefits has been developed by the ISSA. The model is composed of eight parameters or criteria with the purpose to evaluate and highlight the different dimensions of adequacy and the different objectives of an unemployment system. These parameters are:

  1. Coverage level
  2. Type of benefits
  3. Period of entitlement to unemployment benefits
  4. Unemployment benefits level
  5. Eligibility conditions
  6. Employment services and active labour market programmes
  7. Unemployment rate
  8. Administration

For each parameter, several indicators have been defined enabling the measurement of the parameter in question. In total, there are 36 such indicators.

The ISSA unemployment adequacy model is available to member institutions to run. An excel spreadsheet and manual are available to guide members through the process.

ISSA Reports

Measuring multivariable adequacy and the implications for social security institutions:

 

ISSA User Manuals

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