Social security supporting health and employability

New forms of work and work patterns have emerged over the past decades that challenge the relationship between labour markets and social security. These developments are having a significant impact at various levels.

On the one hand, the number of full-time workers in regular employment is decreasing. On the other hand, part-time work and other non-standard forms of employment have increased. Job insecurity and interruptions in employment are increasingly commonplace.

At another level, unemployment has significantly increased in some countries, placing financial pressure on a range of unemployment protection schemes. To help address these challenges, employment policies have a crucial role to play.

Income replacement policies

Unemployment protection programmes provide compensation for the loss of income resulting from involuntary unemployment. As such, these programmes act as a source of income replacement during periods of economic adjustment.

Less than 80 countries worldwide have unemployment programmes; these are mostly social insurance programmes. Generally, the period of entitlement to social insurance benefits is limited and the benefit amount is linked to the insured's pre-employment earnings level. In the absence of social insurance programmes, countries may provide lump-sum grants, payable by either a government agency or the employer. A small number of countries provide mandatory individual severance accounts, with total benefits equal to the value of accumulated capital in the insured's individual severance account.

A shift towards policies that encourage labour market participation

As a result of the challenges highlighted above, a shift is underway within unemployment protection programmes. In addition to their traditional income-replacement role, these programmes have become more proactive; for instance, through activation measures designed to help unemployed persons return to work or measures that facilitate a healthier balance between work and family life. Continuing entitlement to benefits is now increasingly linked to participation in labour market programmes, which may include training, job creation, job brokerage and subsidized employment.

Employment policies help to counteract rise in unemployment

The European Union, the Organisation for Economic Co-operation and Development (OECD) and other international bodies consider employment policies as a key element of employment strategies to generate employment and reduce the financial pressure on unemployment benefit programmes. In OECD countries and elsewhere, employment policy strategies provide a major short-term policy instrument to counteract the rise in unemployment, promote re-employment and labour force participation, and maintain or improve employability. Various country experiences show that an early intervention by means of appropriate tailor-made measures can increase the chances of individuals returning successfully to the labour market. In this vein, some countries also provide additional support in the form of ‘case management' of individual jobseekers.

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