Unemployment and unemployment protection in three groups of countries

This report examines unemployment protection with emphasis on three groups of countries: 1) OECD, 2) Central-East Europe and the Former Soviet Union; and 3) East and South Asia. Section 1 notes the presence of various public social protection programs including pensions, work injury insurance, health insurance, and unemployment benefits. Section 2 describes the measurement of unemployment in these countries and provides details of their unemployment protection programs including unemployment insurance, unemployment assistance, and severance pay schemes. Section 3 explores the costs of providing unemployment protection. It decomposes the cost of unemployment protection into three components: 1) the unemployment rate; 2) the share of weeks of unemployment that are compensated; and 3) the replacement rate (average benefits as a proportion of average wages). Cross country evidence regarding these components of costs is briefly reviewed. Comments on the potential costs of unemployment insurance for Asian economies are offered. Section 4 examines alternatives to unemployment insurance and unemployment assistance for addressing the loss of earnings and increase in poverty associated with unemployment. The four alternatives are severance pay, temporary public employment, social investment funds, and community loan funds. Some observations are made on the comparative strengths and weaknesses of these alternatives.