Sat | Sep 19, 2020

Unemployment insurance plan is sorely needed

Published:Thursday | July 2, 2020 | 12:15 AM


I refer to your editorial in The Gleaner of June 17, 2020 with the headline, ‘Put unemployment insurance on the agenda’. The editorial pointed to The Gleaner’s proposal some time ago for an employee-supported unemployment insurance scheme, managed by the National Insurance Fund.

This is a proposal that merits serious consideration because an unemployment insurance plan is sorely needed in Jamaica, and is something that successive governments have shied away from. I can state with certainty that the plan for unemployment insurance was on the agenda, and was seriously considered when the National Insurance Scheme (NIS) was first discussed in 1964.

I know this because I was one of the four persons that comprised the team of civil servants in the then Ministry of Labour, that was given the assignment to do the planning for what became the National Insurance Scheme.

We were given the basic plan, and the assignment to come up with a draft document for Cabinet discussions and approval. The International Labour Organization (ILO) provided us with the technical expertise, and we drew ideas primarily from England and the United States of America.

In considering the benefits that would be provided, old-age pension and unemployment insurance benefits were high on the agenda. The unemployment benefit proposal eventually fell by the wayside, however, for two reasons. The first was the cost to the scheme, and the second was the widely held and erroneous perception that it would be a handout for the thousands of unemployed in the society.

My initial assignment was to work with the ILO-sponsored Swiss actuary, Peter Thullen, and when we came up with the amount that would be needed to provide unemployment benefits at that time, it was concluded that the NIS could not support the proposal in the initial stages. The recommendation, therefore, was to do like England and the USA, and defer the benefit for a future date. In those jurisdictions, unemployment benefits were provided 18 and 20 years, respectively, after the initial plans were implemented.

This came up in the debate in the House of Representatives on November 17 and 18, 1965, and the labour minister, Lynden Newland, told the House that Jamaica would follow this pattern and institute unemployment benefits at a later date.

The opposition spokesman, Vernon Arnett, made a strong appeal for the benefit to be included in 1965, and recommended that Section 9 of the draft act be amended to include unemployment benefits. He eventually relented with strong reservations, and the act was eventually passed without amendments.

More than 50 years have now passed, and as stated by The Gleaner, I agree that “the time ... is propitious for revisiting the issue.. .”