Lazutka proposes to change the system: the unemployed would receive benefits for longer, and job seekers after the pandemic – 257 euros

Could get longer

The economist Romas Lazutka said that such proposals came from a specially trained group of researchers in one of the projects supported by the Lithuanian Scientific Council. The research team analyzed the unemployment and poverty situation in the country and provided recommendations to Lithuania, which will be presented to the authorities on December 29.

The recommendations prepared propose to extend the payment period of the unemployment insurance benefit from the current 9 to 12 months. It is argued that, although there are significant differences between countries, most European Union (EU) countries apply a period of at least 12 months for the payment of unemployment benefits.

We are not proposing to change the size itself, but keep in mind here that we are not talking about any social benefit, but a benefit paid from Sodra, which is not a bonus anyway, and people have bought it with their own contributions.

When we work under an employment contract, the employer pays a contribution from our salary and this means that a person who loses his job is entitled to compensation for having lost his job and his salary. Here it is the same as insuring the car with liability insurance, and in the event of an event, the insurance company compensates the damage, and here – Sodra.

This, in this case, this benefit covers a relatively small part of the people in Lithuania and that part of the beneficiaries is small and it is bad because people work, pay contributions, and when they are unemployed, some of them do not receive help from Sodra, explained R. Lazutka.

According to him, there are several reasons why a person may be left without Sodra benefits after losing their job.

“One thing is that the duration of the insurance requirement is one year. You have to work for a year to receive Sodra benefits, but especially during a pandemic, a person may have started working in January and lost their job, say in the spring, less than 12 months ago. And then if you lose your job, you will also lose the opportunity to receive that benefit from Sodra. And there are a lot of those people, especially those who come into the job market, say, after school, after school.

In many countries, the benefit is paid for up to one year, so we propose such an amendment. But that does not mean that the unemployed would receive 12 months. The benefit can now lie on your shoulder and lift it up. There are also requirements that you must actively look for a job, “said Prof. R. Lazutka.

However, according to him, the Employment Service (UT) also has to do its work here, which has to check if a person is really looking for work.

“If the UT offers them a job and the person refuses, they lose the right to the benefit, or if they offer courses but the resident refuses to participate in the training, they will not receive that benefit again. But control is very important here, “added the economist.

“In general, this control still needs to be strengthened, regardless of whether the benefit is paid for 9 months or 12 months. It cannot be unduly paid. They still have to manage it,” he said.

The group’s recommendations also suggest that the duration of unemployment benefits could be extended further than 12 months in times of pandemic and crisis. last up to 18 months.

It is true that there is a condition for this: the data of the Department of Statistics must record the growth of the unemployment rate for three consecutive quarters, and the extended duration could no longer apply to those who acquire the right to the benefit during the period in which unemployment begins to decline for three consecutive quarters.

“Other countries have simply extended the pay period because it makes no sense to leave a person without a benefit or require them to find a job when there is no work. This has led many countries to expand benefits even in the current pandemic. If we see that unemployment is increasing and some people do not have a job, say, for half a year, 9 months, a year, then it is very difficult and almost impossible for them to find a job when those who are working are laid off,.

Among the recommendations of the research group is the proposal to reduce from 12 to 6 months the requirement of the duration of the social security service to receive such benefits. during periods in which the Department of Statistics records an increase in the unemployment rate for three consecutive quarters, and in order not to increase moral hazard by extending the benefit period and reducing the duration of insurance requirements in crisis situations, it is In other words, to avoid the deliberate practice of short-term employment and, there is no rush to return to work, it is recommended to introduce a waiting period of 1 month for those who have left work voluntarily, that is, the benefit would be paid when they become unemployed only from the second month.

Also proposes to change the order of job search benefits

The benefit arrangements guide also proposes changes to the current job search benefit. According to the research group, it is proposed to reform it by transforming it into a permanent social assistance benefit for job seekers.

Currently, the temporary job search benefit for the unemployed who are not entitled to the social unemployment insurance benefit is EUR 200, and for the unemployed who are entitled to the unemployment insurance benefit it is EUR 42.

“It is proposed to make it an intermediate link between social unemployment insurance and social assistance benefits. This would be a continuation of the Sodra benefit for those whose payment period has expired, but would be funded from the state budget, when paid together with UT’s job integration assistance measures and strict requirements for active job search, at the same time it would be a benefit before applying for existing social assistance benefits.

The maximum duration of the new benefit would be 6 months, the amount of which would coincide with the minimum consumption needs (DIPP), which in 2020. The authorities are approved 257 Eur. Those who receive the benefit of unemployment insurance from Sodra below the MVPD will receive a part of the new benefit so that it reaches the MVPD along with the benefit paid by Sodra ”, the recommendations state.

R. Lazutka himself claimed that transforming the job search benefit into a permanent one would mean that a person could continue to receive it after Sodra unemployment benefits end.

“In this case, it would be 9 or 12 months after unemployment benefits end,” he added.

The research team also calculated how much the new reforms would cost the state. It is estimated that, depending on the variation in the number of unemployed, the additional costs of the unemployment insurance reform would reach 60 million. EUR, from the current number of unemployed (137 thousand) to 207 million. Eur, if the number of unemployed increases to 220 thousand.

Mauritius: Better to increase profits

Sigismund Mauricas, an economist at Luminor Bank, said he agreed that changes to the benefit payment were necessary, but said he was proposing an extension rather than the duration of his payment.

“I would see a slightly different path: increase the amount of unemployment insurance benefits, because their maximum limits have been lowered enough.” That size should decrease moderately, as it is now, but the current system does not offer much incentive to display official salaries. Those maximum benefit limits, which are a little more than 800 euros, are quite low. I would increase the cap to at least 3 average salaries, ”he said, explaining that in his opinion the order could be such that the amount would be extremely high during the first three months and then it would decrease, but it should be found. balance, because otherwise it could become a tool for the resident not to look for work at all.

“In this crisis, in general, the extension of unemployment benefits is not the appropriate tool, because there is an unprecedented change in the structure of the economy. What changes would we see in 10 years, we see it all in half a year, they are those people who wait too long to return to their jobs, they may not wait for them and then we will have an even greater problem of structural unemployment.

Therefore, I would be inclined to pay very high benefits for the first three months, even during the crisis, identical to the previous salary to cover it in full, and for the next three months – 80%, during the next 60%. and then other mechanisms and other support would be activated ”, Ž commented. Mauricas.

Speaking of the transformation of job search benefits into permanent ones after the termination of Sodra unemployment insurance benefits, the economist assured that our country is not yet ripe for that.

“I think Lithuania is not yet fully mature for these things. In general, it is not very difficult to find work in Lithuania and yet I would be more inclined to have an insurance system more than in Switzerland than in France.

In Switzerland, you run out of unemployment benefit, then you have a couple of months to fake it and then it will be paid to you again. They don’t pay for anything. I would be more in favor of this principle so that people have a pretext to work, ”said the economist.

Supported suggestions

Alexander Izgorodin, an economist at SME Finance, said he supported Lazutka’s proposals to extend the deadline for paying unemployment benefits and extend it further in the event of a crisis or pandemic.

“What is happening in the labor market now is the fact that the labor market will suffer even more during the second quarantine. If we look at the latest data, before the strict quarantine, there was already a sector that seemed very difficult in terms of employment: restaurants and hotels.

Other sectors have not had such significant problems, so as the labor market has not fully recovered from the shock of the first wave of CIVID-19, it will surely feel the second wave, as far as incentives are concerned, the fact that that are necessary.

What else could the state do is increase the same benefits, more precisely, the part of the salary that the state compensates a person who has lost his job, “said the economist.

When asked if he thought extending such benefits would further discourage people from working, Izgorodin said anything could happen.

“But in parallel, some criteria should be introduced to encourage people to find a job after a person has been here for a full 9 or 12 months. deadline to be within the next 2 months. he would be bound to find that job. It could be some kind of compulsory registration in the Employment Service, etc. “, said.

Commenting on the transformation of the job search benefit into a permanent one, the economist assured that he also supported such proposals.

“If it motivates a person to look for work, why not?” He said.