For many decades now, unemployment has been one of the critical issues to deal with. It not only affects the GDP and economy of a country, but it hinders growth by affecting the societal fabric of society.
The pandemic has impacted industries on a large scale, affecting the profitability of companies and the employment of individuals. According to Wikipedia: In the worldwide unemployment index, India stands at 136th position with a 7.9% unemployment rate as of Dec 2021.
The aftermath of unemployment has plagued societies in the past. Therefore, the need of the hour is to solve this problem. The ideal solution is to produce as many jobs as possible, and it will eventually help in battling the problem. However, the desired solution is going to take a lot of time. Until then, the important thing is to focus on alleviating the distress caused by unemployment.
The fastest way out is government-funded financial schemes and programs providing aid to those who lost their employment because of extraneous factors. Unemployment insurance is a prime example of policies that can help the unemployed.
Also Read: How to Make Yourself Recession Proof
What is Unemployment Insurance?
It provides benefits if the insured has lost their job for not any fault of theirs. Unemployment insurance benefits are only available for a limited period and are allocated solely by the government.
Does it Exist in India?
In India, there are no specific insurances labelled as unemployment insurance. However, a few schemes and policies are in effect under the auspices of the central government. These policies provide some benefits to the unemployed. Still, hardly any of the employees are aware of it. Read on to know more about the existing unemployment benefit policies.
In independent India, for the employment protections of the workers, the Employee State Insurance or ESI Act was passed in 1948. Currently, ESI has been running two different unemployment benefits policies, Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) started in 2005, and Atal Beemti Vyakti Kalyan Yojna (ABVKY) started in 2018.
Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)
With an aim to help the citizens during an unfortunate job loss, RGSKY got added to Employment State Insurance Corporation ESIC in 2005. RGSKY is the one and only traditional unemployment insurance policy in India. In order to get the benefits of the RGSKY scheme, a person must be covered by the ESI Act before employment loss.
The policy provides an allowance of 50% of the wage till you get your next job for a maximum of two years. The key thing to note here is that to get these benefits, the insured person must contribute under the ESI Scheme for at least five years before the loss of employment.
Atal Beemit Vyakti Kalyan Yojna (ABVKY)
This policy was added to ESIC in 2018 to provide financial aid to the employees of the organised sector in case they lose their jobs. All employees covered under the ESI act are granted assistance for a maximum of 24 months (about 2 years) or until they find new jobs. Earlier, to get benefits under this scheme, one had to apply within 90 days (about 3 months) of employment loss. However, seeing the volatilities of all the jobs, it has been reduced to 30 days (about 4 and a half weeks).
In order to avail of ESI ABVKY benefits, the insured person must be in insured employment for a minimum of two years immediately before their unemployment. They must have contributed for at least 78 days (about 2 and a half months) in the contribution period immediately preceding their unemployment. Also, they must contribute for at least 78 days (about 2 and a half months) in one of the remaining three contribution periods in the two years before unemployment.
Nowadays, jobs are more uncertain than ever. Therefore, in case of job loss, it becomes essential to have another source of income till you get your new work. Hence, enlighten yourself with the existing unemployment insurance to avoid any financial emergency. Also, for detailed information related to these schemes and policies, please visit ESIC’s official website.