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Germany, the Netherlands and Denmark all have “contributory” systems where people in work pay tax into a safety net fund that covers them if they are made redundant.

Bright Blue said the Government should introduce a similar scheme via a voluntary top-up to National Insurance, which would be paid by both employer and employee.

It said the scheme should cover 50-80 per cent of a person’s salary for at least six months, with payments after that linked to how long somebody has contributed to the scheme.

There would be a cap on the maximum monthly amount that could be claimed, to make the system fairer.

Payments would be conditional on actively searching for a job or entering full-time education or training. People who resign would not be immediately entitled to them.

Those wanting to set up their own businesses could be allowed to withdraw the money as a lump sum for that purpose, in a bid to encourage entrepreneurship.

The reason why no. Reasons.

We used to have just such a system, now we don’t. So, why don’t we?

Also, it’s entirely possible to buy unemployment insurance. Few do. So, why don’t they?

Chesterton’s Fence works even for right wing ideas.

16 thoughts on “No”

  1. There would be a cap on the maximum monthly amount that could be claimed, to make the system fairer.

    How is it fairer?
    I bet those who are earning more would have to pay more (in the name of fairness), so why should they not receive more?

    If you buy car insurance for a ferrari, it costs more than for a ford. But the insurance company doesn’t get to claim that in the name of fairness you get a replacement Pinto if your Portofino gets totalled.


  2. I’m sure that I didnt when I worked in Das Reich and Clogland.

    BIFR and Grikath if you’re listening. What would it have been called ?

  3. Bloke in North Dorset

    How long before Spud’s green eyes light up when he realises there’s another pot of money for him to direct? At which point this voluntary scheme will become compulsory.

  4. Slightly OT but while you’re all worrying about this, have you noticed that they’ve started flying kites about limiting how much you can save into ISA’s?

    A lifetime allowance of £100K has been mooted, which once introduced will naturally be reduced every budget.

    Can’t have the proles saving enough to make any difference to anything, can we now? At least, not without the parasite class getting its cut.

  5. Perhaps your view of why it doesn’t exist is wrong. Chesterton said first ask why before changing something. The why is UK politicians can’t be trusted.

    Actually looked at building an insurance product like this about 15 years ago. It doesn’t work as you can’t get scale. You can’t get scale as people who think they will loose their job will buy, people who don’t think they will won’t buy. So the cost is prohibitive to provide insurance.

    This sort of thing only works as a compulsory societal scheme. The premiums need to be invested so that can’t happen here as politicians will treat the pot as a piggy bank. It’s really crash protection for the economy so the political class could see it as a Keynesian stimulus reserve, but they will raid it for pet causes.

  6. I had employment insurance. It was cheap for the first year, when I had to pay in for no return, but during subsequent years, the price kept increasing, then Covid came along and it increased so much, I couldn’t justify paying for it

  7. One immediate problem with a top-up to National Insurance, voluntary or not, is that NI is a tax and not an insurance scheme so it doesn’t attach to the contributor in a meaningful way.

    It’s important always to be able to distinguish between a pension pot and a chamber pot.

  8. “How is it fairer?”

    It isn’t. Its ‘fairer’ in Leftist-speak: ‘we take money from those we don’t like and give it to those we do’.

  9. ‘… both employer and employee.‘. No such thing as employer National Insurance Contribution, whatever the cost to an employer in addition to wages, it is part of the payroll expense which results in a concomitant reduction in wages whilst leaving the total reward package and therefore cost to employer the same.

    It’s just another one of those deceits operated by Government to hide the true tax burden on individuals.

    Who pays is not necessarily the one upon whom the cost is incident.

    Up until the 1911 National Insurance Act, 75% of the population had private medical insurance via mutuals, friendly societies, community or union schemes. These schemes also allowed voluntary contributions for unemployment and sickness pay.

    Chesterton’s Fence. Why was it changed to a State scam? Entirely to serve political interests.

  10. The strongman case for such a system, other than generally making life a bit less rubbish for those without savings, is that it will improve job-matching. At present if you lose your job and have scant savings, you’ll rush around like a headless chicken trying to find any job, no matter how suitable it is. Under the proposed system you’ll have a bit more time to consider your options and therefore ultimately be better-matched to the job, which should improve overall productivity.

  11. Indeed so, another one of those economic trade offs.

    Longer search time, better job matching. Longer allowable search time at decent income, more time spent not working. What’s the sweet spot?

    An awful lot of research shows that job hunting increases massively in last few (couple to a bit more) months of unemployment benefits. Hmm…..

  12. Otto, what they’re describing is a warped version of our WerkloosheidsWet (WW).

    Basically a national insurance that pays out 70% of your last earned gross salary ( averaged over the last 6 months) for X months (X calculated from the years you’ve worked).

    Mind. and very important, it only is only granted to peeps working under a contract, who got laid off, and where the Busybodies you get to get involved with do not deem any culpability on your end..
    Freelancers, private contractors, work through job agencies, etc. are not eligible for it, and the years you’ve worked in that capacity do not count towards that X …

    It comes with some pretty strict rules, including mandatory job searching, and complete dependence on the Gods of UWV ( the Busybodies administrating the scheme ) regarding additional requirements, and fines ( oh, the fines…).
    Between the incompetence and pettyness of the average UWV consultant, and the sheer amount of work and stress the demands they put on you generate… It’s not a fun place to be.
    Not meant to be, of course, but there’s a thing as Above and Beyond…

    When X ends, or the Busybodies kick you out for “non-compliance”, you fall back to “Bijstand” , which is 70% of minimum wage, and run by the local municipality. I think it equates to “the Dole” in the UK.
    Different set of worms, but actually easier to live with regarding demands and stress.

    You can insure privately, but any amount coming out of that ( and the total accumulated amount..) is treated as “personal wealth” and subtracted from the amount you’d get out of WW ( or Bijstand ), while not extending X. If they don’t make you use that all up first to begin with.
    Given the expense and utter uselessness, peeps only privately insure if they’re business owners as part of disability/illness/pension insurance.
    Even then you’re generally at the level where solid/safe investment would net you more in the security/headache equation.

    Given that I’m not too familiar with the UK benefits schemes, it’s hard for me to tell where their ideas slot in. To me it looks like they Pikachu’d stuff they liked from different systems (with different rationales/”encouragements”/benefits) and stuck them all together with playdough.

  13. “Freelancers, private contractors, work through job agencies, etc. are not eligible for it,”

    OK that was the case for me in NL, where I claimed all my tax back.

    My old German paysheets are in a crate somewhere ( I’ll need them to claim back pension contributions ) but I can’t be bothered to dig them out now.

  14. “Payments would be conditional on actively searching for a job or entering full-time education or training. ”

    We already have a system where you get unemployment benefits *unconditionally*, /regardless/ of whether you are searching for a job or otherwise, for the first six months. Contributory-based Job-Seeker’s Allowance, pays out unconditionally for the first six months, as long as you’ve paid NI for the previous year. Ok, only 75 quid a week, but it already exists.

    Don’t these people even actually look outside the window at the real world before putting pen to paper?

    Caveat: I haven’t actually interacted with the benefits system since 2018.

  15. The alternative is that people who do have a job accumulate some savings. It seems a superior alternative to me.

  16. Tim,
    Then the solution is to offer just 1-2 months of redundancy pay, rather than the proposed 6 months.

    The bigger problem is cui bono? It’s mostly the poor & unskilled who job-hop; skilled workers not so much. Hence I doubt it will get much traction.

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