By Demion McTair. Updated 3:27 a.m., Monday July 13, 2020, Atlantic Standard Time (GMT-4).
Discussion: If COVID-19 has taught us anything, it would be that life has some unexpected turns.
The pandemic has left thousands of people jobless and governments having to get creative to respond to people’s economic needs, while preventing their economies from failing.
Apart from COVID-19, and in the context of St. Vincent an the Grenadines, we have seen examples of where difficulties faced by firms have led to their workers being stranded.
Examples include former Buccament Bay workers, former KFC workers and the list goes on.
Another issue is that no matter how long you work at an establishment, once you decide to leave, chances are, you have nothing to get.
These realities, along with the lessons from the COVID-19 pandemic so far show that there is a grave need for state-sanctioned unemployment insurance to be added to the NIS’ offerings, and or, the establishment of a national severance fund.
National Unemployment Insurance brief proposal:
This insurance should be a mandatory additional payment out of every worker’s salary, especially those in the private sector. The implementation of this unemployment insurance would mean increased NIS contributions by about 5-percent out of everyone’s salary.
Both employees and employers will contribute and benefits awarded to both categories based on their contribution.
This money could be accessed when:
1 Disasters or public health crises cause individuals to be unemployed and companies to shut.
2. A year has ended: A 30-percent annual rebate as a one-time payment if an individual’s employment has not ceased. Firms will also qualify for this rebate.
3. When an employee decides to cease employment at any particular establishment based on personal reasons (migration, change in career, pursuance of another job etc).
4. When an employee has been fired/dismissed/laid off due to redundancy or unfair dismissal. Where it is found that they were unfairly dismissed, they will earn both their contribution and that of their employees on their behalf, plus any additional figure determined by a tribunal or by the court.
5. When an employee retires, in addition to their pension.
Actuaries and financial analysts will have to determine the feasibility of such a proposal and the rate likely to be given to appease employees, while ensuring financial stability of the NIS.
A National Severance Fund
This idea is not new as countries such as Barbados have such measures in place.
The fund will work in more or less the same way outlined above, that the unemployment insurance will work.
The main difference will be the re-creation of the labour department as a statutory body, working in tandem with the NIS to collect money for the fund and ensure its management.
Dismissal or resignation letters will be needed to access the fund, as well as and a unique employment number or the national ID card number to ensure proper identification and management of the system.
The central government can use proceeds from the fund to grow government revenue, whether by lending other governments money at reasonable interest rates, or through internal borrowing from the fund with healthy interest repayment.
This proposal is not fixated and can take on many shades and tweaks to create the best possible version to ensure protection for employees and employers. The proposal, if successfully implemented can also help to strengthen government’s response to crises.
What do you think?
Feel free to add to this discussion by leaving your comments.