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Saudi Arabia

Saudi Arabia is an economic welfare state with free medical care[24] and unemployment benefits.[25] However, the country relies not on taxation but mainly oil revenues to maintain the social and economic services to its populace.

Payment: 2000 SAR (USD $534) for only 12 months for unemployed person from ages 18–35

External links

· Social Services of Saudi Arabia

[edit]United Kingdom

Main article: Jobseeker's Allowance

[edit]Jobseeker's Allowance rates

JSA for a single person is changed annually, and at August 3, 2012 the maximum payable was £71.00 per week for a person aged over 25 and £56.25 per week for a person aged 18–24.[26] The rules for couples where both are unemployed are more complex, but a maximum of £102.75 per week is payable, dependent on age and other factors. Income-based JSA is reduced for people with savings of over £6,000, by a reduction of £1 per week per £250 of savings, up to £16,000. People with savings of over £16,000 are not able to get IB-JSA at all.[27]The British system provides rent payments as part of a separate scheme called Housing Benefit.

[edit]History and etymology

Unemployment benefits were first instituted in 1911. Ten years later over two million people were relying on the payments, as the United Kingdom experienced economic hardship after World War I.

Unemployment benefit is commonly referred to as "the dole"; to receive the benefit is to be "on the dole". "Dole" here is an archaic expression meaning "one's allotted portion", from the synonymous Old English word dāl. [28]

[edit]United States

In the United States unemployment benefits are usually called unemployment compensation. Benefits are generally paid by state governments, funded in large part by state and federal payroll taxes levied against employers, to workers who have become unemployed through no fault of their own. This compensation is classified as a type of social welfare benefit. According to the Internal Revenue Code, these types of benefits are to be included in a taxpayer's gross income.[29]

[edit]Federal-state joint programs

The idea of unemployment insurance in the United States originated in Wisconsin in 1932.[30] In the United States, there are 50 state unemployment insurance programs plus one each in the District of Columbia, Puerto Rico and United States Virgin Islands. Through theSocial Security Act of 1935, the federal government of the United States effectively encouraged the individual states to adopt unemployment insurance plans.

Unemployment insurance is a federal-state program jointly financed through federal and state employer payroll taxes (federal and state UI taxes).[31] Generally, employers must pay both state and federal unemployment taxes if:

(1) they pay wages to employees totaling $1,500 or more in any quarter of a calendar year; or,[31]

(2) they had at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether the weeks were consecutive. However, some state laws differ from the federal law.[31]



To facilitate this program, the U.S. Congress passed the Federal Unemployment Tax Act (FUTA), which authorizes the Internal Revenue Service (IRS) to collect an annual federal employer tax used to fund state workforce agencies. FUTA covers the costs of administering the Unemployment Insurance and Job Service programs in all states. In addition, FUTA pays one-half of the cost of extended unemployment benefits (during periods of high unemployment) and provides for a fund from which states may borrow, if necessary, to pay benefits. As originally established, the states paid the federal government.[31]

The FUTA tax rate was originally three percent of taxable wages collected from employers who employed at least four employees,[32] and employers could deduct up to 90 percent of the amount due if they paid taxes to a state to support a system of unemployment insurance which met Federal standards,[30] but the rules have changed as follows. The FUTA tax rate is now, effective after June 30, 2011, 6.0 percent of taxable wages of employees who meet both the above and following criteria,[31] and the taxable wage base is the first $7,000 paid in wages to each employee during a calendar year.[31] Employers who pay the state unemployment tax on a timely basis receive an offset credit of up to 5.4 percent regardless of the rate of tax they pay their state. Therefore, the net FUTA tax rate is generally 0.6 percent (6.0 percent - 5.4 percent), for a maximum FUTA tax of $42.00 per employee, per year (.006 X $7,000 = $42.00). State law determines individual state unemployment insurance tax rates.[31] In the United States, unemployment insurance tax rates use experience rating.[33]

Within the above constraints, the individual states and territories raise their own contributions and run their own programs. The federal government sets broad guidelines for coverage and eligibility, but states vary in how they determine benefits and eligibility.

Federal rules are drawn by the United States Department of Labor, Employment and Training Administration. For most states, the maximum period for receiving benefits is 26 weeks. There is an extended benefit program (authorized through the Social Security Acts) that may be triggered by state economic conditions. Congress has often passed temporary programs to extend benefits during economic recessions. This was done with the Temporary Extended Unemployment Compensation (TEUC) program in 2002-2003, which has since expired,[34] and remained in force through June 2, 2010, with the Extended Unemployment Compensation 2008 legislation.[35] In July, legislation that provides an extension of federal extended unemployment benefits through November was signed by the President. The extension restored unemployment benefits to the 2.3 million unemployed Americans who had run out of basic unemployment benefits. However, the current extensions in place expire on November 30 unless legislation is passed by Congress providing for an additional extension. Congress is considering extending the Temporary Extended Unemployment Compensation program again.[36]

The federal government lends money to the states for unemployment insurance when the states run short of funds. In general, this can happen when the unemployment rate is high. The need for loans can be exacerbated when a state cuts taxes and increases benefits. All loans must be repaid with interest.

Congressional actions to massively increase penalties for states incurring large debts for unemployment benefits led to state fiscal crises in the 1980s.[citation needed]

[edit]Macroeconomic function

To Keynesian economists unemployment insurance programs act as an automatic stabilizer. When employment grows, program revenue rises through increased tax revenues while program spending falls as fewer workers are unemployed. This creates a surplus of funds for the unemployment program to draw upon during a recession. In a recession, unemployment benefits tax revenues fall and program spending rises as more workers lose their jobs and receive benefits. The increased payments to unemployed workers puts additional funds into the economy; however, others argue that the taxation necessary to support this system serve to decrease employment.[citation needed]


Date: 2014-12-29; view: 959


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