Jamaica’s government is planning to introduce unemployment insurance… but will these mean another deduction from your pay?

Finance Minister Dr. Nigel Clarke made THIS announcement at the opening of this year’s budget debate.

“I’m proud to announce that we are working to unemployment insurance to Jamaica.”- Dr Nigel Clarke

So what is Unemployment Insurance?

Well, it’s simply a form of insurance that would pay you when you lose your job. You wouldn’t collect your full salary, but it would help you out until hopefully until you can find another job.

In the Caribbean, Barbados and the Bahamas both offer Unemployment Insurance. In Barbados, you get 60% of your previous salary for up to 26 weeks.

And in the Bahamas, you get half your previous salary for 13 weeks.

Minister Clarke said they’re still working to figure out how much and how long Jamaica will pay this unemployment benefit.

But this doesn’t come free.

Usually, employers and employees make an equal contribution to the scheme, just like with health insurance.

The government would also front some money to get it started.

According to Minister Clarke, your contribution would likely be between 0.8% – 1.5%  of your salary.

So let’s say you make $200,000 a month. You’d pay between $1,600 and $3,000 which would automatically be taken from your paycheck monthly towards this unemployment insurance.

However, there’s a possibility that you might not have to pay anything at all!

Minister Clarke noted that we already have a lot of stuff taken out of our paycheck – NHT, Heart, NIS, Education Tax, not to mention income tax.

He wants to lump them all into one.

And by doing so, he thinks that we can add Unemployment Insurance to that one big deduction WITHOUT raising the overall amount taken from your paycheck.

“Initial calculations show that we could potentially without increasing the headline statutory deduction rate and with no additional cost for up to 95% of person enrolled in national insurance,” Dr Clarke said.

Now we’re still at least two years away from this becoming a reality, since a lot of stuff still has to be worked out.

Jamaica’s getting a US$20 million loan from the World Bank to help create the new laws and admin that will be needed.

There will also need to be discussions and consultations with the unions and the public. For example, will we still need redundancy provisions if we have Unemployment Insurance?

The unions fought long and hard for that, and might not want to give it up. But all in all, it seems like a positive step for Jamaicans and the economy.

It will help keep people on their feet while they look for a new job, and ensure that even the unemployed can continue spending in the economy, which increases stability for everyone.

And THAT’s the Bottom Line.