Germany - Unemployment Insurance

Unemployment insurance

Unemployment insurance was introduced in 1927, relatively late in comparison with the pioneering programs of the nineteenth century. It replaced the welfare program for the unemployed that had been created in 1919. With the exception of civil servants, all employed individuals and trainees, irrespective of salary or wage levels, are covered by the program. Contributions in 1995 to unemployment insurance were scheduled to amount to 6.5 percent of an employee's gross pay up to DM96,600 in the old L�nder and DM76,800 in the new L�nder , with the employee and employer each paying half. In return, the employee receives unemployment pay of 68 percent of net earnings for a married worker and 63 percent for a nonmarried worker, provided that the unemployed person has worked for 360 insurable days in the last three years before being laid off. Unemployment pay can be paid from the first day of unemployment for seventy-eight to 832 weekdays, depending on the length of insured employment and the age of the unemployed. In the early 1990s, unemployment pay averaged DM1,300 per month. Once unemployment pay runs out, the employee is eligible for unemployment aid, which averaged DM975 a month in the early 1990s. Because the unemployed frequently do not receive enough benefits to maintain their basic living standard, local social welfare entities often provide additional assistance. During unemployment, entitlements to benefits of other social insurance and health insurance programs remain in place.

The unemployment insurance program is administered through a three-tiered administration: a federal labor agency, regional labor agencies in the L�nder , and local labor offices. Unlike the labor-management partnership in the administration of the other insurance programs, this program is controlled by tripartite boards composed of representatives of labor, management, and governments at the federal, Land , and local level. Because East Germany did not have an unemployment insurance program, the adoption of such a program in the new L�nder has entailed numerous administrative problems. In addition, unemployment there is higher than in the old L�nder (in 1994 about 15 percent, compared with 10 percent in the old L�nder ).

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