Unemployment insurance for NIS contributors

National Insurance Scheme (NIS) contributors who lose their jobs are to benefit from unemployment insurance, Finance Minister Dr Nigel Clarke has disclosed.

Clarke today told the House of Representatives, where he opened the 2024/25 Budget Debate, that the macro stability makes it feasible for Jamaica to have this insurance scheme that benefits Jamaican workers.

He said the details of the scheme are still being worked through and that the World Bank is to assist with working through legislative architecture; institutional mechanisms inclusive of installing the institutional capacity; and administrative arrangements.

He said that the Government is now at the point of implementation and within the first quarter of the financial year, it is expected to sign a US$20 million loan agreement with the World Bank.

The international financial institution is to provide the Ministry of Labour and Social Security with technical support to, among many other things, implement the scheme in Jamaica.

Clarke said that a feasibility study indicates that it could cost as little as 0.8 per cent of salary, or as much as 1.5 per cent of salary, with a capital contribution from the Government of a few billion dollars, for this benefit to be provided, depending on parameters selected and other details.

He said because Jamaica already has a plethora of separate statutory deductions which include NHT, NIS, HEART, Education Tax deductions, adding a fifth, replicating the collection, processing, and enforcement administration, may add further complexity for small businesses.

He said that this is not optimal for employees, employers, or the Government.

“As such, we are looking into administratively consolidating these statutory deductions into a single deduction, with the distribution to each entity of its share, enshrined in, and protected by, legislation,” he said.

He said that this is not a new idea but noted that there are details and complexities to be worked through.

He said that the major advantage of the consolidation of statutory deductions, in the context of introducing a new unemployment insurance benefit, is that initial calculations show that the Government could potentially introduce this new benefit without increasing the headline consolidated statutory deduction rate, and with no additional cost for up to 95 per cent of persons enrolled in the National Insurance Scheme.

- Kimone Francis

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