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World Bank report says island nation delivers benefits to 88% of its unemployed

Barbados leads Latin America and the Caribbean region in protecting its citizens during the COVID-19 pandemic through unemployment payments.

A World Bank report, titled Employment in Crisis lauded Barbados, which it says delivered benefits to almost 90 per cent of unemployed workers in the country.

“Beyond the exceptional case of Barbados, whose system delivers benefits to 88 per cent of unemployed workers, only in The Bahamas, Chile and Uruguay do national unemployment insurance arrangements appear to provide widespread, effective coverage,” the report states. 

According to the recently released report, “outside these three countries, even in the remaining few LAC countries that offer unemployment insurance, coverage remains too low”.

The report asserts that only about one-third of the countries in Latin America and the Caribbean offer a national unemployment income support plan.

The Bahamas and Barbados “offer unemployment insurance in the form of contributory risk-pooling plans”.

Workers in informal sector most at risk

The report outlines how workers in informal sectors are often in danger of missing out on unemployment coverage in many countries in the region stating that, “workers with formal but more precarious contracts may be statutorily excluded from coverage by unemployment income support programmes”.

According to the World Bank report, ”… even among formally employed workers with ‘standard’ employment contracts, effective coverage is disappointingly low. Demanding eligibility requirements that fail to reflect the patterns of employment and tenure achieved even by many formal workers impede effective coverage”.

The document highlighted that regulatory and administrative failures often mean that contributions are not received pointing out that “the transaction costs of securing benefits can be prohibitively high, particularly if the benefits are meager”.

The report cited that workers with formal employment contracts in Brazil, Chile and Uruguay have access to large risk pools offered by a national unemployment insurance plan (that is, one not specific to a worker’s firm, occupation, or sector).

In addition, Argentina, The Bahamas, Barbados, Colombia, Ecuador and the República Bolivariana de Venezuela offer unemployment insurance in the form of contributory risk-pooling plans.”

Bahamas experience

The report praised The Bahamas’ level of unemployment benefits during the COVID-19 pandemic, explaining that this country is one of a few in the region to offer unemployment payments to citizens not eligible for the National Insurance Board’s contributory unemployment benefit.

“Job displacement income support – programs specifically designed to sustain the income and consumption of laid-off workers and their families – in the form of unemployment insurance is, therefore, relatively rare in the region,” the report states.

The report explained that some countries, like The Bahamas, offered unemployment coverage that was effective during the pandemic. At the start of the pandemic, the government of The Bahamas created what is called the unemployment assistance (UEA) program, which was separate from the National Insurance Board’s unemployment benefit.

Since the start of the COVID-19 crisis in The Bahamas, the government has spent $16 million on self-employed, government-funded unemployment assistance programmes, $134.6 million on the government-funded unemployment extension programme and $97.4 million on the national insurance unemployment benefit.