Chile: Unemployment insurance: more protection in a context of crisis

Unemployment Insurance began to operate in Chile in October 2002, aiming to provide monetary benefi ts to wage-earners upon termination of their work relationship. The innovative design combines a pay-as-you-go fund with an individual savings account arrangement linked to the severance pay mechanism, irrespective of the cause of unemployment. After operating for six years, a set of reforms were implemented in 2009 to improve access to benefi ts, extend coverage, and strengthen the countercyclical role of the plan, by means of additional benefi ts that become available when unemployment levels rise beyond their usual trend. In the framework of a number of measures designed to reduce effects on employment through public expenditure in infrastructure, stimulation of investment, and direct transfers to the poorest homes, together with activation of the Contingency Programme against Unemployment, actual operation shows that protection of unemployed workers has been kept up inspite of a significant decline of economic conditions in Chile.