OIT - Building Rights-Based Unemployment Protection Schemes - Guidance from ILO Social Security Standards

 ILO brief  Social Protection Spotlight Brief December 2025 Building Rights-Based Unemployment Protection Schemes Guidance from ILO Social Security Standards

 The COVID-19 pandemic has been a stark reminder of the critical role of unemployment protection schemes in guaranteeing income security to persons who have lost their jobs and earnings and are seeking employment. Those schemes also played an important role during the COVID-19 pandemic in maintaining consumption and stimulating economic recovery.  The principles and parameters enshrined in international social security standards provide meaningful guidance for the effective implementation of rights-based unemployment protection schemes that take into account the need for coordination with employment promotion objectives.  The ILO Social Security (Minimum Standards) Convention, 1952 (No. 102) defines internationally agreed minimum levels of protection as well as the core principles for the governance, administration and financing for the nine life-course risks which represent the core of comprehensive social protection systems. Part IV of Convention No. 102 sets out the benchmarks applicable to the contingency of unemployment benefits, as regards to coverage, qualifying and waiting periods, level and duration of benefits, for social insurance and tax-funded schemes.  The ILO Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168) and its accompanying Recommendation No. 176 are the more advanced standards in the field of unemployment protection. These standards not only increase the level of protection that should be provided to unemployed persons (in terms of coverage, benefit amount and its duration, for example) but also underline the importance of implementing unemployment protection schemes in coordination with employment policies designed to promote full, productive and freely chosen employment.  The Termination of Benefits Convention, 1982 (No. 158) can guide the complementarity between unemployment benefits and termination or separation entitlements.  Unemployment protection schemes can play a

designed to promote full, productive and freely chosen employment.  The Termination of Benefits Convention, 1982 (No. 158) can guide the complementarity between unemployment benefits and termination or separation entitlements.  Unemployment protection schemes can play a crucial role at the macroand microeconomic levels, including in the aftermath of crises.  Although the critical importance of such schemes, consideration should be given to the technical and administrative difficulties involved in the planning and introduction of social insurance unemployment mechanisms in countries experiencing high levels of informality and whose social protection systems are insufficiently developed.

Key points ILO brief 2 Building Rights-Based Unemployment Protection Schemes  Introduction As the United Nations agency with the mandate to promote the improvement of rights at work and decent employment, enhance social protection, and strengthen social dialogue on work -related issues, the ILO has worked extensively in the field of unemployment protection since its foundation.1 Proof of this pioneering work is that the first international instruments dealing with unemployment protection were adopted by the International Labour Conference (ILC) already at its first meeting in 1919 with the Unemployment Convention (No. 2) and subsequently, during the great depression, in 1934 with the Unemployment Provision Convention (No. 44) and its accompanying Recommendation. However, to keep pace with the changes and trends affecting labour markets worldwide, these firstgeneration instruments have been revised by subsequent standards. Concretely, ILO constituents have adopted other international instruments relevant to designing and implementing rights -based unemployment protection schemes (see box 1). Notably, in the wake of the Second World War, the Income Security Recommendation, 1944 (No. 67), contributed to the emergence of social security as a central institution of the State. It recognized the need for income security schemes to compensate for earnings

schemes (see box 1). Notably, in the wake of the Second World War, the Income Security Recommendation, 1944 (No. 67), contributed to the emergence of social security as a central institution of the State. It recognized the need for income security schemes to compensate for earnings lost in case of inability to work or to obtain work, and recommended covering all workers, whether employed, self-employed, urban or rural (ILO 2011, para. 44). Notably, based on this systematization effort, the Social Security (Minimum Standards) Convention, 1952 (No. 102), included unemployment protection as an integral part of life-course contingencies to be protected by social security systems placed under the general responsibility of the State.2 Subsequently, in 1988, the ILO constituents adopted more advanced standards on this subject –the Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168), and its accompanying Recommendation No. 176. Although based on the same fundamentals as Convention No. 102 in respect of core principles underpinning unemployment protection, these third-generation instruments moved to

1 It can be noted that “the prevention of unemployment” is specifically mentioned in the Preamble of the ILO Constitution. 2 For further information, consult Part IV of Convention No. 102. 3 See, for example, Articles 2 and 7 of Convention No. 168. understanding social security as part of a broader set of social policies, which include those promoting full, productive, and freely chosen employment (ILO 2011, para. 27). Convention No. 168 increased the scope of protected contingencies as well as the levels of protection when compared to Convention No. 102 and emphasized the importance of coordinating the provision of unemployment benefits with employment programmes and active labour market measures, notably employment services, vocational training, and vocational guidance.3 Currently, the only international standards around unemployment protection that are open to ratification

when compared to Convention No. 102 and emphasized the importance of coordinating the provision of unemployment benefits with employment programmes and active labour market measures, notably employment services, vocational training, and vocational guidance.3 Currently, the only international standards around unemployment protection that are open to ratification are Convention No. 102 (Part IV) and Convention No. 168. However, even in the absence of a formal ratification, the internationally agreed principles and parameters set out in these standards constitute a primary source guiding the development of effective rights-based unemployment protection schemes as par t of comprehensive social protection systems.

These principles include: • the general responsibility of the State for the due provision of benefits; • equality of treatment between nationals and nonnationals; • collective financing of benefits; • the sufficient level of benefits in terms of income replacement or to secure basic needs; • the provision of benefits for a sufficient period to serve their purpose; • the participation of representatives of persons protected persons and of the employers in the administration of the scheme; • the right to complain and appeal in case of refusal or suspension of the benefit or with respect to benefit quality or quantity. ILO brief 3

Building Rights-Based Unemployment Protection Schemes  Box 1. International standards for the establishment of unemployment protection schemes Unemployment protection is recognized not only as a human right, but also as a social and economic right. It is firmly embedded in key international instruments, including the Universal Declaration of Human Rights (1948) and the International Covenant on Economic, Social and Cultural Rights (1966). The international human rights framework is complemented by the ILO’s up-to-date social security standards, which articulate the principles and parameters that should be considered when designing rights-based unemployment protection schemes. These are:  the Social Security (Minimum Standards) Convention, 1952 (No. 102) – Part IV;

security standards, which articulate the principles and parameters that should be considered when designing rights-based unemployment protection schemes. These are:  the Social Security (Minimum Standards) Convention, 1952 (No. 102) – Part IV;  the Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168);  the Employment Promotion and Protection against Unemployment Recommendation, 1988 (No. 176);  the Social Protection Floors Recommendation, 2012 (No. 202). For further information on the above-mentioned international instruments, consult the publication “Building Social Protection Systems: International Standards and Human Rights Instruments” (ILO 2021a). The Social Protection Floors Recommendation, 2012 (No. 202), complements the ILO’s normative framework by calling for the implementation of national social protection floors as part of comprehensive social security systems, which comprise essential health care and basic income security guarantees, at least at a nationally defined minimum level, for persons in active age who are unable to earn sufficient income, including in case of unemployment (paras 2 and 5(c)). Echoing Convention No. 168, Recommendation No. 202 specifies that when designing and implementing their national social protection floors, countries should: (i) combine preventive, promotional and active measures; (ii) promote productive economic activity and formal employment through policies that promote education, vocational training, productive skills and employability; and (iii) coordinate with other policies, including those that reduce precariousness and that promote secure work, entrepreneurship and sustainable enterprises within a decent work framework (para. 10). Having outlined the standards constituting the backbone of the ILO's approach to supporting countries in designing and implementing unemployment protection schemes, this policy brief first discusses the critical role of these schemes, coupled with employme nt promotion policies, in guaranteeing income security and preventing

Having outlined the standards constituting the backbone of the ILO's approach to supporting countries in designing and implementing unemployment protection schemes, this policy brief first discusses the critical role of these schemes, coupled with employme nt promotion policies, in guaranteeing income security and preventing unemployed persons from falling into poverty. Second, the different types of unemployment protection schemes are briefly described before addressing frequently asked questions concerning the establishment and administration of these schemes. These questions include the coverage, qualifying conditions, duration and level of unemployment benefits, financing, administration and coordination with other policies. When appropriate, examples showcasing how countries have given effect to the requirements of Convention No. 168 are also provided. The objectives are twofold: first, to increase awareness of this advanced standard and promote its application in national contexts; and second, to offer practical insights to countries embarking on implementing or reforming their un employment benefit schemes.

 The crucial role of social protection and the momentum of unemployment protection programmes Despite the fundamental role of social protection in poverty reduction and prevention, as well as in accelerating progress towards achieving several Sustainable Development Goals (SDGs), there are still substantial coverage gaps. In 2024, only 52.3 per cent of the global population was effectively covered by at least one social protection benefit. Therefore, as many as 3.8 billion people were left wholly unprotected (ILO 2024b). ILO brief 4 Building Rights-Based Unemployment Protection Schemes The impacts of the COVID -19 pandemic on businesses and jobs, along with the subsequent inflation periods, have highlighted the crucial role of social protection in mitigating the impact of crisis on workers, enterprises, economies and societies. Unemployment protection programmes have proven to be efficient in ensuring income security for workers and their families (ILO 2021h) and preventing unemployed workers from falling into poverty and resorting to harmful coping mechanisms, such as engaging i n

economies and societies. Unemployment protection programmes have proven to be efficient in ensuring income security for workers and their families (ILO 2021h) and preventing unemployed workers from falling into poverty and resorting to harmful coping mechanisms, such as engaging i n informal employment. Countries with unemployment protection schemes were also able to maintain certain levels of aggregate demand and rebound from the economic slowdown (ILO 2021h). As such, in the aftermath of the COVID -19 pandemic, the introduction and expansion of unemployment protection schemes attracted renewed interest from developed and developing countries alike.4 Together with other social protection benefits, unemployment protection schemes represent an essential tool to guarantee income security to individuals and often entire households relying on a single source of income and, at the same time, promote employment, thereby smoothing consumption and stabilizing aggregate demand (ILO 2017). Often, however, risks of policy failure are significant where informality is widespread and where administrative capacity is limited (Duval and Loungani 2019, Chetty and Looney 2006). Indeed, the technical complexities involved in designing, implementing and administering unemployment protection schemes may explain why, historically, the contingency of unemployment has mostly not been among the initially established social security b ranches but has been gradually incorporated into national social protection systems in pace with economic and social development (see figure 1). As observed in the ILO 2011 General Survey concerning social security instruments (ILO 2011), while nearly all developed countries have implemented comprehensive social protection systems covering their populations against most contingencies, the social protection systems of many developing countries have yet to address the challenging task of establishing unemployment protection schemes.

 Figure 1. Development of social protection schemes in national legislation by branch, pre-1900 to 2020

Source: ILO (2024b).

countries have yet to address the challenging task of establishing unemployment protection schemes.

 Figure 1. Development of social protection schemes in national legislation by branch, pre-1900 to 2020

Source: ILO (2024b).

4 An indication of the renewed interest in unemployment protection is the introduction and temporary expansion of unemployment benefits as of 2019, including in China, Colombia (re-introduction), France, Germany, Grenada, Indonesia, Japan, Spain and the Unit ed States. 0 10 20 30 40 50 60 70 80 90 100Share of countries (%) Children Disability Work injury Maternity Old age Sickness Survivors Unemployment ILO brief 5 Building Rights-Based Unemployment Protection Schemes An analysis of the development of national legal frameworks and the introduction of statutory social security schemes, by branch ( see figure 1), confirms that, typically, countries tend to build their social protection sequentially, usually starting by addressing employment injury contingencies, then moving on to introduce old -age pensions, as well as disability and survivors’ benefits, followed by sickness, health and maternity protection. Benefits for children and families, and unemployment benefits, typically come last (ILO 2021h, 45). For example, while 153 countries – out of the 195 countries for which data are available – have implemented social insurance old-age pensions, either as the only mechanism of protection or in combination with other contributory or non-contributory schemes, only 93 countries have established an unemployment protection scheme in law (ILO 2024b). 5 Therefore, as suggested by Recommendation No. 176, countries facing high rates of informality and whose social protection systems and administrative capacities are not sufficiently robust to implement and monitor participation in activation policies as required by contributory unemployment protection schemes should first seek to further develop their systems in respect of other easier to implement social security branches before exploring the introduction of an unemployment insurance

whose social protection systems and administrative capacities are not sufficiently robust to implement and monitor participation in activation policies as required by contributory unemployment protection schemes should first seek to further develop their systems in respect of other easier to implement social security branches before exploring the introduction of an unemployment insurance scheme. In the meantime, non -contributory (tax-financed) schemes that are well coordinated with employment and active labour market policies, can play a key role in securing at least a basic level of income security, and in facilitating the transition into (formal) employment (ILO 2024b).

 Types of unemployment protection schemes6 Before diving into some of the frequently asked questions regarding the design and implementation of robust unemployment protection schemes in line with a rightsbased approach, it is important to note that protection against the risk of income loss can ta ke different forms. Indeed, the following mechanisms are types of unemployment protection schemes recognized in ILO Social Security Standards: • Unemployment protection schemes , which can be organized through contributory (social insurance) or taxfinanced non-contributory mechanisms directed to all residents or those whose means are below a threshold prescribed in the national legislation; • Employment retention schemes that provide full or partial income replacement in case of a temporary suspension of work without any break in the employment relationship. These schemes are sometimes referred to as partial unemployment and wage subsidy schemes; and • Government-financed employment programmes , also known as public employment programmes (PEPs) or employment guaranteed schemes, which focus on providing public goods and services to generate employment opportunities.7 Figure 2 depicts the articulation between the abovementioned social protection and employment policies in line with ILO Social Security and Employment Standards, in particular Conventions Nos 122 and 168, which were adopted under a premise shared by governments, employers and workers from around the world that the real solution to unemployment was not the financial compensation for unemployment only, but also the

line with ILO Social Security and Employment Standards, in particular Conventions Nos 122 and 168, which were adopted under a premise shared by governments, employers and workers from around the world that the real solution to unemployment was not the financial compensation for unemployment only, but also the promotion of both additional jo b opportunities and employment assistance (ILO 1987, para. 6).

5 This number includes social insurance and non -contributory schemes. For further information on aggregated data on legal and effective coverage of unemployment benefits, consult ILO 2024b. 6 This section is largely based on ILO 2021h, 155-156. 7 For further information, see ILO (2021f) and McCord et al. (2024). ILO brief 6 Building Rights-Based Unemployment Protection Schemes  Figure 2. Articulation between social protection and employment promotion

Source: ILO (2021h).

It can be noted that a few countries have opted for Unemployment individual savings accounts (UISA), which require workers, mostly formal-sector employees, to accumulate savings they can later use in case of unemployment. However, without risk -pooling, such savings mechanisms provide only limited protection for those most at risk of losing their jobs, suc h as unskilled workers or young workers ( Duval and Loungani 2019, OECD 2010, Peyron Bista and Carter 2017, ILO 2024a). This risk is especially pronounced in emerging and developing economies, where a substa ntial share of the labour force already faces a high risk of working poverty and unstable earnings while employed, and would, therefore, not have adequate income support in case of job loss (ILO 2017; ILO 2024a). For these reasons, this mechanism is questionable from the point of view of the principles recognized by ILO social security standards, such as collective financing, the

earnings while employed, and would, therefore, not have adequate income support in case of job loss (ILO 2017; ILO 2024a). For these reasons, this mechanism is questionable from the point of view of the principles recognized by ILO social security standards, such as collective financing, the principle of predictability of benefits, and the guarantee to access benefits upon completion of a qualifying period (ILO 2017, 45). In parallel or complementary to social security protection in case of unemployment, national legal frameworks often establish an entitlement of workers to separation payments. They encompass severance pay in case of employment termination at the employer's initiative (in line with Convention No. 158) and redundancy payments arising from terminating a worker on economic grounds, such as redundancy or restructuring. Unlike unemployment protection schemes, which are financed collectively by way of contribution s or taxation, separation payments are not linked to the objective of employment promotion and do not consider the possible duration of the unemployment spell. Moreover, the financial burden of these payments is placed entirely on the employer, which often leads to delays or non -payment, especially if the separation occurs in times of economic distress and business closure. ILO brief 7 Building Rights-Based Unemployment Protection Schemes  Unpacking some of the key provisions contained in Convention No. 168 Based on key provisions in Convention No. 168, this section addresses some frequently asked questions that arise within the framework of technical support provided to ILO constituents for designing, implementing, or reforming their unemployment protection schemes. What are the objectives of unemployment protection schemes? Undoubtedly, the income replacement function of unemployment benefit schemes has been well established in international social security standards, including Convention No. 102. By emphasizing the combination of cash benefits and employment services and related measures such as wage subsidies, Convention No. 168 goes beyond the traditional concept of providing benefits

unemployment benefit schemes has been well established in international social security standards, including Convention No. 102. By emphasizing the combination of cash benefits and employment services and related measures such as wage subsidies, Convention No. 168 goes beyond the traditional concept of providing benefits for a defined set of contingencies ranging from partial to full unemployment, or interruptions of work without a break in existing employment relationships into a much wider concept of ensuring a comprehensive policy response to the two concomitant objectives of employment promotion and protection against unemployment (ILO 2011, para. 98). Thus, the adoption of Convention No. 168 showed employment policy and unemployment protection must be seen in a dynamic, dialectical relation. Indeed, Article 2 of Convention No. 168 stipulates that countries shall take appropriate steps to coordinate their unemployment protection scheme with their employment policy, including by ensuring that the former, particularly the methods of providing unemployment benefit, contribute to the promotion of full, productive and freely chosen employment. Therefore, the Convention is built on the premise that for unemployment protection schemes to be effective, instead of merely compensating workers for a loss o f income, they must contribute to promoting employment8 and support active labour market policies

(ALMPs).

8 The role of unemployment benefits in the promotion of employment was recognized several times in the preparatory documents fo r adopting Convention No. 168. See, for example, the Report of the Committee on Employment and Social Security: first discussion in plenary , ILC. 73rd session, 1987.

Geneva: ILO. 9 The importance of a complementary approach was emphasised during the preparatory work for these instruments, notably in ILO ( 1987, 5).

Article 2 further stipulates that countries shall seek to ensure that the methods of providing unemployment benefit are not such as to discourage employers from offering and workers from seeking productive employment. This provision reflects an agreement that the systems should ensure that both workers and employers are provided with an incentive to actively seek suitable

Article 2 further stipulates that countries shall seek to ensure that the methods of providing unemployment benefit are not such as to discourage employers from offering and workers from seeking productive employment. This provision reflects an agreement that the systems should ensure that both workers and employers are provided with an incentive to actively seek suitable employment, but workers are not forced to accept any job, such as those for which they may be overqualified, simply to ensure their livelihood (ILO 1988, 9). Therefore, Convention No. 168 and Recommendation No. 176 underscore the complexity of designing and implementing a system of unemployment protection that effectively balances the following three concomitant core elements:9 • The need to promote employment , including through incentives that encourage a swift reintegration into the labour market, thereby minimising the duration during which unemployment benefits serve as income replacement. • The equally fundamental requirement of ensuring adequate means of subsistence through collectively financed social security mechanisms to job seekers and those experiencing temporary, partial, or total suspension of employment. • The importance of fostering effective social dialogue by implementing these measures in consultation and cooperation with the organizations of employers and workers, as required by Article 3 of Convention No. 168. But, in practice, how can these schemes promote full, productive and freely chosen employment? The effectiveness of unemployment protection schemes depends not just on their design, but also on the implementation of complementary employment policies, including those aimed at reducing informality. Empirical evidence shows that many advanced and emerg ing ILO brief 8 Building Rights-Based Unemployment Protection Schemes economies have long recognized the importance of coordinating unemployment benefits with active labour market policies, such as job-search support and matching, counselling, vocational training, and retraining to cushion income losses, maintain people’s attachment to the labour market, and facilitate employment (ILO 2020a). For example, most countries have established Public

coordinating unemployment benefits with active labour market policies, such as job-search support and matching, counselling, vocational training, and retraining to cushion income losses, maintain people’s attachment to the labour market, and facilitate employment (ILO 2020a). For example, most countries have established Public Employment Services (PES) to promote labour market participation, provide labour market information, and facilitate job transitions in a manner consistent with the objectives set out in Conventions Nos 168 and 122, namely, the promotion of full, productive and freely chosen employment. This is the case in Argentina, where the Employment Service Network ( Red de Servicios de Empleo ) under the Ministry of Labour, Employment and Social Protection was created in 2005 to provide individuals with more and better opportunities to access the labour market. A network of more than 580 employment centres provides training services, skills cer tification, counselling, job orientation workshops, and a range of services, such as registration of vacancies, pre -screening, and job matching for employers.10 The Network’s services are free of charge and are provided in coordination with the National Social Security Administration, which is the institution that administers unemployment benefits. By coordinating the provision of income security with articulated strategies and services aimed at maintaining the individuals’ attachment to the labour market and increasing their employability (e.g., training, retraining and upskilling), unemployment pro tection schemes offer protection during the initial period of unemployment so that unemployed persons are not obliged to take up unsuitable jobs (ILO 2011, para. 226). As such, coordination is key to promote full, productive and freely chosen employment by all appropriate means, including social security, as envisaged by Convention No. 168. This includes coordination with special programmes that promote additional job opportunities, where they are established. Such programmes should encourage employment opportunities for identified categories of disadvantaged persons having or liable to have difficulties in finding lasting employment, such as

including social security, as envisaged by Convention No. 168. This includes coordination with special programmes that promote additional job opportunities, wher