Unemployment compensation

Unemployment benefits (depending on the jurisdiction also called unemployment insurance or unemployment compensation) are social welfare payments made by the state or other authorized bodies to unemployed people. Benefits may be based on a compulsory para-governmental insurance system. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.

Unemployment benefits are generally given only to those registering as unemployed, and often on conditions ensuring that they seek work and do not currently have a job.

In some countries, a significant proportion of unemployment benefits are distributed by trade/labour unions, an arrangement known as the Ghent system.

The first unemployment benefit scheme was introduced in the United Kingdom with the National Insurance Act 1911 under the Liberal Party government of H. H. Asquith. The popular measures were to combat the increasing influence of the Labour Party among the country's working-class population. The Act gave the British working classes a contributory system of insurance against illness and unemployment. It only applied to wage earners, however, and their families and the unwaged had to rely on other sources of support, if any. Key figures in the implementation of the Act included Robert Laurie Morant, and William Braithwaite.

By the time of its implementation, the benefit was criticized by communists, who thought such insurance would prevent workers from starting a revolution, while employers and tories saw it as a "necessary evil".

The scheme was based on actuarial principles and it was funded by a fixed amount each from workers, employers, and taxpayers. It was restricted to particular industries, particularly more volatile ones like shipbuilding, and did not make provision for any dependants. After one week of unemployment, the worker was eligible for receiving 7 shillings/week for up to 15 weeks in a year. By 1913, 2.3 million were insured under the scheme for unemployment benefit.

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