Unemployment Allowance

There hasn’t been any particular established scheme that is uniform for the country. However various state governments have their own scheme that provides benefits to the unemployed. 

For instance, the Government of Himachal Pradesh under the Department of Labour and Employment has launched the Unemployment Allowance Scheme. This scheme intends to diminish the unemployment problems of the economically weaker section of the society, particularly among the educated and unemployed youth. Under this scheme, the government will grant maximum assistance of Rs.1,500 to every unemployed youth in Himachal Pradesh. 

In India, there is no uniformed or centralized scheme of unemployment insurance readily available to all the unemployed individuals. However, there are a couple of government schemes that provide unemployment benefits. 

The Employees’ State Insurance Corporation (ESIC) offers two unemployment benefits schemes – Rajiv Gandhi Shramik Kalyan Yojna (RGSKY) and Atal Beemit Vyakti Kalyan Yojna (ABVKY). The Employees’ State Insurance Act, 1948 (the Act) was introduced to provide benefits to employees employed in factories and other establishments such as shops, commercial establishments, residential hotels, restaurants, eating-houses, theatre or other places of public amusement or entertainment in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. Apart from providing unemployment benefits to those who are eligible, the Act provides several other benefits. 

The factory and other establishments to which this Act applies must employ at least 10 people or should have employed 10 people on any day in the preceding 12 months. To avail benefits under the Act, the person must be an “insured person” i.e. a person who is or was an employee in respect of whom contributions are or were payable under this Act and who is entitled to any of the benefits provided by this Act.

Under the Act, two unemployment insurance schemes were enacted – the RGSKY and ABVKY.

Rajiv Gandhi Shramik Kalyan Yojna (RGSKY)

The RGSKY was introduced in 2005 to insure unemployed people who are unemployed due to retrenchment and closure of factory or establishment and who are permanently disabled to at least 40% arising out of non-employment injury as certified by a Medical Board.

Atal Beemit Vyakti Kalyan Yojna (ABVKY)

ABVKY applies to people employed for wages or in connection to work in a factory or establishment. The insured person is eligible to receive insurance or relief for up to 90 days but only once in a lifetime provided that the injured person was employed in insurable employment for a minimum period of two years immediately prior to unemployment and should have contributed to at least 78 days in the contribution period immediately preceding unemployment.

Please note that in order to provide some relief to those affected by unemployment due to the COVID-19 pandemic, the unemployment allowance that an insured person is entitled to under ABVKY has been increased from 25% of the average salary drawn to 50% of the average salary payable for a maximum period of 90 days of unemployment and the same is payable after 30 days of losing employment as opposed to 90 days since the loss of employment and this is applicable till July 31, 2021.

Apart from the two aforementioned schemes under ESIC, unemployment benefits in India are few and far. RGSKY and ABVKY are faulty for several reasons, namely that it is applicable only to factory workers who have been employed in factories that employ at least 10 people. This restricts a large part of the workforce who do not work in factories but in other sectors which do not have adequate job security or are susceptible to closure due to extraneous factors from claiming unemployment benefits.

The benefits provided under RGSKY are applicable only for a period of 12 months during the entire insurable period. i.e. after an insured person claims benefits for 12 months, the insured person is disentitled to ever claim benefits under the RGSKY scheme. This acts as a disadvantage for the insured persons who are unemployed for a prolonged period of time and this is especially true for cases of unemployment due to the pandemic.

It is absolutely critical  to implement a centralised or uniform unemployment insurance scheme which is available to the entire workforce regardless of the economic sector, establishment and the nature of employment they are employed in. However, in the absence of this, the need of the hour is to have unemployment insurance that anyone can avail, along similar lines as those of healthcare and other general insurance which is available to the general public.

The Indian Government is expected to introduce a new monthly unemployment allowance scheme to help the unemployed youth in the country. According to sources, the Central Government has been working to implement the Universal Basic Income (UBI) scheme. As part of the scheme, the unemployed youth in India will be provided financial assistance in the form of a fixed unemployment allowance of Rs. 2,000- Rs. 3,500 on a monthly basis.

The Unemployment Allowance Scheme will be launched under the leadership of Prime Minister Narendra Modi. According to sources, the PM Berojgari Bhatta Scheme 2020 aims to increase employment opportunities while reducing the issue of increasing unemployment in the country.

Eligibility Criteria- Those who are looking to apply for the scheme should fulfil the following eligibility criteria:

• Applicant should be a permanent resident of the concerned state to be eligible for this scheme
• Applicant’s age must be between 21 and 35 years
• Should have passed class 12 and must have a graduation or post-graduation certificate
• The applicant should be unemployed
• The applicant’s annual family income should be Rs. 3 lakh or less

Documents Required- Here is a list of all documents required to apply for the Pradhan Mantri Berojgari Bhatta Yojana

• Aadhar Card
• Birth certificate
• Permanent residence certificate
• 12th pass certificate
• Employment office registration certificate
• Passport size photo
• Bank passbook

What is Pradhan Mantri Rozgar Yojna (PMRY)?

PMRY is a Central Government initiative that aims to provide self-employment opportunities to educated youths who are unemployed. The scheme launched in the year 1993, offers unemployed loans to 10 lakh youth. It provides the necessary financial assistance to help them start their business venue in sectors like service, manufacturing, trade, etc. 

Who is eligible for unemployment allowance in India?

The Insured Person should have been in insurable employment for a minimum period of 2 years before his/her employment and should have contributed not less than 78 days in the contribution period immediately preceding to unemployment.

Who is given an unemployment allowance?

A person is eligible to receive these benefits from the state where the person was last employed at, even if the person now lives in a different state. In most states, 26 weeks of benefits are provided to unemployed workers in order to replace about half of their previous wages.

Why are unemployment benefits given?

Unemployment benefit programs play an essential role in the economy by protecting workers’ incomes after layoffs, improving their long-run labor market productivity, and stimulating the economy during recessions.

How do I claim unemployment from ESIC?

Claims to get the relief can be made online at website www.esic.in along with submission of the physical claim with an affidavit, photocopy of Aadhaar card and bank account details to the designated ESIC Branch Office by post or in person.