06 November 2020
•
The UN has warned that a large expat workforce is required for the British Virgin Islands to successfully implement an unemployment insurance programme.
The latest United Nations Human & Economic Assessment of Impact (HEAT) Report on the BVIwhich is designed to support the government's relief and recovery efforts post covid-19, said the implementation of an unemployment insurance scheme would assist to prevent a number of families, including expats, from falling into temporary poverty.
"The main complexity faced in the implementation of such a fund would be the existence of a large migrant workforce. Given that there is a short period during which migrants on work permits are allowed to search for a new job, it seems reasonable to allow workers who have contributed to the scheme to access unemployment benefits while they search for a new job," the report said.
At the individual level, this prevents migrant workers from falling into poverty in a country where they may have no informal safety net"
It added: "At the individual level, this prevents migrant workers from falling into poverty in a country where they may have no informal safety net. This is particularly important given the relatively high incidence of child poverty for Caribbean migrants in the Virgin Islands. At the aggregate level, this retains both labour supply and domestic demand even during downturns."Early in October, Social Security Minister Vincent Wheatley announced that the government had plans to implement an Unemployment Insurance scheme next year. Speaking in the House of Assembly on Tuesday, Wheatley said this insurance scheme would act as a safety net for persons who lose their job.
"So when you are not working, you do not have to be scrambling to figure out where you're going to get money from," Wheatley explained.
He added that the implementation of the scheme will not place an extra burden on employees, adding that such a scheme will be valuable in times of national disasters.
"It is covid now, we don't know when it's going away but it could be something after covid-19. So we have to use this situation here, learn from it, and prepare for the next time," Wheatley explained.
"We don't have right now. We did this $40m quick-fix thing to get us through this little covid-19thing. But going forward, we're going to have proper unemployment insurance."
To get the programme functioning, the UN said that an increase of social security contributions will be necessary, coupled with a financial contribution from the government."
"Assuming a requirement to cover each individual up to at least 60 percent of the average monthly income at the baseline rate of unemployment, the cost of the fund would be approximately $758,000 per month. While the initial capitalisation will require an injection by the government, ongoing replenishment would be funded by a small increase in social security contributions," the report said.
Subscribe to International Investment's free, twice-daily, newsletter
