The unionized Momentum Institute has now criticized unemployment benefits for lagging behind sharp price increases. Salaries that were at least twelve months ago are used for the calculation.
Because unemployment benefits are not adjusted for inflation, the net replacement rate drops from 55 percent of the monthly contribution base to an average of 51 percent. “Everyone registered as unemployed since March 1, 2024 will have their net replacement rate almost fully calculated in 2022 – before wages have even adjusted to the massive inflation,” said Jakob Sturn, an economist at the Momentum Institute.
“Fails to secure livelihood”
This is problematic for “people who have recently become unemployed.” One in three unemployed people is now at risk of poverty, and even one in two long-term unemployed. The average unemployment benefit of 1,091 euros is approximately 300 euros below the at-risk-of-poverty line (single-person households). “The unemployment benefit is missing its actual purpose for people in precarious situations: securing their livelihood,” says Sturn.
The Momentum Institute recommends increasing the net replacement rate of unemployment benefits and emergency aid to 70 percent. In addition, both must be adjusted annually for inflation, as has been the case with other social benefits since 2023.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
