Unemployment insurance

• Definition, Explanation
• Tips, Checklist

One element of German social insurance is statutory unemployment insurance. Legal basis is constituted in SGB III, third book of Social Code. Its function is to alleviate the financial consequences of unemployment. The most important benefits are payment of unemployment benefit, unemployment benefit II and short workers money. Others are occupational advice, job placement service and qualifying education. The insurance carrier is the labour agency, Bundesagentur für Arbeit. In contrast to other social insurances, for the statutory unemployment insurance there is no private equivalent. Major goal of unemployment insurance is to bridge temporary unemployment in between two jobs.

Who is unemployment-insured:

• Employees who are paid remuneration (including people who e.g. work senior part time)
• Military and alternate servants
• Apprentices
• Young persons in occupational rehabilitation facilities
• Women in maternity protection and parents on parental leave
• Getters of sickness benefit, injury compensation or bridging money
• Persons who are home-caring for a family member and file an extra application
• Self-employed in a voluntary continuing insurance if they have been unemployment-insured before then

Who is freed from the obligation to be unemployment-insured:

• Clerks, judges, temporary soldiers, professional soldiers, servants of church
• ‘Minor employees’, that is mini-jobbers and short time employees
• University and school students
• Getters of age-pension or decreased earning capability pension

Insured persons are entitled to benefits from the labour agency.

Contribution rates for unemployment insurance

Unemployment insurance is financed from monthly contributions that are paid half by employees and half by employers. The amounts depend on gross wages – since Jan 1 2008 it is 3.3 per cent in total, that is 1.65 per cent for an employee, up to a contribution assessment ceiling of presently 5,300 Euros a month in the old West-German federal states and 4,500 Euros in the new Eastern states. Clerks as well as self-employed are excluded from contributions and benefits of unemployment insurance

Benefits of unemployment insurance:

• Occupational advancement for employees
  • Occupational advice, placement service in jobs and apprenticeship
  • Qualification assessment, educational measures
  • Mobility aids (travel costs, parting costs, moving costs)
  • Business starting subvention (Gründungszuschuss) for self-employed
  • Financial aids to professional education / apprenticeship
  • Occupational rehabilitation of disabled
  • Short workers money
  • Insolvency money
  • Winter money
• Employment promotion, as a benefit to employers
  • Job market advice, placement service in jobs and apprenticeship
  • Subvention for employing disabled and senior employees
  • Benefits related to senior part time work
  • Subvention of apprentices remuneration
  • Seasonal short workers money
• Employment promotion as a benefit to employment promoting organizations
  • Subvention of in-plant training measures, of employment creation measures, of promotion of further education, of infrastructure improvement
  • Assumption of costs of education in company-extern institutions and of integration supports
  • Credits and subventions to institutions of professional education and further education, occupational rehabilitation as well as homes for young people
  • Subvention of social programme measures
• Remuneration substitutes
  • Unemployment benefit
  • Short workers money
  • Bridging money
  • Insolvency money
• Basic security for unemployed
  • Unemployment benefit II
  • Time-limited subvention when going from unemployment benefit I to II
  • Heating and rent
  • Social money
  • Beginning-money

Those benefits are paid by the labour agency.

Problems and critique about unemployment insurance:

• Unemployment insurance is no insurance. The benefits and contributions are not defined by an insurance company but by law
• Unemployment-unrelated benefits as re-training and employment promotion are included and stresses finances
• Unemployment insurance does not decrease unemployment

• One’s registration in unemployment insurance is done by health insurance. They are informed by the employer about the employee
• As an employee you cannot do otherwise than being insured. The employer deducts contributions from your income to the labour agency
• Benefits are determined as well, by legislation
• As a self-employed, check in how far you can be insured voluntarily in unemployment insurance and in how far it makes sense for you. Potential private similar insurances might be a better choice