Unemployment Benefits definition

Unemployment benefits are payments made to unemployed people in order to help them cope financially without income from employment. Countries differ in the level of support given to unemployed people – support may be basic, covering simple needs such as food and shelter, or may be higher, including non-financial support to help the individual find work.

In most countries benefits are not paid automatically; the unemployed individual needs to register and pass eligibility criteria, such as on age and – in the UK – a certain level of historical contributions to national insurance. Actively looking for work is another common requirement before individuals can receive unemployment benefits.

In many countries payment of unemployment benefits is the financial and administrative responsibility of the Government, but in others it falls to trade unions, under a system known as the Ghent system.

In the UK, unemployment benefits have traditionally been called ‘the dole’ and were introduced in 1911. Payments and administration are undertaken by local Job Centres – the most common unemployment benefit is Jobseeker’s Allowance, although unemployed people may also be entitled to some form of contribution to rent under the Housing Benefit scheme.

In the US, where unemployment benefits are often called unemployment compensation, payments are made by the state, although funding is drawn from both state and federal sources.