BVI News

Gov’t working on long-term Unemployment Benefits Scheme

Government is working to change the necessary legislation that would facilitate the implementation of a long-term Unemployment Benefits Programme in the British Virgin Islands.

Premier Andrew Fahie said on local radio Tuesday that the programme will be instituted by the Social Security Board.

“For about more than the last five years they have been trying to get in this as a new initiative where you have an unemployment benefit from Social Security ongoing,” he said.

“So now we have told Social Security, ‘bring it forward and we are going to make sure we get the legislation in place to put it in’,” the Premier added.

Proposal for funding

Premier Fahie, who is also the Finance Minister, said At-Large Representative and Deputy Speaker Neville Smith has made recommendations on how the programme will be funded. 

He said Smith’s proposal would not require any further statutory deductions to the salary of contributors.  

“I want to point out that right now persons pay about 8.5 percent and businesses half. And they might say here comes another bill,” Fahie began. “But, when we were discussing this matter, honourable Neville Smith said … rather than letting it be 8.5 percent, we can drop that down to 7.5 percent in the beginning and leave the one percent for the unemployment benefit.”

The employer and employee will each contribute half of that one percent, which would bring the total deductions back to the 8.5 percent. 

He said the recommendation is now being evaluated as an option to see if the scheme will be sustainable.

Penn’s unemployment benefit proposal

This announcement from the Premier comes roughly two weeks after Opposition Leader Marlon Penn had proposed a COVID-19 Strategic Economic Recovery Plan, which also promoted the implementation of an unemployment benefits scheme.

Penn had stated that his programme would have been administered through an existing unit of the Social Security Board once legislative amendments were made.

He also proposed that the programme receive seed funding either through a joint contribution between the SSB and government or solely government.

Penn said this seed funding could be recouped over an extended period of time, through the monthly deductions of employee salaries which should be calculated to a certain percentage.

Copyright 2020 BVI News, Media Expressions Limited. All Rights Reserved. This material may not be published, broadcast, rewritten or distributed.

12 Comments

Disclaimer: BVI News and its affiliated companies are not responsible for the content of comments posted or for anything arising out of use of the comments below or other interaction among the users.

  1. Simple says:

    Took 1% from the total 8.5% that both employer and employee now put in. The same pie of 8.5%.

    Nothing drop down to 7.5%. Media needs to learn how to report information.

    Like 3
    Dislike 1
  2. Hmmm says:

    Unemployment benefit has killed to economy in virtually every jurisdiction in which it has been imposed – it become more and more expensive as large and larger parts of the population either elect not to work or are not prepared to take the jobs that are on offer because they think they are too good or too qualified for those jobs. There is. I point in qualifications for a job that nobody will employ you to do unless you start your own business.
    In the BVI, there is no excuse for a belonger not to have a job – it maybe that going forward that we can’t rely on the Gov to give us a job, and we might have to do a job that is not what we really want to do. However, with half the population on work permits and numerous of those permits for unskilled job, there is no excuse for a belonger not to get a job.
    I am very worried about the introduction of unemployment benefit here.

    Like 19
    Dislike 1
    • Unemployed says:

      Unemployment benefit is not to replace the money from your job. It provides a portion do that you don’t starve. It’s not meant to be long term and usually has a rather short limit. In the US because of Covid, the federal government has added a sizable amount to equal or exceed the amount people were making. This is an extremely rare situation. Anyway, the amount they are proposing to set aside will be so small it won’t amount to anything.

      Like 6
      Dislike 1
  3. Ausar says:

    Good going there, Premier!

    In time, the benefits of such a program would far outweigh the risks!

    Indeed, its time!

    Like 2
    Dislike 10
  4. W.E Man says:

    Great initiative, well done Premier and Deputy Speaker, we have a hugely over-funded social security scheme, as many highly paid expats never stay here for more than three years, so never become vested. Yet they pay the maximum allowable in contributions, all to our benefit.

    Like 2
    Dislike 2
  5. Motivation to work says:

    falls away if you can get unemployment benefits..lets all stop working!

    Like 3
    Dislike 4
  6. Diaspora says:

    Undoubtedly, unemployment insurance is a vital safety net for workers in the labour force that have become unemployed either for frictional, structural or cyclical causes. Though it is a vital safety net, it is a challenging and expensive programme. The VI has a small population of approx 30,000 with a labour force of approx 14,000. Let’s take a peek at engaging Social Security in the planning, programming, budgeting and managing the Unemployment Insurance Programme.

    Social Security’s primary task is providing an annuity for retirees, persons with disability(s) and survivors. Therefore, unemployment insurance is best suited within the Department of Labour; it is a labour issue. The combined contribution rate for both employee and employer is 8.5% with each contributing approx 4.25%. Hon Neville “Sheep” Smith(AtL), Deputy Speaker and Backbencher, propose to decrease the combined contribution rate from 8.5% to 7.5%. Further, the total contribution rate will still be 8.5% with the 1% used to fund unemployment insurance.

    8.5% contribution rate set, an actuary must have derived this number as the minimum rate needed to maintain social security stability. Are both Hon Premier Andrew Fahie(R1) and
    Hon Neville “Sheep” Smith (AtL) saying that the 8.5% number was overstated? If so the contribution rate needs to be reduced and social security beneficiaries received an increase in their monthly annuity.

    Nonetheless, doubt casted, the Social Security Board needs to re-engaged an actuary or an actuarial firm to ascertain the true realistic rate to keep social security stable. Additionally, the same actuary or actuarial firm can be engaged to determine a rate that both employers and employees need to contribute to establish and sustain an unemployment insurance programme. Moreover, whether the unemployment insurance programme starts in a few months or in years, it will need some working capital. Social security and unemployment insurance are discrete items.

    Like 8
    Dislike 1
  7. 2020 says:

    I can see where Im going to cut my support of local small business to be able to pay this impending new tax. To be ready for January, I shall be trimming from now.

  8. hmmm says:

    What about us who lost our jobs to Coronavirus but don’t need help yet as our jobs gave us severance and vaca pay but in a few months time we will be super short of money? Tourism is clearly not coming back till 2021.

    Like 1
    Dislike 1
  9. about time says:

    Being unemployed is stupid because you still have to pay $75 to nhi & additional money to social security as the debt accumulates all the time when you cant afford to pay it.

    Percentage yea right 7.5% of zero is zero.

    Like 1
    Dislike 1

Leave a Comment

Shares