The Asian Development Bank (ADB) has flagged the Social Security System’s (SSS) “limited coverage” of unemployment benefit.

Based on ADB’s report released on Wednesdays, March 16, the Manila-based multilateral institution said it is critically important for the SSS to have a well-funded UI scheme.

“The Philippines’ UI benefit offers limited coverage,” ADB said in a report presented at the Southeast Asia Development Symposium.

“It is critically important that the Social Security System has a well-funded UI scheme to provide workers with income stability during major economic shocks and disruptions to the labor market,” the bank added.

ADB said a financially strong unemployment benefit scheme protects employed individuals against the risk of job loss.

ADB also cited a research showing that unemployment insurance simultaneously enhances productivity and stabilizes consumption, acting as an automatic stabilizer that cushions the impacts of economic crises and helps to prepare for the next growth period.

“Integrating active labor market policies in the design of UI schemes is important so the income support is conditional on participation in labor market programs, therefore enhancing employability and linking the UI to future labor market re-insertion,” ADB said.

ADB cited Malaysia’s UI as a good example, which uses a national pooled insurance fund in which both employers and employees make monthly contributions.

“The government provides funding if there is a financing gap, and workers qualify only if involuntarily unemployed,” ADB said.

Another good example is a program in Chile, which ADB said employers and employees make monthly contributions to an account in the name of the employee.

“This is complemented by the Solidarity Unemployment Fund, which employees can access only after depleting their individual savings accounts. As a fully funded system, the Chilean scheme does not create contingent fiscal liabilities,” the bank said.

Last November, SSS said the pension fund had disbursed P869.9 million worth of unemployment benefits in the first three-quarters last year, benefiting 67,937 SSS members who were forced out of their jobs.

The unemployment benefit is an additional benefit to the SSS-administered programs as mandated under Republic Act No. 11199 or the Social Security Act of 2018.

This covers employees including Kasambahay and overseas Filipino worker (OFW) members who were separated from their respective employments.