National Insurance Act 1911 - Part II, Unemployment

Part II, Unemployment

National Insurance Act Part II provided for time-limited unemployment benefit. The scheme was to be based on actuarial principles and it was planned that it would be funded by a fixed amount each from workers, employers, and taxpayers. The scheme from Part II was restricted to particular industries, cyclical/seasonal industries like construction of ships, and neither made any provision for dependants. Part II worked in a similar way to Part I. The worker gave 2.5 pence/week when employed, the employer 2.5 pence, and the taxpayer 3 pence. After one week of unemployment, the worker would be eligible of receiving 7 shillings/week for up to 15 weeks in a year. The money would be collected from labour exchanges.

By 1913, 2.3 million were insured under the scheme for unemployment benefit and almost 15 million insured for sickness benefit.

A key assumption of the Act was an unemployment rate of 4.6%. At the time the Act was passed unemployment was at 3% and the fund was expected to quickly build a surplus. Under the Act, employees contributions to the scheme were to be compulsory and taken by the employer before the workers salary was paid.