By June, Ecuador had paid out eleven million dollars for unemployment insurance: every year fewer and fewer people were receiving benefits

Getting fired is one of the most complex scenarios, says Jessica Muñoz, 27, who was divorced in March 2020 during the COVID-19 pandemic in Guayaquil.

Eligible for unemployment insurance as evidence of at least 24 accumulated and non-concurrent contributions, has been unemployed for at least 60 days and has filed for benefits.

“I did the process on the website and it took me about a month to process everything because I had to register a bank account,” says Jessica, who was greatly helped by this monthly payment.

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“With the pandemic, it was very difficult to find a job, because most of them employed only on the basis of payment. So I had jobs unrelated to my field to pay for my home. Then I was the only one working because my parents were sick. And if it’s useful because it’s like a savings when difficulties arise with work and allows you to get out of critical situations“, Jessica says and adds that she only used it for three months because she got a formal job then.

This is shown by the data of the Ecuadorian Social Security Institute (IESS). Every year, fewer people complete the process of collecting unemployment insurance. In 2021, there were 25,511 people, for whom 34 million dollars were paid. In 2022, it dropped to $25 million and that amount was paid out to 19,494 citizens.

And from January to June 2023, 9807 people go, which is the equivalent of 11 million dollars. This means that this year will probably also close below the previous period.

For him economic analyst Jorge Calderónthis drop in numbers reflects the scenario: that the citizens were employed five months agowhich is the maximum term for insurance collection, and therefore the delivery amount is lower.

Can anyone without a job be insured by IESS for unemployment?

“If the company registers you on the IESS, it deactivates the unemployment insurance. It goes somewhat hand in hand with what the Government has highlighted with the INEC (National Institute of Statistics and Census) figures, that there is job creation, that people who went to work got this insurance,” says Calderón.

He also agrees with the repair economic analyst Guillermo Granja: “There has been a slight recovery, which means that people who were in transition got the job a little faster and that makes them not collect unemployment insurance.”

However, for lawyer Vanessa Velásquez, data reduction is a matter of contract type. “The issue of unilateral termination of the employment relationship, which is a condition for insurance collection, is not so frequent because you already have new contractual modalities, such as, for example, an employment contract that is valid for one year. These contracts end for a certain period of time, so it is not necessarily a matter of untimely dismissal, it is due to a variation of contracting”, says the expert.

And that is also the analysis of the fall of the wave of resignations that happened during the pandemic. “If you do not present the termination due to premature termination and the settlement document stating the same, the insurance will not pay you,” he emphasizes and guarantees that resignation or dismissal with consent does not apply to insurance.

Those who access this insurance must pay 24 contributions and wait 60 days in unemployment to process it. If it is a citizen who has been taxed for twelve months, he cannot register. Now, if you are a citizen who already collects it and during this period you decide to become a voluntary member, this insurance is no longer supplied. The same applies if you find a job.

In these cases, people cannot access IESS unemployment insurance in Ecuador

This amount, which they only receive for five months, is financed by employer contributions of 1% of the worker’s salary. And he receives 70% of the single basic salary on the day of termination of employment.

Ider Salgado, professor at the Faculty of Labor Sciences and Human Behavior at UISEKmentions that unemployment insurance is useful, but is the quantity ineffective. “Because they are small,” he says.

In July 2016, a general regulation on unemployment insurance and unemployment insurance was issued, which explains the form of payment of this insurance starting from 70%, continues with 65%, 60%, 55% and culminates in 50%, in the fifth month.

For example, in this year, whose base is $450, if a person is laid off and eligible, the first month is canceled $315, the second $292.50, the third $270, the fourth $247.50 and the fifth $225.

This amount was logically smaller in 2022. There, the basic was 425 dollars. And that is also calculated. The first monthly payment was $297.50, the second $276.25, the third $255, the fourth $233.75 and the fifth $212.50.

How can I determine that my employer pays contributions to the IESS?

Salgado believes that this item should be larger. “A program in which the last salary of four or six months is paid on the condition that the person shows signs of looking for that job. The first month 100%, the second 80% and so on until the sixth month. And so he gets what he earned“, explains Salgado.

The Citizens’ Commission for Pension Reform is in its last days The Ecuadorian Social Security Institute has made suggestions, and one of them is yes severance fund become mandatory retirement savings for IESS branches. And these resources, which can currently be seen on the individual account of each contributor in IESS, cannot be withdrawn until the contributor withdraws.

This is to improve the idea unemployment insurance make it more expedient and use it in a better way.

For Velásquez, if that approach goes through that would be “forcing” the worker to freeze his dismissal. “It is one of the most complex proposals for the worker,” he emphasizes.

And Granja believes that another option is that this fund for the unemployed can at least be withdrawn for short periods and not reach a pension.