Where laid-off bankers can claim $102k in unemployment benefits
Lost your job in the recent round of redundancies in banking and struggling to find work again? France, where unemployment benefits are capped at $102k a year, is the best place to spend some lazy months (up to 24 of them) at the taxpayers’ expense.
The UK and US are far less generous, while retrenched expat bankers in Singapore and Hong Kong should either find another job soon or go home.
Related: Worst Places to be Laid Off
The Organisation for Economic Cooperation and Development, a Paris-based rich-nation association, has worked out how much unemployment benefits amount to in different Western countries as a percentage of salary.
Below is how much, as a percentage of previous pay, that the OECD calculates a single professional without children can get paid in unemployment benefits during a 12-month period. Such pay is limited to 150 percent of the national average in the last job, a level that most bankers achieve.
1 - Switzerland: 73% of final salary
2 - France: 69%
3 - Germany: 62%
4 - Luxembourg: 64%
5 - United States: 34%
6 - Ireland: 29%
7 - Australia: 16%
8 - United Kingdom: 9%
Being married with children entitles those unemployed to get a somewhat higher rate of replacement pay. Below are the percentages (including other benefits if applicable) for a married person with two children and a spouse who works:
1 - Switzerland: 87% of final salary
2 - Germany: 83%
3 - France and Luxembourg: 78%
4 - United States and Ireland: 58%
5 - Australia: 49%
6 - United Kingdom: 47%
In the UK and Ireland, however, the percentages don't really matter because everyone who's unemployed gets paid a fixed amount regardless of how much -- or little -- was earned before a job loss. In the UK, the amount is 10 percent of the national average wage; in Ireland, it's 32 percent. Today in the UK, if you’re over 25 and unmarried, you’ll get £71 ($107) a week. It’s €188 ($240) in Ireland.
Unemployed financial professionals on the Continent are generally better looked after by the state. "Various studies have often put Switzerland, Germany and France among the countries with the most generous unemployment benefits," said Spencer Wilson, a press officer at the OECD in Paris.
Switzerland and Germany can at least afford to be generous – they have comparatively low unemployment rates of 2.9 percent and 6.8 percent respectively. In France the figure exceeds 10 percent, yet the unemployed there get their handouts longer. The maximum duration of unemployment benefits in France, at 24 months, is the highest in the world, ahead of Switzerland (18 months), and Germany, Ireland, and Luxembourg (12 months each).
In the UK, unemployment benefits are paid for only six months and most US states limit payments as well to 26 weeks (about 6 months). During the financial crisis, unemployment benefits were extended beyond 26 weeks several times in a number of states; the maximum duration of state and federal benefits in the US - reduced last year to 73 weeks from 99 weeks - now applies to only nine states, according to the Huffington Post. The Extended Benefits (EB) program ended in New Jersey and in New York, respectively, mid-2012 and December 2012.
At €79,488 ($102,703) a year, France also has the highest annual ceiling for unemployment benefits. Switzerland is next at 88,200 CHF ($93,117) per year, followed by Luxembourg at €39,584 ($51,109) and Germany at €38,880 ($50,189). At A$12,922 ($13,496) a year for a single person with no children, Australia’s New Start Allowance, which is paid fortnightly, is generous by Asia-Pacific standards.
"France has an unemployment insurance system which is out of the ordinary, both in terms of the ceiling and duration of benefits,” said David Jonin, a partner at law firm Gide Loyrette Nouel in Paris. “However, with an accumulated deficit of over €18bn expected in late 2013, the viability of this system must be questioned.”
The French government’s generosity to unemployed bankers is offset by its attitude toward those who are at work and earning money. The French President initially planned to slap a 75 percent tax on income earned over €1 million ($1.3 million). Following a court ruling last December, French finance minister Pierre Moscovici said last week that the top tax rate applied to earned income couldn't exceed 60 percent.
The French system stands in stark contrast to that in Asia’s main financial centres, Singapore and Hong Kong. Singapore doesn’t offer Western-style unemployment allowances, while benefits of any kind are often limited to disadvantaged groups like low-income earners. Bankers are advised to set money aside before they get fired, which should be easy enough given that income-tax rates peak at 20 per cent. Singapore citizens are expected to rely on family support when the going gets tough, but they may not be out of work for long – the unemployment rate stood at a mere 1.4 percent in the fourth quarter last year.
In Hong Kong, which has an unemployment rate of just 3.4 percent, only people who have been residents for at least seven years can apply for Comprehensive Social Security Assistance. And in the finance sector, even these long-term residents aren’t likely to qualify because the Social Welfare Department further restricts the benefit to those with assets under HK$25k ($3.2k). Bottom line: unless you’re broke, sick, old or otherwise needy, you won’t get anything after you get the axe.
The Persian Gulf
Expats in the Middle East are generally in the same boat as those in Asia. Bahrain, however, is the exception. It is the only country in the Gulf Cooperation Council, a union of Arab states which also includes Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, where non-nationals can claim unemployment benefits, said Sara Khoja, a partner at law firm Clyde & Co in Dubai. Bahraini compensation is capped at 500 BHD ($1,326) a month for six months. But in Bahrain, which has a 3.7 percent unemployment rate, you must have already subscribed to an insurance fund into which the employee, employer and the state each pay 1 percent of the employee's salary.
This article was written in collaboration with Paul Clarke and Simon Mortlock.