The new unemployment benefit will start at 70% of the current minimum daily wage, currently at €648, according to the pilot scheme that is coming into force.

The pilot scheme is being implemented following a study carried out by the Public Employment Service in cooperation with the OECD and as part of a technical assistance project of DG REFORM.

The new pilot unemployment benefit aims to adapt it to the needs of the modern labor market, to motivate more people to find work, and to make it more effective, fairer, and more rewarding.

The implementation of the new pilot unemployment benefit is expected to start within the first months of 2025 and may last up to 16 months.

The objectives of the new unemployment benefit are as follows:

-Motivation to work: it will motivate the unemployed to return to work more quickly as it will start higher in the first few months of unemployment and decrease.

-Competitiveness and fairness: the system will recognise contributions paid and will not equate cases with large differences, as is already the case in 25 of the 27 EU countries.

-Efficiency: Merging and automating complex procedures will ensure simplification and efficiency of the benefit.

The new allowance consists of three parts:

-Fixed grant part: Calculated based on the beneficiary’s earnings. It starts from a subsidy of 70% of the beneficiary’s statutory minimum wage or average daily wage (if the beneficiary’s earnings were less than the minimum wage) and is gradually reduced at the end of the subsidy period. The condition is the completion of a minimum of 175 days of insurance in the 14 months before joining the subsidy, excluding the last 2 months.

-Variable part of the subsidy (“bonus” for those with a longer insurance record): it depends on the beneficiary’s years of insurance (counted from the 4th to the 20th year of insurance) and his/her average earnings (when higher than the minimum wage). The calculation is made by multiplying the coefficients corresponding to years of insurance and average earnings by the statutory minimum wage.

-Reminder that the unemployment benefit is contributory (i.e. it results from unemployment contributions paid during the working life) and not of a welfare nature. Conditions.

Additional benefits/supplements: include Christmas and Easter bonuses and supplements for dependants and single parenthood.

It is worth noting that the institutional framework for regular unemployment benefits as it is currently in force was shaped in the 1950s and 1980s, and no longer adequately meets key social and economic policy objectives, such as providing effective support for the unemployed at a critical time and providing incentives for reintegration into the labour market.

The program will be evaluated after the end of the pilot implementation, and based on the findings of the final evaluation, it will be modified accordingly and applied universally to all unemployed people.

In any case, including all surcharges, the maximum amount of the allowance cannot be more than twice 70% of the minimum daily wage, i.e. 1,296 euros.

Questions and answers about the pilot regular unemployment subsidy programme of the DYPA

Why is there a need for a change in unemployment benefits?

The institutional framework for unemployment benefits was formed in the 1950s, so it is necessary to update it to link it to the needs of the modern labour market and to meet today’s key issues, which are the effective and fair support of the unemployed and the motivation to reintegrate into the labour market.

What are the key principles of the pilot programme of the regular unemployment subsidy scheme of the DIFA?

Motivation to work: it will motivate the unemployed to return to work faster as it starts higher in the first few months of unemployment and tapers off.

Reciprocity and fairness: the system would recognise contributions paid, as is already the case in 25 out of 27 EU countries, and would not equate cases with large differences. Currently, regardless of whether someone has worked 2 years on minimum wage or 20 years on €2,000, they receive the same benefit for the same duration.

Effectiveness: Merging and automating complex procedures will ensure simplification and efficiency of the benefit.

This reform was technically supported by the OECD through the European Commission’s Technical Support Instrument and is financed by the Recovery and Resilience Fund. It complements the employment benefit of the law. 4921/2022, which stipulates that subsidized unemployed persons who find a job before the completion of the subsidy are entitled to 50% of the remaining subsidy in addition to their salary.

When is the pilot implementation of the new regular unemployment subsidy program expected and how long will it last?

The implementation of the new pilot unemployment benefit is expected to be launched by the Public Employment Service in the first months of 2025 and, depending on the insurance requirements of each unemployed person, may last up to 16 months.

What needs is the new pilot regular unemployment subsidy program intended to address?

The new pilot regular unemployment subsidy scheme aims to:

To modernise the benefit to respond to modern socio-economic conditions and enhance its effectiveness;
To support beneficiaries in coping with unemployment, especially in the first difficult months, and to accelerate their reintegration into the labour market.
To strengthen the contributory nature of the scheme, by subsidising beneficiaries according to their years of work and the amount of their earnings, i.e. their contribution to the social security system.

What are the main changes in the new regular subsidy program to serve the above objectives?

The changes are focused on three aspects: a) the conditions for membership, b) the duration, and c) the amount of the subsidy. In particular:

Merges the regular subsidy with the long-term unemployed allowance, allowing a maximum subsidy duration of up to 2 years (24 months), following an individualized approach for the amount of the allowance.

It puts both the inclusion in the subsidy and the duration of the subsidy on a more rational basis, now calculated based on a ratio of 2 months of employment: 1 month of subsidy for the first year of the subsidy, and 3 months of employment: 1 month of subsidy for the second year.

It takes insurance history into account in calculating the amount of the benefit, offering a fixed part that everyone receives and an additional variable part, depending on the insurance history of the unemployed person.
It sets a limit of 175 days of insurance 14 months before the termination of employment (the last two months do not count, just as they do today).

In addition to granting Christmas and Easter holiday bonuses and child allowances, for the first time, it takes into account the status of single parents, which is enhanced by an additional amount.

It is front-loaded, with the subsidy being higher in the first few months and gradually decreasing to support reintegration into the labour market, as is the case in 17 EU member states.

How will beneficiaries be selected for the new pilot unemployment benefit scheme?

Beneficiaries will be selected randomly through an automated system (RCT methodology), from all applications submitted for inclusion in the regular unemployment benefit, once it is established that the new eligibility conditions are met. The new pilot scheme applies to those who have not received a regular subsidy in the previous 4 years since the termination of their employment relationship.

How to apply for the new regular unemployment benefits programme under the pilot scheme?
A separate application is NOT required, as the same application is used as the one submitted for the existing regular subsidy scheme, via the online services of the DYPA. The supporting documents remain the same and are sought ex officio. Only one additional supporting document is foreseen for establishing the status of a single parent, which will be attached to the application, as this is the only document for which there is no possibility of an ex officio search.

Will the beneficiaries of the regular unemployment subsidy programme in the pilot application receive a lower subsidy amount;

No unemployed person participating in the pilot unemployment benefit will receive a lower subsidy amount than they would have received under the current system, just as the law provides for this pilot program.

Are those already receiving unemployment benefits affected by the pilot program?

No. Those receiving unemployment benefits under the current system continue to receive them normally for the duration of their benefits without being affected, as will those who are not selected for the pilot program.

The pilot application of the unemployment benefit also applies to the seasonal benefit;

No. The pilot only applies to the regular unemployment benefit and is not related to the seasonal unemployment benefit. The reform of the seasonal unemployment benefit is a separate subject of study to achieve the greatest possible responsiveness and correlate it with actual working time.

When is the full implementation of the new regular unemployment benefit program expected?

During the pilot implementation, the program will be evaluated and, based on the findings of the final evaluation, will be modified accordingly and applied universally to all unemployed workers.