Economy

Many will receive significantly less unemployment benefits with new rules

As of January 1, new rules apply for calculating unemployment benefits. The changes mean that losing the job will be even less attractive this year than it was before New Year.

If you are dismissed or laid off in Norway, luckily you have a good safety net that catches you up.

This security net, also called the unemployment benefit scheme, secures you up to 62.4 percent of the income you had before you lost your job.

It should be sufficient for the vast majority to cover the most important expenses.

You choose whether the benefit base will be your income the year before you applied for unemployment benefit or an average of the last three years, whichever is best for you.

Income over six times the National Insurance basic amount (6 G), which today amounts to NOK 581,298, is not included in the benefit base.

The income is now reduced to 6 G for each year

If the unemployment benefit base is determined on the basis of average income in the last three completed calendar years, until the New Year, the limit of 6 G was applicable for this average.

However, from the turn of the year, this was changed. Now, the income for each of the three calendar years should be reduced to 6 G for each calendar year, according to both the Ministry of Labor and Social Affairs and Nav.

In other words; The limit of 6 G shall apply to the income of each of the last three years before the application date, instead of the average of the three.

Nav states that the change applies to new unemployment benefit decisions and to re-calculation by re-admission that is granted with effect from 1 January 2019 or later.

Work clarification money, sickness benefit and disability pension are already calculated after the 6G limit, which will now apply to unemployment benefits.

Example with last year’s rules

So what does the new rules for calculating unemployment benefit mean in practice?

Well, let’s say you earned $ 200,000 in 2015, $ 1,400,000 in 2016 and $ 200,000 in 2017.

The sum of the revenues will then be NOK 1,800,000, which gives an average annual income of NOK 600,000.

With last year’s rules it is this sum that would have been capped against 6 G, as mentioned is NOK 581,298.

With the old rules, the unemployment benefit base would therefore have been set at NOK 581,298, which would give you around 362,500 in unemployment benefits in 2019.

Get almost 165,000 less with new rules

With the new rules, your income for each of the three years will be reduced to an average of 6 G for each calendar year.

As the average of 6 G for the income year 2016 amounted to NOK 550,440, this is the amount, and not NOK 1,400,000, that can be included in the calculation of the benefit base.

The sum of the revenues will then be NOK 950,440 (200,000 + 550,440 + 200,000), which gives an average annual income of NOK 316,813.

With this as a basis, your daily allowance will be calculated at NOK 197,700 per year, or 164,800 less than if you had become unemployed before the New Year.

– If, for one or two of the calendar years, the user has had income above six times the basic amount, this could lead to a lower benefit base, compared to previous rules, writes the Naval Department in an email to Pengenytt .

Has no estimate of how many will be affected

Nav’s department at the same time confirms that the calculations above are correct, although they are somewhat simplified.

The income that is included in the unemployment benefit base is adjusted in relation to the changes in the basic amount in the period until the unemployment benefit is applied for.

– The examples, however, illustrate in principle what can be the consequence of new rules versus previous rules, it is concluded.

When asked whether Nav has an estimate of how many people can be affected by the new curtailment rules, the agency must admit that it does not.

“It will take time and resources to figure out such figures, and any numbers will be associated with uncertainty because we do not know the quality of them, the answer is.”

This is required in order to receive unemployment benefits

To be entitled to unemployment benefits, you must have had an income of at least 1.5 G (around NOK 145,000) in the last calendar year ended, or 3 G (around NOK 290.00) during the last three calendar years, according to Nav.

Income refers here to wage income such as employee, sickness benefit, unemployment benefit, care allowance, nursing allowance, training allowance, maternity benefit and parental benefit at birth and adoption.

Industrial income, pension, return on wealth and one-off benefit at birth are not included in the minimum income.

You also have to be a real job seeker and register as that.

If you have children under 18, you can apply for a supplement of NOK 17 per child five days a week.

If both parents receive unemployment benefits, there is only one parent who can receive the allowance.

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