Momentum Institute:

Unemployment benefit lags behind inflation

Unemployment benefit must be adjusted for inflation, demands the trade union-affiliated Momentum Institute (symbolic image).

(Bild: APA/Herbert Pfarrhofer)

Unemployment benefit is lagging behind the sharp rise in inflation, the trade union-affiliated Momentum Institute has now criticized. Salaries that are at least twelve months behind are used for the calculation.

As unemployment benefit is also not adjusted for inflation, the net replacement rate has fallen from 55% of the monthly contribution base to an average of 51%. "If you have been registered as unemployed since March 1, 2024, the basis for calculating the net replacement rate is almost entirely in 2022 - i.e. before wages have even been adjusted to the massive inflation," said Jakob Sturn, economist at the Momentum Institute.

"Fails to secure livelihood"
This is problematic for "people who have recently become unemployed". One in three unemployed people are now at risk of poverty, and one in two of the long-term unemployed. At EUR 1091, the average unemployment benefit is around EUR 300 below the at-risk-of-poverty threshold (one-person household). "Unemployment benefit fails to achieve its actual goal for people in precarious situations: securing their livelihood," says Sturn.

The Momentum Institute recommends raising the net replacement rate of unemployment benefit and unemployment assistance to 70 percent. In addition, both should be adjusted annually in line with inflation, as has been the case for other social benefits since 2023.