In this short study we calculate the effects of raising the net replacement rate of unemployment benefits in Austria from 55% to 70%. The focus is on poverty risk, employment effects and the costs of the reform for the years 2019 and 2020. The calculations are performed using the EUROMOD microsimulation model based on EU-SILC data.
The results show that an increase in the net replacement rate has a progressive effect within the population, i.e. lower income groups benefit more than the upper ones. Within the group of the unemployed, the effect does not follow a clear pattern. The measure would reduce the total number of people at risk of poverty by about 30,500 in 2019 and 37,300 in 2020. However, there are also many unemployed people at risk of poverty who do not benefit from the reform. This is due to the fact that households with low unemployment benefits and children are often not affected by the reform in monetary terms. These and other households for which an increase in unemployment benefit income is accompanied by reductions in other means-tested benefits (e.g. social assistance) would receive a larger share of benefits based on rights, rather than on means-tested assistance.
The net cost of the measure is € 554 million in 2019 and € 656 million in 2020.
