Published On:Thursday, March 04, 2010

By MEGAN REYNOLDS

Tribune Staff Reporter

mreynolds@tribunemedia.net

WORKERS and employers will face the first ever rise in National Insurance Board contributions from June 1 to pay for the national unemployment benefit scheme.

Prime Minister Hubert Ingraham approved the National Insurance Board (NIB) request to raise contributions this week and set a date for payments to rise by one per cent in June, with half of the increase paid by the employer and the other half by the employee.

Employers contributions will go up from 5.4 to 5.9 per cent, while the contributions for employees rise from 3.4 to 3.9 per cent; bringing the current 8.8 per cent contribution rate up to 9.8 per cent.

NIB maintains the rise translates to a maximum weekly increase of $2 for the employer and $2 for the employee, that is no more than a $104 annual increase for employees and $104 per member of staff for employers.

The first contribution rise in the organisation's 35-year history is expected to strengthen NIB's social security safety net with no more than $10 million per year, NIB director Algernon Cargill said.

Employers and workers were warned the increase could be implemented early this year as funding would be needed for the unemployment benefit scheme launched in April last year.

The scheme was launched with a $20 million fund to help thousands of people unable to find work during the recession.

Unemployment had hit 14.6 per cent in New Providence and 17.2 per cent in Grand Bahama, and the scheme aimed to help those out of work while they applied for jobs through the Department of Labour.

A total of 14,692 unemployed Bahamians had claimed $21.9 million from NIB between April and January, and Bahamas Employers Federation president Brian Nutt said businesses have been braced for the increase for several months.

"This has been a long time coming," Mr Nutt said.

"Everybody has been aware it will eventually impact us, so I am just glad that we did get a few more months respite from having to pay.

"June will give enough time for everybody to alter their payroll programme to be able to correct the contribution rate and calculate deductions."

The increase will allow NIB to initiate the second, permanent, phase of the programme in June.

Unlike the first phase that helped those who have been out of work since 2004, the permanent unemployment benefit scheme will only be paid to the recently unemployed from June.

Claimants must have paid at least 52 NIB contributions throughout their working life and of those payments 20 must have been paid in the 40 weeks prior to becoming unemployed, and seven during the 13 weeks before unemployment.

Those eligible to receive the benefit will then receive the unchanged rate of 50 per cent of the average insurable income for up to 13 weeks, that is a maximum of $200 per week paid by a NIB cheque every two weeks.

Mr Cargill said: "You have to be looking for work and certify that on a weekly basis with the Department of Labour to receive the benefit.

"The structures we have in place would prevent fraud from that perspective, as well as from those who are employed."

Employers and workers have also been warned of another one per cent rise in contributions to cover the cost of the National Drug Prescription Plan to be implemented in June.

But Mr Cargill said he does not expect NIB contributions to rise to 10.8 per cent this year.

When brought into force employers and employees will both face another 0.5 per cent rise in contributions.

The National Drug Prescription Plan aims to provide 170 prescription medications free of charge to patients making NIB contributions who suffer from the most common 11 chronic non-communicable diseases.