Jobs Australia has called for industry superannuation funds to provide unemployment insurance.

The group, representing non-profit employment services, commissioned Deakin University professor Andrew Scott to examine ways of helping jobless people through insurance.

“Unemployment insurance has not yet evolved in Australia to top up the particularly low, inadequate level of Australia’s state-provided unemployment payment,” the report says.

“The income replacement rate provided by unemployment benefits and insurance in selected OECD nations is only 45% in Australia, whereas unemployment insurance helps to boost payments to above 60% of previous earnings in the first year of unemployment in Canada, to 70% in central and northern European countries, and above 70% in Nordic European nations.”

The report argues the lack of unemployment cover in Australia creates an opportunity.

“We have insured against old age, illness, workplace injury and disability. It is logical we now similarly insure against the periods of unemployment or intervals between particular paid jobs and for the periods of reskilling.”

Jobs Australia CEO David Thompson says the low rate of federal government payments to jobless people has prompted the examination of unemployment insurance.

“Unemployment insurance would mean that people who lose their jobs aren’t immediately thrust into poverty,” he said.

“Instead of going straight from a living wage to $255 per week [the Federal Government’s Newstart payment], workers with unemployment insurance would have six months at something like 60% or 70% of their previous wage. This is the type of reform that could help people get back to work without adding huge expense to the federal budget.”

The report says super funds can provide this cover because they already insure areas of workers’ lives such as disability.

“Industry super funds enjoy a strongly popular reputation [among] banks and other financial providers because their bipartite non-profit model has consistently delivered superior returns to fund members,” the report says.

“If increased employment disruption does mean that more people need to transition between particular paid jobs for lengthy periods… to regain employment before retirement, then super funds may need to play a more flexible role to assist their members in making those transitions.”

The report offers no practical solutions on how such insurance would be introduced or whether life insurers would have a role, naming brokers IFS Insurance Solutions and Coverforce as organisations that could become involved.

Funding for such insurance could come from increased compulsory super contributions, the report says.