Unemployment insurance is one of the social security policies implemented through various instruments to provide economic security to individuals. The main function of unemployment insurance is to provide income support to individuals who lost their jobs during periods of unemployment. In order to benefit from unemployment insurance payments, one must have a job covered by unemployment insurance and meet certain additional conditions.

In Turkey, unemployment insurance is also implemented within this framework. In Turkey, unemployment insurance payments are not made all at once but on a schedule. In countries that do not suffer from high inflation, making unemployment insurance payments monthly within a certain calendar may not pose a significant risk against inflation. However, in countries with high inflation, such as Turkey, such payments lose their real value against inflation. Inflation causes many economic problems such as income inequality and a decline in purchasing power, but it is also a phenomenon that reduces the real value of unemployment payments. As far as can be observed, this issue does not receive sufficient attention in theory and practice. Instead, unemployment insurance payments are considered a policy instrument to create macroeconomic effects through the demand channel and are the subject of various studies and applications. In this context, there is a large body of literature on the relationship between unemployment insurance and inflation and economic stagnation. This situation shows that the issue is mostly focused on macroeconomics; approaches that centre on guaranteeing sustainable income during periods of unemployment are not sufficiently discussed. Moreover, as far as can be determined, there is no practice that protects unemployment insurance payments against inflation. For this reason, this study aims to analyse the results obtained independently from the debates on the amount or calculation methods of unemployment insurance payments. Because of this approach, this study seeks to answer the following question: Is it possible to compensate for the inflationinduced real depreciation of the unemployment benefit in Turkey? The main hypothesis of the study is that this is possible.

Focusing on the compensation for the real depreciation of unemployment payments in Turkey, this study emphasises that the current system is not sufficiently resilient to the effects of inflation and the importance of maintaining the purchasing power of unemployment insurance payments in a sustainable manner. Since the payment is not made immediately during unemployment benefit utilisation, there is a real depreciation due to inflation. When payments are spread over months or years, the real depreciation increases. In the monthly payment system, the loss of real value increases even more for those who get a job and leave it again during the payment period. The case study technique, one of the qualitative research techniques, was used in the study.

Three models are proposed in this study. Since the first model foresees that unemployment insurance payments are made in one lump sum, payments are protected in advance from the negative effects of inflation. The second and third models are based on the cumulative calculation of inflation rates and their reflection in payments. In this way, the real value of unemployment insurance payments will be preserved. This approach differs from the existing literature, which generally focuses on the impact of unemployment insurance on inflation and other macroeconomic variables and offers an unemployedcentred perspective. As far as can be determined, the first of the proposed models is applied in Portugal for those who want to start their own business, while the monthly reflection of inflation in payments is not applied in any other country.

As a result, indexing unemployment insurance payments to inflation is consistent with the idea of distributing welfare fairly. During inflationary periods, governments implement compensatory mechanisms by increasing civil servants’ salaries and minimum wages, and the same approach should be applied to unemployment insurance payments. Putting the issue on the agenda of trade unions as well as politicians would facilitate the realisation of the proposed models. These proposals provide a more equitable framework for measures to increase social welfare and provide economic security during periods of unemployment in an environment of negative forecasts for employment and social justice. Investigating the economic and social impacts of the models in practice is important to evaluate their effectiveness and sustainability. The studies to be conducted in this context will contribute to making the system more effective and sustainable and to determining the most appropriate model.