No one likes to lose a job, but the unemployment benefits in some countries definitely make the bad news a little less bad. Take oil-rich Norway, where unemployment is 3.3 percent. Thanks to state support, laid-off workers pocket 72 percent of their annual net salary, or $56,940 on average in combined unemployment pay and state benefits, vs. just 28 percent in the U.S., according to the Organization for Economic Cooperation & Development. Germany offers vocational training, including a full-size "fake" supermarket in Hamburg where the unemployed practice working at a checkout. The German government also pays one-third of the salaries of workers whose hours and wages are slashed by up to 50 percent—as long as companies keep those employees on the payroll. And in recession-hit Spain, policymakers launched a two-year, $226 million program in late 2008 that includes paying down workers' mortgages until they find jobs. "Governments want to ensure people don't fall through the cracks," says Paul Swaim, a senior economist at the OECD in Paris.
At some point, fiscal reality may force policymakers to trim benefits. That means cutting back the handouts that can discourage people from looking for jobs. In Japan, with 4.9 percent unemployment, the government gives salarymen 45 percent of their net pay during the first year of unemployment, and just 3 percent if they haven't found work in 12 months. (Some 67 percent of jobless do.) Lower benefits compel many jobless workers to take any job. Says Edward Drury, a 29-year-old telecom salesman in London who has lived on $400 a month in unemployment pay since March: "The lack of money is a big incentive to get back to work."
The bottom line: Europe still offers the most generous unemployment benefits, but handouts may be cut as governments slash budget deficits.