Unemployment benefits in Sweden

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Unemployment benefits in Sweden are payments made by the state or other authorized bodies to unemployed people. They can be divided into a voluntary scheme with income-related compensation up to a certain level, or a comprehensive scheme that provides a lower level of basic support.

Unemployment benefits are payments made by back authorized bodies to unemployed people. In the United States, benefits are funded by a compulsory governmental insurance system, not taxes on individual citizens. Depending on the jurisdiction and the status of the person, those sums may be small, covering only basic needs, or may compensate the lost time proportionally to the previous earned salary.

Sweden constitutional monarchy in Northern Europe

Sweden, officially the Kingdom of Sweden, is a Scandinavian Nordic country in Northern Europe. It borders Norway to the west and north and Finland to the east, and is connected to Denmark in the southwest by a bridge-tunnel across the Öresund, a strait at the Swedish-Danish border. At 450,295 square kilometres (173,860 sq mi), Sweden is the largest country in Northern Europe, the third-largest country in the European Union and the fifth largest country in Europe by area. Sweden has a total population of 10.2 million of which 2.5 million have a foreign background. It has a low population density of 22 inhabitants per square kilometre (57/sq mi). The highest concentration is in the southern half of the country.

Sovereign state Political organization with a centralized independent government

In international law, a sovereign state, sovereign country, or simply state, is a nonphysical juridical entity that is represented by one centralized government that has sovereignty over a geographic area. International law defines sovereign states as having a permanent population, defined territory, one government, and the capacity to enter into relations with other sovereign states. It is also normally understood that a sovereign state is neither dependent on nor subjected to any other power or state.

Contents

History

“Help-funds", the first form of unemployment insurance in Sweden, were created in the 1870s. They are closely linked to trade unions. Since the institution of local employment agencies in the 1930s, and amid the climate of Keynesian policies, the State began to finance unemployment benefits. Since the 1940s, the aim of unemployment insurance was to "provide economic support during a 'transitional period' when the individual who lost his/her employment or left school actively seeks a new employment". [1] In 1948, the employment offices were nationalised, and the National Labour Market Board was established as the central authority, charged also with the task of supervising the voluntary employment relief funds, which were subsidised and controlled by the unions. Since 2004, the latter task has been overseen by the Unemployment Assistance Board.

Employment agency an organization that helps people find a job

An employment agency is an organization which matches employers to employees. In all developed countries, there is a publicly funded employment agency and multiple private businesses which act as employment agencies.

The Unemployment Assistance Board was a body set up in Britain in 1934 due to the high levels of inter-war poverty in Britain. The Board kept a system of means-tested benefits and did widen the number of people who could claim relief.

Labor market policies in the post-war period were built on two concepts: the "active labour market policy", and the task of unemployment insurance to support the readjustment of individuals to the labor market. [1] To have this effect, unemployment insurance had to have some features:

It should not be paid unless the individual has the possibility to take on work during at least a minimum number of hours each week. It should be required for individuals to look for work actively. It should require individuals to participate in labour market programmes which aim to support the individual's possibilities to reenter the labour market. The person should not be allowed to look only for the same kind of job in the long run, as they had before or have been training for. The person should not be allowed to only look for a job within a limited geographical area. [1]

Main features

The Swedish unemployment insurance system has two components: basic insurance and voluntary income-related insurance. Basic insurance is granted to anyone who meets the basic work requirements: 320 SEK per day are granted to anyone over 20 years of age who is enrolled at the employment office and is carrying out a job-seeking plan. Voluntary income-related insurance requires the worker to join one of the 36 independent unemployment funds. To become one of the 3.4 million recipients (2013) of unemployment funds, a worker must have been employed for at least one month and then be registered as a jobseeker in the public employment service agency and be at the disposal of the labour market. After one year of uninterrupted membership to an unemployment fund, and six months of half-time work, a worker is entitled to receive an earnings-related daily allowance of up to 80% of his or her regular income (with a maximum of 680 SEK per day) for the first 200 days. Regular income is the average income during the previous 12 months, including days of unemployment. After 200 days the rate decreases to 70% until the 300th day, and 70% from day 301-450 (only available for parents of children under the age of 18). After 300 (or 450) benefit days, anyone who is still unemployed can obtain a place in the Jobb-och utvecklingsgarantin (Job and development guarantee) labor market program.

Swedish krona currency of Sweden

The krona is the official currency of Sweden. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it but, especially in the past, it sometimes preceded the value. In English, the currency is sometimes referred to as the Swedish crown, as krona literally means crown in Swedish. The Swedish krona was the ninth-most traded currency in the world by value in April 2016.

In Sweden, an unemployment fund is an economic association tied to a trade union, except the Unemployment fund Alfa and a few unemployment funds for self-employed and employers.

As declared by the Swedish Unemployment Insurance Bard (IAF) [2] in 2006, 553,000 workers received benefits during the year, and the unemployment funds paid them 29.9 billion SEK, or an average 54,069 SEK per applicant. In fact, a form of intra-fund solidarity can be traced up; funds usually do not compete for members, as the trade unions usually refer to a "fund organizational area", and costs at this time were covered in solidarity by all the funds. This resulted in similar membership fees for every sector. Moreover, the funds’ costs were mainly paid by government grants. In 2006 only 9.4% of the unemployment benefits were financed by membership fees. [1] Between 2006 and 2008, the share of workers affiliated with an unemployment fund decreased from 83% to 70%, attributable to hiked fund fees caused by decreased state-support. [3] Fund fees returned to pre-2007 levels by 2014, when government funding was restored. In 2015, the density of unemployment funds was 71%, and union unemployment funds alone stood at 73%.

Some unions also promote collective complementary insurance to better cover the growing quota of unemployed who receive less than 80% of their previous wages. Unions offer this benefit to counteract the stagnation of the maximum compensation level and the rise of unemployed average and high-earners. Unions also seek to supplement benefits where the insurance program falls short. In 2005, 45% of those receiving unemployment benefits received less than 80% of their previous income. [1] The collective complementary insurances are fully financed by union fees.

To apply for unemployment benefits from the unemployment insurance fund of you have to be a member. If you are not a member of an unemployment insurance fund, or do not wish to apply for membership of an unemployment insurance fund, you can apply for unemployment benefits from the Alfa-kassan fund. You send your application for unemployment benefits and other forms to your unemployment insurance fund. The forms you need to apply for unemployment benefits can be found on the website of each unemployment insurance fund.

Subsequent developments

The Swedish welfare state and its “active labour market policies” remained quite intact after the deep recession of the 1990s. However, demand for labour remains under the level of the 1980s. Swedish politician and leader of the Moderate Party from 1999-2003, Bo Lundgren, [4] claims the requirement for very intense job-seeking by the unemployed does not necessarily improve the system's functionality. A report written by Lundgren, [4] in his position as head of the Supervisory Division of the Unemployment Insurance Board, argues that in a situation where there are often many job-seekers for each vacancy, the job-seeking activity should be limited to jobs where the applicant has a fair possibility of being offered the job. How to accomplish this is still a matter of discussion.

The problems concerning the effects of joining a Swedish labour market programme have been examined by Barbara Sianesi, [5] who found several issues. If the programme had increased employment rates in its participants, these had also been found to remain significantly longer on benefits and in the unemployment programme. This was especially the case for those entering a programme after having been entitled to unemployment grants. The potential "locking-in effects" must also be examined. Some working categories—women with part-time jobs, manpower-employed, seasonal workers, students, self-employed businessmen—misuse the unemployment benefits and some administrative court cases are expected to clarify these categories for unemployment insurance. [4]

In 2007, important aspects of the systems were revised. The Alliance for Sweden electoral coalition, who won the 2006 elections, endorsed each section of the labour market carrying its own costs of unemployment benefits paid out. This was intended to put pressure on wage levels, increase demand for labour, and reduce unemployment. They claimed a substantially larger portion of the costs for the insurance should be financed by individual fees of the involved workers, to stop the intra-fund solidarity mechanisms. From January 2007, fees to unemployment funds were raised significantly, mostly in funds with a high unemployment rate among the members. From July 2008, the differentiation of fund fees increased considerably. Large membership losses occurred for funds and trade unions. From 1 January 2007 to 31 December 2008, Swedish unions lost 245,000 members (8% of active members) and union unemployment funds almost 400,000 members (11%). [6] Including non-union unemployment funds (the independent Alfa fund and the unemployment funds for self-employed and employers), almost half a million members left the funds. From 1 January 2014, fund fees were restored to about the same level as before 2007. [7]

See also

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References

  1. 1 2 3 4 5 Lundgren, Bo (2006), Recent development in unemployment insurance in Sweden, Brussel: International Experts Workshop of the ISSA Technical Commission on Unemployment Insurance and Employment Maintenance, p.3
  2. The Swedish Unemployment Insurance Board (IAF), Facts about unemployment insurance
  3. Anders Kjellberg and Christian Lyhne Ibsen "Attacks on union organizing: Reversible and irreversible changes to the Ghent-systems in Sweden and Denmark" in Trine Pernille Larsen and Anna Ilsøe (eds.)(2016) Den Danske Model set udefra (The Danish Model Inside Out) - komparative perspektiver på dansk arbejdsmarkedsregulering, Copenhagen: Jurist- og Økonomforbundets Forlag (p. 287)
  4. 1 2 3 Lundgren, Bo (2006), Recent development in unemployment insurance in Sweden, Brussel: International Experts Workshop of the ISSA Technical Commission on Unemployment Insurance and Employment Maintenance, p.4
  5. Sianesi Barbara (2003), An Evaluation of the Swedish System of Active Labour Market Programmes in the 1990s, London: Institute for Fiscal Studies, Abstract
  6. Kjellberg, Anders "The Decline in Swedish Union Density since 2007" Nordic Journal of Working Life Studies (NJWLS) Vol. 1. No 1 (August 2011), pp. 67-93, in particular pp. 67, 73-74 and 79-80
  7. Kjellberg, Anders, Växande avgiftsskillnader i a-kassan - ökad social polarisering , Lund University: Studies in Social Policy, Industrial Relations, Working Life and Mobility. Research Reports 2013:1, p. 69-70

8. ^https://www.norden.org/en/info-norden/swedish-regulations-unemployment-insurance-and-unemployment-benefits

Further reading