Unemployment benefits in Sweden

Last updated

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.

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.

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.

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 to 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

Related Research Articles

<span class="mw-page-title-main">Unemployment</span> People without work and actively seeking work

Unemployment, according to the OECD, is people above a specified age not being in paid employment or self-employment but currently available for work during the reference period.

<span class="mw-page-title-main">Unemployment benefits</span> Payments made by authorized bodies to unemployed people

Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by governmental bodies to unemployed people. Depending on the country 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.

<span class="mw-page-title-main">Swedish Trade Union Confederation</span> Organization of trade unions in the Scandinavian country

The Swedish Trade Union Confederation, commonly referred to as LO, is a national trade union centre, an umbrella organisation for fourteen Swedish trade unions that organise mainly "blue-collar" workers. The Confederation, which gathers around 1.5 million employees out of Sweden's 10 million people population, was founded in 1898 by blue-collar unions on the initiative of the 1897 Scandinavian Labour Congress and the Swedish Social Democratic Party, which almost exclusively was made up by trade unions. In 2019 union density of Swedish blue-collar workers was 60%, a decline by seventeen percentage points since 2006 when blue-collar union density was 77%. A strong contributing factor was the considerably raised fees to union unemployment funds in January 2007 made by the new centre-right government.

<span class="mw-page-title-main">Social insurance</span> Government-sponsored social program

Social insurance is a form of social welfare that provides insurance against economic risks. The insurance may be provided publicly or through the subsidizing of private insurance. In contrast to other forms of social assistance, individuals' claims are partly dependent on their contributions, which can be considered insurance premiums to create a common fund out of which the individuals are then paid benefits in the future.

Social welfare in Sweden is made up of several organizations and systems dealing with welfare. It is mostly funded by taxes, and executed by the public sector on all levels of government as well as private organizations. It can be separated into three parts falling under three different ministries. Social welfare is the responsibility of the Ministry of Health and Social Affairs. Education is the responsibility of the Ministry of Education and Research. The labour market is the responsibility of the Ministry of Employment.

The Swedish Public Employment Service is a Swedish government agency organized under the Ministry of Employment mainly responsible for the public employment service in Sweden and the implementation of labour market policies. The agency should help facilitate meetings and bring together employers with job seekers, especially those who are long-term unemployed and have particular difficulties in finding work. In addition, the agency should work to increase employment in the long term. This is primarily done by giving active support to companies in the recruitment process, facilitating meetings at the premises of the Swedish Public Employment Service and the use of a searchable, gratis vacancy database.

Active labour market policies (ALMPs) are government programmes that intervene in the labour market to help the unemployed find work, but also for the underemployed and employees looking for better jobs. In contrast, passive labour market policies involve expenditures on unemployment benefits and early retirement. Historically, labour market policies have developed in response to both market failures and socially/politically unacceptable outcomes within the labor market. Labour market issues include, for instance, the imbalance between labour supply and demand, inadequate income support, shortages of skilled workers, or discrimination against disadvantaged workers.

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.

In Italy, unemployment benefits are guaranteed by the Constitution. Article 38 states "[...] workers have the right to the provision of financial support sufficient to meet their needs in case of accidents at work, ill health, disability, old age and involuntary unemployment [...]". Esping-Andersen traces in this persistency the origins of the chronically high Italian unemployment rates.

<span class="mw-page-title-main">Italian welfare state</span> Italian social policies

The Italian welfare state is based partly upon the corporatist-conservative model and partly upon the universal welfare model.

<span class="mw-page-title-main">Insider-outsider theory of employment</span> Theory of labor economics

The insider-outsider theory is a theory of labor economics that explains how firm behavior, national welfare, and wage negotiations are affected by a group in a more privileged position. The theory was developed by Assar Lindbeck and Dennis Snower in a series of publications beginning in 1984.

Majeed Mohsen Al Alawi is Bahrain's former Minister of Labour Affairs. For a short time, he was also Minister of Housing. Under his leadership, the country carried out wide-ranging labour reforms with potentially profound implications for its economy and society. The reforms were not without controversy, and Al Alawi often faced stiff opposition. Media reports dated 17 March 2011 indicated that, along with the Minister of Health, Al Alawi resigned from the Bahraini Cabinet in the wake of the government crackdown on protests in Bahrain. These reports were confirmed on 24 March 2011 when a new Minister of Housing was appointed.

The Ghent system is the name given to an arrangement in some countries whereby the main responsibility for welfare payments, especially unemployment benefits, is held by trade unions rather than a government agency. The system is named after the city of Ghent, Belgium, where it was first implemented. It is the predominant form of unemployment benefit in Denmark, Finland, Iceland and Sweden. Belgium has a hybrid or "quasi-Ghent" system, in which the government also plays a significant role in distributing benefits. In all of the above countries, unemployment funds held by unions or labour federations are regulated and/or partly subsidised by the national government concerned.

<span class="mw-page-title-main">Economy of Sweden</span>

The economy of Sweden is a highly developed export-oriented economy, aided by timber, hydropower, and iron ore. These constitute the resource base of an economy oriented toward foreign trade. The main industries include motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel. Traditionally, Sweden relied on a modern agricultural economy that employed over half the domestic workforce. Today Sweden further develops engineering, mine, steel, and pulp industries, which are competitive internationally, as evidenced by companies such as Ericsson, ASEA/ABB, SKF, Alfa Laval, AGA, and Dyno Nobel.

<span class="mw-page-title-main">Unemployment in the United Kingdom</span> Overview of unemployment in the United Kingdom

Unemployment in the United Kingdom is measured by the Office for National Statistics. As of February 2024, the U.K. unemployment rate is 3.8%, down from 3.9% in January.

<span class="mw-page-title-main">Youth unemployment</span> Situation of young people who are willing to work but unable to find a job

Youth unemployment is a special case of unemployment; youth, here, meaning those between the ages of 15 and 24.

As the unemployed according to the art. 2 of the Ukrainian Law on Employment of Population are qualified citizens capable of work and of employable age, who, due to lack of a job, do not have any income or other earnings laid down by the law and are registered in the State Employment Center as looking for work, ready and able to start working. This definition also includes persons with disabilities who have not attained retirement age and are registered as seeking employment.

Unemployment in Hungary measured by the Hungarian Central Statistical Office shows the rate of unemployed individuals out of the labor force. The European Union's own statistical office, Eurostat also makes reports and predictions about the Hungarian job market and the unemployment rate in the country. The KSH's most recent unemployment data shows the unemployment rate for men 15–74 to be 3.3% and 4.1% for women.

Active labour market policies are actions that governments take to help the unemployed back into work. In South Korea, they are administered under the direct supervision of the Ministry of Labor and Employment. They involve subsidized education, vocational training, direct monetary support, and low interest loans.

Denmark is a Scandinavian country in Europe consisting of the Jutland Peninsula and numerous islands. Typically, Denmark has had relatively low unemployment rates. Currently, Denmark has generous unemployment benefits in the form of private insurance funds. Unemployment benefits are typically payments made by the state or other authorized actors to unemployed persons.

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

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.