• Sweden edition
 

Unemployment insurance to be compulsory

Published: 20 Oct 2006 15:00 GMT+02:00
Updated: 20 Oct 2006 15:00 GMT+02:00

Every worker in Sweden will soon be obliged to join an unemployment insurance scheme, according to government proposals.

The government has already announced plans to increase the amount that people have to pay in contributions to the so-called A-kassa funds, which manage unemployment benefits. These funds administer unemployment benefit, but the money they pay out is mostly provided by central government funds.

The governing centre-right Alliance has said it wants to change this, and make the funds more self-financing. While taxes including income tax will be cut, insurance charges will rise. The government will also make people legally obliged to join the insurance schemes, which are currently voluntary.

“We are going to talk to the unions and employers’ organizations about the possiblity of making contributions to unemployment benefit funds compulsory,” said Mårten Wennberg, spokesman for labour market minister Sven-Otto Littorin, to The Local.

“The intention is that there will be no exceptions to the obligation to pay into A-kassa funds. Everyone will have to contribute.”

Some 770,000 people out of Sweden’s workforce of 4.6 million do not currently pay into A-kassa funds.

One of the groups likely to be most affected by the change is the self-employed. While many self-employed people pay into the A-kassa funds, many others do not, due to rules that say that they have to completely stop working in their company in order to claim unemployment benefits.

This contrasts with employed people who are forced to move from full-time to half-time jobs, who are able to claim unemployment benefits to compensate for the time they are not working.

“The reason for this is that it would be hard to monitor people who are claiming unemployment benefit while still keeping their company active,” says Gertrud Hedenström-Eriksson at the Federation of Unemployment Insurance Funds.

Another problem faced by self-employed people is that the current system calculates unemployment benefit based on their most recent year in work. This means that entrepreneurs who try to keep their companies going through difficult times before throwing in the towel have their benefits calculated on very low incomes.

An inquiry into self-employed people and the unemployment benefit system was set up by the previous government, but this is not due to report until after the new laws come into force, which is likely to be next summer, according to Mårten Wennberg. But Wennberg said that these questions would be looked at by the government before it makes a firm proposal.

"These are the things we have to investigate. There are lots of question marks surrounding this subject," he said.

Hans Tapper, at Småföretagarnas Arbetslöshetskassa, which administers unemployment insurance for owners of small businesses, said that the situation regarding the future of the A-kassa system was “very turbulent”, adding that he was “unsure how the new proposals will look.”

“This raises a number of questions, and we will be making our position known. We have already made a number of representations to the current inquiry,” he told The Local.

James Savage (james.savage@thelocal.se)

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