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Job loss insurance plans shed 500,000 members

Published on: 04 Aug 2008 17:03 CET

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“3.8 million members have become 3.3 million,” said Peter Schönfeld from the Swedish Federation of Unemployment Insurance Funds (Arbetslöshetskassornas Samorganisation – SO) to the E24 economic news website.

Since coming to power in 2006, Sweden’s centre-right Alliance government has made a number of changes to the rules governing the country’s unemployment insurance programmes.

Fees have been raised and income replacement levels lowered, resulting in a 13 percent reduction in the number of people choosing to participate in the programmes.

The new rules have also made it harder to attract students, who usually help replace members who retire.

Schönfeld explained that the loss in membership is significantly greater than the usual loss of 80,000 to 100,000 members who leave unemployment insurance funds every year.

He estimates that the between 30,000 and 40,000 have chosen not to sign on to some form of unemployment insurance scheme, leaving them vulnerable in the case of layoffs as they lack any form of income replacement.

The higher fees have also caused larger numbers of workers near retirement age to leave the plans, either because they don’t have the means to pay the new fees or because they don’t fulfill the new criteria for income replacement.

“The hotel and restaurant employee’s unemployment insurance fund has lost nearly 30 percent since October 2006,” said Schönfeld.

“[Many] are low-paid and many have few working hours, and many are perhaps unsure of whether they would receive any income replacement.”

Elsewhere, Småföretagarna, the fund for small business owners, and the Swedish Trade Federation (Svensk Handel), have lost 25 percent and 30 percent of their members, respectively.

Workers who aren’t a member of any unemployment insurance scheme but have been employed full time for at least one year are eligible for basic income replacement of 320 kronor ($53) a day.

The government has plans to introduce obligatory unemployment insurance, set to take effect in 2010, which would cover 4.2 million Swedes.

Plans for the new scheme have yet to be finalized, however.

David Landes(david.landes@thelocal.se)