Increased membership fees and stricter qualification criteria for receipt of unemployment insurance benefits, introduced by the government in January 2007, have resulted in a decrease in the number of members of unemployment insurance funds (*SE0702029I* [1], *SE0706039I* [2]). However, the membership fee for unemployment insurance is now more related to actual unemployment levels and labour market developments. This means that if unemployment among trade union members is low, the membership fee will also drop; if unemployment is high, the membership fee is likely to increase.[1] www.eurofound.europa.eu/ef/observatories/eurwork/articles/decline-in-membership-of-unemployment-insurance-fund-due-to-changes-in-system[2] www.eurofound.europa.eu/ef/observatories/eurwork/articles/government-to-impose-mandatory-membership-of-unemployment-insurance-fund
Due to lower unemployment levels in Sweden since 2006, the majority of members of unemployment insurance funds have benefited from reduced membership fees since July 2008. Nevertheless, trade unions are demanding that the right to tax deduction on fees be reintroduced. However, the employer side claims that, due to the new policies regarding unemployment insurance and lower income tax, employees are receiving a higher net income.
Background
Increased membership fees and stricter qualification criteria for receipt of unemployment insurance benefits, introduced by the government in January 2007, have resulted in a decrease in the number of members of unemployment insurance funds (SE0702029I, SE0706039I). However, the membership fee for unemployment insurance is now more related to actual unemployment levels and labour market developments. This means that if unemployment among trade union members is low, the membership fee will also drop; if unemployment is high, the membership fee is likely to increase.
Reduced unemployment insurance fees
From 1 July 2008, about 90% of members of unemployment insurance funds have been benefiting from lower membership fees. In general, the fee has been reduced by SEK 70 (about €7.26 as at 24 September 2008) to around SEK 250 (€26) a month. The largest reduction of between SEK 120 (€12) and SEK 140 (€15) concerns members of the Swedish Organisation for Managers (Sveriges Chefsorganisation, Ledarna), the Union of Civil Servants (Statstjänstemannaförbundet, ST) and the Swedish Union of Local Government Officers (Svenska Kommunaltjänstemannaförbundet, SKTF) (see table).
However, not everyone will benefit from lower fees: for example, people working in the hotels and restaurants sector, along with those involved in building maintenance and theatre work will have to pay higher fees, due to increased levels of unemployment in these industries. The increase will not affect people on sick leave and unemployed persons.
| Employee group represented by trade union | Before(in SEK) | After (in SEK) | Difference(in SEK) |
|---|---|---|---|
| Executives and managerial staff | 327 | 189 | -139 |
| Civil servants | 315 | 189 | -126 |
| Publicly and privately employed salaried employees | 333 | 208 | -125 |
| Hotel and restaurant workers | 361 | 397 | 36 |
| Building maintenance workers | 351 | 382 | 31 |
| Theatre, artists and media workers | 385 | 405 | 20 |
Note: SEK 1 = €0.10. €1 = SEK 9.66.
Decline in unemployment insurance membership
According to the Swedish Unemployment Insurance Board (Inspektionen för arbetslöshetsföräkringen, IAF), membership of unemployment insurance funds has dropped continuously since the new government bill stipulating higher membership fees came into effect. Since September 2006, membership has decreased by a total of 500,000 persons from 3.8 million to 3.3 million members. In the first half of 2007, the number of members declined by 282,000 persons and by 114,000 members in the second half of the same year. Between January and May 2008, overall membership dropped by some 67,000 persons, and since May of the same year, membership has fallen by between 11,000 and 14,000 persons a month.
Although all unemployment insurance funds have experienced a decline in membership since September 2006, significant differences are evident between the various funds. For example, the insurance fund representing dock workers has only lost 1.2% of its members; in contrast, the fund for civil servants working in defence, customs and the coast guard has lost 42% of its members.
Trade union and employer demands
The Swedish Confederation of Trade Unions (Landsorganisasjonen i Norge, LO) is demanding that the government reintroduce the right to tax deduction for both unemployment insurance and trade union membership fees. The tax deduction provision for trade union and unemployment insurance fees was removed from January 2007, resulting in an increase in membership fees. According to LO, an individual who paid SEK 200 (€21) in trade union fees and SEK 100 (€10) in unemployment insurance membership fees in 2006 received a total cost increase of SEK 90 (€9) a month, or SEK 1,080 (€112) a year. With the government’s increase in membership fees for unemployment insurance to up to SEK 300 (€31) a month, the tax reduction for insurance fees alone would be worth SEK 160 (€17) a month, or SEK 1,920 (€199) a year. LO believes that the right to tax deduction for membership fees is crucial in order to maintain the number of members.
In addition, LO is calling for an increase in the unemployment insurance level – initially to 80% of a person’s last salary and, at a later stage, to 90% of this amount. In the meantime, the confederation will be examining how the insurance fund can meet future demands.
For its part, the Confederation of Swedish Enterprises (Svenskt Näringsliv) believes that the reform of unemployment insurance together with reduced income tax has had a considerable effect among several income groups – as highlighted in a new report (in Swedish) published by the confederation. The government reduced the maximum daily unemployment insurance benefit from SEK 730 (€76) to SEK 680 (€70), which meant that the gross amount of monthly benefits dropped from SEK 16,000 (€1,658) to just under SEK 15,000 (€1,555). According to Svenskt Näringsliv, these new rules imply that the difference in income between a person at work and someone on unemployment insurance amounts to just SEK 1,400 (€145) net. However, if the individual is a member of an unemployment insurance fund, their earnings are somewhat lower. While this shows that the labour market reforms have been effective, Svenskt Näringsliv is calling for additional reforms to increase overall employment levels and to meet labour market demands.
Commentary
It remains to be seen whether the lower membership fees will be able to attract new and former members to the trade unions. However, given the slowdown in several economic sectors and the fact that unemployment levels are starting to increase, a rise in membership fees may occur once again.
Thomas Brunk, Oxford Research
Eurofound doporučuje citovat tuto publikaci následujícím způsobem.
Eurofound (2008), Low unemployment leads to reduced insurance fees, article.
