Transformation of the Ghent System in Sweden: Silent Institutionalization of Complementary ­Unemployment­ Benefits

Abstract

The Swedish public unemployment insurance program is characterized by its governance structure involving union-linked insurance funds, famously known as the Ghent system. This paper argues that the unions’ strongly entrenched interest in the provision of unemployment benefits has continued to shape the establishment and expansion of complementary benefits for the unemployed in multiple forms, including bilateral Employment Transition Agreements between employers’ organizations and unions (occupational pillar) and privately provided complementary income insurance benefits mediated by unions (private pillar). The paper accounts for this multi-pillarization process of the Swedish unemployment benefit provision system and how the unions’ involvement has come to take multiple forms. The paper also discusses distributive implication of this union-led development of the complementary pillars, which reinforces the differences in risk protection between different occupational groups and sectors.

The Ghent system in transition: unions’ evolving role in Sweden’s multi-pillar unemployment benefit system

“…Looking at the private pillar, the unions provide complementary income insurance schemes to their members, topping up benefits from the state and occupational pillars (Lindellee, 2018(Lindellee, , 2021aJansson and Ottoson, 2021a). These schemes are provided in collaboration with private insurance companies, meaning that they are run on the basis of actuarial principles and resemble commercial insurance policies more than social insurance schemes, albeit at a collective level (i.e., group insurance).…”

“…While the Ghent system, with its strongly state-subsidised unemployment funds, remains highly cherished by the key collective players, the unions – at least those organising white-collar workers (SACO and TCO) – have actively engaged in developing complementary pillars to compensate for the retrenchment in the state pillar. Paradoxically, the deteriorating benefits from union-linked unemployment funds have created leeway for unions to regain control over unemployment insurance, using it to recruit members (Lindellee, 2021a). The next section of this article discusses a new phase of this trajectory, with the social partners proposing new UBS governance arrangements and calling for greater control over UBS funding and regulation.…”

“…In many of these agreements, both eligibility for and the size of benefits depend upon a worker’s age, the number of years employed and the employment type (e.g. permanent employment required) (see Lindellee, 2021a: 112 for the list of existing ETAs and coverage figures).…”

Collective agreements against labor market risks in Sweden: the case of the PTK-SAF employment secu rity agreement

“…However, many of them have mainly been descriptive or focused on the effects, or outcomes of these (Bäckström, 2005;Diedrich & Bergström, 2006;Martinsson, 2005;Sebardt, 2005;Walter, 2015;SOU & 59, 2002). The potential for dualization of social protection that an increased role for occupational welfare such as ETAs entails has, however, been discussed in several studies (Jansson et al, 2018;Lindellee, 2018Lindellee, , 2020. Few of these studies have theoretically or empirically engaged with how these schemes relate to changes in other forms of welfare provisions, changes to labor market risks, or why the social partners chose collective agreements as an alternative to public welfare.…”

“…Notable exceptions are studies by Forsberg (1996) and Lindellee (2018Lindellee ( , 2020. Forsberg investigated TRR in the mid-1990s and argued that ESAs were as a result of a cooperative logic and the dynamics within and between corporative institutions.…”