Academic journal article Nordic Journal of Working Life Studies

Joint Responsibility at Its Peak - Searching for a New Nordic Unemployment Model

Academic journal article Nordic Journal of Working Life Studies

Joint Responsibility at Its Peak - Searching for a New Nordic Unemployment Model

Article excerpt


In the Nordic labor market model, the unions play an important role. Recent research has shown that the position of the unions in the Nordic Ghent countries has weakened (Böckerman & Uusitalo 2006, Kjellberg 2006, Lind 2007). In the Ghent countries, unemployment insurances are closely linked to unionism and have thus affected a high union density (Frege 2006, Kjellberg 2011). A consequence of the trend in the Ghent countries is that an increasing proportion of the labor force is either without economic protection or has a very low degree of it vis-à-vis unemployment. This provides movements that advocate the implementation of obligatory unemployment insurance with arguments. Such a scenario could weaken the union's position further since the traditional link between economic security and unionism would disappear (Andersson et al. 2006). Consequently, this would also weaken the Nordic labor market model in which a low degree of labor market regulation is compensated for by collective agreements resulting from negotiations between the labor market representatives. In fact the legitimacy of such a self-regulatory system could be questioned should union membership densities reach a critically low level. Another conceivable effect of the decline in unemployment insurance membership is linked to the notion of de-commodification, i.e., the extent to which the individuals of a given society are guaranteed a reasonable livelihood in case they become, for example, unemployed (Esping-Andersen 1990). It is plausible that uninsured employees will lower their minimum demands regarding employment conditions should they become unemployed, thus undermining the general labor force in terms of working conditions. Finally, another imaginable consequence of this decline is that responsibility for the individual's economic well-being is signed over to a third party. Under the Nordic welfare model, this would be the state.

The public debate on unemployment insurance systems has, however, largely focused on whether or not paid membership should be mandatory, and thus not so much on how a potential unemployment insurance system should be structured. As such, discussion about the future of the Nordic unemployment insurance systems has been rather narrow. By looking at a relatively new example of a Nordic unemployment benefit system (UBS), which has thus far not been described, this article seeks to exemplify how a mandatory UBS could arise. An interesting aspect of this system is that it includes the element of compulsory payment while at the same time enhancing the influence of the labor market parties. Thus, the labor market parties seek agreement and take joint responsibility for the unemployment system; as such, it is an example of the long-standing Nordic negotiation tradition, but in a new context.

In contrast to the majority of the Nordic societies, the Faroe Islands chose to organize its unemployment system on the basis of obligatory membership when establishing it in 1992.2 Despite the system's obligatory membership, the unions have not experienced a notable decline in membership levels since it was launched. Perhaps, this has to do with the fact that the system is to some extent structured in accordance with the principle of the Ghent system. Paid unemployment membership is compulsory for employees and employers and is raised like taxation, similar to many other European countries. At the same time, unemployment insurance is integrated with job centers. Finally, this is all administered by a board consisting of labor market representatives. As such, the Faroese unemployment system is unique. In light of recent developments in the other Nordic countries, it is interesting to see how the system is structured, as well as to what extent the labor market representatives actually have any influence.

Objectives and research questions

The aim of this article is to shed light on the relatively new Nordic UBS used in the Faroe Islands. …

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