Restrictions on unemployment benefit to hit part-time workers

Part-time workers are set to face tougher financial conditions following the announcement that unemployment insurance is due to become more restricted for people in this group. Women in particular will be affected by this proposal, as they make up the majority of part-time workers. At the same time, the government stands to save huge amounts of revenue by limiting unemployment insurance.

Changes to unemployment insurance scheme

Changes to the unemployment insurance scheme were announced in the recent budget bill for 2008. Accordingly, from 1 January 2008, part-time workers will receive unemployment benefits for a maximum of 75 days, as opposed to the previous maximum of 300 days. Single parents will still be compensated over an extended period of more than 75 days through the ‘job and development guarantee’ (SE0705019I). This exception was included as economic conditions could become difficult for many single households, since some part-time workers will lose a large proportion of their disposable income.

One of the motivations behind the government’s proposal is to increase pressure on part-time workers to apply for full-time work. The same rules as before will apply to the new 75 days’ limit. Under the previous system, after 300 days, the unemployed person could choose to continue working part time without receiving unemployment insurance compensation or resign from the part-time work, and if the necessary conditions were met, obtain continuous compensation based on the income received from the part-time work.

Among those who finished their period of unemployment insurance, between 83% and 85% continued their part-time work without receiving any further compensation. The government predicts that some part-time unemployed people will become fully unemployed after the stricter regulations are implemented; however, the fundamental aim of the restrictions is to entice more people into full-time employment. Part-time workers will also qualify for the so-called ‘new-start jobs’ – through which employers pay reduced fees – if they have been unemployed for over two years and if they manage to secure a full-time employment contract (SE0705019I).

Unemployment insurance and part-time work

In 2005, unemployment insurance funds amounting to SEK 8.3 billion (about €885.3 million as at 4 January 2007) were paid out to people who were part-time unemployed. This corresponds to 25% of the total compensation paid out from insurance funds, representing a huge expense for the government in unemployment insurance expenditure. In the same year, some 56,959 persons worked part time while also receiving a supplementary income from unemployment insurance funds. An overall 40% of all those who applied for work through the national job agency were part-time workers. According to Eurostat (2003), about 22% of all workers who work part time do so involuntarily and would thus like to work more hours.

Part-time work and gender

Women are heavily overrepresented among those receiving unemployment benefits and make up the majority of people working part time; approximately 50% of all women receiving unemployment benefits work part time. Furthermore, some 45% of all women who are members of the Swedish Confederation of Trade Unions (Landsorganisationen i Sverige, LO) work part time, while only 9% of the confederation’s male members do so. This is attributed to the fact that women dominate the sectors in which part-time unemployment is highly frequent – for example, in the majority of companies in the retail/commercial sector and organisations in the municipal sector. A [report (in Swedish, 25Kb PDF)](http://www.handels.se/home/handels2/home.nsf/files/Deltider i handeln.pdf/$file/Deltider i handeln.pdf) published by the Union of Commercial Employees (Handelsanställdas förbund, Handels) concluded that in some specific retail sectors – for example, electronics and construction retail, where more men than women are employed – there is a higher proportion of full-time employment contracts. This suggests that it may be possible to change more part-time contracts into full-time contracts – as many trade unions are demanding.

Employer organisations, on the other hand, claim that it is impossible to change employment contracts from part-time to full-time contracts; they attribute this to the fact that work schedules need to be adapted to company opening hours and that more full-time contracts would affect overall employment by increasing the unemployment rates as a result.

Public savings from insurance spending cuts

A recent report published by the Swedish Unemployment Insurance Board (Inspektionen för arbetslöshetsförsäkringen, IAF) shows that, since 2006, when the government began reforming the unemployment benefit system, government expenditure has fallen by an estimated SEK 1.3 billion (€138.8 million) in 2007 and is set to drop by about SEK 1.7 billion (€181.5 million) in 2008. Of these total savings, part-time workers are contributing between about SEK 85 million (€9.1 million) and SEK 95 million (€10.14 million), as a result of the tougher conditions imposed for qualifying for insurance and the lower compensation levels. The further savings obtained due to the new changes introduced to the unemployment insurance system is estimated to reach SEK 898 million (€95.9 million) in 2008 and around SEK 4 billion (€427 million) a year in 2009 and 2010 respectively.

Paul Andersson, Oxford Research