Government withdraws proposal to set up state unemployment insurance fund

In spring 2002, due to lack of political support, Denmark's new Liberal/Conservative government withdrew its proposal to establish a state unemployment insurance fund as an alternative to the existing trade union-run funds. However, the government does have political support for promoting the establishment of more cross-sector unemployment insurance funds.

On coming to office in November 2001, the new minority coalition government of the Liberal Party (Venstre) and Conservative People's Party (Konservative Folkeparti) announced that, as part of its programme for its first 100 days in office, it would table a bill establishing a state unemployment insurance fund (UIF) as an alternative to the existing private UIFs (which are administered by trade unions) (DK0112147F). However, in spring 2002, by agreement with the right-wing opposition Danish People's Party (Dansk Folkeparti, DF), the government decided to withdraw the bill, which would have given employees more freedom of choice in UIFs. However, the government's proposal to allow the creation of cross-sector UIFs with a view to promoting flexibility on the labour market will continue, with DF support. Furthermore, if this measure does not have the desired effect in terms of labour market flexibility, the bill on state UIFs can be tabled again at a later stage, with the issue to be reconsidered in 2004 at the latest.

The existing UIFs are satisfied with the government's decision. However, the association of UIFs has questioned the idea that cross-sector UIFs would be able to reflect the interests of a wide range of workers across different sectors and at different levels. It also believes that the administrative costs would be high. Nevertheless, there is already one private cross-sector UIF, the Christian Unemployment Insurance Fund (Den Kristelige A-kasse), which – with good reason – sees the establishment of more such bodies as competition. It is probable that not all of the members of the Christian UIF are members for religious reasons, but rather because the fund is an alternative to the unions' UIFs.

The general opinion – shared by existing UIFs – is that it will be difficult to change the Danish unemployment insurance system by establishing cross-sector UIFs. It is difficult to see where the members of such funds will come from, if not from the existing Christian UIF. The 20 member unions of the Confederation of Danish Trade Unions (Landsorganisationen i Danmark, LO) are unlikely to take the opportunity to establish cross-sector UIFs and raise the possibility of 'poaching' each others' UIF members. Indeed, LO's affiliates made a commitment in January 2002 that none of their UIFs will admit members who are not occupationally qualified for membership of the union in question.

The LO trade unions state that the activities of the present UIFs involve much more than just payment of unemployment benefits. Only UIFs based on particular sectors and occupations can, according to the unions, offer the services and labour market policy programmes which can bring unemployed members back into employment. The government disagrees and wants to find a model whereby it will no longer be the UIFs which are responsible for checking whether an unemployed person is available for work and thus entitled to unemployment benefits. According to the government, this availability check could be carried out by a state agency, such as the Directorate of Labour (Arbejdsdirektoratet).

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