Low level of membership by young people in unemployment insurance funds
A new study from September 2006 focuses on young people’s attitudes to the Danish unemployment insurance funds and, in particular, the reasons they state for not becoming members of such a fund. The study reveals wide variations in the attitudes of young people, but it also shows that many of them are not fully informed about the scope of the funds.
Many of the young generation in Denmark today have no precise knowledge of the nature of an unemployment insurance fund. They confuse unemployment insurance funds with trade unions or with the social assistance system of the municipalities. Furthermore, young people have widely varying attitudes to unemployment insurance funds and different reasons for taking up membership or not.
These are among the findings of a qualitative study, Unges holdninger til a-kasser (in Danish, 918 Kb PDF), carried out by the Association of Unemployment Insurance Funds (Arbejdsløshedskassernes Samvirke, AK-Samvirke) in September 2006 in relation to young persons’ attitudes to unemployment insurance funds. The study was conducted by the Centre for Alternative Social Analysis (Center for Alternativ Samfundsanalyse, CASA) on the basis of interviews with young people. They were divided into nine focus groups with up to nine persons in each group questioned by 18 consultants from 13 unemployment insurance funds and trade unions in Denmark. The young people interviewed included men and women aged under 30 years, with varying backgrounds, and comprising both members and non-members of unemployment insurance funds.
Declining membership of unemployment funds
During the past decade, an overall decline of 3% has been experienced in membership of unemployment insurance funds. The decrease has been particularly strong in the sectors covered by the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO) who traditionally play an important role in the administration of the funds. They have now 15% fewer members of unemployment insurance funds than in 1996, while an increase in membership has been recorded outside the LO sectors. This overall negative development is further accentuated by the fact that young people in particular have dropped out of the unemployment insurance funds or have failed to become members in the first place.
According to the study, 37% of young people aged 16–24 years were members of an unemployment insurance fund in 1996; this proportion had declined to 20% in 2005. In the 25–29 year age group, the number of members has fallen even more dramatically, from 88% in 1995 to just 20% in 2005.
Conversely, the proportion of members in the 60–64 year age group has increased from 64% in 1996 to 83% in 2005. In 1996, some 79% of the total Danish workforce were members of an unemployment insurance fund; by 2004, this proportion had decreased to 77%. This is partly due to changes in the structure of trade and industry and in demographic developments, as in other European countries. However, this does not fully explain the low number of young people with membership of these funds.
The analysis shows that, the younger the persons are, the greater the proportion of non-membership over the past decade. This trend is the same for all unemployment insurance funds, both in the LO sectors and in other unemployment insurance funds. Nevertheless, the trend is most evident in the LO sectors, with 47% fewer unemployment insurance fund members among the 20–24 year age group and 35% fewer members among the 25–29 year age group.
Attitudes to the funds
On the basis of the qualitative interviews with young people and interviews with youth consultants, the report presents an overall picture of young people’s attitudes to the unemployment insurance funds. The report finds a number of arguments in favour of membership but, on the other hand, the study also indicates that young people experience a number of barriers in relation to membership of such funds.
One of the arguments in favour of membership of an unemployment insurance fund, which young people emphasised, is the financial safety net connected with membership. They also understand that the personnel of the unemployment insurance fund may help them in their career planning and assist them in finding a job in the case of unemployment. Moreover, these young people consider the unemployment insurance fund as a professional anchor with the organisation being able to provide special expertise in the sectors of interest to them.
Many young people also find it more socially acceptable to receive unemployment benefit from a system to which they have themselves contributed, whereas they perceive it as a negative experience to risk having to receive social assistance.
Barriers to membership
The CASA study particularly focuses on the barriers to membership of an unemployment insurance fund expressed by young people. The analysis reveals the existence of a group of young people who have very little knowledge about unemployment insurance funds and have thus not reflected much on the possibility of becoming members.
Confusion with trade unions
Some young persons (mainly the youngest group and those who are unemployed) could not differentiate between unemployment insurance funds and trade unions, or between the system of social assistance and the unemployment benefit system. It should, however, be acknowledged in this regard that, although there has been a free choice of unemployment insurance fund, they have traditionally been administered by the trade unions. This is still the case, but it is possible to become a member of just the unemployment insurance fund and to remain outside the trade union.
Nevertheless, the young persons in this group were neither members of an unemployment insurance fund nor a trade union. The social assistance system covers unemployed persons who are not insured, while the unemployed insurance funds cover insured persons, based on membership dues. This particular group of young people had no knowledge of these matters.
Lack of information
One group of young people emphasised that they had neither received information about the system nor been asked whether they wished to join an unemployment insurance fund, and for this reason they had not become members.
Fewer benefits for young people
Some of the young people stated that they regarded the social assistance system as an attractive alternative to the unemployment benefit system. In other words, they would not have to pay any dues in order to receive social assistance. Furthermore, a key reason for not becoming a member of an unemployment insurance fund is the rule that young members aged under 25 years without any formal education or training are only entitled to 50% of the normal rate of benefit. Some of those who have chosen not to become members due to this 25-year-rule subsequently forget to join an unemployment insurance fund when they are in their late twenties either because they have not been reminded about it or have failed to consider that membership is more beneficial after the age of 25 years.
Scepticism about role of funds
A number of young persons, both with and without a formal education, also dissociate themselves from the aspect of solidarity in connection with membership of an unemployment insurance fund, and are of the opinion that the ‘best place for their money is in their own pockets’. There is also a widespread belief among these young people that the unemployment insurance funds are spending the money they are supposed to administer for beneficiaries on their own administration costs. Some young people look upon the unemployment insurance funds as a sort of ‘trade union careerism’.
Many people with a good education or training background are optimistic and flexible in relation to their future job opportunities and consider that they do not currently have any need for membership of an unemployment insurance fund. They argue that membership of such a fund is not necessary as long as they are not married and have no children.
One of the study’s conclusions is that the unemployment insurance funds are more or less designed for the standard Danish employee with a regular full-time job and an education or training background as the basis for a stable professional career path. This is due both to the seniority and employment requirement and to the funds’ connection with the trade unions. However, many young people do not match this profile and the rules on entitlement to unemployment benefit do not fully satisfy the needs of this particular group.
In a comment on the study, the Head of the Secretariat of AK-Samvirke, Torben D. Jensen, acknowledges the perspectives that the analysis has raised:
The young people clearly outline the strengths of the unemployment insurance funds, but at the same time they also indicate a number of fields where the unemployment insurance funds should adjust their initiatives in relation to young persons. It is, for instance, obvious that we should do something about young people’s lack of knowledge about the existence and offers of the unemployment insurance funds.
AK-Samvirke will now continue its work, based on the results of the study, with the help of a special task force set up to focus on methods to improve the interaction between young people and the unemployment insurance funds. The task force will, for instance, examine how and at what levels information about the unemployment insurance funds can be provided as part of the education system.
Carsten Jørgensen, FAOS