LO economists in new report

A generous unemployment insurance results in efficient structural change



Research does not unambiguously support the idea of the Government that increased pay differentials between those who have jobs and those who are unemployed should decrease unemployment. It is very hard to justify such a policy in a recession, when there are no jobs to seek. This is the view of the LO economists in the report “Safety and efficiency- a better unemployment insurance”.

Instead of broad expensive measures such as tax reductions for income groups who already have employment, the LO economists are of the opinion that the State should draw up the labour market policy with measures directed to the unemployed. A generous unemployment insurance is possible if combined with control and measures adapted to the needs of the individual persons to become gainfully employed.

-The deteriorations of unemployment insurance are unworthy such a rich country as Sweden. To punish jobless people in this way is absurd since unemployment is mainly due to factors beyond the individual’s power, LO President Wanja Lundby-Wedin says.

The LO President also underlines that Sweden previously has managed to cope with crisis and structural changes by readjusting production and retraining the labour force. In this way, Sweden has managed to increase the number of highly productive jobs and, thus, raised the standard of living.

-There is no reason to believe that this would be impossible now, but the Government must then change its policy. A more generous unemployment insurance is necessary in order to maintain demand and reduce the effects of the recession. The number of training programmes, offered to the unemployed, must increase and, above all, be better. To act like the government does now, i.e. to rely on the relocation agreements signed by trade union organisations and employers, is not sufficient. This is a contribution to the relocation work, today’s drastic recession, however, requires more extensive measures, Wanja Lundby-Wedin states.