Excerpt
Table of Contents
List of abbreviations
1. Introduction
2. Welfare Regimes
3. The social security system in the area of unemployment in Germany
3.1. Unemployment Insurance (SGB III)
3.1.1. Organisation
3.1.2. Funding
3.1.3. Principles
3.1.4. Entitlement
3.1.5. Services and Benefits
3.2. Tax-funded benefits (SGB II)
3.2.1. Organisation
3.2.2. Funding
3.2.3. Principles
3.2.4. Entitlement
3.2.5. Services and Benefits
4. The social security system in the area of unemployment in Sweden
4.1. Organisation
4.2. Funding
4.3. Principles
4.4. Entitlement
4.5. Services and Benefits
5. Comparison of the unemployment systems in Germany and Sweden
5.1. Similarities
5.2. Differences
6. The two unemployment systems in the context of welfare regimes
7. Conclusion
Bibliography
List of abbreviations
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1. Introduction
Why does a comparison of different social security systems within the European Union (EU) make sense? Social security systems have to change because the underlying conditions are changing: globalisation, technological innovation, the disappearance of borders in Europe and demographic development are challenges the social systems must respond to.
Social systems have to adapt. But how and in what direction should they evolve: public administration - or private insurance; financed through taxes - or through voluntary contributions; large amount of benefit in order to ensure social peace and to strengthen the consumer - or low benefit to save money and to encourage self-activity? In order to answer these and other questions it may be rewarding to examine the different social systems and to learn from the most successful ones.
In this paper the social security systems of Germany and Sweden in the area of unemployment will be compared. In a first step, the types of welfare regimes from Sweden and Germany are characterised. Then the respective systems of unemployment benefits are described and compared. Finally, consideration is given to the extent to which the welfare regimes are reflected in the systems of unemployment benefits.
2. Welfare Regimes
In his book „Three Worlds of Welfare Capitalism”[1] the Danish scientist Gøsta Esping-Andersen identifies three kinds of welfare regimes:
- the corporatist regime (continental-European)
- the social democratic regime (Nordic model) and
- the liberal regime.
Essential criteria are a) the degree to which labour is decommodified, b) the relationship of entitlements to need and contributions, c) the type of the public-private mix in funding and provisions.[2] Decommodification “occurs when a service is rendered as a matter of right and when a person can maintain a livelihood without reliance on the market.”[3]
In corporatist welfare systems the degree of decommodification is moderate compared to the other two systems. Entitlement is based on contributions. Funding and provision of social benefits are state-dominated and work-related. The corporatist regime “is identified with contributory social insurance that sustains differentiation based on occupational status”.[4] The corporatist regime is represented by Germany.[5]
In social democratic welfare states - represented by Sweden - the degree to which labour is decommodified is high. Entitlements are primarily based on citizenship. Funding and provision of social benefits are state-dominated and universal. The social democratic regime “is linked to middle-class universalism and social equality”.[6]
3. The social security system in the area of unemployment in Germany
There are two systems to assist unemployed people:[7]
1. Unemployment insurance which is mainly financed from contributions paid by employers and employees and whose benefits partly depend on the previously earned income. Legal basis of the unemployment insurance is the Book III of the Social Code (SGB III).
2. Tax-funded benefits for unemployed people who are not entitled to receive unemployment insurance benefits. Legal basis for this system is the Book II of Social Code (SGB II).
3.1 Unemployment Insurance (SGB III)
3.1.1 Organisation
The unemployment insurance institution is the Federal Employment Agency, called “Bundesagentur für Arbeit” (BA). The BA is a statutory body under public law with self-government (§ 367 Abs. 1 SGB III). The Supervisory Board consists of representatives from trade unions, employers' associations and public bodies such as state governments and the federal government (§ 371 Abs 5 SGB III). The BA is assigned to the Federal Minister of Labour and Social Affairs but can make decisions autonomously and on their own responsibility in matters that require no government regulations. It has administrative autonomy.[8]
3.1.2 Funding
The unemployment insurance is funded by the contributions of employers, employees and third parties, by levies, federal funds and other revenues (§ 340 SGB III). The contribution rate is currently 3.0 percent of the wage (§ 341 Abs. SGB III). Contributions are paid half each by employers and those employees who are subject to insurance payments (§ 346 Abs. 1 SGB III).
3.1.3 Principles
The placement in training and work takes first priority over payment of unemployment benefits (§ 4 SGB III). Even employers and employees have obligations: The employers should consider the impact of their decisions on the employment of workers and the unemployed (§ 2 Abs. 2 SGB III). They should quickly inform the employment agencies about operational changes that may influence the employment (§ 2 Abs. 3 SGB III). Workers have to continue in an or start an acceptable position or have to attend a vocational integration programme in order to avoid or to leave unemployment (§ 2 Abs 5 SGB III).
3.1.4 Entitlement
Depending on the requested benefits different requirements have to be met. To be entitled to unemployment benefits the unemployed must be personally registered with the employment agency and have completed the qualifying period (§ 118 SGB III). Job seekers are unemployed if they work less than 15 hours per week (§ 119 SGB III). To complete the qualifying period, the unemployed must have worked for at least 12 months within the two previous years and must have been covered by social insurance (§ 123 SGB III). In order to receive other benefits it is not necessary to be unemployed as long as one is threatened by unemployment (for example promotion of further vocational training) (§ 77 Abs. 1 SGB III).
3.1.5. Services and Benefits
Counselling and Placement
Counselling[9] and placement[10] are the core services and free of charge (§ 43 Abs. 1 SGB III). They may also be claimed by job seekers who are not unemployed. If necessary, a medical or psychological examination can be provided (§ 32 SGB III). The unemployed are required to conclude an integration agreement with the employment agencies (§ 35 Abs 5 SGB III). Placement is not allowed if the employment contract violates the law or common decency (§ 36 SGB III). Anyone who becomes unemployed must register early, not later than three months before the end of the previous employment (§ 38 Abs. 1 SGB III). In certain circumstances the unemployed are entitled to a placement voucher, allowing them to use a private job placement service at the employment agency’s expense (§ 421g SGB III).
Activating Benefits
The employment agencies have a wide range of options to assist unemployed people and jobseekers who are threatened with unemployment in taking up an employment (§ 45 ff SGB III):
- funding expenses for application documents and for traveling to job interviews,
- grants for daily commute, work clothing and equipment,
- measures to assess or improve the aptitude and skills of job seekers,
- start-up grants to cover living expenses and social insurance of people becoming self-employed,
- promotion of further vocational training (including the funding of tuition, travel and child care),
- settling-in grants for employers if they hire unemployed who are difficult to place because of personal circumstances such as a lack of qualification, disability or age (§§ 217 ff SGB III). The amount and the duration of the grant will depend on the deficit of the employee’s capability.
- special programmes for the young and disabled unemployed.
Job creation schemes
Unemployed who do not find regular work even with settling-in grants may get state-funded jobs through job creation schemes (§ § 260 ff SGB III). These schemes promote work in the public interest creating additional jobs whilst not affecting private sector companies. This is to avoid that regular jobs are cut because of public funded programmes.
Wage replacement benefits
The conditions for receiving unemployment benefits (Arbeitslosengeld 1) are described above. The duration of benefits depends on the length of the previous employment and the age of the unemployed (§ 127 Abs. 2 SGB III):
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[1] See: Gøsta Esping-Andersen: Three Worlds of Welfare Capitalism, Cambridge 1990, p. 26 ff.
[2] See: Van Voorhis, Rebecca A.: Different types of welfare states? A methodological deconstruction of comparative re
search; http://findarticles.com/p/articles/mi_m0CYZ/is_4_29/ai_95445127, 19.02.08
[3] See: Welfare regimes – conceptualisation, typology and supplemented approach;
http://socialpolicy.ucc.ie/notes_welfare%20regimes1.htm, 15.02.2008
[4] ibid.
[5] See: Wegener, Alexander: Typen von Wohlfahrtsstaatenregimes 03.04.2008, tuitional material in „Clix“, FHVR Berlin
[6] See: Rebecca A. Van Voorhis, Different types of welfare states? A methodological deconstruction of comparative re-
search; http://findarticles.com/p/articles/mi_m0CYZ/is_4_29/ai_95445127, 19.02.08
[7] The source of this chapter is the Social Code III, unless otherwise stated: Sozialgesetzbuch II + III; (as at 21. Dec. 2008), www.sozialgesetzbuch-bundessozialhilfegesetz.de Since it is a German law the German citation style is applied.
[8] See: Federal Ministry of Labour and Social Affairs: Social Security at a glance, Bonn 2008 http://www.bmas.de/coremedia/generator/10116/social__security__at__a__glance.html and Bundesagentur für Arbeit: “Still the First Choice for Emploxment and Vocational Services”, Nürnberg 2005
[9] Counselling includes information and advice concerning the situation and development of the labour market and occupations, the opportunities of vocational education and training, job search, as well as on the services and benefits of the unemployment insurance (§ 30 SGB III).
[10] Placement includes all activities that are aimed at bringing jobseekers and employers together in order to establish regular employment (§ 35 Abs. 1 SGB III).