Göteborg Papers in Economic History ___________________________________________________________________   DEPARTMENT OF ECONOMY AND SOCIETY UNIT FOR ECONOMIC HISTORY No. 29. January 2022 ISSN: 1653-1000 Unions, insurance and changing welfare states: The emergence of obligatory complementary income insurance in Sweden Jesper Hamark & John Lapidus * We are grateful to the staff at the TAM-archives for their support and knowledge. Unions, insurance and changing welfare states: The emergence of obligatory complementary income insurance in Sweden* Jesper Hamark & John Lapidus jesper.hamark@econhist.gu.se john.lapidus@econhist.gu.se Abstract: How do unions who support universal welfare such as public employment insurance reason when they introduce private solutions such as obligatory complementary income insurance (OCII)? Unions are important actors in shaping the welfare model. Their actions and arguments tell a lot about how and why welfare state changes take place. In this paper, we seek answers to how the unions have acted and argued on OCII, how these actions and arguments have changed over time and whether there are differences across unions within the same confederation and across different confederations. The material includes congressional minutes and other internal documents for the period 2000–2020. Further, a number of newspapers and union magazines are studied. What we find and systematise is a myriad of arguments for and against OCII, some of them referring to the eroded public unemployment insurance and others pointing towards sharp competition between unions to keep or to recruit new members. JEL: I30 J51 J65 Keywords: Unions, public unemployment insurance, obligatory complementary income insurance, welfare models, Swedish welfare model ISSN: 1653-1000 online version ISSN: 1653-1019 print version © The Authors University of Gothenburg School of Business, Economics and Law Department of Economic History P.O. Box 720 3 SE-405 30 GÖTEBORG www.econhist.gu.se Abbrevations Swedish abbrevation Swedish name English name Affliated to A-SSR Akademikerförbundet SSR The Union for Professionals Saco Byggnads Svenska byggnadsarbetareförbundet The Swedish Building Workers’ Union LO (Civilekonomerna) Civilekonomerna The Swedish Association of Graduates in Saco Business Administration and Economics HTF Tjänstemannaförbundet HTF The Swedish Union of Commercial Salaried Employees TCO IF Metall Industifacket Metall The Industrial and Metalworkers’ union* LO Ingenjörerna Sveriges Ingenjörer The Swedish Association of Graduate Engineers Saco Livs Livsmedelsarbetareförbundet The Food Workers’ Union LO LO Landsorgansiationen The Swedish Trade Union Confederation ('blue-collar' confederation) Läkarförbundet Sveriges läkarförbund The Swedish Medical Association Saco OCII (English abbr.) Obligatorisk inkomstförsäkring Obligatory complementary income insurance Saco Sveriges akademikers centralorganisation The Swedish Confederation of Professional Associations ('professional' confederation) SIF Svenska industritjänstemannaförbundet The Swedish Union of Clerical and TCO Technical Employees in Industry TCO Tjänstemännens centralorganiation The Swedish Confederation of Professional Employees … ('white-collar' confederation) (Unionen) Unionen Unionen** TCO * Our translation, there seems to be no official. ** Organises former members of HTF and SIF (both unions merged into Unionen in 2008). Göteborg Papers in Economic History no. 29 4 1. Introduction What makes a relatively universal welfare model gradually lose its characteristics? How do actors who previously – and still – support the universal welfare model reason when they introduce private solutions such as obligatory complementary income insurance (OCII)? Unions are important actors in shaping the welfare model. To understand how they act and argue tell a lot about how and why changes take place. In this paper, we seek answers to how the unions have acted and argued on OCII, how these actions and arguments have changed over time and whether there are differences across unions within the same confederation and across different confederations. We use a sample of unions in all three confederations. Those who lose their jobs have the right to receive 80 percent of their salary from the unemployment insurance. But despite the sharp increase of the ceiling in 2020, the average income earners only receives just over 60 per cent of their salary via the unemployment insurance fund. The erosion has a long history. In 1990, the middle-income earner received 76 percent of the salary, but after that there were deteriorations in various stages. In 2000, the middle-income earner received 56 percent of the salary and in 2015 a historic bottom was reached: the average income earner then received only 41 percent of the salary (Dagens Arbete 2018; Olofsson 2020; TCO 2021). The gradual erosion of the unemployment insurance fund has created a market for private income insurance, which covers income that exceeds the ceiling in the state unemployment insurance. In 2000, the academic confederation Saco received permission from the Swedish Financial Supervisory Authority to offer such insurance to its members. In a press release, Saco's chairman Anders Milton said that (2000-06-28, Tam-Archives): We do not question public welfare, but offer a supplement necessary for many people. Despite the fact that everyone pays labor market contributions on their entire salary, the contribution only provides protection up to SEK 15,950 a month in the unemployment insurance. When the ceiling does not keep up with income development, we have chosen to act instead of just talking. Saco’s income insurance means that our members can increase their own and their families’ security. Today, most unions within the blue-collar confederation LO and the white-collar and professional confederations TCO and Saco include private income insurance as a membership Hamark & Lapidus: Unions, insurance and changing welfare states:… 5 benefit. Several Saco and TCO unions introduced the insurance policies between 2003 and 2006, while the LO unions – which at that time regarded income insurance as a threat to public welfare – waited until 2007 and 2008 before doing so. The table below shows the introduction and current status of obligatory complementary income insurance, OCII, in the ten federations under scrutiny in this paper. When unions offer private income insurance to their members, it may have welfare state consequences. In this context, Titmuss (1958) spoke of social, occupational and fiscal welfare as three of the most important ingredients in what has been alternately called the social division of welfare (Titmuss 1958) and the mixed economy of welfare (Kamerman 1983; Powell 2019), that is, the many different ways in which different welfare areas can be organised and financed. In all countries, these three welfare solutions – social, occupational and fiscal – occur in different mixtures, but to link to Esping Andersen’s (1990) categorisation of different welfare models, social welfare is most prominent in social democratic models while occupational and fiscal welfare are most prominent in liberal welfare models. Göteborg Papers in Economic History no. 29 6 Social welfare refers to state direct financing of welfare services and social insurance through various types of taxes. Occupational welfare refers to the provision of welfare by employers and trade unions (eg. Natali and Pavloni 2018), for example by offering private income insurance to employees or members. With the increasing degree of occupational welfare often follows a greater measure of fiscal welfare, that is, various forms of tax deductions or tax exemption for the private welfare provided by employers and unions. Fiscal welfare often constitutes an indirect cost to the state in the form of lost tax revenue, and the private welfare solutions are thus less private than they initially seem. At the same time, this type of tax exemption and tax deduction for welfare services and social insurance tends to benefit high-income earners to a greater degree than low-income earners (Hacker 2002). Unlike the unemployment insurance fund received with state funds, the private income insurance that is currently offered by most Swedish unions is completely tax-exempt. The tax exemption makes it cheaper for the insurance companies to offer the insurance, which is why the premiums will be lower than they otherwise would be. The tax exemption was one of the most important factors behind the rapid growth of private income insurance in Sweden, unlike in Denmark where they are not tax-exempt (Rasmussen 2014). The tax exemption was far from self-evident when the insurance was introduced in the early 2000s. The Swedish Tax Agency wanted the private insurance to be taxable in the same way as the state unemployment insurance. But the Saco union SIF appealed to the Tax Court, which agreed with SIF, after which the Tax Court’s preliminary ruling was upheld in the Supreme Administrative Court in 2007 (Supreme Court case no. 1120-2006). This type of court procedure is a typical example of layering (Mahoney and Thelen 2010), i.e. the introduction of new rules on top of or alongside existing ones and often far away from the public political debate, measures that can gradually make occupational and fiscal welfare grow even further at the expense of social welfare. In this context, mention must also be made of another fiscal welfare invention which has a built- in, eroding effect on the unemployment insurance fund and which also paves the way for OCII, Hamark & Lapidus: Unions, insurance and changing welfare states:… 7 namely the earned income tax credit (jobbskatteavdraget). The deduction for employees was introduced in several steps by the center-right wing government 2006-2014. This means that the tax on the state unemployment insurance is higher than on income – something that automatically reduces the compensation that the unemployed receive in relation to what he or she previously earned. One of the possible consequences of an eroded unemployment insurance is that some groups feel they have to pay twice for their unemployment risk (Saco 2005; Saco 2006). They have to pay both for a public unemployment insurance that is becoming less and less actuarially viable for high-income earners, and for a supplementary, private insurance which is becoming increasingly important in relation to public insurance. These factors reduce the legitimacy of the public unemployment insurance (Saco 2005; Saco 2006) and can lead to further erosion. At the same time, low-wage unions with a high risk of unemployment among members risk being more or less excluded from the parallel and private insurance system that emerges (Lindellee 2018), partly because private income insurance may become more expensive and / or with worse conditions for these unions while the insurances will only apply to certain members (those who earn over the ceilings of the state insurance) and not others. Ultimately, the development may imply a clearer division of welfare between those who are most established on the labor market (especially high-income earners) and those who are not. The result can be a divided welfare state (Hacker 2002; Lapidus 2019) where some citizens get their welfare financed within the framework of social welfare while others have their welfare financed more and more within the hidden (Howard 1999) welfare that consists of the mixture between occupational and fiscal welfare. However, the provision of various types of private insurance can simultaneously be seen as a defense strategy for unions in times of austerity (Blyth 2013), disembeddedness (Polanyi 1944) and the gradual dismantling of social welfare through layering, drift and conversion (Streeck and Thelen 2005). A weakened unemployment fund threatens the unions and their members in different ways and to different degrees. One way to meet the threat is to put politicians under pressure and demand Göteborg Papers in Economic History no. 29 8 higher ceilings and compensation levels in the public system. But if the unions consider that this does not help in the short term, then OCII may appear as the only way out. At the same time, the defense strategy can be transferred to something else, where the insurance has a membership-recruiting function that is becoming increasingly important for the unions. In the extreme case, it may even be the case that the unions oppose improvements in the public unemployment insurance, as this would reduce the power of the private insurance offer and cause the union to lose members. Regardless of which, all unions are faced with the same difficult questions when it comes to the introduction of private insurance such as OCII: Should they protect the universal welfare model, or should they protect their own members in an increasingly vulnerable labor market? For the low-wage unions, the issue becomes even more difficult, as ever lower levels of remuneration in the public systems can be assumed to push down the reservation wage – and hence put pressure on collective agreements. For these unions, OCII thus becomes a way of maintaining status quo in the labour market. The maintenance of the state system is particularly important for the low-wage unions for yet another reason: The state insurance systems have a redistributive function, since low-wage earners to a greater extent than high-wage earners are exposed to such things as unemployment and illness. The unions’ action influences the functioning of the welfare state and at the same time raises questions about what a union really is and wants to be. For these reasons, it is interesting to study how union-provided private income insurance has emerged in Sweden, to which groups they are directed and with what arguments they have been introduced or not introduced by the various blue-collar, white-collar and professional unions within LO, TCO and Saco. 2. Purpose and aims The overall purpose is to describe and analyse the actions and arguments of the unions in a changing welfare state, from social democratic to more conservative or liberal (Esping-Andersen 1990), from public to more occupational (Titmuss 1958). Hamark & Lapidus: Unions, insurance and changing welfare states:… 9 There are many aspects of the interplay between unions and the welfare state. One is the emergence of different private insurance for different welfare services and social insurances offered by the unions to all its members. In this paper, we seek answers to how the unions have acted and argued on OCII, how these actions and arguments have changed over time and whether there are differences across unions within the same confederation and across different confederations. We use a sample of unions in all three confederations. 3. Previous research Unions and OCII cut into different research areas. On one level, it is about welfare state research, for example the social division of welfare and the relationship between social, occupational and fiscal welfare (Titmuss 1958). On another level, it is about industrial relations and about the unions as market, class or social actors (Hyman 1994). With regard to income insurance in Sweden, its origin and development have been studied in various ways. One of the most important contributions is Lindellee (2018), highlighting the multi- pillarisation (Goodin and Rein 2001) where income protection in the event of unemployment consists of different pillars for different groups in the labor market: public insurance, collective agreement insurance, private insurance via the union and individual insurance. Lindellee describes how the erosion of public unemployment insurance created the risk privatisation (Hacker 2004) that multi-pillarisation entails. It is found that a majority of the employees certainly have a relatively large protection within the framework of multi-pillarisation. But at the same time, some employee groups fall completely outside the private solutions, while other private solutions tend to benefit the members of white-collar and professional unions more than those of blue-collar unions. Kjellberg (2006), Kolsrud (2018), Gordon (2019), and Jansson and Ottosson (2021), have in various ways studied the gradual erosion of the public unemployment insurance and the introduction of different types of private income insurance. Bergdahl (2020) studies a number of private insurances in the area of social insurance and welfare services from a specific union point of view. The method is interviews with union representatives within LO, TCO and Saco, and when it comes to OCII, answers emerge that complement and sometimes overlap with them in the present archival study. Rasmussen (2014) studies the emergence of union-provided income Göteborg Papers in Economic History no. 29 10 insurance in Sweden and Denmark. It is found that one of the driving forces behind the rapid growth in Sweden was that income insurance became tax-exempt. It is also shown that income insurance was first taken out by TCO and Saco and only a few years later by LO, which had previously warned that the insurances constituted a threat to the state unemployment insurance. 4. Theory The trade union movement has never been a monolith. In Sweden, however, the LO unions, despite mutual differences, embraced some sort of socialist ideology. In practice, this meant that LO unions demanded state intervention to curb market forces. Of course, the demands also had a material basis. On an individual level, blue-collar workers benefitted from increased social security. But they also benefitted as a class. However successful the unions were to force employers into signing collective agreements – to be stable, the agreements needed support from a welfare state. Without state protection, notably through a public unemployment insurance, there was always a risk that collective agreements would be undercut and ultimately destroyed by low-wage competition (Nyström 2000). Notwithstanding syndicalist and communist challenges, in an international perspective the Swedish trade union movement was quite homogenous, i.e. social democratic. With the emergence of white-collar and professional unions after the Second World War, however, heterogeneity was added. Many members of white-collar and academic unions are potential losers on universal social policy solutions and can – in comparison with workers – be expected to be more positive towards market solutions and privatisations, and more negative towards taxes, redistribution and government intervention (Arndt 2018). In general, there is a negative relationship between income and preference for redistribution (Alesina & La Ferrara 2005; however, preferences are also governed by expected income). Theoretically, there is thus reason to expect that assistant nurses in Kommunal (LO) are stronger supporters of a redistributive welfare state than nurses in Vårdförbundet (TCO) and autoworkers in Metall (LO), and that Kommunal, like other low-wage unions, is less interested in a development towards private solutions in the welfare arena. Not only income matters. Each of the confederations has an ideological heritage, where LO stands out with a more collective view. Furthermore, the standpoint on public intervention is also Hamark & Lapidus: Unions, insurance and changing welfare states:… 11 shaped by the ethics of different professions (Olofsson 2018). It is notable that both Vårdförbundet (The Swedish Association of Health Professionals) and Läkarförbundet (The Swedish Medical Association) have taken a stand against private health insurance on ethical grounds, and none of the two unions thus offer their members such insurance. In Sweden, as in most countries in Europe, collective agreements apply to both members and non-members of the union. If the wage floor only applied to members, competition from cheaper labor (non-members) would make collective agreements ineffective. The fact that collective agreements cover everyone is the result of a conscious union strategy – a strategy that at the same time raises the question: Who wants to join the union? From an individual’s personal economic point of view, the best solution is to let others bear the cost of membership and, as a non-member, take part of the public goods unions provide – the so-called free rider problem (Olson 1965; Schnabel 2020). One way to deal with the problem is to provide members with selective benefits, without any connection to the employer’s costs. An ancient such member benefit is the right to strike (and lockout) compensation, while a more recent benefit is discounted holiday accommodation. Relevant in this regard is the voluntary or obligatory signing of insurance through the union – everything from home and life insurance to income and health insurance. The free rider problem potentially provides an explanation for the existence of OCII that is not about reduced state commitment. If someone’s home is located in an area that has previously been affected by floods, the fee for home insurance will increase. In the same way, life insurance becomes more expensive for those who have had cancer. The insurance companies want to avoid adverse selection by acquiring as good customers as possible (Akerlof 1978), those with a low risk of water-damaged homes or early death. Bad customers’ chance to participate is to pay extra for their higher risk. Since the same logic applies to the market for unemployment insurance, this means that a union with high unemployment level amongst its members has to buy an expensive insurance – or none at all. Göteborg Papers in Economic History no. 29 12 A public unemployment fund designed as an income insurance, benefits high-income earners more than low-income earners (in absolute figures). Yet, since low-income earners on average face higher risk of unemployment, they too have something to gain from a publicly funded system, be it income-based. Thus, here and now both high- and low-income earners are, albeit for different reasons, beneficiaries of a generous, state-sponsored unemployment insurance. Arguably, an even more advantageous solution for low-income earners, would be a publicly financed basic income insurance (or, more or less equivalent: an income-based insurance with a low ceiling). In the long run, however, such a system may erode the willingness to pay taxes amongst the more affluent and, if translated into political practice, the tax ratio will subsequently fall. Strategic reasoning, based on ‘the paradox of redistribution’ (Korpi and Palme, 1998), suggests that LO should defend a system that gives relatively much to those who have. In this regard, mention shall also be made to policy feedback effects that can ‘create strong political incentives for the maintenance or encouragement of existing private networks of social provision’ (Béland and Hacker 2004), i.e. when private solutions are introduced they can easily multiply themselves and put additional pressure on the public system, for example when unions start to use OCII as a competitive measure against other unions, while forgetting about the arguments that were directed precisely towards the risks of an eroded public insurance system. Which unions can then, on theoretical grounds, be expected to be the most positive about an income-based public unemployment insurance or, on the other hand, a basic insurance with supplementary, private income insurance? We have already stated that LO, for ideological and strategic reasons, is the main defender of a comprehensive public unemployment fund. Professional ethics probably play a marginal role, as we are discussing a transfer and not how welfare services should be distributed. The income profiles in the three organisations, with the most low-wage unions in LO and the most high-wage unions in Saco, point in different directions. On the one hand, individual members of low-wage unions are generally winners on government interventions, but given the unemployment insurance fund’s structure as income-based insurance, the members of high-wage unions are the greatest winners in a preserved system. Given the deterioration of public unemployment insurance, both low- and high-wage unions have a motive for introducing OCII. Hamark & Lapidus: Unions, insurance and changing welfare states:… 13 At the group level, on the other hand, it is the LO unions that have the most to gain from a generous unemployment fund, partly due to the redistributive effect and partly due to the collective agreements being threatened. The insurance theory also suggests that LO has the strongest reason to stick to public insurance where all share the risk for unemployment, as it can be more expensive and more difficult for LO to sign up for private insurance. All unions can be assumed to be interested in OCII as a way of dealing with freeriders, but for TCO and Saco this should play a greater role than for LO. Individual benefit is likely to be relatively more important in less collectivistic unions and, the mirror image of this, that the leaderships of TCO and Saco with greater easiness than LO talk about individual benefits. 5. Material and methods Given the paper’s focus on union arguments for and against private income insurance, including variations between unions and change over time, we primarily chose to study congressional minutes and, secondly, board minutes and other internal documents for the period 2000–2020, that is from around the time the discussion about private income insurance offered by the unions started until today. Third, in order to get additional input, we study a number of newspapers and union magazines. Studying congressional and board minutes turned out to be more difficult than we thought. The material we have collected so far is not comprehensive (not all unions are included) and it suffers from imbalance in several respects. First, the distribution of material between the central organisations is disproportionate, second, the material covers different time periods and third, the depth varies, i.e. in some cases we only have congressional minutes, in others also board minutes as well as documents attached to congresses and board meetings. We started with the simplest possible method, search the internet. There we found congressional minutes for the three LO unions Livs, Byggnads and Metall, for parts of the period. Attempts to obtain material via email and telephone were fruitless (we contacted about ten unions from the three central organisations). Later, we realised that the public inquiry on private health insurance had the same problem (SOU 2021, p. 187, n.51). Göteborg Papers in Economic History no. 29 14 The reluctance to release board minutes and other internal documents is understandable, but the fact that the unions do not want to help with congressional minutes – which have previously been distributed to all delegates and, probably, have been available for all members – is more difficult to understand. Of course, it entails a certain administrative burden to produce the material and send it (to simplify, we have also offered to study it on site), and perhaps the unions also perceive the subject as sensitive (see below). After the futile attempts to obtain material directly from the unions, we contacted the TAM- Archives (TAM-arkivet) in Stockholm which hold records from present-day white-collar unions (TCO) and professional unions (Saco) and their predecessors. TCO and Saco have 13 and 21 affiliated unions respectively (counting only the present-day), too many to be studied at the present stage of the investigation. We therefore selected the largest unions within the confederations. We aimed to study the four largest unions within each confederation, including, if necessary, their predecessors, plus a few additional unions that we chose on a more impressionistic basis. We informed the archive that we were interested in studying material from a total of 16 unions, predecessors included. Access to the TAM-Archives requires permission from the individual unions. By e-mail, we sent our request to the unions and informed them that no personal names would be mentioned. After several more e-mails and telephone contacts, we received approval from 12 of the 16 unions. In one case we did get permission, but with the condition that none of what we presented could be linked to that specific union. The reason stated was that the issue of income insurance is ‘politically sensitive’. We refrained from studying the union. The next obstacle was that the archive stocks differ from one union to another. Two unions had submitted unlisted material to the TAM-Archives, material which we, due to time constraints, found unrealistic to go through. In three more cases, the material turned out to contain so little of what interested us that we chose to ignore it (for example: income insurance is mentioned but without any discussion). Of the 16 TCO and Saco unions, 9 fell away, for various reasons. Among the current TCO unions, we had to settle for a single one, Unionen (the largest of all unions in Sweden), including its two predecessors, HTF and SIF. The second to fourth largest unions affiliated to TCO, Lärarförbundet (the Swedish Teachers' Union), Vision (The Swedish Hamark & Lapidus: Unions, insurance and changing welfare states:… 15 Union of Local Government Officers) and Vårdförbundet (The Swedish Association of Health Professionals), are missing for the above reasons. Among the Saco unions, we have three of the four largest, missing only the third largest, Lärarnas Riksförbund (The National Union of Teachers in Sweden). Included is also the fifth largest Saco- affiliate, Läkarförbundet. It should be noted, however, that Civilekonomerna, together with Jusek, since 2020 are merged into Akavia (‘The new union for academic graduates’). Among the seven federal archives from TCO and Saco included in this survey, the material varies both in terms of time and scope. The table below lists the seven unions together with the three LO unions. The great advantage of the congress material is that it reflects the views of both the federal leaderships and the delegates, as well as the views of the majority and the minority. The board minutes with appendices provide an in-depth picture of the management’s arguments, which, however, largely correspond to what we can see in the congress material. In one case, however, the difference is striking between how the issue is discussed in the board and in the organisation Göteborg Papers in Economic History no. 29 16 at large. When the board of Unionen discusses the problem that the union risks losing members when the unemployment insurance fund is strengthened. This is clearly an internal discussion, which is underlined by the fact that the board discusses how the issue should be ‘communicated to the members’ (Tam-Archives Unionen A2b:24). The best thing, of course, would have been to have board minutes for all unions. We will not get that. Normally, unions do not submit board minutes younger than ten years to the TAM- Archives (Personal communication with the Tam-Archives). In a next step, we will visit the Labor Movement’s archives in Stockholm to study the three LO unions more carefully. We will also expand the coverage of unions, especially within TCO. But apart from the fact that we do not have unlimited time, there is no intrinsic value in knowing everything about everyone. Already in the material we now have studied, one can sense theoretical saturation, i.e. the same arguments are repeated. With existing material, we can also see clear differences between LO on the one hand, TCO and Saco on the other. Further, through the database Mediearkivet, we have studied a number of newspapers and union magazines. We opted for the 5 largest newspapers in Sweden (Dagens Nyheter, Aftonbladet, Expressen, Svenska Dagbladet and Göteborgs-Posten), and all the magazines belonging to the ten federations (in some cases by searching directly at the magazines’ homepages). In addition, we read LO:s Arbetet (Saco does not seem to have any magazine, and we had only limited access to TCO:s Arbetsvärlden via Mediearkivet). For all these newspapers and magazines, we searched for ‘inkomstförsäkring’ (income insurance) and we read all the articles containing this particular word. 5.1 Ethical considerations The material from the TAM-Archives contains, among other things, personal matters. For example, members who report being badly treated by their employer, their union or both. In no such case have we taken notes. It would be ethically inappropriate and we have no research interest in the information, as it does not concern our issues. As mentioned, we promised the unions belonging to the TAM-archives not to mention any personal names. We also have no interest in doing so, the only thing that matters is in what position someone puts forward arguments, be it the federal board, a local organisation or individual members. Hamark & Lapidus: Unions, insurance and changing welfare states:… 17 6. Empirical findings This section presents and discuss the opinions and arguments of union boards and union members regarding public unemployment insurance and OCII. The empirical material can be said to express opinions and arguments regarding the following two normative theses:  The state should raise the ceiling in the public unemployment insurance.  Unions should introduce (and preserve) obligatory complementary income insurance. The presentation is made in two steps. Before we present opinions and arguments of the ten unions individually, we summarise the rather complex arguments. 6.1 Summary of arguments The summary is structured according to the pro et contra-model, where P is ’pro’ and C is ’contra’.1 Each argument is followed by a parenthesis showing which union(s) made it. Congressional and board minutes: Roman style indicates the argument was made by the federation board, italics that it was put forth by individual members, local branches or the like. Newspapers and union magazines are distinguished from minutes with a subscript, e.g. ByggnadsNUM. First order arguments and first order counter-argument are shown in bold style. To a certain degree arguments shift over time, this is not shown in the summary. THESIS A: THE STATE SHOULD RAISE THE CEILING IN THE PUBLIC UNEMPLOYMENT INSURANCE. P1 Individual members should have decent income in the case of unemployment. (All) P2 Unemployment insurance should be financed collectively. (A-SSRNUM, IF Metall, Livs) P3 Public insurance more effective than private; does not exclude certain groups. (IF Metall) P4 Members have to pay twice for unemployment protection (LäkarförbundetNUM) 1 Arguments for and against the thesis T, nomenclature: P1 = first argument for T. (P2 = second argument for T, etc.) P1P1 = first argument for the first argument for T. C1 = first counter-argument against T. P2C3 = second argument for the third counter-argument against T. C1C1 = first counter-argument against the first counter-argument against T. And so on. Göteborg Papers in Economic History no. 29 18 -------------------- C1 Raised ceiling lessens the attractiveness of union membership. (Unionen) THESIS B: UNIONS SHOULD INTRODUCE (AND PRESERVE) OBLIGATORY COMPLEMENTARY INCOME INSURANCE. P1 The gap between public unemployment insurance and wages has widened. (All) P1 P1 Individual members risk severely lowered income standard. (All) P1 P1 P1 Negative macro-economic effects by lowered incomes. (Livs) P2 P1 Potentially weakens collective agreements through low-wage competition. (Livs, Byggnads) P3 P1 Without income security, workplaces become silent. (Byggnads) P2 Recruits new members and keeps present. (All) P1P2 Other unions offer insurance; competitive race; stealing members from other unions (A- SSR, Byggnads, Civilekonomerna, HTF, IF Metall, Ingenjörerna, Läkarförbundet, SIF, Unionen, SIFNUM, HTFNUM) P3 Puts pressure on the state to raise the ceiling. (SIF) P1P3 All unions can’t afford insurance, therefore the state will be forced intervene. (SIF) P4 Avoids lock-in effects; increases labour market mobility (A-SRR, Civilekonomerna, Läkarförbundet) P1P4 Increased mobility puts upward pressure on earnings. (Läkarförbundet) P5 Targets those not covered by complementary income insurance through collective agreements. (Läkarförbundet) -------------------- C1 Principally wrong since the state should take responsibility. (IF Metall, Livs) C1C1 Ideology does not pay members’ housing rents. (IF Metall, Livs) C2C1 Only a temporary solution. (Livs) C2 Weakens the pressure on the state to raise the ceiling. (ByggnadNUM, HTF, IF Metall, LivsNUM) P1C2 The union will put less pressure on the state (ByggnadsNUM) C1P1C2 The union will continue lobbying against politicians to raise the ceiling; presence of OCII makes no difference. (HTF) P2C2 OCII erodes the public unemployment insurance (LäkarförbundetNUM) C1C2 The state will not raise the ceiling anyway, so we might as well get an OCII. (IF Metall) C3 Insurance is too expensive. (Byggnads, HTF, IF Metall) Hamark & Lapidus: Unions, insurance and changing welfare states:… 19 C4 Not all members benefit. (Civilekonomerna, IF Metall, Livs, HTFNUM) P1C4 Low paid members with no use of the OCII subsidy high paid members. (IF Metall, Livs) P2C4 Older members are not allowed to sign. (Civilekonomerna) P3C4 Public employees are already covered by collective agreements. (Civilekonomerna) C5 Unions should not act as insurance companies. (HTF) C6 Risks losing members because of higher fee. (Civilekonomerna) 6.2 Opinions and arguments of individual unions 6.2.1 A-SSR (THE UNION FOR PROFESSIONALS) 2 A-SSR introduced OCII in 2005. The decision was preceded by a bill from 2004 entitled ‘The introduction of collective and joint income insurance - Strategy to strengthen members’ security and development in the labor market’. The bill presents a number of arguments for OCII. One of these is the increased risk of unemployment among A-SSR’s members, even though unemployment is still lower for A-SSR’s members than for the national average. Another argument is that the unemployment insurance fund will probably not be increased for the foreseeable future: The federal board naturally considers that the general security systems should cover income above the current ceiling, but considers the conditions for such a development, in the current economy, to be extremely small. Another argument for OCII revolves around mobility in the labor market. Here, the federal board believes that there is a great need for increased income security, ‘as a security, if the leap into the uncertain would go wrong’. In this context, it is stated that the unemployment insurance fund cannot ‘fulfill this need for security’. Furthermore, the federal board believes that OCII ‘will be a competitive issue’, as more and more unions – SIF, Naturvetareförbundet, Civilingenjörsförbundet, Civilekonomerna and Sveriges Farmacevtförbund – have already chosen to take out such and others – for example Jusek – are well on their way. 2 Tam-Archives. Akademikerförbundet SSR. Series A1, A2 and Non-listed. Göteborg Papers in Economic History no. 29 20 At a federal board meeting in October 2004, it is decided to introduce OCII. The membership fee will thereby be increased by SEK 25 per month. It is also said that OCII must be ‘marketed internally among the members and externally in order to recruit new members’. 6.2.1.1 Newspapers and union magazines According to a higher manager (förbundsdirektör) – writing in the union magazine Akademikern (December 10, 2010) – the members demands ICII (and other private solutions), and therefore the union offers it. The manager reassures that the union forcefully works for a solidaristically financed universal welfare state. It is apparent, however, that the two positions are easy to reconcile for the manager, who states that OCII may be ‘right or wrong, but we can conclude that the benefit is much appreciated’. Similar, non-explicit hinting about ideological problems with private solutions appears two more times in the article. 6.2.2 BYGGNADS (THE SWEDISH BUILDING WORKERS' UNION)3 The 2010 Annual Report states that the OCII was introduced in 2008, as a result of the center- right-wing government deteriorating the unemployment insurance fund, and that the insurance will be phased out in 2010 since it proved to be too expensive. At the congresses in 2014 and 2018, a total of about twenty motions on the reintroduction of OCII are considered. The continuous erosion of the unemployment insurance fund threatens both the individuals and the collective, according to the motions. At the individual level, arguments are put forward about security, the ability to continue living a normal life even in the event of unemployment and that protection for individuals is particularly important in the unstable construction industry. Without security, the collective is threatened since the members will not dare to put work environment or wage demands on their employers. Furthermore, it is claimed that the center- right-wing government does not want the unemployment insurance fund as an income protection, in order to thereby reduce the wage conditions for those at work. To stop this development, the union must, as in the childhood of the labor movement, build up on its own protection against unemployment. 3 Annual report 2010: https://www.byggnads.se/siteassets/verksamhetsberattelser/byggnads-verksamhetsberattelse- 2010.pdf Congress 2014: https://www.byggnads.se/siteassets/kongress/2014/byggnads-kongressprotokoll-2014.pdf Congress 2018: https://www.byggnads.se/om-oss/kongress/2018/kongressdokument/ Hamark & Lapidus: Unions, insurance and changing welfare states:… 21 Furthermore, the argument is made that the union should be strengthened (OCII provides ‘added value in membership’, ‘a strong union requires strong and secure members’) and that other unions have taken out insurance that covers up to 80 percent of previous income. The federal board demands rejection of the motions with the main motivation that the insurance is too expensive for the union. The federal board explains that the union has met with a number of insurance companies but that none of them have been able to offer OCII at a reasonable price as they assessed the risk of unemployment in the construction industry as too great. 6.2.2.1 Newspapers and union magazines Asked by the union magazine Byggnadsarbetaren (October 30, 2012) to comment on the low ceiling in public unemployment insurance, an analyst says: ‘Today, politicians almost seem to expect people to have a separate income insurance through the union.’ In other words, there is less pressure on the politicians to raise the ceiling because of OCII. Byggnadsarbetaren (March 19, 2018) looks back at the congress in 2014, quoting a critic of OCII: ‘We shouldn’t buy ourselves free from political engagement’ – implying that union pressure on the state decreases with the introduction on OCII. 6.2.3 CIVILEKONOMERNA (THE SWEDISH ASSOCIATION OF GRADUATES IN BUSINESS ADMINISTRATION AND ECONOMICS)4 At the general council in 2003, in the bill ‘Joint income insurance for members of Civilekonomerna’, a number of advantages and disadvantages with the introduction of OCII are mentioned. The advantages that are emphasised are that: 1) OCII ‘dampens financial disruption in the event of involuntary unemployment’, this as the union's members ‘has higher salaries than the unemployment insurance system is intended for’. 2) OCII ‘Gives time to find new work’ in a pressured labor market where the notice periods are short and where many members, during the time between two jobs, run the risk of having to rely on unemployment insurance. 3) OCII ‘Supports increased mobility’, which is positive for ‘the individual, for wage development and for companies’, in contrast to the far too low unemployment insurance fund that creates lock-in effects which means that you do not dare to change employment. 4) OCII is a ‘Strong 4 Tam-Archives. Civilekonomerna. Series A1a and A2a. Göteborg Papers in Economic History no. 29 22 recruitment argument for Civilekonomerna ‘and something that, as previously unorganised MSc economists can now choose to become members, makes the union stronger. The disadvantages emphasised are that: 1) OCII leads to ‘Increased cost for the member’ – the bill proposes an increase in the membership fee. 2) OCII benefits many members, but ‘municipality / state / county council employees often have no need for the insurance’. This is because most public employees, at least after three years of employment, already have adequate income protection through collective agreements (however, these members are also protected by an income insurance when changing jobs or sectors, and a membership survey shows that 40 percent of public employees intend to change jobs within the next two-year period – 15 percent also wanted to change sector.) OCII has an age limit, which means that ‘Members are not covered by the insurance from the year they turn 61 years old’. During the ensuing discussions at the 2003 general assembly, further counter-arguments were added, including a reservation written by five delegates. The five delegates pointed out that 1) It is contrary to the union's principles to collectively connect members to an insurance, 2) The public employees have no benefit from the insurance and 3) The union actually risks losing members when introducing OCII, this as the membership fee must be raised. However, at the 2003 general assembly, the federal board is in favor of introducing OCII. It is true that Civilekonomerna has historically had a ‘clear principled view that the union should not introduce collective insurance’, but when we saw ‘the design and cost’ of the Civil Engineering Association’s income insurance, it was still decided to take the issue further and investigate how a similar insurance could be designed for our own union. Competitive comparisons with other unions also recur at subsequent congresses and union board meetings. At a federal board meeting in 2007, a detailed comparison is presented between 10 different TCO and Saco unions’ income insurances. A motion is added to the 2007 council, saying that the union’s OCII is starting to erode against SIF’s ditto, which among other things ‘covers loss of income for a longer period of time, to higher amounts and with different conditions than our does’. In order not to ‘lose market shares’, it is important that the union ‘maintains or increases competitiveness’ through insurance with better terms than today. Hamark & Lapidus: Unions, insurance and changing welfare states:… 23 At a union board meeting in 2015, Civilekonomerna continues to discuss OCII as a means of competition with other unions. It is pointed out, among other things, that the union is almost alone in having an 18-month qualification period for its OCII (other unions have 12 months), something that is a ‘competition restriction in new recruitment’ and something that is ‘particularly serious’ as the Civilekonomerna and another Saco-union, Jusek, have a common recruitment campaign: potential members will be told that Jusek has a shorter qualification period and thus choose Jusek instead of Civilekonomerna. Finally, it can be said that Civilekonomerna is positive about both OCII and increased unemployment insurance. In a document approved by the General Assembly in 2005, these two are discussed in parallel, but without in any way putting the one in connection with the other. Thus, it is claimed that ‘Social insurance must provide long-term stable and secure conditions’ and that ‘We also want to safeguard the principle that the individual or collective can voluntarily take out supplementary insurance that provides the desired compensation in the event of loss of income’. 6.2.3.1 Newspapers and union magazines The articles do not contain any additional relevant information. 6.2.4 HTF (THE SWEDISH UNION OF COMMERCIAL SALARIED EMPLOYEES) 5 The city of Malmö branch’s motion ‘Establishment of an income insurance’ creates a debate at HTF’s union council in 2002. A delegate from the department refers to the member recruitment competition between the unions (‘HTF must invest in this if HTF is not to fall behind other unions that already have this’), and another delegate from the same department believes that the unemployment insurance fund is too low considering what the union’s members earn. But there are also critical voices. One of the federal council's delegates claims that OCII would be far too expensive for the members, and at the same time raises questions of a more principled nature: ‘Add to that the consequence of having too many private insurance, politicians will lose the incentive to change, improve public insurances’. Similar remarks are made by another delegate, who compares with private health insurance and believes that the insurance steers HTF away from the real union activities: 5 Tam-Archives. Unionen. Series A1a and A2a. Göteborg Papers in Economic History no. 29 24 What are we going to do in HTF? Should we become an insurance company or perform the duties we are supposed to perform – union activities. Such insurance would be expensive for HTF to administer. We cannot support the private insurance being allowed to expand as it does today, we already see that many people are taking out private health insurance today and in this way buy ahead of the care queues. The same applies to income insurance, the main responsibility must lie with the state. These negative attitudes towards OCII are absent at later congresses, although the issue continues to be problematised. An example is a motion from the congress in 2004, which states that: We do not think that this means that cutdowns in society will be faster if we were to introduce such a supplementary insurance. If so, we would have already seen such tendencies because many members have that opportunity in other unions. Putting supplementary insurance in comparison with a fight for a higher ceiling is wrong. Of course, we will continue to work to raise the ceiling in the unemployment insurance fund, but if we ourselves have an opportunity to take out our own insurance for loss of income, society can hardly have any objection to it. Our common strength remains in this struggle, because even if we have a supplementary insurance, we are all concerned that the unemployment insurance ceiling is raised, because those who have taken out supplementary insurance then get a cheaper insurance. A motion on ‘Introduction of income insurance’ is also added to the 2004 congress, with reference to both the low unemployment insurance fund and the fact that SIF already has OCII. The Federal Board demands approval of the motion. In its claim, the federal board, just like the motion, points to the low unemployment insurance fund and to the fact that ‘more and more white-collar unions offer income insurance as part of the membership’. In addition, the federal board believes that the insurance is in demand by more and more members. At the same time, however, the board emphasizes that it is of the principled view that this type of insurance should be ‘increased in the general welfare system and apply to all employees’. The board further believes that the introduction of OCII ‘may entail a risk that politicians in the long run renounce responsibility for public unemployment insurance’. 6.2.4.1 Newspapers and union magazines The union magazine Kollega (November 15, 2005) reports from HTF's extra congress in 2005. It is written that several representatives were critical of the proposal to introduce OCII. The representatives believe that HTF should transfer insurance entirely to the state and that an OCII would not function as a recruitment tool – on the contrary, a higher fee would make some members leave the union. Hamark & Lapidus: Unions, insurance and changing welfare states:… 25 In addition, it is argued that OCII will not apply to the vast majority of members. One of the representatives says that ‘the salary levels needed to make use of OCII have only been seen by our members on postcards. The most important thing is to raise the general salary level, not just prioritise those who have succeeded in this life’. The vice Chairman agrees with some of the arguments, but says that there are other arguments in favor of introducing OCII. In addition, HTF has no choice because all other unions have introduced OCII. He says: ‘I still have the same attitude in principle, but we are the last union of civil servants to introduce OCII and we are painted in a corner’. The vice chairman has a similar reasoning in a previously published (August 23, 2005) article in Kollega. He says he does not believe SIF's argument that OCII is putting pressure on the government to improve the unemployment insurance fund, and he adds: ‘If you transfer more and more of the costs of the insurance to the individual, the state will have no reason to improve in the public unemployment insurance. Instead, the state is very interested in reducing its costs’. Here, too, he mentions the fact that HTF is forced to introduce OCII, as more and more unions are obtaining such insurance. He believes that HTF must keep up with developments in order not to lose members. 6.2.5 IF METALL (THE INDUSTRIAL AND METALWORKERS' UNION) 6 Metall discusses the issue of OCII at the congresses in 2011, 2014 and 2017, and each time a decision is made not to introduce one. In 2019, however, the board overturns the decision from the 2017 congress, a procedure that is criticized at the 2020 congress but which eventually receives the auditors’ approval, although they remark that: ‘The federal board, due to the democratic nature of the issue, could have chosen to postpone the question to a future congress’. At all three congresses (2011, 2014 and 2017) there are motions that argue for income insurance due to the low ceiling in the unemployment insurance. A motion from 2011 states that ‘our so- called workers’ government’ (the then, center-right-wing government) has made major deteriorations in unemployment insurance, while three motions from 2014 spin on the same 6 Congress 2011: https://www.yumpu.com/sv/document/view/16336351/protokoll-if-metall Congress 2014: https://www.ifmetall.se/globalassets/avdelningar/forbundskontoret/resurser/dokument/kongress- 2020/tidigare-kongresser/kongressprotokoll-2014.pdf Congress 2017: https://www.ifmetall.se/kongress/kongressen-2017/ Congress 2020: https://www.ifmetall.se/kongress/material2/kongresshandlingar/ Göteborg Papers in Economic History no. 29 26 theme and claim, among other things, that a large majority of members are at income levels well above the ceiling of the unemployment insurance. A motion from 2017 also states that the ‘gap between the unemployment insurance fund and wages’ must be reduced through the introduction of OCII. At all these congresses, the board opposes the motions, and the main argument is that it is the state – not the unions and insurance companies – that must ensure that unemployment benefits are adequate. At the congress in 2011, the board’s statement is that income insurance would ‘relieve the state of costs that should be spread over a larger collective’, i.e. that when the unions introduce insurance the state no longer have to engage in it. In 2014 and 2017 it is said, in the same spirit, that state insurance spreads the risks over all employees, which provides ‘better and fairer financing opportunities compared with a situation where different professions and industries are responsible for the financing’. In a polemic with the board, some motions state that the remuneration levels in the public unemployment insurance will still not be increased, which is why the board’s arguments are not valid in the practical reality. A motion from 2011 claims that it is not possible to sit and wait for a change of government, while a motion from 2014 questions whether any political party – regardless of color – is really prepared to prioritize a sharp increase in the unemployment fund. Another motion from 2014 states that the union should ‘prioritize membership benefits before ideological blinders’, i.e. procure a OCII so that ‘a majority of Metall’s members can be covered by an acceptable income security in the event of unemployment’. However, the Board believes that it will in any case be too expensive for Metall to introduce OCII, and that this would lead to sharply increased membership fees. The board’s statement from 2011 is thus that ‘premiums will be significantly higher when unemployment increases’ and that income insurance is associated with major risks and could have ‘serious consequences for the union’s finances and operations’. In the statement from 2014, it is described how the finance committee has calculated on a possible introduction of OCII, and that such would entail ‘large and unenforceable financial risks for the union’. The board’s statement from 2017 also points to the high costs, and emphasizes that: Hamark & Lapidus: Unions, insurance and changing welfare states:… 27 The higher risk of unemployment to which the union’s members are exposed, compared with other industries, means that the cost of income insurance for Metall is higher compared with other unions. With regard to the costs of OCII, a motion from the Congress in 2011 states that these can be reduced by ‘coordinating the negotiations with other LO unions in the first place and then with the TCO unions’. Here, the board objects in its statement that it has already tried joint negotiations, but that it turned out that The unions had different views on introducing income insurance. Among other things, the unions that had low unemployment and a relatively low wage situation were not interested in joint insurance. For these unions, this would mean greater risks and thus also higher premiums than if they were to take out income insurance on their own. Another argument for OCII is that the number of members would increase, at the same time as the number of members risks decreasing without one. Some motions also point to the injustice that some unions have insurance and others do not, for example one from 2014 that asks: ‘Why should an industrial worker have a worse airbag than a municipal employee or a Unionist (referring to the union Unionen)?’. Another argument against OCII can be found in the board’s statement at the 2017 congress, namely that OCII means that low-paid members who do not need the insurance (i.e. the members whose income do not reach the ceiling in the unemployment insurance fund) are forced to finance the high-paid members’ needs of an income insurance. As soon as the board overturn the decision from the 2017 congress and decides to introduce OCII, however, the earlier counter-arguments are no longer there. For example, the annual report for 2019 states that income insurance increases the members’ security in troubled times and that income insurance has facilitated the organisation of new members. 6.2.5.1 Newspapers and union magazines Articles underline what we saw above: after the decisions to introduce OCII, leading representatives for the union do not discuss ideological problems, see e.g. Dagens Arbete (April 17, 2018) and Arbetet (January 30, 2019). Göteborg Papers in Economic History no. 29 28 6.2.6 INGENJÖRERNA (THE SWEDISH ASSOCIATION OF GRADUATE ENGINEERS) 7 At the 2002 congress, the city of Stockholm-Mälardalen is proposing the introduction of income insurance. The argument is that SIF and Saco already have an OCII (this was only partly true since, at that time, SIF had made the decision about the OCII but not yet implemented it), and that it has become a recruitment argument for SIF. Given the relatively low unemployment among civil engineers, the union should be able to take out insurance that is favorable in comparison with SIF and Saco. This is especially true, the motion claims, if the insurance is made compulsory. The federal board, which takes a positive stance in its response, is instructed by the council to negotiate compulsory income insurance. In the same year, OCII is discussed in the so-called member council. An income insurance is considered to be a ‘powerful membership benefit argument’, and especially good in relation to young professionals who are most likely to leave the union. The issue of differentiated fees is also raised, but the members’ council concludes that a uniform fee is preferable, mainly because such a fee is less administratively costly. The insurance is introduced in 2003. 6.2.6.1 Newspapers and union magazines Interviewed by Svenska Dagbladet (May 12, 2006) a higher manager (förbundsdirektör) argues that the union must combine traditional union work with a diversified supply of services. Also, the attitude towards members needs to be changed, ‘to become more of custom relation than a member relation’. 6.2.7 LIVS (THE FOOD WORKERS’ UNION) 8 Livs was the first LO union to introduce (compulsory) income insurance, in 2007. OCII was not discussed at the congress in 2005, the decision was taken by the board after the congress. At the congress in 2009, the first congress after the income insurance was introduced, the federal board declared that the solution was not permanent but would be seen as a way for ‘members to spend the winter’. Of course, the financing of the unemployment insurance fund should be a state 7 Tam-Archives. Sveriges Ingenjörer. Series A1a and Non-listed. 8 Congress 2005: File received from a Livs member. Congress 2009: https://www.livs.se/organisationen/kongress/kongress-2009/material/ Congress 2013: https://www.livs.se/globalassets/livs.se/organisationen/kongress/kongressprotokoll-2013.pdf Congress 2017: https://www.livs.se/organisationen/kongress/kongress-4-8-maj-2017/ Hamark & Lapidus: Unions, insurance and changing welfare states:… 29 matter – jointly funded via the tax system – but ‘it does not help with ideology when the rent or electricity bill is to be paid’. According to the federal board, the balance of power in the labor market was also an argument for income insurance. If the unemployment insurance fund is too bad, ‘pressure is created on lower minimum wages in the collective agreements and even exceptions from the collective agreements’. Furthermore, the federal board believed that fewer members opted out of Livs thanks to the income insurance (the congress occurred at a time when there was a general decline in participation rates across all LO affiliates, mainly because of political decisions, see below). Furthermore, income insurance contributes to macroeconomic stability by sustaining income and consumption in the event of unemployment and potentially sharply declining demand. If consumption falls, the federal board continued, people’s faith in the future will decrease and, in the long run, union membership will be threatened. In 2013, the federal board states that the income insurance recruits members. Looking back to 2007, the federal board believes that the unemployment insurance fund has become a basic insurance, and that the very purpose of eroding it was to force people to work at any low wages. In that situation, the federal board explained, Livs had no choice but to obtain its own insurance. At the 2017 congress, there is no overall discussion about OCII. But a new argument emerges among the motions. A club board in Stockholm believes that OCII in its current form is unfair, and demands that the insurance be abolished if the injustice is not rectified. According to the motion, the current system of a uniform membership fee means that relatively low-paid (mainly women) subsidises relatively well-paid (mainly men), as only those with income above the ceiling in the unemployment insurance have any benefit from OCII. The motion therefore wants income-differentiated membership fees. In its response to the motion, the federal board states several technical aspects of the insurance and explains that Livs has the best insurance (probably the comparison refers to all LO unions). The argument that low-paid people subsidises high-paid people is not addressed- 6.2.7.1 Newspapers and union magazines In Arbetet (January 12, 2007) an analyst (and former union chairman) argues that an OCII adds value to the members, but continues: ‘The danger is that an income insurance means that the state takes its hand away from the unemployment insurance fund to an even greater extent.’ Göteborg Papers in Economic History no. 29 30 6.2.8 LÄKARFÖRBUNDET (THE SWEDISH MEDICAL ASSOCIATION) 9 In 2002, the Central Board decides to invest in a limited company formed by Saco to handle OCII, but no discussion about this appears in the minutes. In 2011, the council approves a bill from the central board to introduce OCII. The bill states that the central board sees an increased risk of unemployment with more private actors in health care and that it is difficult to assess the unemployment level in 10–15 years. Furthermore, it is noted that demand for income insurance among members has increased. A concrete event, the closure of Astra Zeneca’s operations in Lund, seems to have played a role. According to the central board, income insurance constitutes security, especially for those members who are not covered by collectively agreed so-called adjustment agreements. Income insurance, it is said, means increased security for members with temporary employment, for those who leave their employment due to illness and for those who have worked abroad. In addition, income insurance counteracts lock-in effects, and the fact that doctors dare to change employers can have a positive effect on salary development for the entire medical profession in the long run. The bill also highlights the ‘clear membership benefit’ for members with high incomes, such as managers. Further, the central board points out that other unions offer OCII. As unemployment is low, the premium for union members will be comparatively favorable. 6.2.8.1 Newspapers and union magazines In the union magazine Läkartidningen (12 November 2019), the chairman of the Swedish Medical Association writes that the members now 'have to pay double to get a reasonable level of protection: first via tax and social security contributions, then via an OCII paid for via the union fee’. She further believes that OCII is a symptom of that the public systems are not working properly. In the long run, it will ‘erode confidence in the system and damage the Swedish model that has served us so well’. She believes that it is important to remedy the causes, which she considers to be the shortcomings in the public security systems. A prerequisite for citizens to have confidence in the public systems and the solidarity financing is that ‘the systems give enough back’. 9 Tam-Archives. Sveriges läkarförbund. Series Non-listed. Hamark & Lapidus: Unions, insurance and changing welfare states:… 31 6.2.9 SIF (THE SWEDISH UNION OF CLERICAL AND TECHNICAL EMPLOYEES IN INDUSTRY) 10 SIF was the first Swedish trade union to introduce income insurance. An inquiry was appointed in 1999 and a decision was made at an extra congress in 2001. The insurance was introduced in 2003. At the Congress in 2000, three motions emphasise the deteriorating unemployment insurance fund as a reason for OCII. Two of the motions also mention competition: at the time, Saco had far-reaching plans for supplementary insurance. Since SIF has many academics among its members, the ‘battle for academics’ would be lost to Saco if income insurance is not introduced. The federal board did not raise any objections to the motions but referred to the fact that an investigation was underway. In the documents for the extra Congress in 2001, a unique argument for income insurance emerges among the unions: OCII increases the pressure on the government to strengthen the unemployment insurance fund. It is said that; If SIF introduces the insurance discussed here, the pressure on the government to raise the ceiling will increase. It will also mean that LO, which does not have the conditions to introduce a similar insurance, will put increased pressure on the government. /… / In the event of a possible launch of a supplementary insurance, SIF may be criticised for not pursuing the issue of raising the income ceiling in the general unemployment insurance. However, there is much to suggest that the launch of a SIF insurance increases the pressure on the government to raise the ceiling further. No principled arguments for the state to be responsible for unemployment insurance can be found in the material. However, it appears that SIF disapproves of the effect – reduced income for members – of deteriorating unemployment insurance fund. Arguments against OCII are not found in the material. 6.2.9.1 Newspapers and union magazines The union magazine Kollega (March 22, 2002) reports that Sif's market research on OCII has caused irritation among the LO unions Seko and Grafikerna. The two LO unions believe that Sif is trying to recruit members among Seko's members by introducing OCII and a lower membership fee. The same union magazine reports (February 1, 2006) that Sif is satisfied with the Tax Law Board's decision that OCII shall be tax-free. Sif's insurance manager, Niklas Hjert, believes that 10 Tam-Archives. Unionen. Series A1a and A2a. Göteborg Papers in Economic History no. 29 32 OCII would have become more expensive for Sif's members if the insurance had been taxable, as recommended by the Swedish Tax Agency. 6.2.10 UNIONEN11 At the congress in 2011, the east regional board voted that Unionen should work politically to strengthen the unemployment insurance fund, among other things on the grounds that it has become more similar to a basic insurance. The federal board answers that Unionen works with the issue politically. When the federal board four years later, in 2015, comments on the state increase of the unemployment insurance fund to SEK 25,000 a month, it is with two very different angles. On the one hand, the increase is said to be positive for the members of Unionen, and that it is an issue that Unionen has worked hard for. On the other hand, concerns are expressed that the increased unemployment benefit ceiling will lead to Unionen losing members: ‘80,000 people will have no or less benefit from the income insurance’. Negative consequences for membership need to be noted, while at the same time a way must be found to communicate the ceiling increase to the members. Further, at a board meeting in 2015, certain facts are problematised in the recruitment attempts of new members via OCII: ‘We recruit members by saying that they can get income insurance and they do not get to know that it takes one year of membership to qualify for it.’ A decision guidance document for the federal board in 2012 states that ‘income insurance is by far one of the most important services in Unionen’s membership, both in terms of recruiting new members and retaining existing ones’. OCII is also a means of competition, and the decision guidance document presents the proposal for a ‘best in test stamp’, which, when used correctly in marketing, is judged to increase the recruitment potential significantly. Furthermore, the document notes that Unionen has made a number of improvements in the income insurance in recent years – but so have competitors. The authors write that The intention is to make income insurance so strong that an independent institute can make a comparison between the unions’ different income insurances and that the result can be used in Unionen’s marketing. 11 Tam-Archives. Unionen. Series A1a and A2a. Hamark & Lapidus: Unions, insurance and changing welfare states:… 33 The following year, 2013, however, the federal board is forced to state that no survey company wanted to take on the task. There are also recurring discussions about adverse selection in the insurance, for example in the federal board in 2014. Here, attention is drawn to ‘the tendency for people to choose to join the insurance with the knowledge that they will become unemployed’. Arguments against income insurance are not visible in the material. 6.2.10.1 Newspapers and union magazines The union magazine Kollega reports (March 7, 2014) that Unionen is very critical of a proposal to limit OCII, presented in a report commissioned by the Social Democrats. The 2nd Vice- President of Unionen believes that it is unacceptable from a political point of view to prevent trade unions from offering their members this type of security solution. 6.3 Discussion All unions see OCII as a recruitment instrument. Against the background of deteriorating unemployment fund, it appears to be natural, especially as several unions have experienced a negative membership development. In connection with OCII as a source of recruitment, a related argument is often discussed: competition from other unions that have, or will introduce, OCII. SIF (TCO) was the first union in Sweden to introduce OCII in 2003. Even when the issue was discussed at a congress two years earlier, competition was raised as a strong argument for OCII. At that time, Saco had just launched a voluntary income insurance, and this was sufficient for SIF to fear an escape among members with an academic degree. What began as an external, political factor (lowered public income insurance) quickly gained an independent, intra-union dynamic. Starting with SIF’s discussion in 2001 and introduction of OCII in 2003, a seemingly unstoppable process was set in motion that led all TCO and Saco unions to acquire OCII. This dynamic seems to take place on the one hand within TCO-Saco, on the other hand within LO. The reason is that competition between the two spheres was and is limited (although IF Göteborg Papers in Economic History no. 29 34 Metall in recent years has shown concern about competition from Unionen [Dagens Arbete 2018]). The only union in our material that does not directly cite competition as a reason is Livs, the first LO union to introduce OCII in 2007. From that time on, a similar competitive dynamic is set in motion within LO as well. Fear of losing members to others is the dominant competitive perspective. Unionen (TCO) appears to be the exception, using the competition more offensively as a way of recruiting members from others. The competitive dynamics can be seen as an example of the prisoners’ dilemma. Given that pressure on politicians to raise the ceiling decreases when the unions introduce OCII (this will be discussed below), it is conceivable that everyone wins by not introducing it. But once the process has started, everyone must follow. The opinion is expressed by a group of delegates at an HTF (TCO) congress: If an unanimous trade union movement refrained from taking out supplementary insurance, we would have been supportive. If this is not the case, HTF must also offer additional insurance. In at least one of the cases, it is obvious that the board’s arguments change after the introduction of OCII. At IF Metall (LO) congresses in 2011, 2014 and 2017, the board opposed the motions demanding introduction of OCII. Besides financial restrains, the main argument was that the state must ensure that unemployment benefits are adequate. At the congress in 2011, the board stated that income insurance would ‘relieve the state of costs that should be spread over a larger collective’. In 2014 and 2017 it was said that state insurance spreads the risks over all employees, which provides ‘better and fairer financing opportunities compared with different professions and industries being responsible for the financing themselves’. However, as soon as the board made its decision to introduce OCII, the counter-argument ceased to exist. The annual report for 2019 thus stated that OCII increases the members’ security in troubled times, and that OCII has facilitated the organisation of new members. In 2019, Metall advertised in the member magazine Dagens Arbete about OCII, and according to the annual report 2019 OCII got ‘a prominent place’ in the recruitment folder entitled ‘Seven good reasons to join IF Metall’. Hamark & Lapidus: Unions, insurance and changing welfare states:… 35 Furthermore, the argument that low-wage earners subsidise high-wage earners seems to be a strong argument within the LO unions. In a motion written by a group in Livs, it is said that OCII must be abolished unless this ‘injustice’ ceases, but Livs’ board chooses not to reply to this section of the motion. How are politicians’ willingness to raise the ceiling in the public unemployment insurance affected when the unions introduce OCII, and how does the existence of OCII unions affect political action? SIF’s board believed that OCII is increasing the pressure on politicians to raise the ceiling. The argument is that some unions cannot afford to introduce OCII, which will force politicians to act. Implicitly, the reasoning is based on the premise that politicians would not be able to cope with the varying security conditions that would arise in the labor market. On the contrary, HTF’s board stated that politicians will lose the incentive to improve the unemployment insurance fund when the unions introduce OCII, and that in the long run there is a risk that the state will take less responsibility for a public unemployment insurance. Prior to the introduction of OCII, IF Metall’s board reasoned in a similar way: if the unions take over responsibility for the insurance, the state no longer needs to get involved. Sociologist Anders Kjellberg disagrees: He does not think that politicians would be under more pressure to raise the ceiling if OCII did not exist. The parliamentary situation is what matters (Dagens Arbete [October 8, 2018]). A local HTF club believed that OCII does not make any difference with regard to political decisions on the unemployment insurance fund. In a motion, the same club also wrote the only statement we have found about the union’s own involvement in the issue of a higher unemployment benefit ceiling. It was said that the union’s involvement is not affected by OCII. The unions’ own role as a political influencer is hardly discussed at all. However, we find it hard to believe that the recruitment instrument OCII constitutes would not affect how the unions act. The board of Unionen says it bluntly: an increase in the unemployment insurance fund means a risk of membership flight. Although Unionen also emphasises that it wants to see a strengthening of the unemployment insurance fund, it seems reasonable that the issue will be given lower priority after the introduction of OCII. Göteborg Papers in Economic History no. 29 36 It would be interesting to empirically test whether OCII affects politicians on the one hand, and trade unions on the other. In the case of the LO unions Byggnads and IF Metall, the boards have often opposed OCII when the members want it introduced. A possible interpretation is that the boards, unlike the members, ‘can afford’ to be more ideological (this is also what they are sometimes accused of by members, having ideological blinders, etc.). A parallel is that not only LO but also TCO and Saco have been more critical of the introduction of OCII than its affiliated unions; again possibly because it is easier to be ideological the further away from the risk of unemployment, or from members at risk of unemployment, one is. Both Ingenjörerna and Läkarförbundet state that their premium will be comparatively low as unemployment among members is low. Byggnads and IF Metall have the same reasoning but at the other end of the scale: their members receive high premiums due to high unemployment. 7. Conclusion Why do almost all Swedish unions introduce OCII for their members? The simplest answer is that it is due to the gradually eroded public unemployment insurance, and that the gap between income and unemployment benefits has thus become ever larger. This is also the reasoning of most unions. The gap between income and unemployment benefits is a main argument for introducing OCII, something that seems logical not least to high-wage unions whose members often earn high above the ceilings of the public insurance. But low-wage unions also have many members who earn above the ceilings, and even among these members there has been increased pressure to introduce OCII. The increased gap between income and unemployment is mainly due to political decisions. During the center-right government 2006-2014, there was a pronounced political will to weaken social welfare such as the unemployment insurance, a strategy that had a variety of ingredients: Increase in contributions to the unemployment insurance fund, reduced benefit level in the unemployment insurance fund, various steps of increased earned income tax credit, tax exemption for private income insurance (Kjellberg 2014; Rasmussen 2014; Gordon 2019). Hamark & Lapidus: Unions, insurance and changing welfare states:… 37 But even before and after this period, Social Democratic governments have also contributed to weakening the public unemployment insurance fund (and thus strengthening private solutions), among other things by decoupling the ceiling in the public unemployment insurance from the wage index during the economic crisis in the 1990s. The gap between income and unemployment benefits forces more and more unions to introduce OCII. What starts as a defensive solution can, however, for example through policy feedback effects (eg. Béland and Hacker 2004), become a solution that is generally favoured by some of the unions. When private benefits are widely relied upon by citizens, they may impact political mobilisation and public expectations in much the same way that widely distributed public benefits do, creating strong political incentives for the maintenance or encouragement of existing private networks of social provision. Are there such policy feedback effects in the case of unions and OCII? In the archive material we find that some unions problematise OCII from a universal welfare state perspective, but this is done less frequently as more and more unions introduce OCII. An example is IF Metall, who used to be ideological opponents of OCII but now advertises OCII and gives it a prominent place in the stated reasons for joining the union. 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Dimitrios Theodoridis: The ecological footprint of early-modern commodities. Coefficients of land use per unit of product. 2017 22. Stefan Öberg: An introduction to using twin births as instrumental variables for sibship size. 2017 23. Stefan Öberg: Instrumental variables based on twin births are by definition not valid. 2018 24. Jesper Hamark and Kristoffer Collin: Industrial wages in mid-1880s Sweden: estimations beyond Bagge’s Wages in Sweden. Data, source and methods. 2019 25. Stefan Öberg: Too LATE for Natural Experiments: A Critique of Local Average Treatment Effects Using the Example of Angrist and Evans (1998) 2019 26. Jesper Hamark: Labour market conflicts in Scandinavia, c. 1900–1938: The scientific need to separate strikes and lockouts. 2020 27. Carl-Johan Gadd: Jordnaturernas fördelning i Sveriges län år 1700. 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