In Austria there is currently a discussion about reforming unemployment benefits. Scandinavian countries are often seen as role models. You can find out what the Scandinavian models look like and what Austria could learn from here.
There is currently a discussion in Austria about reforming unemployment benefits. Scandinavian countries are often touted as role models. Protection against dismissal is generally more relaxed in Scandinavia – but you can also find your way back to a job more quickly. At first glance, the support is higher, everything inclusive but only slightly better. When comparing, however, there are many factors to consider – some of which are not so easy to transfer.
Only a third of the unemployed find a job again quickly
Scandinavian countries, especially Denmark, are often touted as exemplary. The unemployment rate is currently lower in Denmark than in Austria, but higher in Finland and Sweden. But that alone is not meaningful, says Lukas Lehner, who researches labor market topics at Oxford University. What is striking, however, is that, according to the OECD, around 20 percent of all unemployed people in Denmark and even 30 percent of all unemployed people look for a job for less than a month in Sweden. In Austria, not even 10 percent find their way back to work as quickly. Around half of the unemployed in Denmark, Sweden and Finland find a job within three months, in Austria this only applies to a little more than a third of those affected.
The proportion of long-term unemployed in Austria is significantly higher
On the other hand, the proportion of long-term unemployed in Austria is significantly higher. According to the OECD, 12 to 17 percent of the unemployed in the three Scandinavian countries have been unemployed for more than a year, and 24 percent in Austria. All in all, you lose your job in Scandinavia than in Austria, but you get back to work more quickly. Whether that’s good or bad, it’s not that easy to answer. In the end, people in Austria have more “company-specific skills”, says Lehner. In Scandinavia, people rely more on transferable, general know-how.
Discussion about “degressive” unemployment benefits
Ultimately, one has to agree that part of the unemployment insurance – at least in the regular job market – can no longer be placed, says Lehner, who is also involved in the Lower Austrian “Marienthal model project, in which all long-term jobs are offered a job. Therefore, one must also think about the long-term security of the people. This topic is currently being discussed controversially in Austria, under the keyword “degressive” unemployment benefit – also a support that is high at the beginning but then drops. Here, too, Scandinavian countries serve as role models.
Unemployment benefits in Scandinavia are much more generous
But it is also worth taking a closer look, recommends Lehner. The “net replacement rate”, ie unemployment benefits as a proportion of the last net income, is currently being discussed. This is a constant 55 percent in Austria, with the switch to emergency aid, however, the support decreases, the OECD assumes 51 percent after the first year. In Denmark, on the other hand, the support started much more generously, namely at 82 percent. In Sweden there is 69 percent at the beginning, in Finland only 58 percent and thus hardly more than in Austria.
Overall, Austria pays no less
If one compares the situation after two years, the Danes are still at the percent of the last net income, whereas the Swedes have only 59 percent since the 6th month of their unemployment, the Finns when when & with only 31. In the long term, the support in Denmark falls to 50 percent, also about the same level as the Austrian emergency aid. These figures, however, only reflect part of the truth, because the picture changes if you add other social benefits – those who die in unemployment are often not cut, says Lehner.
If you take a single parent with two children, according to OECD figures, this comes to a net replacement rate of 76 percent, which is hardly less than in Denmark (88 percent), Finland (82 percent) or Sweden (77 percent).
To compare the level of the net replacement rates Falling short
However, Lehner emphasizes that it is too short to compare the level of net rates over the duration of unemployment. Social security goes much further than just money. “Social security has to do with whether I can say no to the current job,” said Lehner. Whether you also have an alternative and can switch. Because if you can’t do that, you remain dependent on the employer and the current working conditions.