Contested Welfare Institutions: The Conservative Attack on the Swedish Ghent System

The Swedish unemployment insurance, which is not run by the state but consists of several voluntary union-run unemployment funds, was for a long time one of the most generous in Europe and, furthermore, marked by exceptionally low employee contributions. At the end of 2013, things looked quite different. Generosity had strongly declined, less than one-third of the unemployed were eligible for unemployment benefits and the once solidarity-oriented insurance system had deteriorated into a highly differentiated one, in which low-wage workers had to pay the highest contributions. What can explain this degeneration of Swedish unemployment insurance? The main thesis of the paper is that it was not so much socioeconomic changes but the special institutional design of the insurance scheme, more precisely the strong position of trade unions within the so-called Ghent system, which provoked fierce attacks by the bourgeois parties and ultimately led to the system’s erosion. Thus, in a sense, the generosity of the unemployment insurance became a victim of a more fundamental conflict about union strength. To understand the political conflicts surrounding the Ghent system and the different reform strategies chosen by the rightist parties it is necessary to take a historical as well as conflict-based perspective on the welfare state, which stresses the contentious character of welfare institutions as well as their structuring impact on political power struggles. Such an approach not only explains how an, at first sight, somewhat anachronistic union-run insurance system could survive and even prosper for many decades, but also points to the vulnerability of the Ghent system after the end of social democratic hegemony.