Unions and Private Insurance Companies in the Wake of Retrenchment in a Universal Welfare State

This paper studies the response of private actors to welfare-state retrenchment and their role for institutionalizing a divided welfare state, with twenty-first century Sweden as a case. The empirical background is provided by the gradual hollowing out of unemployment-insurance benefits from the mid-1990s. As a reaction, most Swedish labor unions have come to include their own mandatory supplemental unemployment insurance targeted exclusively at their members, either by using their own insurance companies to administer the supplemental insurance or by making agreements with external companies for the purpose. By interviewing past and present key actors within labor unions and insurance companies, this paper identifies the stated perceptions, motives, choices, and challenges behind the new role of unions and insurance companies, as well as the continuous development of their relationship to one another, and the interest in potential further welfare-state retrenchment or re-expansion. Key findings include that unions and insurance companies recognize their supplements as suboptimal, both from a social-insurance perspective and in terms of profitability. However, strategic concerns, historically well-developed relations between unions and specific insurance companies, and ideas of social responsibility, are invoked as reasons why the supplements have been introduced and kept. Many interviewees stress the importance of the policies of the center-right 2006-2014 government for the development. Among unions, those organizing blue-collar workers express greater concern with the manageability and political implications of supplements. In all, the paper makes several contributions. It analyzes the general question of how private organizations may react to retrenchment by assuring the social protection of their own members while at the same time inevitably supporting the institutionalization of a divided welfare state. It traces the growth of a new constellation of actors consisting of different private organizations and individual representatives who move between these organizations. It joins an emerging literature that updates ideas about Sweden, which is sometimes heralded as the epitome of a universal welfare state that effectively crowds out private insurance initiatives. Finally, it provides an important point of departure for discussions of the organizational premises for and interests in retrenchment lock-in and future welfare-state re-expansion.