Who falls outside the unemployment funds?
Abstract
The rate of trade union membership has been declining in Finland over the last two decades. At the same time, unemployment funds independent of trade unions have emerged alongside them. The proportion of those belonging to unemployment funds among potential members has, however, remained fairly unchanged over the last 20 years, at approximately 85 percent. In other words, approximately 15 percent of employed persons do not belong to an unemployment fund. In the current economic situation, the threat of unemployment is real and affects a wider range of wage earners than before. This report seeks to examine which groups of wage earners remain outside the voluntary earnings-related unemployment insurance system.
The study makes use of Statistics Finland’s 2013 Working Conditions Survey, which has been linked to data from the FLEED (Finnish Longitudinal Employer-Employee Data) dataset on individuals’ activity history. According to the empirical findings, there is a group of individuals who would benefit significantly from fund membership but nevertheless remain outside it. Those not belonging to a fund are typically young men working in atypical employment relationships with low levels of education. These groups of wage earners have a clearly high risk of unemployment. According to the findings, the non-fulfilment of the employment condition cannot explain the low rate of fund membership among the wage earner groups in question. Moreover, given that the net replacement rate is clearly better for low-wage earners compared with high-wage earners, remaining outside an unemployment fund indicates irrational decision-making.
As a follow-up study, the focus could be on the group that has remained outside the fund system, examining what drives their motives for not joining a fund. Is it a matter of budget constraints, ideology, indifference, peer pressure, or perhaps lack of information? (AI translation)
- ISSN: 1795-1801 (Online)
- ISBN: 978-952-209-148-2 (Online)
- Publication in PDF-format
