Sweden Finland Austria

34
The calculations in the case where the unemployed person is not eligible for insurance
benefits are more difficult to interpret. In general the calculations in table 2.5 show rather
large decreases in disposable income. This is partly because housing costs and allowances
are not taken into consideration in the calculations.
Housing allowances are separate components of the social assistance schemes in several
countries and often more generous than ordinary housing benefit schemes (Denmark,
Sweden, Finland and Germany but not in Great Britain and the Netherlands). Canada only
has housing allowances in relation to social assistance. For those receiving social assis-
tance there is therefore in the first mentioned countries and in Canada a tendency to over-
estimate the negative impact of this ’income event’, compared to receiving unemployment
insurance benefits, when housing benefits and allowances are not taken into consideration.
In the calculations for Denmark, the unemployed receives social assistance (without
allowances for housing). In Sweden (except for the period July 1st to December 31st 1994
when the system was integrated in the mandatory insurance scheme) a special labour
market compensation is received, but this may be supplemented by social assistance and
housing allowances (not included in the calculations). In Denmark and Sweden (except in
the ’mandatory’ period), these elements of social security are alternatives to unemployment
insurance benefits. From 1998 this element in Sweden is the basic (mandatory) level in the
new Swedish unemployment insurance scheme, cf. the section 
announced changes
1997/98'. The Danish social assistance system was changed fundamentally from 1994. The
benefit became related to the max. benefit for unemployment and it became taxable. The
system, as mentioned, also includes allowances for housing costs (this allowance is non-
taxable), in some cases more favourable than the ordinary housing benefit scheme. The
minimum U.B. (the rate in the alternative scheme) has been used in the case for Finland,
when the unemployed is not eligible for earningsrelated U.B. This is also equivalent with
the benefit for the outinsured.

---

35
Table 2.5.
Effects on disposable income of being unemployed for 3 months and the whole year in 8
countries, 1997.
DK
S
FIN
A
D
NL
GB
CAN
Not eligible for insurance, 3 months’ unemployment
Compensation 
32
26
19
51.5
53
32
15
7
percentage
1
)
1
)
Change in disposable
-14.0
-17.2
-15.5
-8.6
-8.2
-9.5
-19.1
- 19.0
income, %
Not eligible for insurance, 12 months’ unemployment
Compensation 
32
28
2151
.5
53
32
1
5
7
percentage
1
)
1
)
Change in disposable
-58.2
-70.6
-71.9
-48.2 
-48.5
- 52.6
-79.8
- 90.7
income, %
1) The compensation percent is after tax. 
In Germany, the additional scheme is primarily for people whose rights to receive insur-
ance benefits have expired, but only if the person needs the compensation. Austria has a
similar scheme. In Great Britain it is also possible to supplement the compensation (JSA
(IB)) shown in table 2.5 with e.g. compensation for housing expenditures just as in the case
with unemployment benefits. In the Netherlands, the unemployment insurance system con-
sists of 3 steps, the first is the basic system, where the duration of the benefit period is ½
year, in step 2 the length of the benefit period (dependent on former work) varies from ¼
year to 4½ years. Step 3 has a benefit period of 2 years and thereafter the unemployed will
receive social assistance (older unemployed workers can stay longer in step 3). Step 2 and
3 are categorized as the additional system in table 2.3. The out-insured Dutch unemployed
APW in table 2.5 receives social assistance, which on a net base is equivalent to the flat
rate benefit in step 3 of the U.B. scheme.
The outinsured Canadian unemployed receives social assistance, the rate of Ontario has
been applied. Housing allowances are available in Canada in these cases, but have, as
already mentioned, not been considered in the calculations in table 2.5.
Even if direct comparison of the outcome recorded in table 2.5 is difficult, it is evident that
the schemes of Austria, Germany and The Netherlands give a considerably better coverage
than those of the Scandinavian countries. For Sweden, where the insurance scheme is
without time limitations, the scheme here, however, is a not often used alternative. The
schemes of Great Britain and Canada give a low compensation.

---

36
In order to see the impact of unemployment on the disposable income of a married couple,
the case where an insured part time working partner becomes unemployed was studied
(unemployed for the whole year). The results are contained in table 2.6.
Table 2.6.
Effects on the couple’s disposable income from unemployment during the whole year for
the part time working partner in the APW-couple in 8 countries, 1997.
DK
S
FIN
A
D
NL
GB
CAN
Compensation percentage
7175
64
56
60
70
1
5
41
1)
Change in disposable income, %
- 6.5
- 9.1
- 10.6
-15.7
-12.3
-10.2
-28.6
- 17.6
1) The compensation percent is after tax.
It is evident that the relative loss of income in the Danish case is modest, some would say
very modest. This could imply small economic incentives for the part time working partner
in a couple to seek for a job in case of unemployment, if the joint income is basis for such
decisions, especially if the unemployed is entitled to the prolonged benefit period, cf.
comments on table 2.3. The low reduction in the Danish case is partly due to the taxation
of couples. The lower income for the wife as unemployed results in increased tax reduc-
tions for the husband, because of increased unused tax allowances for the now unemployed