When receiving unemployment benefits

Labour market policies play an important role in the general economic policy in all the Nordic countries. High employment and low unemployment ae not only important goals, but also prerequisites for the existence of the Nordic welfare states.

Compensation rates

The data show that the compensation rate for insured unemployed singles is considerably higher than for uninsured unemployed singles. At the income level AW75, which represent the common wage worker, Faroe Islands followed by Denmark have the highest compensation rates in both groups. However, in the lowest income group (see database), the compensation rate is lower for insured unemployed singles than for non-insured unemployed individuals in the Faroe Islands. The reason for this is that for non-insured unemployed people, the benefit is a fixed amount that does not depend on previous income.

The two graphs with calculated compensation rates for single persons compare the income level after receiving unemployment benefit for either insured or un-insured based on the income level from work. The income level compared is at 75% of the average wage.

The level of the compensation rate for insured people depends first and foremost on the amount of the daily cash benefit in relation to previous income. For the lowest previous income levels without children (see compensation rates for all income levels), the compensation rate is highest in Norway for single persons and in Denmark and the Faroe Islands for couples.

For families with children the compensation rates are higher than for families without children. This is partly explained by whether a child supplement is payable, as is the case in Finland and Norway. In addition, the amount of both housing benefits and charges payable for day-care institutions are adjusted in relation to income. This is important in relation to the level of compensation for both insured and non-insured people and helps to ensure a high level of compensation for single parents. In Iceland, day-care charges are not adjusted according to income, but depend on labour market activity and marital status. Thus, there are lower charges for unemployed. In Sweden, day-care is only allowed three hours a week for the unemployed, and from the age of three, these hours are free of charge. This reduces expenses and thus affect the compensation rate.

Another explanatory factor for families with children having higher compensation rates than families without children is the child allowance, an income per child that is not affected by becoming unemployed.

Please refer to the section on Unemployment, for more specific information on rules in each of the Nordic countries.

The graph shows the calculated compensation rates for single person with children comparing the income level after receiving unemployment benefit for insured based on the income level from work. The income level compared is at 75% of the average wage.

The calculated compensation rates shown in the two graphs for couples compare the income level after receiving unemployment benefit for insured with the income level from work. The income levels compared is at 75% of average wage for parent on benefit and 100% of the average wage for the other parent. The calculation is equivalized with respect of size of family to secure comparability.