The Minister of Social Affairs and Housing’s proposed changes to the unemployment insurance system involve shortening the maximum benefit period from 30 months down to 18 months. This is presented as a way to “encourage activity,” but in reality it represents a reduction of rights that will hit hardest those who are already in the weakest position in the labor market – those most at risk of long-term unemployment and social isolation.
It is not the first time the government has spoken of improving services for job seekers alongside cuts to benefit rights. Such statements have been made before, but experience shows they have not been fully delivered. Employment service offices around the country have been closed, including in Húsavík, under the banner of reducing costs. Meanwhile, it is the people who need the system most who are left with less security and fewer resources. If real support is to replace benefits, it must be clearly funded and properly implemented, not just mentioned in a policy document.
One of the main justifications cited is a comparison with the other Nordic countries. Benefit periods there are often shorter, and therefore, it is argued, Iceland should follow suit. But why should it be seen as a flaw that we have until now offered better rights than our neighbors? On the contrary, one could say it is a strength of the Icelandic system to provide people with greater security while they search for work. Instead of always aiming for the lowest common denominator, we should ask: what best serves the long-term interests of people and society?
The minister emphasizes that the savings from these changes could amount to as much as six billion ISK per year. But nothing is said about what it will cost to implement new measures and provide the promised increased services. The experience of municipalities further suggests that when the state cuts benefit rights, the burden largely shifts to local social services. Thus the problem is not being solved but rather moved elsewhere.
The minister also intends to change the minimum eligibility requirements for unemployment benefits so that a job seeker must have worked in the domestic labor market for at least 12 months during the qualifying period to be insured within the system. Under the current system, participation in the labor market for 3 months is required. It is estimated that this change will reduce annual expenditure by 200 million ISK.
It is also worth considering whether this shortening will in fact encourage activity. The risk is that a group of job seekers, who now have the right to benefits for up to 30 months, will after 18 months be left without income from the unemployment insurance system and instead have to rely on social assistance or be forced to apply for disability assessment. This is not encouragement, but rather a risk of locking people into long-term inactivity and systemic exclusion from the labor market. There is in fact a real danger that the goals will turn into their opposite.
The minister speaks of compassion and the importance of reaching people earlier. It is certainly true that early intervention is critical, but it must be based on real measures and support – not unilateral cuts in rights. If the government wants to avoid premature disability assessments and foster activity, then it must ensure that rehabilitation, vocational training, counseling, and support measures are accessible and fully funded. Otherwise, the danger is that we will only see increased costs elsewhere in the system, and worse than that: people losing their connection to the labor market and society for the long term.
The conclusion is that the proposed changes involve cuts that primarily hurt those who can least afford them. It is not justifiable to impose such burdens on vulnerable groups under the guise of savings. If we truly want to encourage people to be active, we must invest in real services, education, and job opportunities – not shorten the time people are given to get back on their feet.
The author is chairman of the Framsýn trade union.
