Administering unemployment insurance

Compulsory unemployment insurance came into force in 1977. The organization of unemployment insurance largely relies on existing institutions, with unemployment insurers and employment offices playing a central role. The Federal Office for Industry, Trade, and Labor, was long responsible for overseeing the various public and private institutions.

Since the first unemployment funds, insurance funds for the unemployment, were established at the end of the 19th century, some workers were able to insure themselves, voluntarily, against the risk of unemployment. Even before the federal government did so, some cantons introduced compulsory unemployment insurance for all or some of their employees. As a rule, if employees wanted to receive benefits should they become unemployed, they had to insure themselves and pay into a fund that was public, trade union, or co-financed. Insurers of the unemployment were responsible for checking the claims of the insured, collecting the contributions, and paying benefits. Since 1924, unemployment insurers have received federal subsidies.

The Federal Office of Industry, Trade and Labor (BIGA) was long responsible for supervision these subsidized, private, unemployment insurers. It exercised a supervisory and controlling function to ensure compliance with the framework law on unemployment insurance, and it also coordinated the cantonal employment offices. Before compulsory unemployment insurance was introduced, the BIGA was in charge of revising the unemployment insurance laws. This was also true in 1974, when a commission of experts was entrusted with drawing up a compulsory unemployment insurance law.

The division of tasks between BIGA, employment offices and unemployment insurers 

The new law on compulsory unemployment insurance relied heavily on existing institutions, with the implementing bodies the employment offices and the established unemployment insurers. Unlike other social security funds placed under the responsibility of the Federal Social Insurance Office, the BIGA remained responsible for supervising unemployment insurance because unemployment insurance and its associated institutions were closely linked to labor market regulation. The Federal Law on Compulsory Unemployment Insurance and Insolvency Compensation (AVIG) completed the legislative process by 1982; it regulated what was now a centralized administration of unemployment insurance. The administration was divided into three areas: insurance contributions, benefit payments for the unemployed, and job placement.

With the introduction of compulsory unemployment insurance, both the organization and the supervision of unemployment insurance financing was centralized at BIGA. Insurance contributions were co-paid, one-half from insured employees, in wage-related amounts, and the other half by the employers. These went in to the BIGA-affiliated compensation fund, which paid out the compensation amounts and covered the costs of administering the unemployment insurance funds. The compensation bureau was responsible for keeping track of insurance contributions, and for overseeing both unemployment insurers and cantonal authorities. The compensation bureau, in turn, answered to a supervisory commission with representatives of employers and employees, federal government and cantons, and researchers. It monitored how the compensation fund developed, and was a body that could directly advise the Federal Council. Even today, the supervisory commission remains the highest executive body in unemployment insurance.

Payment of unemployment compensation was, and still is, the responsibility of private and public unemployment insurers. Salaried employees were now automatically insured. Only once a job was lost, and an entitlement to unemployment benefits triggered, could an unemployed individual turn to one of the unemployment insurers he or she had freely selected. As the first unemployment insurers were established by trade unions, they continue to play an important role in administering unemployment insurance. In addition to the private insurers, each canton has by now also established its own unemployment insurance office, with all of them today affiliated with the Association of Public Unemployment Insurers.

The cantonal authorities, having delegated implementation tasks to municipal employment offices, were responsible for job placement and for oversight of the unemployed. Employment offices were also able to use unemployment insurance monies to finance preventive measures, including training courses or job creation programs. Decisions about adopting preventive measures were taken by the cantonal authorities, and had to be reported to the compensation bureau.

Employment offices and unemployment insurers worked closely together, though they practiced a division of labor. The employment offices clarified eligibility, which meant the unemployed had to receive the imprimatur or "stamp" from the employment office, one which also established their availability to work. Stamps on the control card entitled individuals to unemployment benefits paid by the unemployment insurer. Insurers were also responsible for sanctions in the event, for example, that an employee quit work. In that case, the unemployment insurer could impose termination days, meaning they could cancel some part of the unemployment benefit. This provision remains valid today.

Administering the ‘work activation’ policy since 1995

In 1995, the Federal Assembly passed the second partial revision of the AVIG, which resulted in a reorganization of the unemployment insurance administration. The revision introduced a work activation policy focused on reintegrating the unemployed into the labor market. While the unemployment insurers remained responsible for the payment of benefits, Regional Employment Centers (RAV) took over the functions of the employment offices. The RAV was now responsible for job placement and for checking the status of the unemployed. Stamps recording the physical availability of the unemployed were no longer used, now replaced by a monthly consultation. In these conversations, efforts by the unemployed to find work were reviewed, and information about positions, additional training or education, and job creation measures were communicated. RAV financing was provided by unemployment insurance funding; the RAV began operating in 1997, and around 100 RAV existed throughout Switzerland by 2018.

To promote reintegrating the unemployed into the labor market, cantons had to develop and implement labor market measures, including continuing education courses and employment schemes intended to improve the employability of the unemployed. Cantons are responsible for making the needed number of spaces in such measures available, and receive monies from the unemployment insurers. The cantons created logistics centers specifically to coordinate, plan, review and develop labor market measures.

The implementation of labor market measures depends on private and public institutions at the local as well as federal levels. The labor market measures are offered and carried out by private, not-for-profit, and public institutions. Unemployment insurers reimburse providers for the costs which arise, while the cantonal authorities supervise the providers of labor market measures and monitor compliance with the service agreements. Cantons, in turn, are accountable to SECO, the State Secretariat for Economic Affairs which integrated BIGA into its administrative apparatus in 1999, and it regularly issues instructions to ensure uniform application of the law, and it also monitors the compliance with legal enforcements mandates.

The principle of ‘work activation’ has grown in importance in other branches of insurance, so increased cooperation has become necessary. Interinstitutional Cooperation, a program begun at the cantonal level in 2001 and supported later by the Federal Department of the Interior, is intended to help better coordinate activities and measures in the areas of labor market integration, unemployment and disability insurance, social assistance, and vocational training.

Literatur / Bibliographie / Bibliografia / References: Magnin, Chantal (2005): Beratung und Kontrolle. Widersprüche in der staatlichen Bearbeitung von Arbeitslosigkeit, Seismo Verlag Zürich; Tabin Jean-Pierre, Togni Carola (2013), L’assurance chômage en Suisse. Une socio-histoire (1924-1982), Lausanne.