At the outbreak of the Second World War, the top priority was to ensure the financial protection of soldiers and their families. During the First World War, the lack of a safety net had been a key factor in exacerbating social tensions as soldiers serving in the military had no access to income other than their military pay. After the war, the state was under no obligation to compensate soldiers for their loss of earnings. The private sector had different regulations depending on the industry and employee category. On 20th December 1939, the Federal Council therefore decided to introduce a system for compensating income loss. This was expanded in 1940 into the Income Compensation Insurance for Militia Soldiers (LVEO), which also covered the self-employed. The insurance was financed by contributions from employers and employees (two percent of earnings each) as well as subsidies from the Confederation and the cantons. It protected up to 90 percent of the income of married soldiers. However, the benefits for unmarried soldiers remained modest. The Confederation left much leeway to employers to manage the LVEO with the equalization funds set up by business associations. At this point, the Central Compensation Fund (ZAF) was the only federal institution involved and was mainly responsible for balancing the accounts of each of the funds.
After accident insurance, the LVEO constituted the second compulsory social insurance branch in Switzerland. It quickly gained substantial popularity. It was soon treated as a model for the AHV. However, the LVEO provided no protection from loss of earnings and poverty. Its relatively generous scope was also aimed at reducing incentives for married women to enter employment. The LVEO thus made a substantial contribution to the stabilization of bourgeois gender roles and family values.
By 1947, the LVEO had paid out a total of 1.64 billion francs. At the same time, the ZAF surpluses rose to 1.165 billion francs. Most of these funds were to be used as seed money for the AHV in 1947, which greatly increased the likelihood of the new social welfare system being implemented. After the war, LVEO financing relied on capital reserves and federal contributions until its reorganization in 1958/1961.
Literatur / Bibliographie / Bibliografia / References: Leimgruber Matthieu (2009), Schutz für Soldaten nicht für Mütter. Lohnausfallentschädigung für Dienstleitende und Sozialversicherungen in der Schweiz, in M. Leimgruber, M. Lengwiler (ed.), Umbruch an der ‚inneren Front‘. Krieg und Sozialpolitik in der Schweiz 1938–1948, 75–99, Zürich.