Institutional moral hazard in the multi-tiered regulation of unemployment in Switzerland Background paper

This paper has been written in preparation of a research project funded by the European Commission (on the Feasibility and Added Value of a European Unemployment Benefit Scheme, contract VC/2015/0006). This paper adds information and detailed analysis to the following deliverable of that research project: Institutional Moral Hazard in the Multi-tiered Regulation of Unemployment and Social Assistance Benefits and Activation - A summary of eight country case studies; but it was not a deliverable. We use the concept ‘institutional moral hazard’ to analyse intergovernmental relations within multi-tiered welfare states, specifically the domain of in unemployment-related benefits and related activation policies (the ‘regulation of unemployment’). This paper is one of eight separate case studies, it focuses on Switzerland. Swiss unemployment insurance is regulated by the federal government but activation thereof is implemented by the cantonal offices. Minimum requirements and a monitoring system were introduced to ensure that these offices focused on activation of unemployment insurance caseloads. Furthermore, the federal government attempted to harmonise cantonal social assistance top-down, but these efforts were dropped in favour of non-binding inter-cantonal guidelines. In short, reforms borne out of federal concerns were often rejected or altered as cantons defended their autonomy.