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Unemployment fund or trade union? Here’s how they differ

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  • Income security
  • Membership
  • YTK

Have you considered whether you should join an unemployment fund or a trade union? That’s a good question, but actually a little misleading. Unemployment funds and trade unions are not alternatives to each other. They are two different entities with their own tasks, operating methods, and funding.

Nevertheless, they are often confused in discussions. Why is that?

The fund pays the earnings-related daily allowance – the union does not

Unemployment funds and trade unions have in common that they are both related to working life and collect membership fees from their members.

The role of unemployment funds is clear and defined by law. From the fund, you can receive:

  • Earnings-related daily allowance if you become unemployed or are laid off
  • Services to support your job search
  • Mobility allowance if your job is located far from your home
  • Transition security allowance if you are over 55 and have been dismissed

Trade unions, on the other hand, are associations that can define their tasks in their own rules. They often include:

  • Collective bargaining
  • Advocacy and lobbying
  • Employment, legal, and training services

A trade union cannot pay you earnings-related daily allowance if you become unemployed.

Why are the funds and unions mixed up?

In many trade unions, membership fees also include membership in an unemployment fund selected by the union. In this case, the union acts as a kind of “middleman,” but the actual income security is still provided by a separate unemployment fund. This can cause confusion, especially when the union’s communications mention income security as part of the union’s services, even though it comes from the fund.

Different tasks, different prices

Trade union membership fees can be several hundred euros higher than unemployment fund membership fees. This is due to the differences in tasks. You can consider trade union membership based on your own situation and needs.

Joining an unemployment fund, on the other hand, is a no-brainer: it is always worthwhile. It is insurance against unemployment.

Membership in trade unions has declined steadily in recent decades. The total membership of unemployment funds, on the other hand, has remained at around two million for a long time. This means that more and more wage earners feel that they primarily need the services of an unemployment fund.

The Financial Supervisory Authority published its latest membership statistics in May. The YTK Unemployment fund now accounts for 28% of all fund members, meaning that more than one in four has chosen YTK as their fund partner.

However, this joy is mixed with concern. Although a significant proportion of wage earners already belong to a fund – almost 2 million – there still seems to be too little understanding and knowledge about funds, especially among younger people. This was clearly evident in the latest survey of people who do not belong to a fund. When asked about the most important reasons for not joining an unemployment fund, as many as 35% of the reasons were related to poor knowledge about joining a fund or about which fund would be suitable for them.

You have the freedom to choose

Fund membership does not restrict your union membership. The same applies vice versa.

You can:

  • Join only an unemployment fund
  • Join only a trade union
  • Join the fund of your choice (e.g. YTK Unemployment Fund) and a trade union separately

You cannot belong to two unemployment funds at the same time. However, changing funds is possible and easy. If your trade union offers membership of an unemployment fund and you want to change unemployment funds, you can request a reduction in your trade union membership fee equal to the unemployment fund membership fee.

As a member of the YTK Unemployment Fund, you can join YTK Worklife. YTK Worklife is not a trade union, but an association that offers comprehensive working life services at a reasonable price to members of the YTK Fund. For example, you can receive legal assistance in employment matters, insurance for work and leisure, training, and job search coaching.

When it comes to trade unions and unemployment funds, it is not a question of which is better, but rather what services you need and what you are willing to pay for them.

The choice is yours.

Ilona Kangas

Ilona Kangas

Director of Employment Services

I help our members and employees to succeed at work in many different ways. I lead and develop the activities of YTK Worklife and am responsible for managing customer experience, marketing and communications in YTK Work life services and fund services.