Unemployment was, undoubtedly, the most “problematic” social risk. National-level policies compensating against the risk of unemployment were introduced, in a majority of countries, several decades after the creation of other branches of social insurance (Alber 1982: 49). This lag in timing was in many cases the consequence of a profound uncertainty about the commensurability between unemployment and other labor market risks and about the possibility of applying traditional insurance techniques to situations of temporary loss of work (Leibfried 1977: 189-201). As pointed out by a recent wave of scholarship, the political struggles surrounding the institutional design of a system of unemployment insurance were embedded in and inextricably linked to a broader set of political deliberations about the causes of unemployment, feasible remedies for it, and, more broadly, the place of unemployment in modern industrial society (Salais et al. 1986, Piore 1987, Topalov 1994a, 1994b).

The notion of unemployment underpinning the classificatory and redistributive practices of institutions of social insurance remains a category of relatively recent origin. In contrast to beliefs and practices that viewed unemployment as an individual risk, resulting from the idleness, unwillingness to work, or moral shortcomings of the worker, the “modern” notion of unemployment sees unemployment as a natural and regrettable by-product of a particular organization of work in the modern enterprise (Piore 1987). Thus, broad changes in the organization of work, such as the emergence of the stable employment relationship, as well as other institutional changes, such as modifications in private and public institutions of poor relief and the dissolution of older forms of solidarity, contributed to this change in the societal understanding of the notion of unemployment. These changes served as preconditions for the policy debates that are the subject of the present chapter.

Policies insuring against the risk of unemployment were the result of a protracted and highly disputed process of political negotiation. The frequent change of system in many countries and the intense experimentation, by most governments, with a variety of different policies reflect these political conflicts. Prior to World War I, only a few German cities had established a Ghent system of unemployment insurance. The onset of World War I brought about the introduction of the first national-level policy of unemployment assistance in 1914.