What is Ghent System ?
‘Ghent System’ is the system used to pay unemployment benefits to unemployed individuals by trade unions instead of the government or any government authorized agency.
It is known as the ‘Ghent system’ as it was first implemented in Ghent, which is a city in Belgium. However, currently Belgium uses a hybrid system where the benefits are distributed by both the government and the trade unions.
Currently, it is the primary source of welfare payments in Denmark, Iceland, Finland and Sweden. Hence, employees from these countries are always a part of some kind of trade union.
Another important point to consider is that, in the case of the hybrid models, the state benefit would be a fixed sum for every employee while the trade union benefit depends on the previous earnings.