The Industrial Revolution led to the emergence of a working class employed under wage-based labor contracts. During its early phases, workers were subjected to long working hours, unfavorable working conditions, and low wages. Moreover, masses of unemployed workers -conceptualized as the “reserve army of labor”- came into existence. As a consequence of unemployment, workers and their dependents were frequently deprived of humane living conditions. This situation created not only profound social hardship but also structural challenges for the economy and the state.

Over time, unemployment came to be recognized as a social risk, prompting efforts to establish institutional mechanisms capable of ensuring a minimum standard of living for those who lost their jobs. The earliest initiatives took the form of voluntary unemployment insurance schemes. The first compulsory unemployment insurance system in the modern sense was introduced in England, the country where the Industrial Revolution originated. Subsequently, this approach gradually diffused to and was adopted by other countries. Unemployment insurance was established with the primary objective of providing temporary income support to unemployed individuals until they secured new employment, thereby evolving into a social policy instrument designed to offer financial protection to workers against the risk of unemployment.

This article employs a case study methodology to analyze the Unemployment Insurance Fund in Türkiye, which was created to finance unemployment benefits, and to assess whether the Fund is utilized in accordance with its original purpose. Following a general overview of the historical development of unemployment insurance, the study examines the amendments introduced to the Unemployment Insurance Law No. 4447, enacted in 1999 after protracted legislative efforts, and their implications for the allocation of Fund resources. The findings suggest that subsequent regulatory changes have led to a transformation in the utilization of the Fund’s accumulated resources, one that does not operate in favor of workers. Instead, statistical evidence indicates that substantial portions of the Fund have been transferred to employers under various support and incentive schemes.