Eva Uddén Sonnegård

Ministry of Employment Sweden

The Government’s Economic Policy

Eva Uddén SonnegårdState Secretary

Ministry of Employment


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ArbetslöshetsersättningArbetsmarknadsprogramEkonomiskt biståndSjukpenning & sjuklönAktivitets- och sjukersättning

Individuals supported by social transfers Thousands of full-time equivalents, forecast

2009-2011

Source: The Ministry of Finance.

Disability pensionSickness allowanceSocial assistanceLabour market program

Unemployment


Swedish population growth up to 2050

Change compared to 2009

Source: Statistics Sweden.

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The Beveridge Curve


Three legs:

Increase supply Increase demand

Improve matching

Improved mobility, more flexibility=> focus on excluded groups

”Make it more worthwhile to work”

”Make it easier and less costly to take on new employees”

”Matching people to jobs”


The Government’s economic policy affects Labour Supply

through:

• Earned income tax credit• Lower unemployment benefits• Limited possibility for part-time unemployment benefits• Longer waiting period for unemployment benefits• Changes in finance of unemployment benefits• Changes in sick-leave benefits (lower ceiling, increased

control)• More and better ways back for people on sick leave• Effective labour market programmes


The Government’s economic policy affects Labour Demand

through:

• “New start jobs” – compensation by twice the employers’ social security contribution when hiring long term absent (unemployed, sick, social aid recipients and newly arrived refugees)

• Decreased employers’ contributions for youth and from 65 years of age

• Increased possibilities for temporary contracts of 24 months

• “Step-in jobs” for newly arrived refugees in combination with Swedish language studies

• Tax reductions on RMI (repairs, maintenance and improvement of housing) and household-related services


The Government’s economic policy affects

Matchingthrough:

• Modernisation of the labour market institutions – a nationally integrated authority for Public Employment Service

• Individual action plans and intensified coaching• Job and development guarantee• Job guarantee for youth• Practical work experience• Supplementing private actors


Recent changes in labour market policy affect potential

employmentOECD Economic outlook:

Will increase potential employment

Institute of Labour Market Evaluation:Will probably decrease equilibrium unemployment by 1-2 percentages


Number of employedSeasonally adjusted data, 3-month moving

average

Source: Statistics Sweden.

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Swedish unemployment1980-2009, forecast 2010-2014

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Short run effects of the crisis

Decreased production & increased unemployment

and, consequently;

Decreased tax revenues & increased budget deficits


However…

The largest threat ≠ unemployment per see

but instead

that the unemployed will give up & leave the labour force


HOW?By protecting the employability of

individuals

1. By keeping the unemployed active, through- education - labour market programs- work time arrangements- active job search etc

2. By lowering the barriers to employment, throug - incentives (ie making work & transitions pay), - coaching/training/activation strategies, - lowering wage costs


Crisis management

The Swedish example 1. Accept structural change as the root

of growth Increase labour demand

through, for example:Investments in infrastructure, tax credits for RMI*measures, decreased social security contributions, support to local authorities

Provide extra resources to:

2. Active labour market policy-measures

in particular coaching & matching

3. Regular education & training* RMI = repairs, maintenance & improvement


Expansionary economic policy in SwedenAutomatic stabilizers and spending. Source: OECD Economic Outlook nr 85

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Policies continue to:

Uphold labour force participation

Increase access to employment

Make our labour markets structurally stronger


Social exclusionJanuary 2010

Source: Statistics Sweden, Swedish Social Insurance Administration, Swedish Public Employment Service.

Number of personsChanges compared to

January 2009Changes compared to

January 2006

Unemployed 320 000 54 000 36 600Labour market programmes 177 901 82 942 43 678Potentially looking for a job 270 200 69 300 58 500 of which full-time students who apply for work 131 600 51 500 40 800Underemployed 298 900 14 300 28 900Sickness allowance 128 027 -33 619 -115 632Disability pension 493 827 -34 401 -61 962Total Social Exclusion: 1 688 855 152 522 -9 916

Documents

Eva Uddén Sonnegård