Ministry of Employment Sweden
The Government’s Economic Policy
Eva Uddén SonnegårdState Secretary
Ministry of Employment
Ministry of Employment Sweden
0
200
400
600
800
1 000
1 200
1 400
1 600
70 75 80 85 90 95 00 05 10
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
Ministry of Employment Sweden
Swedish population growth up to 2050
Change compared to 2009
Source: Statistics Sweden.
-100
0
100
200
300
400
500
600
700
800
900
2010 2015 2020 2025 2030 2035 2040 2045 2050-100
0
100
200
300
400
500
600
700
800
900
0-19 years
20-64 years
65 years and older
Thousands Thousands
Ministry of Employment Sweden
2006
2000
2007
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
0 2 4 6 8 10 12 14 16
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1999
1990
1991
1992
20052004
2003
1996
1997
19982002
2001
1994
2008
2009
Relative level of vacancies
Total unemployment, per cent
Relative level of vacancies
1993
1995
The Beveridge Curve
Ministry of Employment Sweden
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”
Ministry of Employment Sweden
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
Ministry of Employment Sweden
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
Ministry of Employment Sweden
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
Ministry of Employment Sweden
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
Ministry of Employment Sweden
Number of employedSeasonally adjusted data, 3-month moving
average
Source: Statistics Sweden.
4 100
4 200
4 300
4 400
4 500
4 600
4 700
01 02 03 04 05 06 07 08 09 10
4 100
4 200
4 300
4 400
4 500
4 600
4 700Thousands Thousands
Ministry of Employment Sweden
Swedish unemployment1980-2009, forecast 2010-2014
0
2
4
6
8
10
12
14
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
0
2
4
6
8
10
12
14
Procent Procent
Ministry of Employment Sweden
Short run effects of the crisis
Decreased production & increased unemployment
and, consequently;
Decreased tax revenues & increased budget deficits
Ministry of Employment Sweden
However…
The largest threat ≠ unemployment per see
but instead
that the unemployed will give up & leave the labour force
Ministry of Employment Sweden
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
Ministry of Employment Sweden
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
Ministry of Employment Sweden
Expansionary economic policy in SwedenAutomatic stabilizers and spending. Source: OECD Economic Outlook nr 85
-2
0
2
4
6
8
10
12
14
Sve
rige
Luxe
mburg
Dan
mar
k
Fin
land
Tys
klan
d
Bel
gien
Tje
ckie
n
Japan
Ned
erlä
nder
na
Span
ien
Nya
Zee
land
Aust
ralie
n
Sto
rbrita
nnie
n
Kan
ada
Öst
errike
Ital
ien
Fra
nkr
ike
Pol
en
Por
tuga
l
USA
Sch
wei
z
Automatiska stabilisatorer
Aktiva åtgärder
Procent av BNP
Ministry of Employment Sweden
Budget deficitsFinancial savings 2010 Source: OECD Economic Outlook nr 86
-16
-14
-12
-10
-8
-6
-4
-2
0
2Sto
rbrita
nnie
n
Irla
nd
USA
Fran
krik
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Spa
nien
OECD
Japa
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Por
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oom
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Ned
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Ital
ien
Dan
mar
k
Tysk
land
Finl
and
Est
land
Sve
rige
Sch
wei
z
Procent av BNP
Ministry of Employment Sweden
Policies continue to:
Uphold labour force participation
Increase access to employment
Make our labour markets structurally stronger
Ministry of Employment Sweden
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