Much has happened since the Swedish social insurance and safety net began to take shape. The SNS research project “Economic and Social Security” provides a comprehensive overview of the social security systems for parenthood, illness, unemployment, old age, and economic assistance. The aim is to contribute with new knowledge and information for further discussions. What problems should the systems address, and what are the prerequisites to do so? How should the responsibility be distributed among the public, employers, and individuals? And what are the consequences of different ways of allocating responsibility?

The project runs from 2023 to 2025.

CONTACT

Research Director: Gabriella Chirico Willstedt, gabriella.cw@sns.se, 0722-43 41 08

Project Manager: Susanna Allstrin, susanna.allstrin@sns.se, 0790-98 13 33


LOWER REPLACEMENT RATE IN SOCIAL INSURANCE AND MORE COMPLEMENTS

The income loss principle in social insurance has weakened since the 1990s, as an increasing number of people today have incomes exceeding the limits set by the insurance. As a result, the average compensation rate has decreased over time. At the same time, the importance of supplementary and contractual insurances has increased, creating complementary systems to insure the same risks. What are the consequences for the effectiveness of the social insurance system, and the overall distribution profile, as a result of these developments?

CHANGES IN THE AGE STRUCTURE AND COMPOSITION OF THE POPULATION

Life expectancy is increasing, and the proportion of individuals of retirement age relative to the working-age population is growing. This trend requires more people to work longer. However, the transition to a longer working life is progressing too slowly. How do the design and regulations of social security systems affect the incentives for a longer working life?

Today, nearly one-fifth of Sweden’s population is made up of foreign-born individuals. Many of them have come to Sweden in adulthood, contributing to lower contributions to the pension system. Employment rates are also lower among foreign-born individuals as a group compared to native-born individuals, which affects both benefit levels from, and qualification for, the economic security systems. What implications do demographic changes have for the functioning of security systems?

TRADE-OFFS BETWEEN SECURITY, EFFICIENCY AND OTHER GOALS

The balance between providing economic security while also maintaining strong incentives to work is a trade-off in all social security systems. Additionally, the design of these systems can lead to behavioral adjustments in various areas. For example, parental insurance can influence both birth rates and women’s opportunities for gainful employment, rules in health insurance can affect retirement decisions, the level of unemployment benefits can impact labor market transitions, and so on. What goal conflicts exist within and between the economic security systems? And what information do policymakers need to make well-balanced decisions when different goals are in conflict with each other?


REFERENCE GROUP

Alecta, Almega, Arbetsförmedlingen (the Swedish Public Employment Service), Folksam, Företagarna (the Swedish Federation of Business Owners), Inspektionen för arbetslöshetsförsäkringen (IAF) (the Inspectorate for Unemployment Insurance), Inspektionen för socialförsäkringen (ISF) (the Inspectorate for Social Insurance), LO (the Swedish Trade Union Confederation), Pensionsmyndigheten (the Swedish Pensions Agency), SACO (the Swedish Confederation of Professional Associations), SEB (Skandinaviska Enskilda Banken), Socialdepartementet (the Ministry of Health and Social Affairs), Svenskt Näringsliv (the Confederation of Swedish Enterprise), Sveriges A-kassor (the Swedish Unemployment Insurance Funds), Swedbank, TCO (the Swedish Confederation of Professional Employees), Trygghetsfonden TSL (the TSL Transition Foundation), and Försäkringskassan (the Swedish Social Insurance Agency).


COMPLETED SEMINARS

Conditions for a collectively agreed unemployment insurance fund (a-kassa) – October 9, 2023

How do children fare when parents become unemployed? – February 3, 2023


ongoing studies

The first period with the Transition and Retraining Support

Modern economies are continuously undergoing structural transformations, which also leads to a changing labor market. This transformation necessitates the movement of workers from less to more productive jobs.  Economic policy attempts to facilitate this process through various means. On October 1, 2022, the Transition and Retraining Support (Omställningsstudiestödet) was introduced following an agreement between the state, the Confederation of Swedish Enterprise, the Swedish Trade Union Confederation (LO), and PTK. The support consists of a study grant and a study loan, where the grant covers 80 percent of the previous salary up to a ceiling for those covered by the main agreements between the Confederation of Swedish Enterprise and LO/PTK. The purpose of the support is to strengthen the individual’s position in the labor market through studies that equip them with skills that are high in demand. The report uses microdata from CSN (the Swedish Board of Student Finance) and examines two questions: Is the likelihood of applying for and receiving the support higher for individuals with a weak position in the labor market and for education towards occupations that are predicted to grow in the future?

Authors: David Seim, Professor of Economics at Stockholm University, and Peter Fredriksson, Professor of Economics at Uppsala University.

Launch in the fall of 2024.

Basic or Income Security: The Swedish Social Protection System in a Historical and International Perspective

The social insurance programs in Sweden cover a portion of the income lost in situations such as unemployment or illness. Some countries have designed their insurances based on a basic security principle, with the primary goal of reducing the risk of poverty and ensuring that an individual’s income does not fall below a certain minimum level. Sweden, however, has adhered to a principle where the size of benefits should reflect the income that is lost. The idea is that social insurances should provide a certain degree of income security for most of the working population, alongside basic security for the most vulnerable. Over time, there are indications that the Swedish social protection system has become less generous and inclusive. The principle of compensating for lost income in social insurances has weakened, while the size of means-tested social assistance has lagged behind the general income growth.

The purpose of this report is to analyze the Swedish social insurance system and means-tested social assistance in a historical and international perspective. How have social insurance and social assistance evolved as society has changed? Do the Swedish trends diverge from those other comparable countries? The report concludes with a discussion of potential distributional effects and the sustainability of the system for future generations.

Author: Kenneth Nelson, Barnett Professor of Social Policy, University of Oxford

To be published: January 2025

A Swedish Patchwork – 50 years of Parental Leave Policies

This year marks the 50th anniversary of the Swedish parental leave policy. Throughout its history, this income-based and individualized system has given parents, both men and women, the right to temporarily leave paid work to care for their newborn children. As a guiding principle, shared parenting has been prioritized.

Over time the parental leave has undergone several reforms to address identified shortcomings. In order to inform policy decisions today, this report draws attention to the motives behind the different reforms and their impacts over the years. Consideration is paid to the link between financial risk reduction and parenthood. Additionally, an analysis of which groups have been prioritized, who have benefitted from the insurance over time, and who were labelled as deserving is also discussed. This report thus explores how ideas of social and gender equality have shaped the evolution of parental leave benefits over the last 50 years.

Author: Ann-Zofie Duvander, Professor of Sociology and Demography at Stockholm University and Mid Sweden University, and Åsa Lundqvist, Professor of Sociology at Lund University.

To be published: spring 2025.

FINANCIAL AID – THE UGLY DUCKLING

This study is the first in a long time to take a holistic approach to financial aid at a systemic level. The aim is to understand the events and situations in people’s lives that create a need for financial assistance, as well as how the aid is designed to protect against those situations.

When the Swedish welfare state began to take shape, poorhouses, and financial assistance (then poor relief) were the dominant answers to how people could achieve some form of financial security. Although the poor relief was never fully reformed, the idea was that the general welfare systems would expand to include everyone. The financial aid would go extinct or at least only affect a very small part of the population. However, the financial crisis in the 1990s came with challenges, with difficulties in establishing oneself in the labor market and therefore in the social security systems. Today, financial aid fulfills an important function, but it is not considered part of the welfare system. Such a discussion concerning is needed at a time when the media and research report on child poverty, young people being recruited into gangs, and how the poorest are falling further behind the middle class.

Author: Rickard Ulmestig, professor in social work at Linnaeus university.

To be published: spring 2025.

Social security in its legal shape

The Swedish security system known as social insurances have both expanded and been altered over time. This entails different points of departures and objectives within the legal regulation. Like geological sediments, the legal regulation of social security constitutes a complex system of norms and principles that have been built up, layer upon layer, with different and sometimes conflicting, social and economic ambitions. Within the social insurances, there are rules, norms, principles, objectives and approaches that both mesh and clash. It is a recognized fact that the regulatory framework is very extensive, changeable and in parts legally and technically impenetrable. It is easy to get caught up in the details, in the interpretation and application of various legalities. At the same time, there are guiding principles in the current regulation that can be traced back to the 1940s. A general, mandatory security system creates expectations but also questions about adequacy; does the insurance fulfill its purpose of providing social security?

In this report, we focus on the legal construction of the regulatory framework and ask whether the legal quality of the legislation has the strength it requires considering new challenges, such as, for example, the changing age structure of the population and a changing labor market. The purpose of the social security system, what events the benefits intend to cover, which people are covered and the interfaces between different types of benefits, are all discussed from a jurisprudential perspective.

Author: Ruth Mannelqvist, Professor of Law at Umeå University, and Sara Stendahl, Professor in Public Law at Göteborg University.

To be published: spring 2025.

The New Mosaic of Income security: Supplementary Benefits for Loss of Income in Sweden

Supplementary occupational benefits that complement the public social insurance system have a long history in Sweden but have grown in significance over time. Unlike public social insurances that apply universally, supplementary benefits are regulated by sector, industry, or occupation through collective agreements or membership in trade unions. Consequently, conditions and benefits vary among different groups of workers.

The evolving landscape of supplementary benefits raises several questions about their role in addressing income inequality, well-being, employment, and economic growth. The increasingly diverse array of public and complementary welfare solutions may also impact the traditional Swedish welfare model, renowned for its universal coverage, generosity, and fairness. Researchers have long acknowledged the challenges in studying supplementary benefits, citing the scarcity of comprehensive and accessible data detailing variations across demographic groups and evolution over time.

In light of these considerations, we adopt a comprehensive approach by mapping supplementary benefits and tracing their historical development.

Authors: Axel Cronert, Associate Professor in Political Science at Uppsala University; Lisa Laun, Associate Professor in Economics at the Institute for Evaluation of Labour Market and Education Policy (IFAU); Klara Eklund and Karin Meiton, research assistants at the Institute for Evaluation of Labour Market and Education Policy (IFAU).

To be published: spring 2025.