Sweden has fallen behind in the social security league

If a majority of the population have their primary insurance interests outside of the official model, this can affect the willingness to pay taxes, according to Joachim Palme.

A current report compares the development of health, occupational injury and unemployment insurances, based on an average industrial worker's salary. The results reveal that several countries have passed Sweden on all three insurances.

”This isn't the Olympics, but it's a little surprising that Sweden, which was previously set to take all the medals, is now in the middle of the pack. And the biggest setback is in the area of unemployment insurance,” says Joachim Palme, Professor of Political Science.

From being the second highest in the world in 2005, Sweden fell well below the average when the OECD countries were compared. Less than a third of the Swedish population are below the ceiling and have the right to 80 per cent of their salary in unemployment insurance benefits.

Others may of course have additional insurances, but there are risks involved in relying on private solutions, according to Joakim Palme.

”If you want political stability or sustainability in a society, a good recipe is normally that you have a majority of the population that don't just help pay for the party; they can also get something in return. If a majority of the population have their primary insurance interests outside of the official model, this can affect the willingness to pay taxes.”

Joakim Palme believes there are a number of advantages to a public social insurance system; first and foremost, the redistribution of income, for the benefit of those who are on low incomes or have poor health. But there are also advantages which are purely efficiency-related.

”You keep the administration costs down and avoid negotiating the matter of insurance at every workplace, because that's already solved via legislation.”

Another advantage is the avoidance of the lock-in effect resulting from separate insurance systems for different groups on the labour market.

”This is particularly true for pensions, where changing from the private to the public sector and vice-versa entails a certain degree of risk-taking when systems are structured differently.”

Recently, a number of different political parties have highlighted the issue of raising the ceiling for unemployment insurance benefits.

Joachim Palme and his research associates have also participated in the debate and argued in favour of a radical reform of the social insurances. They also call for more of an investment approach to labour market policy.

”In times of crisis, we should invest first of all in active measures that improve people's opportunities to return to work. Here too, Sweden has fallen behind in international comparisons, whereas other countries have raised their ambitions.”

In the 90s, many questioned whether labour market initiatives were tax money well invested, but the situation has now been reappraised.

”In the current state of the market, a lot of economists have advocated investment in the quality of the labour market policy. We need to raise the qualifications of jobseekers,” says Joakim Palme.

The same applies to health insurance. Here, he feels that rehabilitation is an unused resource, at a time when the rate of illness is increasing in Europe and an ageing population needs support.

”Here we see a public interest among the European countries and the OECD countries to invest more offensively and hopefully learn from one another.”

FACTS

The report Sveriges socialförsäkringar i jämförande perspektiv (2012) [Sweden's social insurances in a comparative perspective] has been commissioned by the Parliamentary Committee on Social Insurance. It is an analysis of the development in 18 OECD countries from 1930-2010, in a collaboration between Joakim Palme and researchers at the Swedish Institute for Social Research (SOFI) at Stockholm University.