Social Protection in the Nordic Countries 2003

Transcription

1 Social Protection in the Nordic Countries 2003

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3 Social Protection in the Nordic Countries 2003 Scope, expenditure and financing Social Protection in the Nordic Countries can be ordered at: Schultz Information Herstedvang 12 DK-2620 Albertslund Phone: Fax: or at:

4 Social Protection in the Nordic Countries 2003 Scope, expenditure and financing Nordic Social-Statistical Committee 2005 Issued by the Nordic Social-Statistical Committee (NOSOSCO) 67 Islands Brygge DK-2300 Copenhagen S Phone: Fax: mail@nom-nos.dk Website: Editor: Johannes Nielsen Translated by: Lone Dalgaard from: Social tryghed i de nordiske lande 2003, København: NOSOSKO, 25:2005 Cover by: Sisterbrandt designstue, Copenhagen Layout and graphics: Jesper Marcussen & Liv M. Mathiasen Printed by: AN:sats, Copenhagen 2005 ISBN ISSN The basic data for this publication s tables on income distribution, typical cases, social expenditure, and the specifications hereof, may be downloaded from the NOSOSCO home page: You can navigate through the statistics by clicking on the Statistics menu.

5 PREFACE Preface The Nordic Social-Statistical Committee (NOSOSCO) is a permanent committee under the Nordic Council of Ministers and the Nordic Committee on Social Policy. It was set up to coordinate social statistics from the Nordic countries and to make comparative analyses and descriptions of the scope and content of social welfare measures. The Committee is composed of three representatives from each country as well as a number of substitutes. The countries chair the Committee in turn for three years with Norway having the chairmanship for the period As from 2005, the Faroe Islands have full membership of the Committee, and data from the Faroe Islands are now also included in this publication. In its report, Social Protection in the Nordic Countries, NOSOSCO publishes its findings regarding current social developments. As a result of their EU membership or participation in the EEA cooperation, all Nordic countries are obliged to report data on social protection to EUROSTAT, the EU s statistical office, and consequently NOSOSCO has decided to adopt the specifications and definitions in the ESSPROS, EU- ROSTAT s nomenclature. This year's theme section deals with social measures concerning children and adolescents at risk. In connection with the preparation of the present report, NOSOSCO set up an editorial group that assisted the Committee Secretariat in its work. 5

6 PREFACE The Nordic Social-Statistical Committee is currently composed as follows: DENMARK: Casper Holm Andersen Per Kampmann * Torben Fridberg Carsten Torpe Steffen Hougaard FAROE ISLANDS Heri Petersen* Jógvan Bærentsen FINLAND: Rolf Myhrman Salla Säkkinen Markku Lindquist Mikko Pellinen Helka Hytti Tiina Palotie-Heino* ICELAND: Ingimar Einarsson Hrönn Ottosdóttir * Kristinn Karlsson NORWAY: Odd Helge Askevold Marit Helene Mørkved* Kirsti Gaasø Anita M Sivertsen SWEDEN: Tom Nilstierna * Anna Holmqvist Christina Liwendahl Bengt Eklind Cathrina Ferrmark Hanno Leif Johansson Ministry of Social Affairs National Labour Market Authority The National Institute of Social Research Statistics Denmark Statistics Denmark Ministry of Social Affairs and Health Statistics Faroes Ministry of Social Affairs and Health STAKES Statistics Finland Central Pension Security Institute Social Insurance Institution Ministry of Social Affairs and Health Ministry of Health and Social Security Ministry of Health and Social Security Statistics Iceland Ministry of Labour and Social Affairs Ministry of Labour and Social Affairs Statistics Norway National Insurance Administration Ministry of Health and Social Affairs National Board of Health and Welfare Statistics Sweden Ministry of Health and Social Affairs National Social Security Office Statistics Sweden Johannes Nielsen, Head of NOSOSCO s Secretariat, is the editor of the present report and has acted as secretary to the editorial group. * Members of the Editorial Group. Nordic Social-Statistical Committee,

7 CONTENTS Contents Chapter 1. Changes in Nordic Social Policies since Chapter 2. Method Chapter 3. Population and Income Distribution Chapter 4. Families and Children Chapter 5. Unemployment Chapter 6. Illness Chapter 7. Old Age, Disability and Survivors Chapter 8. Housing Benefits Chapter 9. Other Social Benefits Chapter 10. Social Expenditure Chapter 11. Social measures concerning exposed children and adolescents 220 Appendix 1. Information Found on NOSOSCO's Home Page Appendix 2. Basis for the Regulation of the Social Benefits Appendix 3. The Nordic Social Policy Publications Issued by NOSOSCO Symbols Used in the Tables: Data not available..... Data non-existent.... Less than half of the used unit... 0 or 0,0 Nil (nothing to report)

8 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 Chapter 1 Changes in the Nordic Social Policies since 2003 DENMARK: The Danish economy is basically sound with no major balance problems. In 2004, the economy was characterized by improvement following several years of a low economic growth rate, a decrease in the employment rate and an increase in the unemployment rate because of the international downturn. Economic growth increased from 0.7 per cent in 2003 to 2.4 per cent in 2004 and is anticipated to increase in 2005 and 2006 at 2.4 per cent and 2.2 per cent, respectively. Private consumption and housing investments increased relatively sharply, supported by low interest rates and by the general reduction of taxation and other initiatives implemented by the Government in 2004 with a view to stimulating the economy. As a result of the economic growth, the employment rate has been increasing and the unemployment rate decreasing since the end of The employment rate is anticipated to increase further by about from 2004 to Following a slight increase in the unemployment rate from 5.9 per cent in 2003 to 6.1 per cent in 2004, a drop in the unemployment rate to 5.5 per cent in 2005 and 5.1 per cent in 2006 is anticipated. The surplus on the balance of payments' current account amounted to 2.6 per cent of the GDP in 2004, and in 2005 and 2006, a surplus of 2.1 per cent and 2.5 per cent, respectively, is anticipated. The surplus on the total public finances increased to 2.3 cent of the GDP in 2004, and is anticipated to be 2.6 per cent in 2005 and 2.3 per cent in Public spending increased by 0.7 per cent in 2004, and for the total public sector, the framework for growth is 0.5 per cent from 2005 to In 2004, the Government concluded a political agreement on a municipal reform, which will fundamentally change the framework for performing the public tasks and the public services in Denmark as from

9 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 The reform pictures a new public sector, in which municipalities, regions and the State are responsible for each their tasks. The State lays down the general framework. The municipalities are responsible for the tasks directly concerning the citizens and consequently become the main entrance for citizens and businesses to the public sector. Five new regions will be given the responsibility for the health sector and regional development tasks and will be responsible for solving certain operational tasks for the municipalities. The reform implies that the county authorities will be abolished and the number of tax levying levels reduced from three to two. With the amalgamation, the number of municipalities will be reduced from the present 271 to 98. As to employment, the governmental unemployment service and the municipalities will join forces in new common job centres and enter into a committing cooperation on employment actions. All citizens and enterprises with a need for assistance and services will thus get one single entrance to the employment system. The job centres will focus on employment irrespective of the unemployed individual being insured or not, and irrespective of him or her being close to getting a job or needing a long process of job-oriented measures. Central Government continues to be responsible for employment measures concerning ensured unemployed people, and the municipalities for the other target groups (cash benefits, sickness benefits, rehabilitation, etc.). In about 10 pilot job centres, Central Government will delegate the governmental employment actions to one municipality, which will undertake the activities for both the municipal target groups and the ensured unemployed people. Four new governmental employment regions will be established, which are to monitor the development in the labour market and follow up on the results and effects of the activities in the local job centres as well as perform a number of inter-disciplinary employment-political tasks. The labourmarket parties will have influence on the employment measures in both the national, regional and local level. The unemployment insurance funds will maintain their present tasks. As to the social services area, local authorities will be authoritatively, provisionally and financially responsible for all social services, benefits and activities. Citizens need only establish one single contact to get help and need only contact one single authority, which will be responsible for all offers and measures within the social services area. The five new regions will take over the management of the present county-authority institutions and activities, with the exception of measures concerning children and adolescents at risk with social or behavioural problems, which will be the responsibility of the local authorities. The regions will be 9

10 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 responsible for that institutions etc. are available for the municipalities. The running of these measures will mainly be financed by way of the local authorities paying charges. The regions must adapt their capacities and develop the regional social actions based on an annual framework agreement between local authorities and region. The framework agreement will be based on municipal reviews of municipal needs and estimated utilization of places in the regional measures. A national knowledge and special-counselling organization will be set up, which is to counsel local authorities and citizens with respect to the most specialized and complex issues. Besides, an information gateway to municipal, regional and approved private measures will be established. The new regions will be responsible for the health-care measures, which will mainly be financed by Central Government and by local authority contributions. By way of municipal co-financing, local authorities are ensured a larger part in the National Health Service. Local authorities and regions will be obliged to cooperate on coherent treatment, training, prevention and nursing. This will be done by the local authorities taking over the responsibility for prevention and rehabilitation. In order to improve conditions for families with children and to ensure an enhanced correlation between family life and working life, all municipalities must have established a day-care guarantee for children between six months and school age as per 1 July With a view to extending the freedom to choose between public and private day-care facilities, it will become easier as from 1 October 2005 for qualified private suppliers to establish and run day-care institutions as private institutions as well as a possibility for such private institutions to keep any gains they might make on the operation. The entitlement to choose a daycare facility across municipal borders will be extended to comprise club offers from 1 October On 1 January 2006, a placement reform enters into force. The reform implies stronger demands on the case administration and better education of the public employees, courses for foster families, more focus on children s schooling, enhanced implication of families and network by way of family consultation and placements within networks, improved return procedures following placement as well as enhanced hearing and complaint procedures for children and adolescents. As part of the Government s action plan to reduce absence due to illness, a new model for visitation and follow-up procedures in sickness benefit cases will be introduced as from 1 July Local authorities must concentrate on those sick persons, who are most at risk of losing their affiliation 10

11 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 with the labour market, and who are most in need of a close, individual follow-up. To an increasing degree focus must be put on any possibilities of gradually returning to work during a period of illness. New medical certificates containing information as to how much work a sick person is capable of doing should support this. In 2003 and 2004, the Government provided extra allocations of DKK 1.4 and 1.2 billion, respectively, in order to increase the activities and reduce waiting lists for examinations and treatment. The number of people, who had some kind of operation, increased by from 2001 to 2003 corresponding to an increase of 15 per cent. The waiting period was reduced from 27 to 20 weeks for 18 major operations from July 2002 to December As from 1 July 2005, a guarantee was introduced concerning treatment of alcohol problems. The supplementary pension amount to old-age pensioners with low incomes in addition to their pension has been improved as from 2005, partly by way of a higher maximum benefit amount and partly by way of a more lenient scaling down of incomes. THE FAROE ISLANDS: Since the middle of the 1990s, the Faroese society has experienced a favourable economic development, during which it has gone from deep recession with massive unemployment to a boom with full employment. In 2002, the development started turning around again and now the Faroe Islands suffer an economic setback, which for the past couple of years has resulted in a decrease in value. The GDP was consequently reduced by 2.8 per cent in 2003 in relation to the previous year. The unemployment rate went up from 2 per cent in mid 2002 to about 4 per cent at the beginning of Despite the limited geographical size of the Faroe Islands, there are marked differences in the unemployment rates of the various areas. The Faroese National Bank foresees that the recession will continue for another two years, which also increases the strain on the Unemployment Insurance Fund. The insurance scheme is financed by the labour market parties, and because of the decreasing revenues and increased expenditure, contributions to the scheme will be increased from 0.75 per cent to 1 per cent of all wage and salary payments as from 1 July During recent years, the expenditure on the income-substituting cash benefits in connection with maternity leave has been increasing. The cash benefit amounts amount to 100 per cent of any previous income with a maximum, which has been changed from DKK to DKK per month as per 1 June

12 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 A new Child Welfare Act was passed with effect from 1 January 2006, which will replace the previous Danish Child Welfare Act from The aim of the new Act is primarily to improve children and parents legal security. This makes increased demand on the professional skills of the childwelfare committees and of the administration, which in the new Act is mainly decentralized to the local authorities. A central child-welfare committee will be set up, which is to make decisions concerning welfare cases. Besides, the administration of residential-care institutions will be dealt with centrally. In order to meet part of the need for places in institutions for the elderly, 134 extra places will be procured during the period in nursing homes and collective housing units, corresponding to an increase in the number of places of about 35 per cent. Contributions to the special basic-pension scheme, which is administered and financed by the labour-market parties, increased from 0.5 to 0.75 per cent of all wage and salary payments as per 1 January This results in an immediate increase in the payments to all pension recipients of some DKK 300 per month, corresponding to an increase in the special basic pension of about 42 per cent in relation to Moreover, the Government is planning further increases in 2006 and FINLAND: In recent years, the economic growth in Finland has been 2-3 per cent a year. Also in 2005, the growth is expected to be 3 per cent. The weak economic development has impeded the growth in the public sector s revenues and increased pressures on spending. In , the surplus in the public economy was over 2 per cent in relation to the GDP. This surplus is among the highest in the EU Member states. The surplus can mainly be ascribed to the employee pension funds as both the state and local government economies are showing deficits. The most important goal in the Government programme is to improve the employment situation. For that purpose, income taxation has been eased in In addition, the taxation of companies was eased in order to promote Finland s competitiveness. Furthermore, indirect taxation was reduced in certain respects; in particular have taxes on alcohol been lowered. Simultaneously, the state economy has been strengthened. The objective is to reduce government indebtedness and to secure the sustainability of the public economy. As the economic growth has been slow, the demand for labour has declined somewhat. In 2004, the employment rate dropped slightly, and it is anticipated to recline further to 67.0 per cent in The average unemployment rate fell to 8.8 per cent in The unemployment situation is 12

13 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 expected to improve to some extent in The unemployment is largely of a structural nature and shows large regional differences. The disposable household incomes increased in The increase was mainly due to the growth in the income from property. Consequently, income differences among households grew slightly in In international comparison, the differences are still small. Despite the increased demand for pension provision and social and health services as well as the high unemployment rate, the total development of social protection expenditure was moderate. In , the ratio of social protection expenditure to the GDP was about 27.0 per cent, which is still lower than the EU average. A comprehensive pension reform entered into force on 1 January 2005 and will be implemented in stages. The main objectives of the reform are to ensure the solvency of the employee pension scheme as life expectancy is increasing, to defer retirement by 2 to 3 years and to ensure the supply of labour. The early pension alternatives are limited, the minimum qualifying age for part-time pension will be raised and the conditions for granting it will be tightened. The minimum qualifying age for old-age pension is made flexible. It is possible to retire between the ages of 62 and 68 years. With a view to postponing retirement, the pension accrual rate will be raised according to age: for year-olds, the pension accrual is 1.5 per cent of their earnings per year, for year-olds 1.9 per cent and for year-olds 4.5 per cent. Since 2005, pension accrues for all employment relationships starting from the age of 18 years - also for periods of minding a child and studying. In the new pension system, steps are also taken to prepare for people s longer life span by introducing a so-called lifetime coefficient, by which new pensions will be revised for the first time in The local government and state pensions will be reformed according to the same principles. Several minimum benefits have been raised in recent years. From the beginning of 2004, the child benefit for the first child was increased by EUR 10 to EUR 100 per month, and the increased benefit payable for children of single parents was increased by EUR 3 to EUR 36.6 a month. In 2005, the minimum amounts of the sickness, maternity, paternity and parents allowances were increased by EUR 94, i.e. to EUR 380 per month. Furthermore, the allowance payable for home care for children was raised by EUR 42 to EUR 294: the allowance payable for private care by EUR 19.6 to EUR 137. As of 1 March 2005, the amount of the national pension was raised by EUR 7 a month. Starting from 1 March 2005, access to non-emergency care is guaranteed on equal criteria throughout the country. Patients must be ensured contact with their health centre during normal opening hours. In non-emergency 13

14 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 cases, a person must have an assessment of his need for care or treatment within three days of the contact. Apart from doctors, nurses may assess the need for care. The assessment of the need for specialist treatment must be provided within three weeks, and access to medically justified care and treatment normally within a maximum of three months and at the latest within six months. If the municipality of residence or the relevant joint municipal board cannot provide treatment within the defined timeframe, they have to obtain it from other service-providers without any extra charge to the client. The defined timeframes also apply to dental care. The aim of the ongoing National Development Project for Social Services ( ) is to secure the availability and quality of social services, to reform the way they function, to improve the access to staff and staff skills, and to develop working conditions. Since the beginning of 2004, local authorities have been able to provide clients with service vouchers for the purchase of home services within the social welfare system. For the local authorities, the service voucher is a new way of providing services besides their own service provision and purchased services. In order to ensure the financing of municipal social welfare and health care, Central Government transfers to local governments have been increased markedly in recent years. In 2002, the share paid by the State was 24.4 per cent, and in 2004, it was as much as per cent. The national Veto programme to promote the attractiveness of working life and the work ability and functional capacity of the working-age population is being implemented in The programme aims at securing full work participation for citizens and reinforcing the attractiveness of work as an option in all life situations. ICELAND: The economic development was very favourable in Iceland during the second half of the 1990s. The economic growth continued into 2000 with a slight recession in In 2003, economic growth again reached 4 per cent and in per cent. According to forecasts made by the Icelandic National Bank and the Ministry of Finance, growth will be about 5 per cent in the period According to the National Bank, inflation was 4 per cent on average in 2004, and the banks and other financing institutions have expressed worries about the development, as the inflation is considerably higher than expected. The objective of the National Bank is to keep inflation below 2.5 per cent. However, the economic situation is in general regarded as being stable. 14

15 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 The unemployment rate was between 3 and 4 per cent in the period During the first months of 2005, the unemployment rate has decreased, and it is estimated to be an average of about 2.5 per cent. The unemployment rate is higher for women than it is for men. At the beginning of 2005, it was 2.2 per cent for men and 3.3 per cent for women. Studies of the pharmaceutical market revealed that the expenditure on medicine in 2003 was about 46 per cent higher in Iceland than it was in Denmark and Norway. Consequently, the Ministry of Health and Social Security concluded an agreement with the pharmaceutical producers to work for lower medicine prices. At the end of 2004, a new executive committee was set up for the National Organisation for Social Security (Tryggingarstofnun rísikins) according to changes in the legislation governing the Insurance Council. The committee members are now appointed by the Ministry of Health and Social Security, whereas it was previously the Parliament that appointed the members. The purpose of this changed procedure is to strengthen the tie between the department and the institution as well as to work for a more long-term planning in the insurance sector. The unemployment benefits were increased considerably on 1 March 2004 by 11.4 per cent and on 1 January 2005, they were increased by another 3 per cent. This was partly due to unemployment benefits not having been adjusted in relation to the wage development in the labour market. The benefits to young disabled people were also increased. The number of disability pensioners has increased sharply during recent years, and in the period the increase was about 40 per cent. This was ascribed to changes in the labour market, introduction of new criteria for the measurement of the reduction of working capacities, as well as the anticipatory/employment pension now being considerably hither than the unemployment benefit. These factors are considered the cause of there being more people than before applying for anticipatory/employment pension. Parental leave in connection with birth has now been extended to nine months, and mothers and fathers may divide the period between them and at the same time maintain 80 per cent of their income from work. As from 1 January 2005, a ceiling was introduced, resulting in a compensation maximum of ISK per month and the calculation basis now being two years as against the previous six months. In 2003, the Ministry of Health and Social Security set up a committee to look into the possibilities of moving tasks in the health sector and the care and services sector for the elderly from Central Government to the local authorities. The committee presented its proposals at the end of 2004 and 15

16 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 suggests that apart from the highly specialized treatment of illness almost everything else be moved to the local authorities and/or their regional associates. The proposal has not yet been finalized. In 2003, a plan was framed for the expansion of the care and services schemes for the elderly. The plan has now been implemented and runs until 2015; it covers i.a. the following areas: equal opportunities preventive work and elderly people's health home help to the elderly financial and labour-market issues housing issues administration and organization of issues concerning the elderly as well as studies of the elderly's situation and planning for the future. Public health and the preventive work have gained importance in the treatment of illness. On 1 July 2003, a new Public Health Institute of Iceland was established. The establishment is part of the ambition to realize the objectives to improve public health in the national public health programme until NORWAY: Since the summer of 2003, the Norwegian economy has seen a recovery. The gross domestic product (GDP) increased by 2.9 per cent from 2003 to 2004, while the GDP for mainland Norway (i.e. without the inclusion of the oil economy and foreign shipping trade) increased by 3.5 per cent. This is the highest growth rate since the recovery in 1977/1998. The most important motive forces have been a strong stimulation of the monetary policy, increasing oil prices and a limited international revival. On average, the labour force was in people, which was largely the same as in As the number of people of the age group years increased, it resulted in the average participation rate decreasing from 72.9 per cent to 72.6 per cent in This implies that part of the employment seekers have withdrawn from the labour force as a result of the labour market having been difficult for some time with an ever increasing unemployment rate. In 2004, there was an average of unemployed people corresponding to 4.5 per cent, which is almost the same as in After five years of a gradually increasing unemployment rate, it appears that the situation has now changed. In the autumn of 2002, the Government entered into a four-year intention agreement with the labour-market parties to the effect that more people participate in working life. The Government and the labour-market parties have 16

17 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 prolonged the agreement to the end of 2005 by a declaration of 3 December The declaration contains a number of conditions for the continuation including enhanced demands on work-related activities during illness. In order to enhance the action in the individual work place, new rules governing absence due to illness were introduced on 1 July As from this date, all absentees will be tested in work-related activities no later than eight weeks after having given notice of sickness in order to be entitled to sickness benefits. This does not, however, apply where sickness speaks against it. Besides, if the absentee is able partly to perform his or her normal work, graduated sickness benefits will be awarded. Active absence due to illness will in general be reduced to four weeks. Moreover, sanctions against doctors will be enhanced to the effect that doctors who do not comply with the new rules will lose their right to issue notices of sickness. As from 1 January 2004, the requirement that people must have been employed in order to be entitled to sickness benefit was extended from two to four weeks. At the same time, the period in which one may be out of work without losing one s right to sickness benefits was reduced from three months to one month. With effect from 1 January 2004, it was laid down by law that the social security offices must evaluate the need for occupational rehabilitation as early as possible during the absence due to illness and no later than by the end of the sickness-benefit period. If the person in question is not ready for active work at the end of the sickness benefit period and consequently is awarded rehabilitation benefit, the need for occupational rehabilitation must be assessed after six months of rehabilitation-benefit. As from 1 January 2004, the rules governing the period in which the rehabilitation benefit may be received were tightened. After that date, one may only receive this benefit for more than two years in very special cases. As from 1 January 2004, a new time limit was introduced in respect of disability pension. The conditions are the same as for permanent disability pension. If there are some possibilities that a recipient will be able to return to work, a fixed-duration benefit will be awarded and not the disability pension. In future, disability pension will only be awarded to people, who are not expected to be able to go back to work or to regain their working capacities. The benefit may be granted for a period of one to four years and will then be revaluated. The fixed-duration benefit is calculated in the same way, as is the rehabilitation benefit (daily cash benefits for rehabilitation), and the compensation level is 66 per cent of the income basis. With effect from 1 January 2004, several changes were made to the rules governing occupational rehabilitation. Firstly, the age limit for entitlement 17

18 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 to benefits towards education/training as a rehabilitation initiative was raised from 22 to 26 years. The reason is that young people receiving normal education/training should not have covered their education costs by the social security scheme. Education/training as a rehabilitation measure has now been limited to three years to underline that the aim of rehabilitation is a normal job and that the rehabilitation measure must be both necessary and expedient in order for the objective of a permanent job to be met. In the spring 2005, the Norwegian Parliament decided that a new employment and welfare administration be established. The governmental responsibility, which today is divided between Aetat and the National Office for Social Insurance, will be combined into a new governmental directorate. The municipalities will still play an important part in the employment and welfare policy and maintain the responsibility for the social assistance. A joint administration between State and municipality will be established so that citizens need only contact one administration. The new employment and welfare directorate will be set up in the first half of The joining of the administrations in all of the country s municipalities will take place over a long period, but according to plan the entire implementation must be carried through before A pension reform is also underway. The basis of this work is the main principles adopted by the Norwegian Parliament in the spring People with an income from work, which is lower than twice the basic amount (NOK ) will with effect from 1 January 2004 have the period in which they are entitled to unemployment benefit reduced from 78 to 52 weeks. As a follow-up on the main objective concerning the day-care institutions for children, a maximum user charge of NOK per place was introduced as per 1 May 2004 for a place in a day-care institution. Besides, a statutory rule governing sibling deductions and that all day-care institutions must provide reduction schemes for families with low incomes was introduced. From 1 January 2004, the governmental authorities assumed the county councils responsibility for children and families. At the same time, a new administrative body was established the Directorate for Children, Youth and Family Affairs. Among other things, the Committee is responsible for the running of day-care institutions for children, homes for the placement of children and family-based actions as well as the provision of assistance to municipalities in connection with difficult placements and adoptions. From 1 January 2004, the responsibility for treatment (institutional treatment and out-patient treatment) to abusers of substance drugs was shifted from the county authorities to Central Government by way of the regional health-care providers. From the same time, treatment became part of the spe- 18

19 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 cialized health service (multi-disciplinary specialized treatment of substance drugs). The responsibility of local authorities for measures vis-à-vis abusers of substance drug has not been changed as a result of this reform. SWEDEN: Despite a favourable economic growth, the Swedish economy is burdened with the problem of increasing unemployment. Increased productivity is the primary cause of this problem. In the spring of 2005, the unemployment rate exceeded 5 per cent. The Government s goal is to reduce the unemployment rate to 4 per cent. Public consumption has increased and is anticipated to continue to increase. At the same time, a surplus in public finances has emerged, which has turned a previous net debt into net wealth. Welfare initiatives implemented during the period deal with an increased basic level in the parental insurance scheme, increased study loans and grants to students at upper secondary schools and reforms concerning a universal pre-school. In recent years, attempts have been made at coming to grips with the high number of people on sick leave by changing the social insurance rules. One important change along these lines is that part-time sick leave is always to be the first choice. There has also been a decrease in sick leave in recent years. The proportion of people on part-time sick leave has increased from some 25 per cent at the beginning of the 21st century to 35 per cent at the beginning of In December 2004, about people were on sick leave, which is people less than at the same time two years before. This represents a decrease of slightly more than 15 per cent. However, the proportion of people who receive disability pension has increased. In 2005, the sickness benefit was raised from 77.6 per cent to 80 per cent of the income qualifying for sickness benefits. At the same time, the period during which employers pay these benefits was reduced from three to two weeks. The changes constitute a readjustment to previous rules. The Government has set a goal that implies halving the social assistance expenditure during the period There is nothing to indicate that this ambitious goal will have been achieved. Up until 2003, the social assistance expenditure had decreased by 26 per cent. At the time of writing (May 2005), follow-up on the final year has still not been conducted, but advance figures show that the social assistance expenditure increased between 2003 and The Government has announced an extensive initiative targeting families with children during the remainder of this term of office. In 2006, the child al- 19

20 CHANGES IN THE NORDIC SOCIAL POLICIES SINCE 2003 lowance and supplementary allowance for any additional children will be raised. The same year, the monthly maintenance allowance will be increased by SEK 100 per child. In addition, the ceiling in the parental insurance system will be raised from 7.5 to 10 basis points (SEK in 2005). At the same time, the minimum levels in the parental insurance system will be raised from SEK 60 to SEK 180 per day. The increased housing allowance given to families with children will be raised and a special supplementary child allowance will be introduced in the financial support system to students. According to calculations made by the Ministry of Health and Social Affairs, the initiative targeting families with children will result in a certain reduction in the social assistance expenditure. The total costs of the announced reforms amount to almost SEK 4.2 billion in increased benefit costs. At the same time, the social assistance expenditure will be reduced by some SEK 450 million. This means that 10 per cent of the increased benefit costs will be recovered in the form of reduced social assistance expenditure. The initiative targeting families with children will result in increased disposable incomes for the majority of households with children. However, the reforms imply that some 7 per cent of households with children will not have their disposable incomes increased. The vast majority of these households receive long-term social assistance, which means that the increase in benefits only leads to an equivalent reduction in the social assistance expenditure. 20

21 METHOD Chapter 2 Method The present report employs the structure and definitions used in the ESSPROS 1 nomenclature. The overall definition in Social Protection in the Nordic Countries was, however, previously almost identical to that used by EUROSTAT. EUROSTAT uses the following order: Illness; Disabled People; Old Age; Survivors; Families and Children; Unemployment; Housing Benefits and Other Social Benefits. For the sake of continuity, NOSOSCO decided to keep the original order in its description of the social protection systems, which is as follows: Families and Children; Unemployment; Illness; Old Age, Disability and Survivors; Housing Benefits and Other Social Benefits. Old Age, Disability and Survivors are described in one chapter of three sections, as pensions and services provided to these groups are interrelated, both at the regulatory and at the organizational level. Definitions Both in the previous issues of Social Protection in the Nordic Countries and in the ESSPROS, statistics have been designed primarily to include all public transfer incomes and service measures aimed at insuring citizens in certain specific situations as well as against the consequences of certain types of life events. Also included are schemes that are compulsory for large groups of people as a result of collective or other kinds of agreements. The statistics concern current running costs. As a rule, investment spending and tax reductions are not taken into account. 1 ESSPROS = European System of Integrated Social PROtection Statistics. 21

22 METHOD Social Benefits A social benefit is defined as a benefit that is of real advantage to those receiving it. This means that a recipient does not pay the full market price or the full running costs for services. The fact that the recipient, by being affiliated with an insurance scheme, has paid contributions - and thereby in reality has financed, fully or partly, the benefits that he receives - is of no significance in this context. A benefit must present a direct value to the citizens. Consequently, subvention to trade and industry, e.g. in the shape of subsidies to housing construction, is not regarded as social benefits. Registration Accounts from public authorities and other social administrations are, wherever possible, used in the registration of expenditure and revenue. In some cases, expenditure and financing will, however, have to be presented as calculated amounts. In other cases, the required specification cannot be made on the basis of the national accountancy systems, and consequently the figures will have to be broken down on the basis of estimates. In cases, where user charges are payable for social services, the expenditure is registered after deduction of such charges. The expenditure on such social services is therefore not the total running costs, but the net amount for the body in charge of the relevant service. Financing Incoming funds or contributions to the financing of the social expenditure are made up of means deriving from public authorities, employers and insured individuals or households. The incoming funds are used for current payments in the course of the year, and in some cases for the establishment of funds to ensure future payments. According to need and rules, such funds also cover current payments. Yield on funds in the shape of income from interest and property is primarily found in relation to pensions. Where transfers are made to funds, and where means from funds have been used towards the financing of the current social expenditure, these will be listed by net amounts in the expenditure statistics. 22

23 METHOD Benefits from public authorities payable only to their own employees are regarded as benefits payable by an employer. Certain benefits payable by employers to their employees, such as sickness benefits payable for part of a period of illness, are regarded as being financed by an employer, even though such benefits in other connections are regarded as part of an employee s salary. Charges payable by citizens (user charges) for social services have not been included in the social expenditure tables. Yield on real property is included as part of the financing according to the ESSPROS method of calculation. Specifications Specifications of the individual expenditure entries can be found on NOSOSCO s homepage (cf. the colophon). Administration Costs The present report lists administration costs as one single entry. In principle, only expenditure on the direct administration of the social expenditure is listed. It is, however, not always possible to separate administration costs from other wage/salary or running costs. Calculation of Fixed Prices For the conversion into fixed prices, the consumer price index from the Nordic Statistical Yearbook was used. Typical Cases To illustrate the compensation payable in connection with various social events, calculations have been made for different types of families and income levels as to the compensation level of a number of benefits. The calculations are based on the earnings of an Average Production Worker (APW), calculated by the OECD, and are used in most of the comparative studies. 23

24 METHOD The following family types and income levels are used: Single parent with one child: I. 50 per cent of an APW II. 75 per cent of an APW III. 100 per cent of an APW IV. 125 per cent of an APW V. 150 per cent of an APW. Single childless person: I. 50 per cent of an APW II. 75 per cent of an APW III. 100 per cent of an APW IV. 125 per cent of an APW V. 150 per cent of an APW. Couple with two children: I. 75 per cent and 50 per cent of an APW II. 100 per cent and 75 per cent of an APW III. 125 per cent and 100 per cent of an APW IV. 150 per cent and 125 per cent of an APW Childless couple: I. 75 per cent and 50 per cent of an APW II. 100 per cent and 75 per cent of an APW III. 125 per cent and 100 per cent of an APW IV. 150 per cent and 125 per cent of an APW. As to typical cases concerning social assistance the following applies: In respect of couples, it is assumed that neither of the partners has any income from work, any other income-substituting benefits or pension. Besides, the disposable income is in this typical case calculated after tax and social contributions, payment for day-care institutions and rent, where the rent calculation was based on the calculation basis for the housing benefit in the other typical cases. Contrary to the other typical cases, the rent proper was calculated as an expense. Consequently, this typical case differs from the other typical case calculations. A detailed description of the typical cases and the calculations concerning them can be found on NOSOSCO s home page (cf. the colophon). 24

25 METHOD Calculation of Income Distribution In order to illustrate further the significance of social cash benefits to the distribution of income, information on the composition and distribution of disposable incomes for households in the Nordic countries have been included in Chapters 3, 4 and 7, respectively. A household consists of adults and any children living at one and the same address, irrespective of the children being over or under 17 years. This does not apply to Iceland, however, where children over the age of 15 living at home are calculated as independent households. The income quartiles were calculated on the basis of the equivalent disposable income, where a household s disposable income was divided by the equivalence unit based on the size of the household and the equivalence scale. The so-called modified OECD equivalence scale is used, where a child is defined to be 0-13 years old and adults 14 years+. The first adult counts as one, whereas subsequent adults count as 0.5 and children 0.3, and consequently the scale will be: 1 + ((no. of adults) x 0.5) + (no. of children x 0.3)). In the calculation, households have been weighted in relation to their sizes, as for example: A household consisting of four people represents four observations (in addition to the sampling weights). The data are based on representative samples of the populations in each of the countries. The indicator on income distribution has been calculated from these samples. Data on households incomes have been mainly retrieved from administrative records, and in some countries such information is supplemented by information from household interviews. In respect of Iceland, only data concerning the disposable incomes for households over and under 65 years, respectively, were included in Chapter 7. It should be noted that since changes have been made in the calculation basis the results are not comparable to publications containing data from the year 2000 and earlier. In Figure 3.2, calculations were based on all households, whereas calculations in Figures 3.3 and 3.4 were based on calculations for single people and couples separately. In Figures , the first quartile consists of the households with the lowest incomes, whereas the households with the highest incomes make up the fourth quartile. In Figures 3.3 and 3.4, the average disposable income in different quartiles has been presented in PPP-Euro. As mentioned above, quartiles have been formed separately for single people and cohabiting couples, respectively. In 25

26 METHOD addition to income level figures 3.3. and 3.4 also include income structure in different quartiles. The calculation basis for the tables, figures and spreadsheets, on which the tables and figures concerning distribution of income in the present report were based, can be seen on NOSOSCO s home page (cf. the colophon). Relative Poverty Tables concerning relative poverty for the following family types/households have been included: 1. Single childless people under 65/67 years 2. Singles with children 3. Childless couples under 65/67 years 4. Couples with children 5. Single people over 65/67 years 6. Couples where one or both partners are over 65/67 years. The definition of relative poverty is households who have less than 50 and 60 per cent, respectively, of the median of the equivalent disposable income for all households. Otherwise, the calculation basis is the same as in the tables concerning income distribution. The spreadsheets with reference to the tables and figures of this report concerning poverty can be downloaded from the NOSOSCO homepage (cf. the colophon). Purchasing Power Parities Purchasing power parities (PPP) are defined as the currency conversion factor corresponding to the purchasing power of the individual currencies. This means that a certain amount, when converted from different currencies by means of PPP factors, will buy the same amount of goods and services in all the countries. The PPP calculations have partly been used in the comparison of social expenditure, partly in the comparison of compensation levels in connection with various social events. The PPP calculations in the present report are in PPP-Euro. Preliminary 2003 estimates were used. The estimates for the individual countries are as 26