The Government's Economic Policy - Eva Uddén Sonnegård

8/9/2019 The Government's Economic Policy - Eva Uddn Sonnegrd

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Ministry of Employment Sweden

The Governments EconomicPolicy

Eva Uddn SonnegrdState Secretary

Ministry of Employment


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0

200

400

600

800

1 000

1 200

1 400

1 600

70 75 80 85 90 95 00 05 10

ArbetslshetsersttningArbetsmarknadsprogramEkonomiskt bistndSjukpenning & sjuklnAkti itets- och sjukersttning

Indi iduals supported by social transfersThousands of full-time equi alents, forecast 2009-2011

Source: The Ministry of Finance.

Disability pensionSickness allowanceSocial assistance

Labour market program

Unemployment


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Swedish population growth up to 2050Change 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


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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

199 0

1991

199 2

20052004

2003

199 6

199 7

1998

2002

200 1

199 4

200 8

2009

Relative level of vaca cie

otal employme t, per ce t

Relative level of vaca cie

199 3

199 5

The Beveridge Curve


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Three legs:

Increase supply Increase demand

Improve matching

Improved mobility, more flexibility=> focus on excluded groups

Make it moreworthwhile to work

Make it easier andless costly to take onnew employees

Matching people to jobs


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The Governments economic policy affects

Labour Supplythrough:

Earned income tax credit

Lower unemployment benefitsLimited possibility for part time unemployment benefitsLonger waiting period for unemployment benefitsChanges in finance of unemployment benefitsChanges in sick leave benefits (lower ceiling, increased

control)More and better ways back for people on sick leaveEffective labour market programmes


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Labour Demandthrough:

N ew start obs compensation by twice the employerssocial security contribution when hiring long term absent

(unemployed, sick, social aid recipients and newly arrivedrefugees)Decreased employers contributions for youth and from 65years of ageIncreased possibilities for temporary contracts of 24 months

Step in obs for newly arrived refugees in combination withSwedish language studiesTax reductions on RMI (repairs, maintenance and improvementof housing) and household related services


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Matchingthrough:

Modernisation of the labour market institutions anationally integrated authority for Public EmploymentServiceIndividual action plans and intensified coachingJob and development guaranteeJob guarantee for youthPractical work experienceSupplementing private actors


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Recent changes in labour marketpolicy affect potential employment

OECD Economic outlook:Will inc rease pote n t i a l em pl oyme n t

Institute of Labour Market Evaluation:Will p robab l y d e c rease equ ili br i um

unem pl oyme n t by 1-2 p er c e n tages


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N umber of employedSeasonally ad usted 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

4 700

housands housands


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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

Proce t Proce t


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Short run effects of the crisisDecreased productionincreased unemployment

a nd, c onseque n t l y;

Decreased tax revenuesincreased budget deficits


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However

The largest threat unemployment per see

but instea d

that the unemployed will give upleave the labour force


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HOW?By protecting the employability of individuals

1. By keeping the unemployed active , through- education

- labour market programs- work time arrangements- active job search et c

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


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Crisis management

The Swedish example1. ccept structural change as the root of growth

Increase labour demand

through , f or exam pl e:

I nv

estmen

tsin inf

rastruc

ture,

tax c re di ts f or RM I*measures ,d e c rease d so ci a l se c ur i ty c on tr i but i ons ,su pp ort to l oc a l author i t i es

Provide extra resources to:

2. ctive labour market policy measuresin p art ic u l ar c oa c h ing & mat c hing

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


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Expansionary economic policy in Swedenutomatic stabilizers and spending. Source: OECD Economic

Outlook nr 85

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i g e

u x e m

b u r g

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k r i k e

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S c w e i z

A t t s t sa t r r A t a t r r

Pr c nt av BN P


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Mi ni s

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sterrike

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inl nd

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S erige

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P r o c en t av B NP


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Policies continue to:

Uphold labour force participation

Increase access to employment

Make our labour markets structurally

stronger


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Social exclusionJanuary 2010

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

N umber of personsC hanges compared t o

January 200 9C hanges compared t o

January 2006

U nemployed 320 000 54 000 36 600L abour market p rogrammes 1 77 9 0 1 8 2 9 42 43 67 8P oten tially looking for a job 270 200 6 9 300 5 8 500

of which full-time students who apply for work 131 600 51 500 40 800U nderemployed 2 98 9 00 1 4 300 2 8 9 00S ickness allowance 1 2 8 027 -33 6 19 - 11 5 632D isability pension 4 9 3 8 27 -34 40 1 -6 1 9 62T otal Social Exclusion: 1 6 88 8 55 1 52 522 - 9 91 6

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The Government's Economic Policy - Eva Uddén Sonnegård