• Sweden's news in English

'Punishments for inactive unemployed'

Paul O'Mahony · 13 Nov 2006, 10:52

Published: 13 Nov 2006 10:52 GMT+01:00

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The minister draws an analogy with fines for a badly parked car.

"Experiences from Denmark, Holland, Switzerland and England show that most people react to a warning. If you say to people, 'now you should look for a job, otherwise you will get a parking fine', the effect is that they find work," said Borg.

With the government's new proposal for unemployment insurance, the maximum daily sum will be reduced to 680 kronor.

While it is already possible under the current system to partially withdraw unemployment benefits for those not considered sufficiently active in their job searches, the rule is seldom applied.

Borg hopes that a one-day fine will be applied more freely. This in turn will lead to job seekers trying harder to gain employment, according to the minister.

Social Democrat Sven-Erik Österberg, vice chairman of the parliamentary labour market committee, is critical of the finance minister's proposal.

"Punishing unemployed people instead of creating new jobs is a case of starting at the wrong end," said Österberg.

According to Österberg, the problem is not that the unemployment funds are too generous but that there is a lack of jobs.

"Fines just mean more pressure on people already in a tight position – the long-term unemployed – for whom there aren't any jobs anyway," said Österberg.

But according to Bertil Holmlund, Professor of Economics at Uppsala University, the jury is out as to whether Borg's proposals will result in lower unemployment.

"We just don't know. Sweden had a reform in 2001 that has not yet been fully evaluated. Pre-2001 there were stiff punishments for those not seeking work and it was possible for all benefits to be withdrawn," Holmlund told The Local.

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"This was then relaxed somewhat, and Borg's suggestion means a further softening of the system. But we cannot be sure of the effects."

What about the finance minister's examples drawn from experiences in other countries?

"Yes, it is certainly true that people react to sanctions. But it is not obvious what the optimal trade-off is," said Holmlund.

Paul O'Mahony (paul.omahony@thelocal.com)

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