The country's prime minister, Ulf Kristersson, announced the inquiry at a press conference held on Thursday alongside Finance Minister Elisabeth Svantesson, Social Minister Anna Tenje, and Linda Lindberg, the Sweden Democrats' spokesperson on social affairs.
"It's a fundamental principle that it should always be more financially rewarding to go to work than to go on benefits, but today it isn't always the case," Kristersson said in a press statement. "That's why we are taking the initiative to bring in a benefits cap with the idea of increasing the motivation to work. It's an important structural reform to get more people into work."
The promise to put in place a benefits cap was an important part of the Tidö Agreement between Sweden's three government parties and the far-right Sweden Democrats, on whom they depend for their support.
Svantesson said that there were currently around 20,000 households in Sweden who get more money by being on benefits than they would if they worked.
"The subsistence allowance, just to make clear, is not in itself a large payment. But if you have income support and a family, many allowances are added," she said.
"If you get stuck in what was supposed to be a temporary thing, then it's a great challenge to move on. It was never intended that subsistence allowance would be a long-term source of income. It is about incentives but also about morals."
Maria Hemström Hemmingsson, the Director General of the Institute for Evaluation of Labour Market and Education Policy (IFAU), a state-owned research institute, has been appointed to run the investigation and to make her proposals in December 2024.
Hemmingsson is already leading an inquiry on subsistence allowance, after being appointed by the former Social Democrat-led government to look at what requirements the government could impose on those receiving the benefit.
In the inquiry she can either set a cap for the total amount of benefits any single household or individual can receive, or she can suggest reforms which would prevent people from receiving too many different types of benefits simultaneously.
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