Response to interpellation 2023/24:207 on the indexing of sickness and activity compensation
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns the indexing of sickness and activity compensation to meet rising living costs. M argues that the compensations are already indexed through the price base amount, which in 2024 means an increase of 9.14 percent 1 2. M emphasizes that a restrained fiscal policy and inflation control are necessary to protect households' purchasing power 1 2 3. S argues that the price base amount is not sufficient to protect the standard of living during high inflation 4. S argues that the current model increases economic inequality and that the government prioritizes tax cuts for high-income earners over strengthening the most vulnerable 5 6.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Anna Tenje (M)
Madam Speaker! Jessica Rodén has asked me if I will take the initiative to change the indexing of sickness and activity compensation to ensure that these compensations keep pace with increasing living costs and thereby maintain their value over time. Jessica Rodén has also asked me what other measures I intend to take to strengthen the economic security for individuals with sickness and activity compensation.
The indexing of the sickness benefit and the activity benefit is designed to ensure that the benefits keep pace with increasing living costs. Sickness benefit and activity benefit are adjusted annually with the price base amount, which follows the price level according to the consumer price index. On 1 January 2024, the price base amount is increased by 9.14 percent. Full sickness benefit in the form of guarantee benefit for those who have reached the age of 30 is thereby increased by approximately 1,100 kronor per month. Persons with income-related sickness benefit or activity benefit can receive approximately 1,900 kronor more per month. It is an appropriate arrangement that sickness benefit and activity benefit, in accordance with current law, are indexed with the price base amount to compensate for precisely those increased costs.
Sweden is in a pressured economic situation. We are well aware of this. The Government takes responsibility in this challenging situation by pursuing a restrained fiscal policy. An overly expansive fiscal policy risks creating a worse economic situation for Sweden with even higher inflation for a longer period and a further deterioration of households' purchasing power.
At the same time, the government is taking measures to support households that are particularly hard hit by the price increases. One such measure is the proposal in the government's budget bill for 2024 to further extend the temporary supplementary grant within the housing allowance.
Jessica Rodén (S)
Madam Speaker! Thank you to the Minister for the answer!
The sickness insurance is a central part of the welfare and constitutes an important social contract between society and the individual. The insurance shall provide security in the event of loss of income or when one lacks capacity to work.
The sickness benefit and the activity benefit are two insurances for those who have reduced capacity for work due to illness, injury, or disability. These benefits are, as stated, intended to compensate for lost income and support the individual in maintaining a reasonable economic security and quality of life.
There are approximately 250,000 people in Sweden who receive sickness and activity compensation, and approximately 60 percent of these are women. The guarantee level in the sickness and activity compensation for a person over 30 years of age is today 12,163 kronor before tax. If one is under 30 years of age, the compensation can be lower.
The sickness benefit in the form of guarantee compensation constitutes the basic protection in the sickness benefit system and is linked to the price base amount. The price base amount reflects price developments and is used to protect the value of the sickness and activity compensation, and the increase is an adjustment to inflation. The purpose is that it should be possible to buy just as much for the money and that the standard of living should be maintained at the same level.
But the fact that the compensations are adjusted with the price base amount is no guarantee of an unchanged standard of living. During periods of low inflation, the value of the price base amount decreases at a slow rate, and during periods of high inflation, the value of the price base amount decreases much faster. This means that those individuals who have compensations linked to the price base amount experience a lowered standard of living. Försäkringskassan writes in a recent report that the sickness benefit is not protected against high inflation. When the new level of the price base amount came into effect in January this year, its value had fallen to below 93.7 percent of the original value.
Madam Speaker! Yes, Sweden is in a pressured economic situation. The Minister writes in his response that an overly expansive fiscal policy risks creating a worse economic situation for Sweden with even higher inflation for a longer period. Therefore, I want the Minister to explain to me why investments to lower taxes for high-income earners do not fuel inflation, while investments to strengthen the sickness and activity allowance would do so.
Statsrådet Anna Tenje (M)
Madam Speaker! Yes, Sweden is in a winter. A few weeks ago we had snow-covered lovely streets, somewhat slippery, but they testified that it was winter. But we also have winter in the Swedish economy, as the member also pointed out.
The economic situation has weakened and the Swedish economy is assessed to be in a recession, and it will be so throughout 2023 and also into 2024. The highest inflation in 30 years and higher interest rates, together with declining global demand, are the main reasons for the economic downturn.
Many families and homes have recently seen their household budgets shrink, much due to high food prices and high interest rates. The Government and other central actors, the Riksbank and the parties in the labor market, have taken a great collective responsibility to counteract inflation biting itself into high levels. Inflation is by far the households' absolute greatest enemy. The longer it bites itself in, the deeper it digs into the households' wallets. Therefore, the fight against inflation is the best measure to strengthen the economic security for all households.
The budget that the government presents for 2023, and also for 2024, is restrained in order to combat inflation. But in addition to being restrained, we have still chosen to prioritize supporting households and welfare. To counteract prices rising more than necessary, but to support those who are particularly vulnerable, we have taken several measures. The tax was what the member himself was on, but I want to speak about the tax on fuels, which is lowered next year. Municipalities and regions receive extensive supplements to strengthen welfare, and the temporary additional grant through the housing allowance for families with children with particularly weak finances is extended for another six months. In addition, there are substantial upward adjustments of the sickness benefit and the activity benefit with the price base amount of 9.14 for 2024, which I mentioned initially, and was 8.6 for 2023.
Jessica Rodén (S)
Madam Speaker! I did not perceive that I received an answer to my question. We shall try again.
The current model causes income inequalities in society to increase, that is, the economic inequality is increasing. The Social Insurance Inspectorate considers that the income development in households that lack connection to the labor market and which primarily support themselves through guarantee payments has fallen behind the average income development.
Economic inequality has grown stronger, and its impact extends far beyond the reach of the wallet. Almost four decades ago, Sweden was a model for equality, where we together built a welfare state that supported all citizens. But unfortunately, we see a worrying trend. The gaps between social groups are increasing, and it is not just a question of the distribution of resources but also a matter for our national health and our social cohesion.
The increased inequality affects our mental health in an alarming way. Research clearly shows that in societies with larger economic gaps, mental ill-health increases. It is not just an issue that affects those who struggle with their finances, but it is an issue that affects us all and which undermines our collective self-esteem. Inequality thus affects our society's well-being and it affects life expectancy. Child mortality and other health-related indicators are negatively affected when the gaps increase.
It is also important to understand that economic inequality is not solely a question of material welfare. It is about values, our view of one another, and the social structure we want. In an equal society, everyone is given the opportunity to flourish and contribute to our common future. In a time when we need more solidarity and cohesion, and when we need more economic equality, the government and Sverigedemokraterna instead invest in raising the ceiling for the deduction for renovation (rotavdrag) in 2024. They increase the economic gap by introducing the eighth job tax deduction, which does not include persons with sickness and activity compensation. They are thus prioritizing lowering the tax for those who already have it so that they can manage, and let the sick and persons with disabilities pay more tax than those who are in wage employment.
The government is therefore supporting them with the most money at the expense of the sick and persons with disabilities. It is remarkable that the government makes this prioritization, especially now when we are in the midst of an economic crisis. I believe these priorities increase the gaps in society.
Madam Speaker! I ask once again: Can the Minister explain to me why investments in lowering taxes for high-income earners do not fuel inflation, while investments in strengthening the sickness and activity allowance would?
Statsrådet Anna Tenje (M)
Madam Speaker! Inflation is the households' worst enemy. This government has had the strategy from day one to fight inflation, and it will continue to be our strategy. Even now, although the war against high inflation is not won, we now see the effects of the government's policy, and we see a lower inflation rate. But here we must also continue to be persistent so that this does not backfire.
We will continue to safeguard household finances by ensuring that inflation is pushed back, while we continue to support the most vulnerable households in these economically tough times.
It is always easy to demand more, but it is not always easy to do right. In my previous assignment as the chairman of the municipal executive board, it was often about making tough decisions that were not always appreciated in the moment but which in the long run proved to be right. The same applies now when I am a minister. I am completely convinced that the focus on precisely combating inflation is entirely right and correct. It is the high inflation that is the households' worst enemy.
The government is protecting households, that is to say indexation, supplements for families with children and inflation control in all areas, while we are always prepared to take further measures if the crisis were to deepen.
A well-balanced budget in this situation is about fighting inflation and ensuring that we support the most vulnerable households.
Jessica Rodén (S)
Madam Speaker! I do not seem to be able to get an answer to my question as to why investments in lowering taxes for high-income earners do not fuel inflation, while investments in strengthening the sickness and activity allowance would.
Just as the Minister said, it is a dark winter, and it may become even darker. Households have lost ten years of real wage increases, and the proportion of households struggling to make ends meet has increased significantly. Alarms are being raised about longer queues at the churches' help centers, and it is not only those who already had small economic margins who are worried about how they will afford Christmas presents and Christmas food this year.
Every fourth person with a disability has a low economic standard. According to FUB, it is the levels of the sickness and activity compensation that are the primary cause of poverty among persons with intellectual disabilities. In its report *Trapped in Poverty?*, FUB writes that a person with sickness and activity compensation can fall behind by approximately 1,700 kronor per month.
Between 2003 and 2020, the average wage increased by 52 percent. During the same period, the sickness and activity allowance has increased by 29 percent.
As has been said, economic inequality does not only have consequences for the wallet, Madam Speaker. Differences in income affect the well-being of our entire society.
As a Social Democrat, I am convinced that a community is measured by how well we take care of the most vulnerable. Strengthening the economic security for people who are ill or have a disability is not only an investment in their well-being but also an investment in a stronger and more inclusive society.
Therefore, a few days before Christmas, I would like to wish that we could continue to work together for a community where no one is left in the shadows and where every individual is given the opportunity to flourish regardless of the challenges they face.
Statsrådet Anna Tenje (M)
Madam Speaker! Many thanks to the interpellator for this debate!
I can state that for us Moderates, it is not a contradiction to lower the tax through a job tax credit for low- and middle-income earners - it also hits households that are having a tough time right now; inflation leaves no one untouched - and at the same time increase the sickness and activity allowance and increase it by 9.14 percent.
These are measures that are included in the budget for 2024. But as I said in my previous speech, I am following this issue very closely. We see now that the inflation rate is easing, and hopefully we see a brightening ahead. But we are still holding onto that issue and monitoring it closely so that it does not turn back, given that it is what would worsen the economy the most, especially for those who have the worst economy right now.
We are also not averse to taking other measures if we see that this crisis worsens further, because it is precisely the particularly vulnerable households that this government chooses to focus its efforts on.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.