sou · H8B346 · 2020-08-07 00:00:00 — •There should be special sanction rules in unemployment in- surance where employees themselves give notice, in order to avoid abuse, but it is open to question whether the current rules strike the right balance. Excessively strict rules may result in employees staying for too long at dysfunctional places of work, giving rise to higher levels of sick leave and other consequences. •Profiling – an assessment of a jobseeker’s knowledge and skills as a basis for matching with the labour market – should be developed and tested as a tool for determining the level and dura- tion of wage subsidies for employees who do not achieve average productivity. •Work capacity assessments should be made compulsory prior to decisions to refuse sickness benefit. •The should retain its role as a central coordinating agency and be given an expanded mandate without delay. Plans for privatisation have support in research. •The Swedish Work Environment Authority should be provided with increased resources. In addition, there should be greater scope for information sharing between authorities monitoring the work environment and those combating economic crime. Migration, introduction and integration Following an initial period for which central government is respon- sible, the main responsibility for the introduction and integration of immigrants currently rests with municipalities. In the Commission’s assessment, central government should take a longer-term respon- sibility, above all to assist local authorities with limited economic resources. •A more stringent regulatory framework is needed for labour immigration. The need for such immigration should be assessed by an authority, as used to be the case. An offer of employment should be legally binding on the employer, and penalties when an employer deviates from the conditions forming the basis for a work permit should affect the employer and not the immigrant worker. Where the employer does not follow the agreed condi- tions, such behaviour should not be criminalised, but the financial penalty should be a significant one, and the employee should receive compensation without having to take his or her claims to court. •Assessment of asylum applications should be concentrated in a number of reception centres where asylum seekers live and participate in early measures while awaiting their decisions. •Municipalities should be responsible for initiatives providing an introduction to Swedish society, while the should have responsibility for preparations for the labour market, including identification and validation of knowledge and skills. Asylum seekers should be required to participate. •IT support for the ’s decisions on recommended places of for those granted permits should be developed using effective algorithms to maxi- mise the likelihood of their finding work. •Daily expenses allowances for asylum seekers should be increased so as to reduce the administrative burden. •The incentive effects of introduction benefit and supplementary introduction benefit should be reviewed, to make it equally worth- while financially for both spouses in a household to take a job. Levels should be adjusted so that municipalities are not burdened with the cost of income support during the introduction period. Appropriate interventions should be available to meet all needs, not least for individuals with a short education and work experience. •The rules in the Reception of Asylum Seekers Act (1994:137) on accommodation arranged by asylum seekers themselves should be phased out. •As mentioned earlier, days of parental benefit paid at the mini- mum level should be reserved in the same way as days paid at the sickness benefit level, an arrangement that may be particularly important in households with traditional gender role values. Individuals on parental leave with parental benefit should be permitted to attend introduction to Swedish society and Swedish for immigrants courses. •The inquiry into student finance recommended above should analyse needs in particular from a migration point of view. •The needs to intensify its efforts to give equivalent introduction support to newly arrived women and men. Among other things, interventions for women who are a long way from the labour market must be expanded and put on a permanent basis. •Efforts to combat ‘honour-related’ violence and oppression should be stepped up, for example by means of further surveys and training for staff who may come into contact with those affected. Housing, neighbourhood and environment Significant housing shortages exist in a majority of the country’s municipalities. For a number of years, production of new housing has been low and uneven, and the existing stock is not being used entirely efficiently. The housing market has become polarised, in the sense that low-earning households have come to dominate the rental stock, while a large proportion of those on middle and high incomes own their homes. Taxation of housing has gradually been tilted in- creasingly in favour of owner-occupied homes, with adverse distributional consequences. •Under current conditions, neither municipal housing companies nor private actors have sufficient incentive to build new homes. Central government must take a greater financial and possibly also operational responsibility. The level of investment support for the provision of rented homes and student accommodation should gradually be raised. The focus should be on a larger share of this support going to the metropolitan regions. The support scheme should be continuously evaluated. •A state ‘top loan’ for construction in weaker housing markets should be introduced. •The supply of housing must be planned on a regional basis, as labour markets normally extend over more than one municipal- ity. Municipal authorities should meet at a regional level to deter- mine the need for home and to allocate responsibility among the municipalities of each region, in consultation with central government. The municipal right of pre-emption (first refusal) should be reintroduced. •A decision has been taken to conduct an inquiry into the design of social housing. This inquiry should be given additional terms of reference to look into a state-owned property company that could assume responsibility for producing new homes in situa- tions where neither municipal companies nor private property owners show sufficient interest. •Taxation of owner-occupied and rented housing should be har- monised. Taxes or charges on owner-occupied homes should be proportional above a certain minimum amount, with no ceiling. Increases in the value of housing should be taxed like other capital gains. •Full use should be made of the room for manoeuvre under EU legislation with regard to municipal housing companies. Should the decision be taken not to develop a special category of social housing, it should be clarified that the ‘sound business principles’ requirement does not conflict with a low-price approach limited only by the cost-price principle. •The possibility of taking profits out of municipal housing com- panies should be limited to social preventive measures that de- monstrably improve housing environments and reduce segrega- tion. •A state rent guarantee should be introduced to facilitate access to housing for younger people and households with lower but stable incomes. •Tenants should be given more influence over renovation work, to prevent improvements in standards and increases in rent that make it necessary for some to move. •The , and Planning and should be tasked with evaluating models for homeless families with children, together with interested municipalities. •Having failed to keep pace with inflation, housing benefits have lost their significance as a housing policy instrument and need to be raised. The increase should be designed to be of particular benefit to families with children. The position of consumers has developed in different directions in different markets in recent decades. In some markets, competition is healthy and price trends are favourable. In others, for various reasons, consumers are less well placed to assert their rights: as a result of monopolies in the case of electricity distribution, a marked asymmetry between producers and consumers when it comes to health care services, or a general shortage, as in the housing market. The proposals put forward by the Commission in these areas will help in general terms to strengthen the position of the consumer. In one area – that of debt – a specific proposal to that end is presented. Households with small financial are sensitive to a temporary loss of income or unforeseen expenditure. The financial stress caused by such disruptions undermines their decision-making capacity and increases the risk of overhasty decisions, for example to take out expensive, short-term loans or to turn to commercial gambling to try to resolve the situation. This can give rise to negative spirals and debt traps that are difficult or impossible to escape from. One option is debt relief. Around 183 000 children are currently growing up in a home where at least one parent has debts that have been referred to, or has entered a debt relief scheme with, the Swedish Enforcement Authority. However, debt relief is not suf- ficient to handle every situation that arises. With inspiration partly from legislation in , the Commission therefore recommends an absolute limitation period for debts, subject to certain conditions. •Absolute limitation of debts for individuals with long-term over- indebtedness should be introduced under the Limitation Act. By international standards, the state of health in is generally good. However, significant differences exist between income groups and between regions. Relatively new developments, such as the health care choice reform and private health insurance, risk further increasing differences in access to health care. •The health care choice system has meant that the formerly joined-up system of child health care no longer works as it used to do. No one actor now has overall responsibility for monitoring public health and coordinating preventive interventions. The regions should be given a responsibility for preventive public health, with a particular responsibility for measures targeted at households at greater risk. •An inquiry should be carried out into the feasibility of a concrete programme of effective measures to promote healthy lifestyle habits, particularly among young people in all socio-economic groups. This should include, for example, wider-ranging teaching and efforts to establish good habits in schoolchildren (exercise, diet etc.), health counselling for adults (based on the ‘Väster- botten model’), and taxation of food additives such as sugar and salt. •Current policy on alcohol should be maintained and also tight- ened up in certain respects. •Problem gambling is now viewed on a par with other forms of addiction or misuse, but there is no coherent and effective policy in this area. Such a policy should be developed, modelled on those for other types of dependence. The Commission recommends restrictions on marketing as in the case of tobacco and alcohol. •The Health and Act needs to be made more precise so as to clarify what constitutes a violation of its inten- tions. Private health insurance is one example of a phenomenon that can give rise to conflicts with those intentions and that may need to be more clearly regulated. •People with disabilities often have a capacity to work that can be made use of with appropriate assistive technology. Support arrangements need to be made more effective to reduce costs and enable more people to participate in employment. Commercial operators have for example driven up the cost of hearing assistive technology in an unacceptable way. Transfer payments – children and families The main changes to transfer systems for children and families pro- posed by the Commission were presented earlier under the heading Gender equality – changes to the rules on sick leave during preg- nancy and pregnancy benefit, parental benefit, and entitlement to childcare during unsocial working hours. Economic vulnerability in childhood can have long-term conse- quences for children’s health and life chances. Housing and the local environment are particularly important in this regard. The Com- mission’s proposal to restore housing benefit as a housing policy instrument is therefore important, and changes to the benefit should be designed so as mainly to help families with children. Insurance to cover unemployment and reduced working capacity Sickness benefit is intended to provide financial security for individuals who, for a limited period, are unable to work owing to illness, and covers the period they are ill and their capacity to work is reduced. Unemployment insurance offers more specific cover for periods in transition between jobs, and requires the unemployed person to seek and take work that is considered suitable. The requirements and incentives to do so increase, moreover, the longer the person is unemployed. Individuals with a weak position on the labour market are often excluded altogether from these systems by the requirements of the existing rules, even though they may have worked and paid taxes and contributions over a long period of time. In the case of sickness benefit, the requirement is a predictable income for a certain time into the future. With unemployment benefit, the condition is sufficient hours of work going far enough back in time, and also membership of an unemployment insurance fund, either one linked to a trade union or the independent Alfakassan. Another problem concerns people who are denied sickness benefit with reference to what is termed ‘normally occurring employ- ment’, but who on contacting the are judged too ill to be able to find a job. In the Commission’s view, conflicting assessments of this kind by central government agencies are unacceptable. For these systems of insurance, the Commission makes the following proposals: •Levels of benefit paid under public insurance schemes have fallen over a long period for a large proportion of those covered. A long-term target should be for 80 per cent of the individuals insured to have a benefit level of 80 per cent of their normal income. •The sickness insurance scheme should be based on historical monthly income. This change can be made fiscally neutral if so desired, by adjusting either contributions to the system or benefit levels, or by a combination of the two. •Unemployment insurance should be compulsory within the framework of existing administrative arrangements, that is to say, a combination of insurance funds linked to trade unions and an independent one, which employees would have to choose be- tween. Benefit levels should be based on monthly income and should be raised. •It should only be possible to deny individuals sickness benefit with reference to work of a specified character on the labour market. Such a decision must be preceded by a work capacity assessment that permits a more concrete appraisal of what avail- able jobs could be appropriate. Definitions of what types of work are to be considered suitable for the person insured should be harmonised between the rules of the unemployment and sickness insurance schemes. In the area of crime, the important point to be noted is that pre- ventive measures are the most effective. A large proportion of criminal careers can be traced back to failure at school, which in turn is often associated with neuropsychiatric disorders, substance misuse in the family and similar problems. If children and young people at risk are identified early on and support measures put in place, in other words, it is possible to avoid much higher costs, both personal and socio-economic, later on in life. Exclusion early in life increases the risk of dysfunctional patterns of behaviour. Even with a successful policy of prevention, crimes will be com- mitted. At that stage in life, too, it is important that the measures taken by society are designed to integrate and not to exclude. Entry to the labour market and starting a family are important factors in achieving integration, and education while in prison should there- fore be part of the process of readjustment. The Commission has no specific proposals in the areas of crime prevention and treatment of offenders, but confines itself to making the following assessments: •Early interventions in childhood and adolescence to prevent individuals embarking on criminal careers are cost-effective, pro- vided that at-risk groups can be identified with sufficient accu- racy. This requires coordinated efforts by schools, social services and child and adolescent psychiatric services. •As far as possible, crime policy should be guided by research, and not by what are judged to be politically attractive measures. Lengthening already long prison sentences has an uncertain effect and may, at worst, be counterproductive. Increasingly, companies have become instruments of organised crime, with negative distributional consequences for both crime victims and exploited employees. To counteract this trend, the Commission proposes the following: •The statutory audit requirement should be reintroduced for small limited companies. •An inquiry should be conducted into the possibility of additional information sharing between authorities to facilitate targeting and control. A modern tax system should be based on progressive taxation of income. There is a strong correlation between capability (measured as earned income) on the one hand and capital assets and capital incomes on the other. This is an argument for taxing capital as a complement to labour, so as to be able to make overall taxation more progressive without too large an increase in the marginal rate of tax on labour. The tax-to-GDP ratio is not a good measure of the extent of government involvement in household finances. In a direct com- parison with other countries, has a relatively high tax ratio, but when this is corrected for taxable transfer payments, welfare policy on the expenditure side of the budget and other policy elements, the country occupies more of an intermediate position. Since the turn of the century, the tax ratio has fallen by 5.7 per cent of GDP, currently corresponding to just over billion. The growing inequality of income in is due largely to political decisions. Capital incomes, which are taxed less than in- comes from labour, have increased in significance, and the tax and transfer system is, in general, less redistributive than before. Rev- enue from capital taxation has shown a downward trend from 7 to 5 per cent of GDP, despite an increase in both stocks and flows of capital. Taxation of housing used to be guided by the principle that the state should be neutral between owner-occupied and rented accom- modation. Now owner-occupied housing is strongly favoured, more so than in most EU countries. Another factor of distributional significance is what are referred to as ‘tax expenditures’, i.e. subsidies on the revenue side of the budget that arise from deviations from the benchmark level of a given tax. Examples of this are lower value added tax on food, tax relief for interest on loans, and the and deduction schemes for home repairs and maintenance and household services. In the area of taxation, the Commission has confined its atten- tion to taxes with clear distributional implications: •The tax on capital incomes should be raised, guided by the aim of a uniform rate of tax on all capital incomes. Inheritance and gift tax should be reintroduced, and an inquiry should be conducted into the feasibility of a wealth tax. •Taxation arrangements for closely held companies, the ‘3:12 rules’, appear to have generated some increase in employ- ment, but it is unclear at what cost. The rules have also been exploited to develop company structures that circumvent the progressivity of the tax system. Changes that would eliminate such abuse, while preserving the positive elements, were the subject of an earlier inquiry (SOU 2016:75). The proposals from that inquiry should be implemented. Steps should be taken to prevent structures of the type mentioned by introducing a more stringent activity requirement for these companies. •The principle of equal treatment of rented and owner-occupied housing should be reinstated. The rate of tax on tenant-owner apartments should be harmonised with that applying to houses. •A charge or tax on real property should only be levied above an exempt amount, but on the other hand there should be no ceiling on the amount payable. Tax relief for interest payments should be reduced in stages. The property charge on rented apartment should be abolished. •The pandemic will lead to a sharp decline in the public budget balance, owing to both increased expenditure and reduced revenue. To restore the balance in public finances, significant tax increases will be necessary. These should be based on the prin- ciple of taxation according to ability, that is to say, be clearly progressive in character. The remit of the Public Commission on Equality differs sub- stantially from those of regular government inquiries, on account of the broad mandate set out in its terms of reference. As earlier parts of this report have made clear, its work covers a large number of policy areas, and it has not been possible to develop detailed pro- posals throughout as would normally be the case in an inquiry. A good many proposals and recommendations call for further inquiries, and estimates of costs in such areas will necessarily be approximate. The Covid-19 pandemic has radically changed the basic condi- tions for fiscal policy. Both the tax ratio and ambitions in terms of the balance of public finances will need to be reassessed. In its out- line analysis of financing, however, the Commission has disregarded the effects of the pandemic. The problems faced by even before the pandemic, moreover, are on such a scale that it seems unrealistic to imagine that they could all be solved simply by reallocating existing budget funds. The extensive immigration of recent decades has crucially changed the conditions on which earlier decisions regarding the surplus target and tax ratio were based. The EU Stability and Growth Pact includes public budget deficit and debt requirements which has for a long time met by a good . The surplus target has recently been adjusted downwards, but the balance of public fi- nances could be lowered by another roughly 1 per cent of GDP while still respecting the requirements of the Pact, corresponding to a fiscal space of just over billion. As mentioned, the tax ratio has been reduced by 5.7 per cent of GDP since the turn of the century, corresponding to around billion. The surplus target was once set with reference to demographic projections that foresaw a sharp increase in the dependency ratio – the proportion of children and elderly people in the population was expected to grow relative to the proportion of people of working age. Immigration since the turn of the century has radically altered the demographic profile of the population: the dependency ratio improves by between 15 and 16 per cent when individuals born abroad are included. To be able to make the most of this favourable situation, however, those born abroad, as well as groups of people born in who for various reasons neither work nor study, will have to be integrated as far as possible into the labour force. This calls for very substantial investments in education and training, combined to varying degrees with wage subsidies. In the absence of such investments, there is a risk of costs of other kinds – a lack of economic growth, greater dependence on transfer systems, and social conflict.