Increase in parental benefit has minimal impact on fathers’ take-up rate
Published: 2 September 2007
Parental insurance comprises three kinds of cash benefits: parental benefit in connection with childbirth, pregnancy benefit and temporary parental benefit. Parental benefit (/föräldrarpenning/) is payable for a total of 480 days. For the first 390 days, the benefit paid is equivalent to the parent’s qualifying income for sickness benefits, corresponding to 80% of income subject to the ceiling of the insurance scheme. Beyond these 390 days, a parent can remain at home with a child for a further 90 days at a minimum daily benefit level of SEK 180 (€19.42 as at 13 August 2007). Some 60 parental benefit days are reserved exclusively for each parent.
In 2006, parental leave benefit increased from SEK 24,800 (€2,676) to SEK 33,000 (€3,561) a month. The aim of this reform was to motivate more fathers to use extra days for parental leave. A study by the Swedish Social Insurance Agency shows that fathers are generally improving their use of parental benefits, but so far the increased ceiling has had only a modest impact. Women still take on more childcare responsibility and the gender gap remains at the same level.
New parental benefit
Parental insurance comprises three kinds of cash benefits: parental benefit in connection with childbirth, pregnancy benefit and temporary parental benefit. Parental benefit (föräldrarpenning) is payable for a total of 480 days. For the first 390 days, the benefit paid is equivalent to the parent’s qualifying income for sickness benefits, corresponding to 80% of income subject to the ceiling of the insurance scheme. Beyond these 390 days, a parent can remain at home with a child for a further 90 days at a minimum daily benefit level of SEK 180 (€19.42 as at 13 August 2007). Some 60 parental benefit days are reserved exclusively for each parent.
In Sweden, the amount of insurance benefits is calculated on the basis of the price base amount, which, in turn, is linked to the consumer price index so that benefits maintain their value as the general level of prices changes. The government sets the price base amount annually; for 2007, it is SEK 40,300 (€4,390). The income ceiling for parental leave benefit in connection with childbirth is 10 price base amounts; this corresponds to a maximum annual salary of SEK 403,000 (€43,483) on which benefits are payable in 2007. The income ceiling for temporary parental benefit and pregnancy benefit is 7.5 price base amounts, amounting to a maximum annual salary of SEK 302,250 (€32,612).
First results
The Swedish Social Insurance Agency (Försäkringskassan) has examined the effects of the increased parental leave benefit so far. The analysis is mainly based on parents with a gross annual income of SEK 295,000 (€32,000) or more. Some general tendencies emerge in relation to the take-up of parental leave and use of benefits.
In general, the use of parental leave benefit follows a seasonal pattern.
Men with an income exceeding the former income ceiling have increased their use of parental leave benefit during the summer months.
Women earning an income exceeding the former income ceiling have increased the use of parental leave benefit during the entire year.
Men have used more days of parental benefit as a result of the increased income ceiling; however, the difference in days used between men and women has not decreased, due to the fact that women with a high income simultaneously increased their take-up of parental leave days.
From the children’s perspective, the reform has a positive outcome since both men and women are taking an increased number of parental leave days; thus, children spend more time with their parents at home, which was not the case before.
Beneficiaries of the reform
The reform has mainly influenced the behaviour of parents with an income exceeding the former income ceiling of SEK 24,800 (€2,676) a month, since they can now avail of the higher benefit levels in relation to their income. The table below outlines the compensation levels according to different income groups.
| Gross monthly income (SEK) | 10,000 | 20,000 | 30,000 | 40,000 | 50,000 | 60,000 | 70,000 |
|---|---|---|---|---|---|---|---|
| Compensation level in 2007 (%) | 79 | 79 | 79 | 66 | 53 | 44 | 39 |
| Compensation level before reform in 2006 (%) | 80 | 80 | 66 | 50 | 40 | 33 | 28 |
Note: The compensation level does not exactly correspond to 80% due to the fact that the income is multiplied by a ‘calculating factor’ of 0.989.
Source: Swedish Social Insurance Agency, 2007
Reaction of social partners
The Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) welcomes the reform on parental insurance benefits. LO presumes that an increased individualisation of insurance benefits may improve the situation of women in the labour market. Nevertheless, the confederation identifies two obstacles to achieving greater equality in the labour market. Firstly, employers tend to offer poorer wage conditions to women than to men, since they assume that women may take longer parental leave than men do. Secondly, this wage difference also impacts negatively on equality within a family as it further strengthens the uneven division between unpaid and paid work when women and men become parents.
The Confederation of Swedish Enterprise (Svenskt Näringsliv) believes that the reform will support a more equal use of parental leave. However, one problem is that, although insurance benefits are attributed on a more individual basis, the system remains inflexible for many families. Due to different working hours and various life situations, a lot of families cannot adjust to the ‘normal pattern’ according to which families have to live in order to fully benefit from the insurance reform. Thus, the confederation calls for a more flexible system and less of a top-down approach.
Thomas Brunk, Oxford Research
Eurofound recommends citing this publication in the following way.
Eurofound (2007), Increase in parental benefit has minimal impact on fathers’ take-up rate, article.
