Background information

Many of the industries with a high share of young workers, such as commerce and hospitality, have been hit particularly hard by the restrictions and behavioral changes that the pandemic entails. The government thus decided to lower payroll taxes for people aged 19-23, in order to support the continued employment as well as new recruitments of young people.

Content of measure

The measure means employers' social security contributions (payroll tax) for people aged 19 to 23 will be reduced during the period January 2021 to March 2023. The original level of 31.42 percent is thereby lowered to 19.73% for this particular age group. The reduction is applicable to employees in the age group earning no more than SEK 25,000 per month (€2,500). For those earning more, the original rate applies.

The reduction was originally planned to take effect from April 2021, but was brought forward to include all of 2021 (and last until April 2023) through an extra amendment budget. The cost of the measure is estimate to SEK 9 billion for 2021-2022, and an additional SEK 1.4 billion for the first quarter of 2023.

Use of measure

No information about the use of the measure is available at this point.

Target groups

Workers	Businesses	Citizens
Youth (18-25) in employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Any other form of consultation, institutionalised (as stable working groups or committees) or informal	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

The social partners were involved thorugh the regular referral round, where legal proposals are shared with a number of organisations (including but not limited to social partner organisations, government agencies, NGOs etc).

Views and reactions

The original proposal, where the measure was set to take effect from the second quarter of 2021, received criticism from Confederation of Swedish Enterprise for being too late. But the organisation was otherwise largely in favour of the proposal.

Trade union organisations, such as the Confederation for Professional Employees, argued against the measure, stating that the measure is too costly and that research has proved no or only limited effects on employment can be expected from reducing the payroll tax.

Sources

• 08 November 2020: Vill skynda på sänkt arbetsgivaravgift (www.svd.se)
• 15 January 2021: Sänkta arbetsgivaravgifter för unga tidigareläggs (www.regeringen.se)