European Foundation
for the Improvement of
Living and Working Conditions

The tripartite EU agency providing knowledge to assist
in the development of better social, employment and
work-related policies

COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case SE-2021-1/1893 – measures in Sweden

Lowered payroll taxes for young people

Sänkta arbetsgivaravgifter för unga

Country Sweden , applies nationwide
Time period Temporary, 01 January 2021 – 31 March 2023
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Active labour market policies, incl. subsidised job creation
Author Anna-Karin Gustafsson (Oxford Research) and Eurofound
Case created 26 April 2021 (updated 30 April 2021)

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

Citation

Eurofound (2021), Lowered payroll taxes for young people, case SE-2021-1/1893 (measures in Sweden), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.