Sweden Finland Austria

Unemployment benefits
The access to the scheme was tightened considerably in 1995. This was followed up in
1996 with more effective control of the availability for the labour market of the unem-
ployed. Employer financing was enhanced (more weeks covered by employer financing),
and differentiation of contributions according to the number of firings of each firm intro-
duced. This can be seen as a move in direction of further privatization of the scheme.
The job seekers employment act was implemented in 1998, one of its aims is to keep
young unemployed (16-18 years) close to the labour market through individual action
plans.
Disability pensions
Access to this scheme (WAO) has been tightened considerably in recent years, the benefit
levels and the duration of benefits have been cut for many , e.g. in form of benefit reduc-
tions after some time as a recipient. From 1998 there is also a scheme for self employed
(WAZ). Employer contributions will be differentiated according to the entrants to the
scheme from each company, and from 1998 only the employer pays contributions also to
the WAO scheme.
GREAT BRITAIN
Taxation
Personal taxation was decreased in Great Britain again in 1997. The personal allowance
increased significantly and the tax rate in the second bracket was lowered from 24 to 23 per
cent. Britain is the ’low tax’ country in Europe, a position which was further strengthened in
1997. The reductions in personal taxation continued in 1998. From 1999 a 10 per cent tax
bracket was introduced and the 20 per cent bracket disappeared.
Unemployment benefits
The unemployment benefit scheme was replaced by the Jobseeker's Allowance (JSA) from
October 1996. The new scheme combines U.B. and I.S. paid to unemployed people in one

---

72
scheme. If the contribution conditions are met the unemployed will receive JSA (C), where
C indicates that it is contribution based, for six months in the same way as in the old U.B.
scheme. If the person is still unemployed after six months he or she will receive JSA (IB),
where IB indicates that it is income based. This part of the scheme is means-tested. There
are no time limitations attached to JSA (IB).
If the contribution conditions are not met, the unemployed starts immediately (after the
usual waiting period) receiving JSA (IB). It is possible to receive JSA with work for up to
16 hours (if it is JSA (IB) there will be means-testing) and as a participant in government
training courses. The rates are differentiated according to age, lowest for the 16 to 17 years
old, higher for 18 - 24 years old and highest for unemployed over 25 years of age. In some
cases there will be a 'Top-Up' from JSA (IB) to recipients of JSA (C).
Family allowances
From June 1998 the family allowances for lone parents were lowered to the same level as
for couples with children, but only for new single parents. The reduction was approxi-
mately 6 GBP/week for the eldest child.
Family credit
The Family Credit (FC) scheme is for families with children and low working income. It
has a basic credit, credits for children and a special 30 hours (of work) credit. For income
(net of tax and social contributions) above a certain threshold the benefit is being tapered
off by 70 per cent. A child care disregard (CCD) of up to 60 GBP/week could be deducted
from the income. From June 1998 the CCD has a max. value of 100 GBP/week for fami-
lies with 2 children. FC is a cash benefit paid on a weekly basis. From October 1999 the
Family Credit scheme will be replaced by the Working Families Tax Credit scheme. Tax
credits (refundable) will be used in stead of cash benefits. The structure of the scheme is
similar to the FC scheme, but the taper is smaller, 55 per cent. The CCD has also been
changed into tax credits. The administration of the new scheme will be done by Inland
Revenue. Another cash benefit scheme, the Disability Working Allowance will, at the
same time, be replaced by the Disabled Person's Tax Credit. There seems to be a develop-
ment, at least in Great Britain and Canada, cf. the next section, towards using the tax
scheme instead of the benefit scheme to secure adequate income primarily for families
with children. This can be seen as a step in the direction of integration of the tax and
benefit schemes.
Other initiatives
The New Labour government has started a comprehensive reform of the tax/benefit sys-
tem, some of the changes are reported above, others are in preparation. A new old-age
pension scheme, known as Stakeholder Pension is being discussed, labour market initia-
tives, under the label New Deal are being implemented, e.g. initiatives to get young unem-

---

73
ployed back to work, which may be subsidized work. The reforms will be commented
upon in more detail in future editions of 
Elements'.
CANADA
Taxation
The tax rates and tax brackets stayed constant in 1997, they only change when the annual
price increases are above a certain level. Contributions for CPP increased slightly while
those for employment insurance, cf. below, decreased slightly. Local taxes for Ontario
dropped significantly.
In 1997 the earned income tax credit scheme (WIS) was reshaped to contain a new refund-
able tax credit scheme, which is designed as child benefits (on top of the ordinary child
benefit scheme). There is a 
build-up' phase, where the benefit grows from zero to its
maximum, a constant phase, where the benefit is unchanged, and a 
tapering' phase, where
the benefit is reduced to zero. The 
build-up' phase was abolished in 1998, implying that
all low income families (with children) start as recipients. It is the plan than this new
scheme will develop into a uniform child benefit scheme replacing all other benefits for
children.
Employment insurance
A major reform of the former U.B. scheme was passed by the Canadian Parliament in 1995
and was gradually implemented in 1996 and 1997. Basis for the benefits has been weeks
of work, it will now be hours, which will be beneficial especially for part time workers.
The duration of the benefit period was reduced from a former maximum of 50 weeks to 45
weeks (this is an absolute max.). Measures to promote employment is included in the new
scheme, e.g. by improved information on jobs available and subsidized employment also
for self-employed. From 1997 a supplement for families with children was introduced,
raising the compensation rate to a maximum of 65 per cent of the lost income. The usual
level is 55 per cent.