Sweden Finland Austria

Parental benefits
The parental insurance scheme is a remarkable component of the Swedish social security
system. The scheme provides a high degree of flexibility for the parents considering care
for children in connection with births, illness or ’leave’ to contact day care institutions or
schools. Only the maternity leave part of the scheme is considered here. In this scheme the
parents have rights for income related benefits in 360 days and after that rights to a (low)
flat rate benefit for 90 days more. In case of twins or even more children born at the same
time the duration of the benefit periods are enhanced.
The scheme for parental leave in relation to births was changed in 1994, when a special
benefit for child care was introduced from July 1994. This new benefit replaced the last 90
days of the benefit period. According to the new scheme the parents received a taxable
benefit of 2,000 SEK per month per child in the age group from 1 to 3 years. The full
benefit was received if the parents did not use public day care at all, a partial benefit was
received if public day care was used on less than full time basis. Expenditures for private
day care were deductible in taxable income. The scheme was only in operation for ½ year
from July 1994 until January 1995. From January 1995 the ’lost’ 90 days of the maternity
leave were reintroduced.
The compensation for the 360 days with income related benefits was 90 per cent of the lost
income (up to the usual ceiling). In 1995 this was changed to one month (30 days) for each
of the parents with a benefit of 90 per cent of the former income and 300 days, which can
be divided between the parents, with a gross coverage of 80 per cent of the former income.
From 1996 the gross compensation was changed to 85 per cent for two months (one for
each of the parents) and 75 per cent for the remaining 10 months. In 1997 the coverage was
75 per cent for all 12 months. From 1998 the 75 per cent will be changed back to 80 per
cent.
The effect of the maternity leave benefit is shown for a couple (1.5 APW income) getting
child no. 2 in relation to a couple (1.5 APW income) already having 2 children. Two cases

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are calculated. In the first all 360 days (but none of the 90 days) are used, and it is assumed
that the father has 60 days and the mother 300 days. The system is very flexible so the
benefit period can be divided between the parents in many ways. It is also possible to have
¾, ½ or ¼ of the benefit and work on part time basis, and the period of leave can be spread
over time until the child is 8 years old. This is a quite remarkable scheme. In the other case
the mother has 14 weeks of maternity leave. This is the ’standard’ case from chapter 2.
Table 3.9 contains the results.
Table 3.9.
Impact on disposable income of maternity leave benefit. 1.5 APW income level plus child
allowance for 2 children, couple.
1991
1992
1993
1994
1995
1996
1997
2)
Benefit in 360 days ,
1)
Reduction in 
disp. inc. %
3.5
3.4
3.6
3.6
6.5
8.5
9.3
Benefit in 98 days,
Reduction in 
disp. inc. %
0.9
0.8
0.9
0.9
1.5
2.0
2.3
1) 300 days for the mother. 60 days for the father.
2) Preliminary calculation. Note that the assumption in ’Elements’ is now 330 days for the mother and 30
days for the father. Table 3.9 is based on the assumptions from 1) for reasons of comparability.
Up to 1995 the parents (with the assumed income and distribution of the leave) could have
parental leave for one year with a modest reduction on disposable income of 3.5 per cent.
That was changed significantly in 1995, 1996 and also in 1997, when the relative reduction
was more than 2.5 times what it was in 1991.
Summary
It is without any doubts that the changes in the Swedish tax/benefit system during the
period 1991 to 1997 have had significant impacts. For the schemes covered in this section,
with the exception of injuries from work, the situation for recipients of benefits is rela-
tively worse in 1997 than it was in 1991 based upon the chosen reference family types. The
’impact’ calculations do not tell about the development in real disposable income over time
for the family types, but it is evident, that this has been inferior to that of the reference
families.

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