Sweden Finland Austria

Sickness benefits
Due to the long waiting period in the Finnish scheme (9 week days after the first day with
illness) there are no benefits in the insurance scheme for illness in 1 week. There is there-
fore no reason to present any calculations, which would only show the impact of losing
wages for one week.
There have been changes in the 'stepwise' benefit formula, they will be mentioned under
the maternity leave benefit scheme.
Unemployment benefits
A reduction in the base of 3.5 per cent was introduced in the earningsrelated part of the
scheme in 1994, implying that only 96.5 per cent of the lost income was included when the
benefits are calculated. This was a 'negative' compensation for the occupational pension
contribution on earned income, introduced in 1994. This contribution is not levied upon
unemployment benefits. The base reduction was increased to 4.5 per cent in 1995 and
stayed at that level in 1996 and 1997. The waiting period was increased from 5 to 7 days
in 1997.
The flat rate part of the scheme was 116 FIM/day in 1994. This was increased to 118
FIM/day in 1995, which was also the rate in 1996 and 1997. The thresholds in the stepwise
benefit formula were increased relatively little (they follow the increase in the flat rate part
of the scheme, so there was an increase in 1995) with the result that the share of the lost
income which is compensated with the high percentage (42) is declining. The results of the
changes are contained in table 4.4.

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The result is, as should be expected, a gradually increasing negative impact over time.
From 1995 to 1996 it is especially the lowest compensation percentage in the stepwise
benefit formula (20 per cent), covering the last part of the lost income, which causes the
decline for singles. It is the first time this low percentage is applied, due to the very modest
increase in the threshold between step 2 and 3 in the formula. The wife (0.5 APW income
when working) does not reach the 20 per cent. The same effect is behind the changes from
1996 to 1997 as well as the longer waiting period, especially in the 25 per cent unemploy-
ment case. The almost unchanged impact for the couple in 1997 is primarily because of the
low income deduction, which is almost at maximum level for the unemployed wife. The
lighter taxation outweighs the constant flat rate element and the longer waiting period.
Table 4.4. Impact on annual disposable income from unemployment (earnings related scheme). APW
income level for single, 1.5 APW income level for couple.
1994
1995
1996
1997
1)
Single, 25 % unemployed.
Reduction in disp. income %
8.3
8.8
9.2
9.8
Single, 100 % unemployed.
Reduction in disp. income %
36.0
36.3
37.4
39.3
Net replacement rate %
64.0
63.7
62.6
60.7
Couple, spouse with 0.5 APW income
100 % unemployed.
Reduction in disp. income %
9.7
10.2
10.5
10.6
1) Preliminary calculation (
Elements').
If the unemployed is not a member of the earnings related U.B. scheme or the rights have
expired he or she will receive a flat rate benefit (minimum U.B.), which was 116 FIM/day
in 1994, 118 FIM/day in 1995, 1996 and 1997. The waiting period was increased from 5
to 7 days in 1997. The impact of receiving minimum U.B. is shown in table 4.5.
Table 4.5. Impact on annual disposable income from unemployment (minimum U.B.) APW income level.
1994
1995
1996
1997
1)
Single, 25 % unemployed.
Reduction in disp. income %
14.3
14.6
14.9
15.5
Single, 100% unemployed.
Reduction in disp. income %
68.5
69.8
70.9
71.9
Net replacement rate %
31.5
30.2
29.1
28.1
1) Preliminary calculation (
elements').

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With an almost constant flat rate benefit and a relatively strong increase in nominal wages,
the result is an increasing negative impact on disposable income from receiving the mini-
mum U.B. The increased waiting period contributes in the same direction in 1997, espe-
cially in the 25% unemployment case. The minimum U.B. is also a component of the
earnings-related scheme presented in table 4.4.