Sweden Finland Austria

CHAPTER 1
Main characteristics of the social security
systems of the 8 countries
Three aspects of the institutional framework for the social security systems of the 8 coun-
tries are focused upon in this chapter
1.
The conditions of entitlements
2.
The benefit formula (is it a flat rate payment or is it related to previous income)
3.
The methods of financing social security (general taxes, social security contributions
or otherwise)
The characterization of the three aspects of the institutional framework will be rather
crude, and not without problems. Take e.g. unemployment insurance. This scheme is
voluntary in Denmark, Sweden and Finland (the ’earnings related’ component) but man-
datory in the other countries. On the other hand in Denmark, Sweden and Finland self-
employed people can join the insurance system, which was not possible (in 1997) in the
other countries. This is the reason for ’unemployment insurance’ being characterized as
’open with access for all relevant groups’ in Denmark, Sweden and Finland, cf. the follow-
ing.
1.1.
Conditions of entitlements
Table 1.1 shows the general character of conditions of entitlements for social security in
the 8 countries.
It is evident from table 1.1 that the Austrian and German social security systems are char-
acterized by schemes for people working with no or only relatively limited general access,
while the Danish, Swedish and Finnish systems are characterized as being ’open’ and with
a relatively high degree of general access for all relevant groups, a main characteristic for
the Scandinavian model. The British, Dutch, and Canadian systems are ’in between’. 

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Table 1.1.
Entitlement for social security, 1997.
Elements
DK
S
FIN
A
D
NL
GB
CAN
Illness, benefits, insurance
*
*
*
2
2
2
*
/
2
2
1)
1)
1)
Unemployment, insurance
*
*
*
2
2
2
2
2
1)
1)
1)
Injured from work, insurance
*
/
2
*
/
2
*
/
2
*
/
2
2
*
2
Disability pensions
*
*
/
2
*
/
2
2
2
2
*
/
2
2
Retirement
*
/
2
*
/
2
*
/
2
*
/
2
2
*
*
/
2
*
/
2
3)
Family allowance
*
*
*
*
*
*
*
*
2)
Maternity leave, benefits
*
*
*
2
2
2
*
/
2
2
*
The entitlement is in principle for all relevant groups.
2
The entitlement is for people working, primarily employees.
1)
Compensation is also for self-employed, therefore the character 
*
was used.
2)
Means test to zero for relatively high income earners.
3)
The minimum pension in Austria has the same characteristics as social assistance. This is not, or only
to a minor extent, the case in the other countries having a minimum pension (
*
).
What is the more specific content of this characterization?
In Germany there are, generally speaking, separate systems for different working groups
in the population. The main groups in this connection are employees in the private sector,
employees in the public sector and self-employed people.
The employees in the private sector have their own schemes for compensation in case of
illness, unemployment, maternity leave, injuries from work, invalidity and retirement.
Within the private sector there are separate systems for groups with particular professions,
i.e. within agriculture and mining. The separate systems for the professions mentioned are
not considered here.
For employees in the public sector social security is included in the employment condi-
tions. Self-employed people may join social security schemes of their own.
Another reason for the characterization of Germany is the connection between the contri-
butions paid to the specific schemes and the right to receive benefits. Generally speaking,
without former contributions there is no right to receive benefits.
Austria has a system similar in structure to that of Germany and which is also insurance
based in the sense that entitlement depends upon former contributions.

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In Denmark the social security system is characterized as being relatively open with
general access for all relevant groups. Membership of the voluntary unemployment insur-
ance scheme is required in order to receive unemployment benefits, but also self-employed
people can join the insurance scheme. The basic public pension system is open for all, only
requiring a certain age and a certain length of the stay in the country. The additional public
pension scheme requires a former working period and contributions paid to make the
person entitled to benefits, it is a defined contribution plan. Only employees can receive
benefits from the additional public pension scheme.
The Swedish system has the same characteristics as the Danish one. There is, however, a
difference of degree, because the Swedish additional public pension scheme, which basi-
cally is a defined benefit plan, is much more important from the point of view of the
recipient. The Swedish additional pension scheme is also open for self-employed people.
The general characteristics of the Finnish system follow the lines of the Danish and Swed-
ish ones, it has the same degree of ’openness’ as in the other two Scandinavian countries.
In Great Britain there are two separate components of the social security system, one for
people with an appropriate contribution record primarily from working, the other non-
contributory comprising income related and non-income related benefits, cf. section 1.2.
In the Netherlands there is a general social security system for all and, on top of that, a
separate one for employees. This construction is connected to the method of financing, cf.
section 1.3. There is no specific insurance for being injured from work. People being
injured from work are eligible for compensation for illness and, if the loss of working
capability is permanent, for invalidity pension according to the public scheme.
The Canadian system is close to the Austrian and German systems as far as entitlement is
concerned, it is primarily for people working, but the Canadian pension scheme also
contains a residence based basic pension independent of former work history, just as in the
Scandinavian countries and the Netherlands.
It can be debated whether family allowances belong to social security or not. They basi-
cally have the same character in all the countries with respect to the 3 aspects discussed in
this chapter.