Poor Relief,Taxes and the First Universal Pension Reform: the origin of the Swedish welfare state reconsidered

In the year 1900, Sweden probably had the oldest population in the contemporary world. It was also the first nation to implement a universal pension system in 1913. The universal character in early social legislation has certainly been decisive for the development of the Swedish welfare state. This alternative has not been self-evident. Why did the reforms turn universal, when the continental model, the Bismarck social security system, was exclusively directed at industrial workers? Research has concentrated on demographic factors and growing demands for social security, or on the fact that Sweden was still a predominantly rural society with about 2,400 local authorities. This article examines the development of social legislation in the light of local government expenditures and incomes, and suggests an overlooked possibility: the formulation of the first universal national social security reform was a redistributional response to uneven distribution of incomes and general expenditures among the rural districts in Sweden.     

EMPLOYERS AND SICKNESS INSURANCE

The Swedish Employers' Confederation (SAF) had already applied in the 1910s a strategy that companies should not compete with social benefits on the labour market. So SAF welcomed the introduction of national sickness insurance in 1955. The system included deductibles, which were seen as necessary in sickness insurance. Before the reform salaried employees had received sick pay from the employer and their compensation was 100%. Their organizations succeeded, in spite of SAF resistance, in getting supplementary contractual sick pay leading to elimination of deductibles. This paved the way for other organizations to negotiate solutions that gave full compensation for loss of earnings while sick. Consequently sickness rates became very high. Up to 1990 SAF was unable to stop the elimination of deductibles. The economic crisis around 1990 made it possible for politicians to introduce deductibles and statutory sick pay. This was in accordance with SAF's views. Increase in long‐term illness from 1997 led to a weakening of SAF's position. According to the unions, long‐term illness was due to bad work environments and measures should be taken to give employers incentives to improve working conditions. Supported by the unions, the social democratic government introduced increased financing responsibility for employers 2005.     

Poor relief, taxes and the first Universal Pension Reform: the origin of the Swedish welfare state reconsidered

In the year 1900, Sweden probably had the oldest population in the contemporary world. It was also the first nation to implement a universal pension system in 1913. The universal character in early social legislation has certainly been decisive for the development of the Swedish welfare state. This alternative has not been self-evident. Why did the reforms turn universal, when the continental model, the Bismarck social security system, was exclusively directed at industrial workers? Research has concentrated on demographic factors and growing demands for social security, or on the fact that Sweden was still a predominantly rural society with about 2,400 local authorities. This article examines the development of social legislation in the light of local government expenditures and incomes, and suggests an overlooked possibility: the formulation of the first universal national social security reform was a redistributional response to uneven distribution of incomes and general expenditures among the rural districts in Sweden.