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More on How government make
polices – Youth unemployment in Sweden – Did expensive government
policy helped create jobs for the youths?
Tuesday, 27 March 2012
As the Swedish
youth continue to bask in persistent unemployment and with no sign that
the situation will improve soon, the Swedish government has engage in
various forms of reforms so as to ignite a means for them to get into
employment. That reforms have been very costly but has it is
questionable if these reforms have assisted youth into a form of jobs
situation. Answer: Nope…
The government
policy on youth employment drive has been described as costly and
inefficient where over Skr 1billion has been spent on such reforms but
which has not cause any measurable job creation.
As the drive to
seek how to put the youth into work ware on, the Hotel and restaurant
industry has earned the most from the reform, according to exclusive
figures that the Swedish daily, Dagens Nyheter has produced.
The report in
the paper holds that the same proportions of young people working
during the time of the reform are just the same number that was working
before and after the reform. This may indicate that most of the jobs
that happen when the halving of the employer's contribution was
effected would have still been there anyway.
Three years ago
the government passed a policy to halve employer's contribution on
National Insurance to young people under 26.This was a continuation of
a cut made started in 2007. The idea was to encourage employers to hire
more young people.
And the cost of
reform has swelled. So far it has cost Skr51.5 billion, in the
government's budget it has been calculated that it will bite out
Skr48.9 billion. But there is no research to suggest that the reform
has had the impact that the government had hoped for. Neither has there
been any evidence from the various different industries which the paper
examined has shown that an increase in employment among those under 26
has really happened.
“It is a bit
naive if you think you can have rapid and substantial effects of only
halving the payroll and changing starting salaries for young people,
given the structure of the industry,” says Anders Weihe, chief
negotiator for Engineering Industries, employers' organization for much
of the Swedish industrial enterprises.
“Cutting the
payroll tax is an expensive method with uncertain effects. A lot of
evidence shows that it has no effect at all. In addition, it aims to
combat a problem that is smaller than most people think,” says Lars
Calmfors, professor of economics.
He points out
that youth unemployment figures are inflated, partly because students
who are not in the labour force, but registered as unemployed are
looking for work as a complement to their studies.
The research is
suggesting that reduced employer contributions are ultimately passed on
in higher wages instead of leading to more jobs.
Small and
medium-sized industrial companies, by contrast, would probably have
been more willing to hire younger people as a result of the halving
payroll tax, according to the assessment.
According to
figures provided by the Swedish Tax Agency, the hospitality sector is
the sector that has received the largest percentage reduction in
employer contributions in relation to wage costs. This reduction
amounted last year to 4.8 percent of total payroll.
Bjorn Arnek,
industry economist at the Swedish Hotel and Restaurant Association, is
convinced that lowered payroll will lead to more jobs.
“Between 2008
and 2009 Sweden underwent one of its worst economic crises. Now we see
a turn up in the proportion of young people and I absolutely believe
that reduced employer contributions works”, he says.
The high figure
for the hospitality industry can be compared with 1.1 percent for
manufacturing and mining and 0.9 percent for healthcare and social
services.
All this
happens as Sweden continues to have almost 50 percent of employees
under 26. The question being asked is how does the reduced payroll
already passed affecting them and why are they not being employed?
Looking at the earning of the sector it is reported that that it is
possible for profits to a large group of employers.
But the Swedish
government insists that the decrease in employer contributions could
have saved youth jobs that would otherwise have disappeared during the
crisis in 2008 - 09.
By Scancomark.se Team
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