On welfare benefits and not participating in the labour market

This report discusses the number of people receiving welfare benefits while not participating in the labour market. We use data from a register-based system on employment, education and benefits. According to the register data, about 779 000 persons aged 15-66 receive a welfare benefit or more than one welfare benefit. This includes benefits in compensation of lost employment income like unemployment benefit, sickness benefit, early retirement, rehabilitation benefits and disability benefits. We have also included some benefits less directly relating to employment. These are survivor pension, cash-for-care benefit, benefit for single parents and social security benefit.

Quite many of the approximately 779 000 persons receiving these benefits are participating in the labour market. Most of the people receiving sickness benefits are only temporary absent from their job. In addition, many people are receiving benefits in addition to being employed. If we remove these groups, about 470 000 persons receive welfare benefits without participating in the labour market.

We have discussed some challenges with regard to the quality of the register-based system on employment, education and benefits. It is difficult to determine the exact scope of these problems, but we have made some calculations to estimate the scope of quality problems – like late withdrawals from the Register of employees. We have also made some calculations with regard to the number of persons receiving sickness benefits who do not return to work.

Taking in regard late withdrawals from the Register of employees, the fact that some persons on sickness benefits do not return to work, and also defining persons who are neither employed, unemployed or participating in job creation programmes as persons not participating in the labour market, approximately 507 000 persons receive welfare benefits while not participating in the labour market.

So far, we have defined “not participating in the labour market” as not working. If we instead define it as “not in the labour force”, the number of persons who receive a welfare benefit while not participating in the labour market is approximately 461 000.