In June 2004, a public committee issued recommendations aimed at achieving closer coordination of public labour market and welfare functions on Norway. It recommends giving administrative responsibility to two new bodies, covering work/income matters and pensions respectively, and political responsibility to a single ministry. The social partners have until November to give their views on the proposals.
In June 2004, a public committee published its report, containing recommendations on how to achieve a closer coordination of public labour market and welfare functions. It recommends placing responsibility for work- and income-related matters in one state administrative body and for pension matters in another. The municipal social security service would remain more or less unchanged, although the committee proposes several mechanisms to promote greater coordination between this service and the work and income administration. The report is now to be considered by relevant organisations and public bodies, including the social partners, and they have until 1 November 2004 to submit their views on the committee’s recommendations. It is hoped that, on the basis of these responses, a final proposal on the coordination of labour market and welfare administration can be put before parliament in spring 2005, together with a proposed pension reform (NO0402101F).
Background
In August 2003, a committee was set up to deliberate the organisation of labour market and welfare services, with a view to closer coordination of public authorities' activities in these areas. The context is that demographic trends suggest that the Norwegian welfare state system will come under increasing pressure in the years to come. The age distribution of the population is changing, the average age is increasing and the older population is growing. This situation results in significant employment challenges as well as problems connected to the financing of future commitments on pensions and other benefits, because it both redirects employment towards the health and social sector and places an extra tax burden on the working population, which in relative terms is getting smaller. Moreover, approximately 700,000 people of employable age are temporarily or permanently outside the labour market, whilst receiving benefits of various kind from the state. The overall goal of future Norwegian welfare policy is thus to get more people off welfare benefits and into employment, and this perspective has for some time seen to necessitate changes in how these services are organised. In 2002, the government issued a green paper outlining recommendations to this end, but parliament called for further deliberation on the issue before a decision was made. Thus, the public committee was set up and given a mandate to deliberate organisational solutions to promote the goal of better coordination of labour market and welfare administrations.
Current system
Labour market and welfare administration is at present the responsibility of three institutions. The Public Employment Service (Aetat) is responsible for public employment services and benefits to 'ordinary' job seekers and people with work-related disabilities. The National Insurance Administration (Trygdeetaten) manages benefits for people both within and outside the labour force, and is responsible for a range of services in relation to work and rehabilitation, family and pensions, as well as health-related benefits. Many of the benefits paid by the National Insurance Administration are intended to provide a certain level of income for people who do not have income from ordinary work. Social security benefit provision is the responsibility of the 'social benefits system' (Sosialtjenesten), which is devolved to the level of the individual municipalities. The main objective of this service is to provide a minimum safety net for people who for social or health-related reasons are unable to find, or not entitled to, other forms of income.
This organisation of public labour market and welfare services is now regarded as being too fragmented, involving too many contact points between service users and providers and too little coordination between the various bodies. In many ways it is viewed as an impediment to getting people back into active employment, and is seen to some extent to trap people in welfare benefit dependency.
Proposed changes
In light of the apparent shortcomings of the present organisation of labour market and welfare services, the committee proposes placing all the employment-related functions in a single state administrative body, a 'work and income administration'. This body would be responsible for a wide range of services in relation to work and reduced capacity to work, such as placement services, qualifications and competences, rehabilitation, the labour market re-entry of disability pension beneficiaries, and the monitoring of sickness absence. It would also provide a range of benefits in relation to the financing of subsistence during unemployment, sickness absence, temporary disability and rehabilitation, as well as other work-related benefits. The new body would have a wide range of functions, from making final decisions in individual cases to ordinary service provision. Many of the services and benefits that it would deal with are, as mentioned above, at present administered by the National Insurance Administration.
The responsibility for pension services and benefits would also be located in a single, although separate, body, a 'pension administration'. The areas of responsibility of this body would be pension benefits, family-related benefits and health reimbursements. It would be responsible for most of the services that are not allocated to the new work and income administration.
The responsibility for, and provision of , social services and social benefits to those who for various reasons are not able to acquire fund, or not entitled to, other forms of income, will remain with the individual municipalities. This will thus still be a decentralised activity, and the various municipalities will continue to enjoy considerable leeway in how these services are shaped and administered. It is, however, important to note that the work and income administration would, according to the proposal, have to take greater responsibility for getting people on social benefits back into the labour market. This requires greater coordination between the social security service and work- and income-related services than is the case today, as well as efforts to ease the mobility of social benefits recipient within the system. One such mechanism is the introduction of a special 'job applicant benefit', which could be given to social benefit recipients applying for work. The aim is that this would encourage people, who would otherwise prefer social benefits, to take an active approach to finding employment. The most important area of practical coordination will be at the local municipal level between the various offices of the new work and income administration and the social security services.
New ministry
In order to anchor the reform at the political level, it is recommended that changes be made in ministerial arrangements and responsibilities. A new ministry of labour and social affairs (Arbeids- og Sosialdepartementet) would be established, whose main responsibility would be to create an all-embracing policy in the areas of the labour market, working life, social security, pensions and living conditions. The aim is to bring about coordination at the top level by placing responsibility for these areas, and thus the proposed reform, in the hands of one minister. The minister of labour and social affairs would also be responsible for monitoring the 'inclusive working life' (inkluderende arbeidsliv, IA) agreement - a deal between the government and social partners that aims to cut sickness absence, improve the employment situation of people with disabilities and increase the average actual retirement age (NO0301104F). The new ministry would thus take on some of the responsibilities currently vested in the Ministry of Labour and Government Administration (Arbeids- og administrasjonsdepartementet, AAD), the Ministry of Local Government and Regional Development (Kommunal- og regionaldepartementet, KRD) and the Ministry of Social Affairs (Sosialdepartementet, SOS).
Commentary
A majority of the parties in parliament have stressed the need for coordinating labour market and welfare services in a single body. The committee's recommendations would not, however, reduce the number of bodies providing services, but rather restructure the whole system by placing responsibilities and provisions where they actually belong. In this way the proposal serves to simplify the relationship between the users and providers of services and benefits, and as such to ease the road to employment for people on different type of benefits.
There also seems to be a general consensus among governmental bodies, professional institutions and social partner organisations about the desirability of closer coordination and reorganisation of labour market and welfare services in Norway. The only critical voice raised so far has been the Norwegian Association of Local and Regional Authorities (Kommunenes Sentralforbund, KS). It argues that the key to getting more people away from benefits and into employment is coordination through municipal-level institutions, rather than coordination through reorganisation of central state institutions, according to a recent newspaper article.
The proposed reform of labour market and welfare services will be one of the largest of its kind ever undertaken in Norway, and will have far reaching consequences. (Håvard Lismoen, FAFO Institute for Applied Social Science)