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← Overview Database of Innovative Social Policies in Europe

Cut payroll tax for youth

Country of implementation
General short description of the innovation
The cut in payroll tax for young people means a reduction in social fees for the employer when hirirng a young person. This measure was introduced in 2007 with an 11% reduction for employed persons aged 19-25. Another cut was implemented in 2009 by another 6 %, also increasing the target group to anyone under the age of 27. The cuts affect those in the target group gaining employment or already in employment from the date om implementation. The employer is not required to make any application or fill in any forms, the measure is effective automatically. /
Target group
Policy Field
  • general fiscal
Type of Policy
  • public
Duration of the policy
Implemented in 2007, onging
Scope of innovation
  • Scope: The high unemployment rate is described as a consequence of demographic changes with an increasing share of young people in the labour force, therefore the response is rather structural than a temporal/emergency response to an acute crisis situation.
  • Budgets: 2008 est. 1,99 billion SEK, (2009; 2010; 2011; 2012; 2013;)
  • Number of intended beneficiaries: young people age 19-25 in the labour force
  • Spatial coverage: national
General description of (intended) objectives and strategies
To create incentives for employers to hire young people just entering or fairly new on the labour market by reducing social fees. The social fees are cut in half (apart from the pension-fees which remain unaffected).
Nature of the innovation-short-term perspective
short-term perspective (institutional and systemic):
Nature of the innovation-long-term perspective
long-term perspective (programmatic/radical change): Long term perspective, running program since 2007, aiming to continue during 2014 according to the gov. budget proposition. Part of a general will to incrementally change the labour market structure, in this instance by lowering thresholds for young people to enter the labour market and thus catering to the occupancy-needs of an increasing share of young people entering the labour force.
Type of ideal-typical strategy for the innovation
  • dualisation
Type of innovation
  • new/changed output and/or outcome
New outputs
  • subsidies/tax-credits (2007-2009: 11% tax credit for 18-25 year olds, 2009 ? ongoing: additional 6 % tax credit for anyone under the age of 27)
Clarification of intended mechanisms, outputs and outcomes (optional)
Intention/mechanisms: to create incentives for employers to hire young people by lowering the social fees for employed ages 19-25/27 thereby lowering the threshold for young people into the labour market / Intended output: cut payroll taxes for young people. /
Intended target group
Young people 19-25 (2007-2009), under 27 (2009 ->)
Working age population
  • employment situation (part time or full time unemployed youth)
Actors involved in policy-making/implementation and/or evaluation
  • central state
Clarification of the role of various actors
Apart from the state, other actors serve as consultive bodies in the official report serving as the basis for the official proposition.
Intended output
  • subsidies/tax-credits
Did the innovation have any outcome related to job quantity?
intended ? higher, but has been so to a very small extent intended - lower
Clarification of outcomes in terms of impacting resilience and labour market inclusion
Little or no impact since the measure barely resulted in any change of the occupancy rate among young people or any additional unintended outcomes. Evaluations of young peoples perceived social inclusion or measurements of social inclusion variables have not been found
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