Financing of social expenditure

All Nordic countries have ambitious targets for the social sector, consisting of high levels of funding that have major macro-economic and budgetary significance.

Responsibility of countries

The fiscal quotas i.e., the sum of direct and indirect taxes as a proportion of GDP, are generally high – among the highest in the world. There are many similarities in terms of how the Nordic countries finance their social security systems, but also differences.

In most countries, the local government are responsible for social services such as care for elderly and disabled and childcare. The central government and regions have the responsibility for health care services. A substantial part of the social expenditures is financed by employers and the insured through contributions and special taxes. The main source of finance varies among Nordic countries.

Regulations in each country

Denmark

The regions are responsible for specialised healthcare, while the local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing, and care for elderly and disabled people. In general, the local authorities only finance cash benefits to a limited extent. The grants are general rather than earmarked, and the local authorities finance most of the expenditure on services.

Faroe Islands

The national government is responsible for specialised healthcare and the administration of cash benefits. The local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing, and care for elderly and disabled people.

Finland

Income-related cash benefits are financed by employer and employee contributions, while the basic schemes are financed by government expenditure. Local authorities play the most important role in relation to financing services. However, the national governments also make a substantial contribution, in the form of general, non-earmarked grants. Generally, the grants are earmarked for specific sectors. The government’s share of the financing is considerably higher than in the other Nordic countries.

The regions are responsible for specialised healthcare, while local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing and care for elderly and disabled people

Iceland

The national government is responsible for specialised healthcare and the administration of cash benefits. The local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing, and care for elderly and disabled people.

Norway

The national government is responsible for specialised healthcare and the administration of cash benefits, while the local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing, and care for elderly and disabled people.

Sweden

Income-related cash benefits are financed by employer and employee contributions, while basic schemes are financed by government expenditure. Local authorities play the most important role in relation to financing services, but the national government also makes a substantial contribution in the form of general, non-earmarked grants.

The regions are responsible for specialised healthcare, while the local authorities are responsible for social services such as childcare, child and youth welfare, healthcare and nursing, and care for elderly and disabled people.