Norway may raise taxes. All due to an aging population
Spending on the Norwegian social benefits system is rising. New calculations by the Labour and Welfare Administration indicate a clear increase in costs by 2035. This may translate into higher taxes for workers.
An increasing share of GDP will go towards benefits.
Fot. Pixabay (zdjęcie poglądowe)
The Norwegian Labour and Welfare Administration has published new forecasts regarding benefit system expenditures. According to these, in 2035 costs will reach NOK 831 billion. This is NOK 95 billion more than in 2025. The increase is mainly due to the aging population.
Rising pension costs
The largest increase concerns pensions. Pension benefit payouts have risen by NOK 65 billion since 2015. In 2025, they will reach NOK 351 billion. By 2035, they are expected to increase by another NOK 56 billion. This accounts for more than half of the total expenditure growth.
The demographic structure is changing. The number of people over the age of 67 is increasing. At the same time, the share of people active in the labor market is declining. This limits contributions to the system. An increasing share of the state budget is being allocated to social benefits.
The demographic structure is changing. The number of people over the age of 67 is increasing. At the same time, the share of people active in the labor market is declining. This limits contributions to the system. An increasing share of the state budget is being allocated to social benefits.
Forecasts assume maintaining current social policy rules.Photo: Adobe Stock, standard license
More health benefits and system changes
Expenditures on health benefits are also rising. This includes, among others, sickness benefits, rehabilitation benefits, and disability pensions. Between 2015 and 2025, they increased by NOK 42 billion, reaching NOK 269 billion. By 2035, they are expected to rise by another NOK 20 billion annually.
Changes are being introduced to limit spending. The rules for reimbursement of medications for obesity and diabetes have been tightened. Regulations for benefits for single parents and those who have lost loved ones have also been changed. These measures are expected to save about NOK 2.5 billion over a decade. The greatest effect comes from pension reforms, which are expected to reduce expenditures by NOK 50 billion.
Changes are being introduced to limit spending. The rules for reimbursement of medications for obesity and diabetes have been tightened. Regulations for benefits for single parents and those who have lost loved ones have also been changed. These measures are expected to save about NOK 2.5 billion over a decade. The greatest effect comes from pension reforms, which are expected to reduce expenditures by NOK 50 billion.
The administration's forecasts also indicate possible consequences for taxpayers. If the increase in expenditures were to be covered entirely by taxes, each worker would have to pay NOK 13,000 more per year. At the same time, slower economic growth limits the ability to finance the system, which may affect future state budget decisions and the direction of social policy changes.
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