Just over a third (34,5%) of the state budget currently goes to Social Security. After a decline in this share in 2012-2022, an increase is expected both this year and next. An increasing part of the value will also be allocated to financing social security until 2032. This is due, among other things, to the fact that he now expects more sickness absence. More people are also expected to claim benefits “arbeidsavklaringspenger (AAP)”.
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Social Security will cost $717 billion in 2032
National Insurance expenses cover most NAV benefits. In addition, expenses for medicines, the free card program and other health services managed by the Norwegian Directorate of Health are included. In 2022, spending was NOK 624 billion compared to 2024, an increase of NOK 92 billion compared to 2012. Spending is expected to increase by another NOK 92 billion, to NOK 717 billion by 2032.
Greater participation in value creation for social security
Social security spending as a share of mainland Norway's gross domestic product (GDP) is expected to increase from 15,8% in 2022 to 17,4% in 2032. This means that a greater share of value creation should be allocated to financing of social security.
– To illustrate what this could mean, we calculated what it would be like if the entire increase were financed by higher taxes. This will require each taxpayer to pay an additional tax of NOK 14 per year, says NAV division director Ole Christian Lien.
More sickness absence and more people using AAP benefits
The increase in pension spending is the main reason for the increase in Social Security spending. Therefore, it is expected to reach NOK 2032 billion by 59. However, the pension reform will contribute to the deceleration of growth, and itself will provide savings of NOK 31 billion by 2032.
Areas that are expected to grow more in the future than in the last ten years include, in particular, pharmaceuticals and other health services (including the free card program), sickness benefits, redundancy benefits and aids.
The strong increase in spending on pharmaceuticals, health care and aids is due to the larger number of older people. In the case of pharmaceuticals, the increase is also due to the emergence of new and more expensive pharmaceuticals.
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Sickness absence has not decreased after the corona pandemic, it is still increasing
– We currently believe that sickness absence and the costs of sickness benefits will stabilize at a slightly higher level than before the pandemic, says Lien.
Until 2019, the number of people receiving AAP benefits was decreasing. Later, the decline turned into an increase. This is because more people are joining the program than before, which is due, among other things, to increased sickness absence, as well as the fact that many people are staying in the program longer than before. This is likely due to the consequences of the coronavirus pandemic, and changes to the regulations in 2022 made it easier to continue the program after 3 years.
– The positive is that AAP recipients have enough time to return to work if possible. But what's also troubling is that more and more people are out of work due to health problems, Lien says.
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Source: NAV
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