The debate on cash benefits in Norway is anything but child’s play. Here’s why it’s important

JW-cash-supportPhoto: Norway Today / Unsplash

It is over two decades since the “kontantstøtte” (cash support benefit scheme) was first introduced in Norway. What was once seen as a way to give families real freedom of choice, in terms of daycare, has morphed into a political and public debate about immigration, integration, and the encroachment of “Big Government” into family life. In the latest political chapter of this hotly debated topic, it has seen a government divided amongst itself and a governing party at odds with the Prime Minister. Is this a beneficial use of cash to help families prioritize adequate care of their children or is it a wasteful use of taxpayer money that actually hinders the integration of immigrant populations?

Fractures have appeared in the ruling coalition

It is not often that a political party publically is at odds with its leader, especially when that party is in government. However, the ruling Conservative Party defied its leader, and current Prime Minister, Erna Solberg, over the controversial issue of “kontantstøtte” (cash support benefits).

Perhaps the most fiercely debated, and consequential, outcome of the Conservative Party’s (Høyre – H) national assembly recently was the vote on whether to keep to scrap this benefit. In this vote, the Prime Minister voted against a clear majority within both her party and the ruling coalition to keep the cash benefit. A majority (184-145) of her conservative-leaning colleagues decided to scrap the cash benefit in order to offer “waiting support” for parents whose children are in line for a kindergarten position.

That a sitting Prime Minister is at odds with many in her own party, and governing coalition, is not common. The leadership of the ruling Conservative Party was split as Deputy Leader, Tina Bru, voted to scrap the benefit. She felt it not only hindered integration for immigrant women but there has to be a limit on what the government can pay for.

There is hope, however, that Prime Minister Solberg could work with the Christian Democratic Party (Kristelig Folkeparti – KrF) as Kjell Ingolf Ropstad voted with the Prime Minister.

Just what sort of divisive issue is this that can separate coalition partners and pit a Prime Minister against her own party?

Cash benefit was politically controversial from its inception

The cash benefit scheme was introduced on August 1, 1998. It was introduced to increase the quality of care of children who could not attend daycare due to over-demand. In its current form, it is a cash benefit, paid in arrears, given to parent/s of children who do not attend full-time daycare with a state subsidy.

One can receive cash benefits when the child is between the ages of 13 – 23 months old, for a total of 11 months. Currently, the maximum amount is NOK 7.500,- / month. Most importantly, both caregivers of the child must be members of the Norwegian National Insurance Scheme for, at least, 5 years.

Since its very inception, the nature of the cash support benefit scheme has been largely characterized by bipartisan disagreement. While the scheme was supported by the centrist Bondevik Government there was widespread opposition from the political left, with the Labour Party (AP) and Socialist Left Party (SV) voting against its creation.

Reform calls from Norway and abroad, decline in recent years

Pressure for reform slowly built over the following years both from within and outside Norway. In 2003 the Organisation of Economic Development (OECD) released a report looking specifically at labor market integration in Norway. Amongst its recommendation, it suggested “to abolish the cash benefit” as a way “to increase incentives for the parents to place their children in early childhood education…which participation in..has demonstrably favorable effects on the education outcomes of children of migrants…”

By the time of the second Labor-led Stoltenberg government, there was a need for a reform of this scheme resulting in the “Cash Aid Act” of 2015. This reform not only reduced the amount paid but also reduced the age of children eligible, removing the benefit for children aged two and above.

The scheme has seen a steady decline over the years according to figures from Statistics Norway (SSB) They show that whilst 8 in 10 children used the scheme in its first year, this fell to only 21% two decades later. Along with government legislation, there has been large-scale development of kindergartens throughout Norway, increasing the number of places for children and thus the need for the scheme.

Family mother children
Photo: Alexander Dummer / Unsplash

Represents a lost year of work, wages, and skills for parents?

The scheme has been mired in controversy since its inception. Most of the negativity surrounding it involves both political and public debates about immigrant communities’ integration within the workforce and society at large. One of the major criticism is that it has, allegedly, led to contribute to the poorer integration of immigrant communities into Norwegian society.

The common critical argument is that the scheme essentially pays for a parent to stay at home, if they wish, with the child for 11 months. Now, should the parents use government-subsidized daycare instead, this would free them up for some form of employment. For parents in immigrant communities, of which many have limited Norwegian language skills (and thus employment opportunities) it represents both a financial and societal loss.

Financially, critics see it as a double cost to the state. Firstly, the state is giving money to an otherwise productive member of society. Should the parent decide to place their child at a kindergarten instead, this would potentially free them up to gain some form of employment. This potential employment is the second cost as the parent loses 11 months of potential wages, pension rights, and, most importantly, taxable income for the state.

A further criticism is that by this parent not gaining employment, they are missing out on learning valuable social, practical, and linguistic skills. Possessing any form of employment is an important tool to sharpen both practical and personal language skills. For immigrant communities who have higher rates of unemployment than so-called “ethnic Norwegians,” this 11 month period represents falling further behind in employment and societal integration.

Does it slow a child’s early learning skills and prevent some mothers from joining the workforce?

There is also criticism of the scheme’s impact upon both mother and child. Even though the scheme has been reduced from two-year-olds to one-year-olds, it is still fairly common for Norwegian children to be sent to kindergarten at this age. As a baby’s brain is like a sponge, it absorbs all around it. There is a fear that for families that use the cash benefit scheme instead of sending their child, full time, to a kindergarten it is losing valuable socialization and language skills.

A child starting kindergarten is its first step into the wider world. This is valuable time not only for the child to be away from its parents but also for the parents to meet other parents. Furthermore, many children who grow up together go to the same kindergarten, elementary school, and high schools thus forming the nucleus of future social and professional networks.

One of the keys to gaining employment in a relatively small and parochial workforce, like Norway’s, is having a valuable network. Critics say that the scheme prevents all of this from happening as often the child stays at home with a parent.

The NAV, who administers the scheme, states that the benefit scheme is strictly “gender-neutral.” In fact, the benefit is actually paid to the child. However, the SSB has found that benefit is mainly transferred to the child’s mother. For immigrant communities, the use of this benefit by the mother, then deciding to stay at home to take care of the child, can prevent the inflow of immigrant women into the Norwegian workforce.

Photo: Gorm Kallestad / NTB scanpix

Daycare expensive enough, government should have no say in family decisions

There is, however, a converse argument for the continued support and use of this benefit scheme. Advocates of the scheme focus on the increasing expense of kindergarten and the fact that government should have little or no control of families’ child care decisions.

Though the government subsidies daycare throughout Norway and, since the inception of this benefit has invested heavily in kindergartens, it is still relatively expensive. Oslo kommune, for example, charged a maximum price of NOK 3135,- per month for a position in a kindergarten.

This is not including an extra supplement for food and the fact that prices do range from kindergarten to kindergarten. Though there are reduced rates for extra children and lower-income families, it is still another monthly bill to pay. Using the cash benefit scheme allows an 11-month reprieve of this extra outlay for families who are struggling.

Given the various national and regional lockdowns throughout the past year, the issue of government control of private citizens’ lives has resurfaced again. This issue of personal freedom, from government edicts, is also used by proponents of the cash benefit scheme.

The benefit essentially gives parents more financial freedom to organize their child’s care as they see fit. Furthermore, its removal would give, proponents argue, less freedom for families to decide exactly how they want their child cared for. Its removal may also harm low-income families as they would have to then have to send their child to kindergarten, at their own expense.

Residence requirements have led to surprising figures over use

Over the course of the two or so decades that the benefit scheme has been in use, there has been a growing decline in both its use and popularity. However, for low-income immigrant families, the benefit is still prevalent.

The countries of origin of immigrant families that use it are quite surprising. The SSB found, for the 2018 financial year, that it was children with backgrounds from Sri Lanka, Pakistan, Kosovo, Iraq, and Poland that used this benefit most, with a range of 40-44%. Often these are families that are well established in Norway. Conversely, only 4-15% of children with a background from India, Sweden, Eritrea, and Syria used this benefit.

The key here is the changing of the law, from July 1, 2017, to include caregivers who have 5 years of contributions to the Norwegian National Insurance Scheme. This means that families with an immigrant background, who are established in Norway, still see it as beneficial. However, those who have recently arrived, many as refugees or from troubled societies, perhaps need it most but cannot use it until their 5th year of residency.

This paints a picture of immigrant communities both using it most but also being denied the right to use it. Children without an immigrant background saw a recent rise in use, up to 17% for 2018. This figure will surely rise given the economic chaos caused by the economic impact of COVID-19 over the past two years. The release of newly updated figures, by the SSB, should make interesting reading.

The scheme now has an uncertain future

Given its controversial political history, which is still influencing debate today, one should remember the nature of the cash benefit scheme. It is to help families, often with an immigrant background and who have low income, organize the care of their young children.

As political debates have raged, in recent times, about immigration and the role of the welfare state, a sensible approach should be taken. The question remains, though, is this scheme doing more harm than good to both parent and child?

Given recent events, it seems that even on the political right, who traditionally are champions of personal freedoms and a reduced government role, the cash benefit scheme days could be numbered. It appears that a majority of those in government want it scrapped in favor of other support for parents and infant children.

The opinions expressed are those of the author and are not held by Norway Today unless specifically stated.

About the author:

Jonathan is a lover of the written word. He believes the best way to combat this polarization of news and politics, in our time, is by having a balanced view. Both sides of the story are equally important. He also enjoys traveling and live music.

Source: #Norway Today / #NorwayTodayNews

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