Everyone who is employed in Sweden is insured for employment-based benefits, including sickness benefit. All residents of Sweden must have a social security number: those born in the country get one at birth, foreigners that take up residence in Sweden for any period of time will be issued one by the Swedish Tax Agency (or Skatteverket) as part of the population register (or Folkbokföring).

The social security number is composed of the date of birth of the individual, plus three digits, plus one check digit. Gender is indicated by the third digit: an even number for women, odd for men. These three digits may also contain information about the region of birth. The actual name of this number in Sweden is personnummer, which directly translated to English would be "Personal Number".

Tax authorities use the number in all their communications relating to tax, so it is illegal to work unless you’re in possession of one. The state insurance system uses the number in order to calculate pensions and for handling of insurance payments, and many private companies use it when storing information about individuals and their accounts, for example banks and insurance companies.

When you make a purchase using a credit card the social security number is used to check your identity. During the 1970s the use of the personnummer was much debated and criticized as it was seen as a potential invasion of privacy. As a result the Swedish Data Act was created in order to regulate how such computerized personal information may be stored and used, although this legislation has not been strenuously enforced.