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'Inertia' of Swedish model bashed by firms

'Inertia' of Swedish model bashed by firms

Published: 19 Feb 2012 10:00 GMT+01:00
Updated: 19 Feb 2012 10:00 GMT+01:00

Swedish companies, relatively unscathed by the European debt crisis, dislike the Swedish economic model's inertia, want reforms to boost their competitiveness, and want to adopt the euro, their representatives say.

"I think Sweden should join the euro... We benefit a lot from the single market, which is not sustainable without the single currency," said Urban Bäckström, who heads the Confederation of Swedish Enterprise (Svenskt Näringsliv), the country's main employer's organisation representing some 60,000 businesses.

European Union member Sweden rejected the common currency in a 2003 referendum and Bäckström acknowledged that "we haven't lost anything so far," by standing outside the bloc.

According to a December poll however, nearly nine out of 10 Swedes want to hold onto their krona.

"It's not a short-term matter for Sweden (but) more of a long-term one," Bäckström said at a meeting with international media.

But if Sweden wants to remain competitive in the long run, industry players insist it must act soon, not only to move towards embracing the euro but also to reform Sweden's womb-to-tomb welfare state, which is seen weighing heavily on business flexibility.

The problem, many say, is that Fredrik Reinfeldt's centre-right coalition government has proven hesitant to introduce far-reaching reforms since coming to power in 2006.

"They don't have to do much because they didn't promise much," joked Elisabeth Thand Ringqvist, the head of the Swedish Federation of Business Owners, representing some 70,000 entrepreneurs.

While the Financial Times named Sweden's Anders Borg the world's best finance minister last year, Thand Ringqvist, who served as an advisor at the Swedish enterprise ministry between 2006 and 2010, said she felt he had done little but deal with the here and now.

The real question, she said, is "What do we need to do now to be somewhere in 10 years?"

And the main answer? "You need to loosen the laws... (The existing) laws lock people in," she told AFP, insisting that present labour laws in Sweden make it difficult for employees to change jobs and locations.

Reinfeldt recently proposed helping people change careers at 50, but according to Thand Ringqvist, current Swedish labour laws would prove a major obstacle to that plan, since employees who switch companies after 20 years lose all the benefits of seniority that otherwise largely shield them from layoffs.

Reinfeldt also recently suggested gradually pushing Sweden's retirement age up to 75 from today's 65-year limit, but the proposal was met with wide-spread criticism.

"Why not 85?" ranted Bäckström, insisting that it was "more important to get young people to work than forcing people to work more."

Not long ago, Swedes were on average entering the workforce at the age of 21, he said, lamenting that today the average jumping-off age is 28, sporting multiple degrees and accumulated personal experience.

"There are many years lost," he said, blaming the government for not taking advantage of the years of economic bliss to lower taxes, which remain among the highest in the world, or reform the labour market.

"The trick is not to have high tax rates, but high tax revenues," he said, insisting the Swedish model with its generous tax-financed welfare state "can be sustained if we correct a few things."

Without questioning globalisation, which benefits large Swedish companies like Atlas Copco and Ericsson, Bäckström stressed the need to "improve the climate in Sweden" for small businesses too.

At the end of January, blue collar union leader Stefan Löfven took over as head of the Social Democrats, which have been in opposition and crisis-mode since 2006 following virtually a century of dominating Swedish politics and overseeing the creation of the Swedish welfare state.

The arrival of someone so heavily focused on labour issues at the top of the main opposition party could be a good thing, Bäckström said, pointing out that Löfven "could force the government to introduce reforms."

AFP/The Local (news@thelocal.se)

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Your comments about this article

11:12 February 19, 2012 by jdbpogo
so now sweden is going to embrace unabashed corporatism. news flash: the euro doesn't look like its going to be here in 5 years and anti-welfare policies have worked out sooooo well for the people of the u.s. this is just insanity! but, the government gets what it wants no matter what the people say.

sweden needs to take a few steps back and decide whats best for its people instead of blindly perusing corporate interests.
14:06 February 19, 2012 by procrustes
FLASH: Not only will the Euro be here in five years, it will be functioning as a alternative reserve currency to the USD. That is the real reason Bond Vigilantes/rating agencies have attacked the Euro--the Euro was already (IS already) functioning as an alternate world reserve currency, and for the US Dollar to lose its reserve status spells unmitigated financial disaster for the USA.

The USA is in far worse shape than Europe, many states having far bigger economies that Greece, Spain and Portugal are in far worse shape--Greece being the exception. California (at one time the world's seventh largest economy) for over a year could not pay its bills and gave people "I Owe You" notes, instead. Imagine if Spain did that.

The USA went broke waging stupid wars (the Iraq debacle went on far longer than WWII), tax breaks for the ultra-rich, subsidies for Big Oil, ad nauseam. Crime and a population armed to the teeth make any real reform in the USA impossible. Imagine a Greek-style riot in the USA with 50cal assault weapons on the street.

Europe went broke educating and supporting the health and well-being of its people. Who do think will come out of the depression in better shape? USA or Europe?

What matters in the future is who has the best bridges into China, India and the rest of Asia. Who does Asia hate more? The USA or Europe?

If you want to play North American financial markets, do it in Canada.
15:15 February 19, 2012 by swe-usa
Comment: 2: Clearly you don't understand the whole situation and what the collapse of the dollar would mean for Europe and Asia. If the dollar collapses the EU and Asia doesnt just walk away with a win. There is so much more going on with the dollar, US military, European military, oil and currencies than you know. And did you say "depression", umm is Europe and USA in a depression now? I will let you think of that one and how we define things using Economic vocabulary.

Meanwhile, everywhere in the world continues to be forced to acquire dollars first in order to purchase oil. This is what secures the strength of the dollar. And if you think that is going to change anytime soon why dont you go talk to Gaddafi...oh wait...he is dead. And he is dead because he tried to rumble the oil-dollar market by wanting gold for oil. So if you just think, hey move into Canadian financial markets now, than you are missing a big opportunity. Instead you should learn how things really work and be involved in every big market and how they move respectively. Cheers
21:12 February 19, 2012 by 2394040
Competition is a fraud. Most people confuse sports competition with economic competition. Nothing could be further from the truth. In sports, if one team comes out on top, the other teams are still in business. In the economy, if one company comes out on top, it is because it has destroyed most, if not all, of its competitors. Not only are jobs gone, but the prospects of those who originally had jobs. Here in the good old USA is a good example. When I was young, there were plenty of jobs. Now, thanks to "competition", there aren't enough jobs to handle a constantly-growing competition. The only people who benefitted were the rich. Now, if Sweden wants to follow this example, then just go ahead and see what happens in the future. As any good history teacher will tell you, the first lesson on history is that people never learn from it. So go ahead, compete economically, and see what happens in the future. And don't say you weren't warned.
22:16 February 19, 2012 by procrustes
Comment #3

There are already major countries making agreements to trade oil in their national currency by-passing the dollar, and the trend will only continue. You have no idea what I do or do not understand.

Trading in Canada for the USA play does not mean that one isn't say, um, inventing in Australia/New Zealand for the Asia play, or...but then I don't have the big picture you do. Clearly not.

USA corporate interests declared war on the Euro. Europe understands. Great (?) Britian (aka American lap dog) kicked Europe in the balls when she needed her. Europe won't forget.

Again, what matters to the West right now is who has the best bridges into Asia. Who does Asia hate more?

And yes, were it not for fudged unemployment figures, GDP games, the current situation would clearly fit the definition of a depression. There is a website "Shadow Stats" that calculates economic indicators the way they were calculated before fudgemanship came into play. It makes for interesting reading.

I'm still hoping that the GOP self-destructs and President Obama wins a landslide with long coattails giving him a Congress that can make majors changes. It's a hope. Meanwhile, the Euro will survive and will be stronger for it. Germany has not forgotten what cause WWII and will not go down the hyperinflation road again.
08:34 February 20, 2012 by swe-usa
Obama wins by a landslide...Obama has only given the further okay of the agenda the protect the dollar using the US military. Obama is really quite of an american gangster, takes the peace price and then woops ass with bombs. He is just like everyone else, listening to instructions from the big business.

Anyways, dont say that there are countries who are passing the dollar without mentioning specifically who they are and if they have been successful so far.

And does it matter who Asia hates more. What matters is who they hold debt with not cheesy politics.

And I am glad that there is a website, but there is no depression here. If you want to say that America is in a depression then talk to my grandparents or possibly yours and undestand what a real depression is.

And for Germany's sake, I hope that they are successful in their quest to kick Greece off of the Euro and screw those mother F**kers. Greece just wants to make this last as long as possible so the Euro continues to lose value. And the more value it loses the easier it is to pay off their debts.

By the way...What you do has nothing to do with this. I presume that you and I agree more than we disagree.
09:18 February 20, 2012 by Marc the Texan
The Euro's problems are only just beginning. Sweden should be thanking their lucky stars that they're not involved. The Euro's future existence is very much in question. Bully calls of it supplanting the USD are ludicrous because there is no substance to it. The Dollar dwarfs all other currencies COMBINED. That includes the Euro, Sterling, Yen, Yuan et al. COMBINED! That's not changing. That's why the US has been flooded with European capital this winter. The US is safe compared to everywhere else. The US is growing manufacturing, has good productivity growth and is reducing dependence on foreign energy. The Eurozone is tipping into recession once again. The Eurozone has structural problems associated with every facet of the system; monetary, fiscal and banking... and that will continue for years if it doesn't shatter first. Sweden should steer clear and avoid measures that favor multinational companies.
11:16 February 20, 2012 by isenhand
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