• Sweden's news in English
 
app_header_v3

Sweden 'slimmest Nordic welfare state '

AFP · 21 Jan 2014, 07:33

Published: 21 Jan 2014 07:33 GMT+01:00

The Nordic model, known for high taxes and its cradle-to-grave welfare system, is getting a radical makeover as nations find themselves cash-strapped. During the post-war period, the Scandinavian economies became famous for a "softer" version of capitalism that placed more importance on social equality than other western nations, such as Britain and the United States, did.

Then came globalization and an ideological shift to the right has led to a scaling back of the public sector.

In Sweden, visitors are sometimes surprised to learn about year-long waiting times for cancer patients, rioting in low-income neighbourhoods and train derailments amid lagging infrastructure investment.

READ ALSO: French ambassador Jean-Pierre Lacroix on myth-busting the image of "leftwing Sweden"

"The generosity of the system has declined," said Gothenburg University politics professor Jonas Hinnfors. "Much of this already started changing in the 1980s and especially in the 1990s." 

In the wake of a banking crisis in the early nineties, Stockholm scrapped housing subsidies, reformed the pension system and slashed the healthcare budget. A voucher-based system that allows publicly funded, privately managed free schools to compete with state schools was introduced, and has drawn attention from right-wing politicians elsewhere, including Britain's Conservative Party.

In 2006, conservative Prime Minister Fredrik Reinfeldt's government accelerated the pace of reform, tightening the criteria for unemployment benefits and sick pay while lowering taxes. Income tax in Sweden is now lower than in France, Belgium and Denmark, and public spending as a share of GDP has declined from a record 71.0 percent in 1993 to 53.3 percent last year.

Once the darling of progressives, Sweden has become a model for free-market-leaning thinkers including British weekly The Economist, which last year hailed the scaled-down Nordic model as "the next supermodel."

"They offer a blueprint of how to reform the public sector, making the state far more efficient," it wrote.

This month, the Wall Street Journal praised tax cuts and entitlement reforms in Sweden and Denmark that "are now discomfiting their big-government admirers overseas."

Although polls show strong support among Swedes for the income tax cuts of the past few years, the leftist opposition looks set to win this year's general election. The Social Democrats, in power for much of last century, have been boosted by a string of scandals in private elderly care homes involving degrading treatment of their residents, and by plummeting school results in international rankings.

READ ALSO: Unlikely dalliance to usher out Alliance? 

Critics wonder, however, how the workers party will inance an improvement of public services, having already pledged to keep the popular income tax cuts.

If Sweden is the Nordic country to have gone the furthest in shrinking its welfare state, Denmark has moved the fastest. When her Social Democratic government took power in 2011, there was little to suggest Prime Minister Helle Thorning-Schmidt would make any dramatic changes to the country's cherished welfare state -- funded by the world's highest tax burden.

After a centre-right government had raised the retirement age and reduced the unemployment benefits period from four to two years, "Gucci Helle" -- as she is known among her detractors -- went on to cut corporate taxes to 22 percent from 25 percent.
Other reforms have included requiring young people on benefits to undertake training, and withdrawing student aid to those taking too long to finish their studies.
It has left her deeply unpopular in some quarters. At last year's May Day speeches, she was met by jeers as audience members sprayed her with a water pistol, threw tomatoes at her, and even flashed their buttocks.

For some of Thorning-Schmidt's allies -- notably the leftist Red Green Alliance -- the reforms have been too much to stomach, and in November her minority government had to seek support from the main opposition parties to pass this year's budget. Denmark has been spurred into action by a persistently sluggish economy since a housing bubble imploded in 2007, leading to anaemic household spending.

Story continues below…

Among Danes there is also a sense that the welfare state was ballooning out of control. In 2011, a TV report aiming to show what life was like for the poor in Denmark visited the home of a single mother on benefits, whose disposable income turned out to be 15,728 kroner (2,107 euros, $2,860) per month.

"Poor Carina", as she was later nicknamed, sparked a national debate on the level of unemployment benefits, with one pollster crediting her with fuelling a rise in the number of people who felt benefits were too high.

The next Nordic country to reform its welfare state is likely to be Finland, battered by a downturn in the two pillars of its economy: the forest industry and information technology. Helsinki responded to the crisis by announcing in August a slew of measures to put more Finns to work. Under the controversial plan, the retirement age is to go up, time spent at university will go down, and incentives to enter the job market will be boosted for the unemployed and young mothers.

Only Norway looks unlikely to reform entitlements anytime soon, bolstered by its oil wealth. The country is home to the world's largest sovereign wealth fund. Worth some 5,116 billion kroner (610 billion euros, $830 billion), each of the country's 5,096,000 inhabitants is -- at least on paper -- a millionaire.

New centre-right Prime Minister Erna Solberg has pledged to preserve the welfare state. 

Your comments about this article

Today's headlines
So Sweden has high taxes? Not as high as you might think
A taxpayer hands in their tax declaration. Photo: Bertil Ericson/TT

So you think Swedes pay a lot in tax? Others pay much more, according to a new study.

Man injured in shooting at Malmö shopping mall
Rosengård Centrum in Malmö. Photo: Björn Lindgren/TT

Police cordoned off an area around a shopping centre in Malmö after a man was shot on Tuesday afternoon.

The Local List
Ten Swedish phrases you only hear in summer
Let's work on that tan. Photo: Vilhelm Stokstad/TT

Summer always leaves foreigners baffled by Swedes' unique seasonal habits. Here's The Local's guide to navigating small talk when the sun comes out.

Swedish kids' TV cooks up storm with condom haggis
How, er, not to make haggis. Photo: SVT screenshot

Not the Swedish Chef as you know him.

Swedes outgrown as world's tallest people
How tiny they must look to a Dutch person! Photo: Henrik Montgomery/TT

Forget the myth about the tall, blond, modern Viking.

Record number of drowning deaths in Sweden this year
Linus Magnusson och Ester Meijer, life guards at Skanör beach in southern Sweden last year. Photo: Andreas Hillergren/TT

More people have drowned in Sweden so far this year than in any other year this century. The good weather is getting the blame.

Presented by American Express
6 simple travel hacks that will make your life easier
File photo: Pixabay

Getting ready to jet off on summer holidays? Be sure to check out these tips and tricks for avoiding unnecessary headaches between packing and relaxing.

Pupils' school photo Nazi salute 'wasn't criminal'
The harbour in Simrishamn, close to where the incident took place. Photo: Jorchr/Wikimedia Commons

Four high school students who performed a Nazi salute in a school photo have had their convictions for inciting racial hatred quashed by an appeal court.

The Local List
Silly season: seven strange Swedish summer stories
But at least the weather's nice. Photo: Johan Nilsson/TT

What are Swedish journalists to do during the long dry news spell of summer? Here are the most bizarre stories we could find.

Opinion
'We don't know how Brexit will affect our time in Sweden'
Sweden-based Brit Sarah Campbell, left. Photo: Private & AP Photo/Tim Ireland

One month after the Brexit referendum Sarah Campbell, a British reader based in Uppsala, pens a love letter to her European Union.

Sponsored Article
What can newcomers learn about Sweden at Almedalen?
National
Meet the northern Swede who is the world's best mosquito killer
Sponsored Article
5 reasons you should try dating with The Inner Circle
National
Sweden's Hollywood star Alicia Vikander puts her pen in the bottle
Gallery
People-watching: July 22nd-24th
Blog updates

22 July

After the horror, carry on regardless (Globally Local) »

"This time last week, we were just digesting the horror of the Nice killings, in which…" READ »

 

11 July

Swedish quizzes (The Swedish Teacher) »

"Hej! I have created some quizzes you can take online to test your Swedish skills. Here…" READ »

 
 
 
The Local Voices
The Jewish Syrian who dreams of rebuilding his country
Sponsored Article
Gran Canaria: Where Swedes go to work (and play)
National
Watch this Swedish weather host leave his fly open... on live TV
The Local Voices
'I fled war in Syria. I never expected to be beaten in Sweden'
National
WATCH: Asylum seeker brutally beaten by Swedish bus driver
Sponsored Article
Why you should attend an international job fair
Technology
Why everyone is talking about Sweden's GTA pride parade
Sponsored Article
Why Swiss hospitality graduates are in demand
National
EU hits truck cartel with record price fixing fine
Society
OPINION: Why Sweden is the most extreme country in the world
Sponsored Article
Five easy ways to travel more often
The Local Voices
'There is equality in accommodation in Sweden: Everyone is suffering'
Sponsored Article
Why expats choose international health insurance
Gallery
Property of the week: Gräsö, Östhammar
Gallery
People-watching: July 15th-17th
Sponsored Article
'Sweden's Lauryn Hill' touches the country's musical soul
National
How to make sure you're not caught out by Sweden's old bank notes
Sponsored Article
Five things Americans should know about voting abroad
Business & Money
Why Sweden has been named the most innovative country in Europe
National
Terror attack: what should you do?
Sponsored Article
Local guide: the best of Berlin
National
French expat on the moment he was assaulted by a Stockholm bouncer
Sponsored Article
Why you need a EuroBonus American Express Card
Technology
Gunman? Nah, smartphone Swede
The Local Voices
'If the war in Syria ended today, would you go back?'
The Local Voices
‘I feel like I’m living in a grave!’
Gallery
IN PICTURES: Sweden's Princess Victoria celebrates 39th birthday
Gallery
People-watching: July 13th
National
Swedes discover surprise mountain
Politics
What Sweden's home secretary thinks of Britain's new PM
Gallery
Property of the week: Smedjebacken, Dalarna
The Local Voices
'Even xenophobic Swedes can be polite’
Politics
WATCH: A very Swedish take on Brexit...
National
Swede's fury at Daily Mail's Bråvalla 'lies'
Gallery
People-watching: July 8th-10th
The Local Voices
'The best time to be smuggled to Europe is August 20th, 2015'
The Local Voices
Swedes: Stop obsessing over your material life and start talking to strangers
3,357
jobs available