“Things are brightening up for Sweden,” said the finance minister, as he painted a glorious picture of the Swedish economy. With figures demonstrating “a high growth rate, low inflation, increasing competitiveness and sound public finances” he emphasised Sweden’s success compared to the rest of the EU.
But the government sees the level of unemployment, stuck at just over 5%, as a sizeable smudge on the country’s economic image. And with an election less than 18 months away, it is also the Social Democrats’ biggest political headache.
“Konjunkturinstitutet [The National Institute of Economic Research] predicts an unemployment rate next year of 4.6% on average,” said Nuder.
“And that’s before they even know about the measures in this budget. We predict an average rate of 4.4% next year,” he said.
That gives the government a target of 4% by the end of 2006, but Nuder avoided committing himself to a particular rate by saying that the numbers aren’t the point.
“For us it’s not important if unemployment is 4% or 3.9% or 3.5%. For us, every single individual who is jobless is a failure,” he said.
“That’s why will dedicate every day, every hour, as long as we have the confidence of the voters, to trying to push back unemployment.”
The finance minister announced a 1.4 billion kronor package designed to create 20,000 new jobs next year. Much of that will take the form of tax exemptions to employers to encourage them to take on people who are long-term unemployed.
While unions and opposition parties agreed that the big issue was unemployment, they were unimpressed with Nuder’s proposals.
“If this is a big investment then the word ‘big’ has lost its meaning in the Swedish language,” said Dan Andersson, the chief economist at trade union organisation LO.
“The situation in the job market is tough and a billion in this respect is rather small. The analysis and measures are not at all in proportion to the problem,” he added.
The Moderate Party’s economic spokesman, Mikael Odenberg, added to the criticism of Pär Nuder’s budget.
“The verdict has to be severe: you have run the country for ten years and you have utterly failed on jobs,” he said.
There were few surprises in the budget, since the government has hammered out its proposals with its coalition partners, the Left Party and the Greens, in very public negotiations in recent months.
The justice department gets an extra 135 million kronor to help support centres protecting the rights of women in society plus another 175 million kronor to increase police recruitment and prison capacities.
317 million kronor was earmarked for closing down the nuclear reactor at Barsebäck, while forest owners who were affected by the winter storms will be given 50 kronor per cubic metre lost plus reductions in diesel fuel tax.
The education department has been given 135 million kronor to train 1,000 more teachers.
The costs of dealing with the aftermath of the tsunami, estimated at 150 million kronor, will be taken from the defence department’s budget, which has been frozen at 8.5 billion kronor.