Sweden fails to create jobs

Sweden has had good economic growth since the crisis of the early 1990s, but other countries have been better at creating jobs, a new report from consultancy firm McKinsey has shown.

When McKinsey looked at the Swedish economy in 1995 it said that Sweden had been losing ground. The country’s GDP was rising more slowly than in comparable countries, and Sweden was falling behind other countries in growth tables.

But deregulation during the crisis years has meant that Sweden has recovered, principally due to increased productivity. This has led to Sweden rising a few places in the growth tables.

Entry to the EU and better regulations have led to significantly imcreased competition, which has forced Swedish companies to become more efficient. Changed in planning laws have led to competitiveness in the retail sector has increased.

But McKinsey points to the Swedish construction sector as an area of weakness. Overregulation, bureaucracy and an ‘oligarchic structure’ make the building sector ineffective. No significant improvement has been noted over the past few years.

Problems in the construction industry have a knock-on effect for other sectors, making the building of offices, factories, homes and hospitals more expensive.

High Swedish growth has also not been matched with a sufficient number of new jobs. McKinsey writes that other countries have been much more successful at job creation. Between 1992 and 2003 the proportion of Swedes in work fell by 3.1 percent. In the UK, France and Norway employment rose by 4 percent in the same period.

The differences in the changes are equivalent to between 400,000 and 500,000 Swedish jobs, McKinsey estimates.