Jobs dominate Borg’s first budget

The battle to generate jobs was at the top of the government's agenda, finance minister Anders Borg made clear as he presented his first budget on Monday.

Borg began the parliamentary debate surprisingly, by complimenting former prime minister Göran Persson for having in many ways contributed to a strong Swedish economy.

But there was a sting in the tail, and he emphasised that the Swedish economy consists of more than simply high growth, low inflation and strong public finances. Sweden also suffers from mass unemployment and it will take time to return to full employment, said Borg.

“Mass unemployment is not just an economic issue. The one million people who are outside the job market have the right to feel needed and included in the world of work,” he said.

The finance minister said that bringing back a sense of fairness to the job market was at the core of his budget.

“An important part of creating more jobs is to introduce a employers’ deduction in 2007 which will reduce tax by between 500 and 1,000 kronor. Then we will take another step and maybe more as finances allow.”

In order to generate more jobs, stronger finances and continued welfare, a number of tough decisions were required, said Anders Borg, as he outlined an austerity package for those who are currently outside the labour market.

“There will be somewhat lower benefits for unemployment and a scaling down. That is necessary to push back joblessness.”

Borg promised also to reform the Swedish Employment Service, AMS, and measures which will result in more people starting businesses through reduced wealth tax.

“We also want to make a major investment in women’s companies and give Almi more resources. The total unemployment must be clearly lower at the end of this parliament,” he said.

And that should happen, according to the finance minister, without a decline in incomes or an increase in wage disparities.

Former finance minister Pär Nuder attacked Anders Borg for not having fully-financed proposals in the budget.

“It’s short by 24 billion kronor for 2007 and 2008 so that the government can live up to its promise before the election that all tax cuts will be funded,” said Nuder.

He then reeled off a list of key economic indicators to show the strength of the Swedish economy, and wondered aloud whether the government might have an interest in painting a picture of the economy that was bleaker than the reality.

“Yes, of course there are political reasons. By cutting benefits the unemployed will be forced to take lower paid work,” said Nuder.

“This closes the circle after a turbulent – to say the least – week with the Reinfeldt government. There will be more nannies in Täby and Djursholm and their employers will have lower wealth and property tax,” said Nuder.