Reinfeldt should listen to criticism from business owners

For the first time ever, a centre-right government has failed in its first year in power to improve Sweden's business climate, says Nima Sanandaji from the Captus think tank.

Reinfeldt should listen to criticism from business owners

Entrepreneurial activity typically tends to flourish in Sweden under centre-right governments before once again diminishing under socialist rule. But a survey recently published by the Confederation of Swedish Enterprise shows that the current centre-right ruling coalition has bucked the trend. For the first time ever, entrepreneurship has not increased during the first year of a right wing government’s term in office.

Stimulating the growth of businesses has for a long time been a winning argument for the four centre-right parties in Sweden. But the current government has done little to improve the entrepreneurial climate. Surveys indicate that business leaders have reduced their support for the government. Shortly after the last general election in 2006, a survey by pollster SIFO showed that just 10 percent of small business owners lacked faith in the government’s business policies. Six months later, the figure had risen to 27 percent.

The parties of the centre-right frequently attribute the government’s low opinion ratings to the implementation of drastic, but necessary, reforms which seek to stimulate workfare and entrepreneurship over welfare. But in reality, the Reinfeldt administration’s unpopularity may be partially explained by its failure to bring about business climate reform.

Rigid labour market regulations, which make it difficult to hire and fire workers, represent an important hindrance to the ability of companies to expand. Matters are complicated further by extremely powerful labour unions, which are free to attack businesses they dislike. The leading centre-right party, the Moderates, have previously been staunch supporters of opening up the labour market. But Moderate Party policy reform has led to a situation whereby the party now supports labour market regulations in their current state. According to a survey conducted by polling agency SKOP on behalf of the Confederation of Private Enterprises, 69 percent of business leaders believe that the government has not made it easier to hire workers.

The so-called 3:12 rules, which regulate how profits can be taken out of small firms, represent another important obstacle to private sector growth. Viewed by many as bureaucratic and difficult to follow, the Board of Swedish Industry and Commerce for Better Regulation estimates the annual cost of following these rules at 13,000 kronor for a sole trader. The total cost for the Swedish economy is estimated to be as high as 1.5 billion kronor.

Traditionally the centre-right parties have focused on improving opportunities for companies to grow. But the ideological shift occurring within the Moderates has meant that there is less interest than before in liberalizing the regulations faced by companies.

The transformation that has occurred within the main centre-right party in Sweden can be clearly observed in the policies of the Reinfeldt administration. According to Anders Bornefalk, economist at the Confederation of Swedish Enterprise, the ruling Alliance risks being the first centre-right government to fail to increase entrepreneurial activity within its four year mandate. If this turns out to be the case, one of the main arguments for supporting centre-right governments at election time – their ability to improve the business climate – will suddenly lack any semblance of credibility.

Nima Sanandaji is president of the Swedish free market think tank Captus and publisher of Captus Magazine.

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OPINION: Will the Sweden Democrats play nice or will they seek ‘revenge’?

A row over Swedish public television suggests that the room for compromise between the Swedish Democrats and their partners in a possible new coalition government will be limited, argues David Crouch.

OPINION: Will the Sweden Democrats play nice or will they seek ‘revenge’?

On Tuesday evening, SVT’s flagship news magazine Aktuellt included a seven-minute segment about the Sweden Democrats (SD). They invited Willy Silberstein, head of the Swedish Committee Against Antisemitism, and PM Nilsson, the respected political editor of business daily Dagens Industri

This was an example of what TV journalists do all the time – get two sensible people with different views to explain and argue their positions. The approach allows viewers to be exposed to different opinions and make up their own minds.  

Silberstein said it was “frightening” that a party with Nazi roots had so much support in Sweden and expressed a concern that the SD’s strong showing at the polls would encourage racists. 

“I do not mean that the Sweden Democrats in any way call for violence against immigrants, but I think there is a risk that a climate will arise where many people who have racist attitudes feel a greater freedom to say things and possibly also act violently against minorities,” he said.

Nilsson respectfully and sympathetically argued that the SD kick extremists out of the party, and that the experience with similar parties in power in other Nordic countries is that they fail to make any fundamental changes to these liberal democracies. In some ways, it felt like the conversation I had with my Jewish relative that I described in my last column, although Nilsson failed to answer the real fear among ethnic minorities that the election result encourages racists. 

This innocuous bit of television provoked a furious outcry from the Sweden Democrats. Björn Söder, one of the SD’s top leaders and their candidate to become the new speaker in parliament, accused SVT of broadcasting “pure propaganda”. The public service broadcaster should be reported for bias and “fundamentally reformed”, he said.

Barely 48 hours after the polling stations closed, here was the SD with the gloves off, gunning for one of the party’s traditional enemies – journalists. 

In 2016, Linus Bylund, now the party’s chief of staff, called journalists “enemies of the people”. On election night, Bylund joked that he was looking forward to “a lot of what we like to call ‘journalist rugby’” – pushing journalists around, he explained. When Aftonbladet columnist Peter Kadhammar visited the SD stronghold of Hörby in 2020 and asked to read the town council’s official diary – a legal democratic right – two SD goons followed him and sat, arms folded, to intimidate him while he worked.

SD critics of the mainstream media have supporters inside the other right-wing parties that make up the loose electoral bloc that is on the verge of taking power. On Tuesday morning, Gunnar Axen, a venture capitalist and for 16 years a member of parliament for the Moderate party, tweeted: “A piece of advice to the Moderates and SD before the government negotiations regarding ‘public service’: A cancerous tumour is operated on completely, you leave nothing behind because then it starts to grow again.”

Söder’s outburst against the media should be a concern to anyone who consumes journalism in Sweden and relies on journalists to provide them with accurate information on which to lead their lives. But it also raises a bigger issue: to what extent will the party be prepared to compromise in the event that negotiations take place with the three other right-wing parties about forming a new government?

The Financial Times was one of the few foreign media allowed into the SD’s valvaka election vigil party on election night (The Local’s application for press accreditation was rejected). Its reporter Richard Milne wrote: “One word was on the lips of many Sweden Democrats MPs who spoke to the Financial Times: ‘It is revenge,” said Henrik Vinge, deputy leader. Linus Bylund, its chief of staff, added: ‘It is revenge because the other parties have treated us badly — even the three [rightwing] parties on our side.’”

It is easy to forget what it has cost SD politicians personally to get where they are today, and therefore how determined they are to pursue their ideological goals. Leading members have made sacrifices, they were in the movement when it was acceptable to make fun of them and even beat them up. Some have lost their positions or even their jobs for being SD members. Whether you think this was right or not, they have been isolated and bullied by the media and other Swedish institutions.

“These are investments that they have made, and they will not immediately become politically fatigued in negotiations, they are in it for the long term,” one experienced SD-watcher told me this week.

However, the SD have also seen what has happened to other, similar parties in the Nordic countries, and particularly the Danish People’s Party, whose role in propping up a minority conservative government has seen its support fall through the floor.

At the same time, in the municipalities it has controlled, the SD have behaved responsibly and generally stayed away from enacting hardcore policies. Moreover, this approach has seen its share of the vote grow by between 4 and 10 percentage points in all of these towns, which might have taught it that the softly softly approach works.

The election literature I received from my local SD was all about cuddly local issues and mentioned immigration only once – in sharp contrast to the election leaflet from the SD’s national arm.

Will the party take a similar softly, softly approach now it has the chance for power on the national stage, or will it want to show the full extent of its new political power and throw its weight around? If that includes taking revenge on the mainstream political parties and the media, be prepared for fireworks.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University.