Local government layoffs looming

Shrinking tax revenues will force one in three Swedish municipalities to lay off employees this year.

According to responses from 257 of Sweden’s 290 municipalities to a survey sent by Svergies Radio (SR), nearly every municipality expects budgetary problems in 2009.

In almost every case, tax income predictions on which last autumns budgets were based are unlikely to be realized.

All told, municipalities in Sweden is facing a budget shortfall of 5.5 billion ($684 million), which could mean the elimination of up to 2,500 local government jobs.

“When the money is gone, municipalities don’t have any other option than to do what everyone else is doing, that is to say, give notice, make people redundant, and shut down operations,” said Ingemar Sandström, a Centre Party municipal council member from Nordmaling on Sweden’s northeast coast which is planning layoffs.

But the final number of job losses will vary depending on exactly what action different municipalities decide to take.

In addition, four of ten municipalities told SR that they plan to raise different fees as another remedy to make up expected budget deficits.

One last resort is to raise taxes, although most municipalities would rather avoid doing so unless absolutely necessary.

“If we raise taxes, we would have the highest in Sweden, so that doesn’t seem like a really fun way out of this,” said Ewa-May Karlsson, a Centre Party municipal council member from Vindeln in northern Sweden, to SR.