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Swedish welfare refers to the Swedish variant of the mixed economy welfare state prevalent in much of the industrialized world. Similar systems are found especially in the other Nordic countries.

Sweden has been categorized by some observers as a middle way between a capitalist economy and a socialist economy. Supporters of the idea assert that Sweden has found a way of achieving high levels of social equality, without stifling entrepreneurship. The viewpoint has been questioned by supporters of economic liberalization in Sweden and skeptics of socialism as a viable approach to economic management.

The term "Swedish model" has also been used as a label. The September 2006 issue of The Australian Financial Review magazine carried an article which praised what it asserted to be Sweden's distinctive political and social system, while The Economist carried an article in its September 7, 2006 issue which featured interviews with Swedish economist Assar Lindbeck who was critical of the achievements of the Swedish welfare state.[1]

Admiration for Sweden's economic system has traditionally been associated with an admiration for what is said to be the country's liberal attitude to social issues.

Sweden's system developed slowly but persistently throughout the 20th century as a result of many decisions. The development was led by the Swedish Social Democratic Party and the trade unions. This involved opposition from the business community and the liberal and conservative opposition. Such opposition probably contributed to several market reforms Sweden began to implement during the 1980s. Sweden, like many other western countries, struggled immensely during the 1970s. Some suggest that maintenance of the "Swedish Model" may be a result of increased economic freedom over the past two decades rather than further social democratization.[2]

Contents

History

There is some dispute whether the origins of the Swedish welfare are in 1930s or the late 19th century, before the Social Democrats first came to power in 1920. In 1847 and 1853 Sweden passed "poor relief laws", taking the first step towards implementing the welfare state. The Swedish Trade Union Confederation (Landsorganisationen i Sverige) was founded in 1898 with a strong tie to the Social Democratic Party. As early as 1913, Sweden's Liberal Party government (non-socialist), with the support of the populace, began broadening the range of social benefits. It took most other developed countries until the Great Depression of the 1930s to take similar steps. A possible explanation for this is often said to be certain cultural norms dating back to the small agrarian villages which were relatively late to be industrialized. These values asserted conformity and egalitarianism over individualism (see Jantelagen and lagom.) The Liberal Party government passed the National Pension Act in 1913 to provide security for the aged. In 1918 a liberal-SAP coalition government passed a new poor law, turning the responsibility of assisting anyone in need over to local governments, while the central government contributed administrative support. This law was to remain the cornerstone of Sweden's assistance programs for the next 40 years.

The welfare state was built much in thanks to the predominance of the Swedish Social Democratic Party, the large unions that encompassed almost the entire population, and the industries that were similarly almost all unionized. Still today trade unions play an important part. In January 2002 the Confederation had 1,960,000 members (Sweden has a total population of 9,000,000). Sweden's industries have consisted of a few global chains since the late 19th century, such as Electrolux, Volvo and Ericsson, in 1902 united in the confederation "SAF" (since 2001 merged into the Confederation of Swedish Enterprise).

In 1938 the Saltsjöbaden Agreement (named after the small town Saltsjöbaden) between the workers and employers confederations was signed. It resolved several issues on the market. It came to form a particular form of industrial relations in Sweden, the so-called “Saltsjöbaden spirit”, marked by willingness to co-operate and a mutual sense of responsibility for developments in the labour market.[3]

Sweden's social welfare continued to develop during the 1950s and 1960s, during which time Sweden was the third wealthiest country in the world for a period, with practically zero unemployment. The Welfare State then reached a peak in the 1970s, when it in effect affected and included everyone from child care to the pension system (see Social Security (Sweden)). The exact event that made it peak and slowly decline was the 1973 oil crisis. For brief periods Sweden was controlled by moderately right-leaning governments, which came about due to periods of high taxes and unemployment.

Only in the latest decades did changes arise, due to a hard industrial crisis, resulting to a decrease in social funding in the 1990s. This recession hit Sweden hard, and caused social problems for many years afterwards, such as higher crime-rates. Sweden was brought out of the recession, but in 2000 there was a minor crisis due to the worldwide burst of the dot-com bubble. Further economic precautions brought about a strong, growing economy.

Although it is clear that the global economic environment is changing, posing a threat of job outsourcing to employment within Sweden, health care, education, and plentiful natural resources have ensured that Sweden has for now maintained moderately high levels of employment and moderately strong levels of economic growth. Sweden has been recently ranked as one of the strongest economies in Europe. In this regard, Sweden is acclaimed by many to be a successful example of social democracy. Many praise the Social Democrats for taking Sweden out of the recession of the 1980s and early 1990s, and argue that the problems Sweden faces are due to an ongoing adaptation to the global economy. Others say that Sweden's current system is taxing on the economy and further reforms need to be made to encourage economic growth. They say that the current system creates a bidragskultur (a welfare culture) where people, especially youth, are not motivated to work. Others argue that the youth would work if it were not so difficult for them to find jobs. It should be mentioned that Sweden currently has one of the world's lowest poverty levels, (6% according to the United Nation's Human Development Report), and is among the top five most egalitarian countries in regard to income distribution. Both of these are major goals of the Swedish welfare system. However Sweden's GDP per capita is currently lower than its Scandinavian neighbors, and economic growth is a major issue right now. Sweden faced an election in the autumn of 2006, and the country is still split between left and right, but even the elected right-leaning coalition government intends to maintain the foundations of the welfare state, with some adjustments intended to lower unemployment and further economic growth. No major party in Sweden has in its program to disassemble the social welfare state. To attempt to dismantle the welfare state would prove to be unpopular with Swedish voters, who are typically skeptical of both the far right and the far left.

In contrast to the GDP used above in the article, Swedish nominal GDP-per capita is quite different than the more common measurement used above. Sweden ranks almost twice as high when using the nominal count and this is since the living costs are quite high in Sweden but mostly as a result of the high taxation which in turn makes healthcare, education and other vitaly important services very cheap or free. The result of the Swedish/Nordic welfare state mirrors itself in the consequent top ranking on the United Nations Human Development Index where Sweden has since its development always been among the top nations together with other welfare states such as Norway, Denmark and Canada. Other positive effects include one of the highest trust in society among the population and one of the most successful school systems.[4][5]

See also

Notes

  1. ^ The Swedish Model : Admire the Best, Forget the Rest, by The Economist
  2. ^ Bergh, Andreas. 2006. Is the Swedish Welfare State A Free Lunch? Econ Journal Watch 3(2): 210-235. [1]
  3. ^ The Saltjö agreement At the European Foundation for the Improvement of Living and Working Conditions website.
  4. ^ http://www.economist.com/displaystory.cfm?story_id=11477890
  5. ^ http://www8.umu.se/soc/kurser/ht2007/kriminologi/Uppsatser/Daniel%20Br%e4nnstr%f6m.pdf

Further reading

  • Peter A. Swenson, Capitalists Against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden , Oxford University Press (September, 2002). ISBN 0-19-514297-7

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