The Swedish Model Government Offices of Sweden, Ministry of Finance Presented by Dylan Richard

What is the Swedish Model? A social wefare strategy of inclusive growth Main objectives of the model: Prosperity, equity, and gender equality Autonomy and independence Seeks to provide publicly provided welfare services and social security systems covering Swedes “from the cradle to the grave” Prosperity: Should increase and be equitably distributed among citizens High and rising prosperity is dependent upon a dynamic business sector that contributes to high productivity growth and employment Equity: Based on the fundamental belief in the equal value of all human beings and their equal rights to independent and autonomous lives Gender Equality: A central component of the equity goal in the Swedish Model Autonomy and independence: Prevents power imbalances A matter of relationships between employees and employers, but also between individuals and their families The Swedish Model aims to create a society in which individuals can maintain a good standard of living and favorable opportunities for development, independently of family and with a strong position in relation to their employers Based on a direct alliance between the individual and the state in regards to both rights and duties

Who are the authors? The Government Offices of Sweden Ministry of Finance The Ministry of Finance is responsible for issues concerning central government finances, including coordination of the central government budget, forecasts and analyses, tax issues, and management and administration of central government activities. The Ministry is also responsible for matters concerning financial markets, consumer legislation and housing and community planning. https://www.government.se/government-of-sweden/ministry-of-finance/ Important to note that the authors of the paper are the same people who created the program that the paper is talking about, which opens the door for potential subjectiveness and biased perspectives about the effectiveness of Sweden’s wefare system

Schematic of the Model

Prerequisites for the model Sound public finances Trust and legitimacy High employment Strong and equal social partners Sound public finances – essential to ensuring that fiscal policy is sustainable over the long term and that there is fiscal space to pursue stabilization policy Trust and legitimacy – research shows that trust is the most fundamental factor in the successful establishment and upholding of common regulations that benefits most people High employment – has direct impact on the capacity to achieve the objectives of the Model. Needed to finance the programs and limit the amount of social transfers that are required Strong and equal social partners – includes partnerships between employees and employers, which can be made stronger by the use of strong labor unions (Nordic countries have highest union membership rates in the world)

Pillar 1 – a labor market that facilitates adjustment Coordinated wage formation Wage conditions regulated through collective agreements made directly between social partners (employers and employees), rather than state and local government intervention Active labor market policy Supports mobility in the labor market Also includes training initiatives, subsidized employment, and employment services Effective unemployment insurance Facilitates adjustment in labor market and creates acceptance for the need for continual structural transformation in the economy

Pillar 2 – welfare policy Welfare services Includes childcare, education, and healthcare Social security systems Create a more equitable distribution of prosperity Pillar 3 – economic policy Openness and competitiveness Open to international competition Stabilization policy Mainly in the form of monetary policy Maintain a fixed monetary value (2% annual inflation) Welfare policy – designed to promote high labor force participation, high employment, strong productivity growth, and competitiveness. -Also designed to promote equality of both opportunities and outcomes. -distinguished by a high degree of universality: cover the entire population, not just economically disadvantaged groups Economic policy Swedish prosperity based on the ability of Swedish companies to compete internationally Sweden is ranked as the 9th most open country in the world according to Eurostat

The relationship between economic efficiency and social equity Acknowledges a tradeoff that exists between efficiency and equity and is a key factor in the Swedish Model More social equity requires more social programs, which require more funding (taxes). This taxes will reduce economic efficiency in the form of deadweight loss How to limit this distortionary effect? Properly designed incentive systems Anderson (2015) – how systems are designed is important in relation to incentive problems and the risk of over-use of social programs. Sweden’s answer: emphasize making rights conditional upon duties i.e. right to get unemployment insurance conditional upon the person actively looking for a new job

Concluding remarks The Swedish Model stresses growth in prosperity that is equally distributed Interaction and cooperation between social partners (employers and employees) and with political leadership is essential to evolving the model and responding to changes in the outside world Don’t forget about the potential biases that could affect the article being that the author is critiquing their own program Article did not specifically identify any criticisms of the Swedish Model