1. Scandinavian welfare regime in crisis
Sweden

2. Introduction Political dominance of Social Democrats
Institution full employment policy on Keynesian principles: new industrial economy
Public investment in R+D & infrastructure
1938 LO/SAF pact (central negotiation)
1940 Labour Market Board – active labour market policy (training and mobility)
Social Policy:
compulsory sickness insurance
State pensions
Extensive .social services

4. Post-war growth (1950s and 1960s)
1940s: citizenship pension & sickness benefits raised
TU voluntary unemployment benefits extended and reinforced (Labour Market Board).
Basic rates topped up by earnings-related supplements (pensions and sickness and TU unemployment insurance)
Sickness benefits cover child care for 4 years
Local state social services and social assistance

5. Swedish welfare state at zenith (1980s) I
90% income replacement ratios for sick, unemployed or absence through child care
70% replacement rate for pensioners
Social security costs rise:
1965 = 13.5% GNP
1980 = 32% GNP

6. Swedish welfare state at zenith (1980) II
Expansion of local social services
Comprehensive health care
Housing (owner occupation and publicly provided rental)
Residential facilities for elderly, children and handicapped
Compulsory care for children and alcoholics (1982: institutionalisation made voluntary)
Professional expertise, state management + high taxation

7. Early Crisis: 1980s
1976: welfare costs raised by economic downturn (SDP loses power)
1982: SDP re-elected:
Krona devalued
Wage restraint introduced (welfare protected)
New public investment in Swedish firms
New training programmes:
Collective bargaining strengthened
1980s: Swedish unemployment low and inflation steady
80% women in workforce at 85% male wage rate

8. Crisis 1990s: collapse of Soviet block
10% inflation and rising unemployment
Government applies for EU membership
Krona devalued against DM
Welfare cuts: SDP loses 1991 election
1992 currency crisis (interest rates – 500% & unemployment = 11%):
welfare cuts
full employment policy abandoned
unemployment insurance made compulsory
1994 SDP re-elected (but welfare reforms stay)

9. Restructuring Nordic Model(s) 1990s
Economic ‘modernisation’ policies aim at low inflation
Severe budget cuts, fiscal austerity (Euro links)
Tax cuts and reduced benefits
Negotiated wage constraints: labour market regulation retained: flexible work sharing schemes negotiated.
Social policy: reinvigoration of duty to work
LMA programmes / education
Multi-pillar pensions restructured: early retirement closed down
Measures to reconcile work-family & raise female labour market participation
Targeted policy for immigrant / posted workers
Danish ‘flexicurity’: unemployment + high protection.

10. Welfare changes post 1990s Higher charges for child/ elderly care
Health care competition: private provision, internal market, higher charges
Labour Market Board: employment policy
Training: allowances cut
Employment protection amended
Employers promote flexibility
Education: competition between ‘free’ and state schools

11. Influence of EU
1994: entry into EU reinforces constraints on public expenditure
Amsterdam Treaty (1997).
Chapter on employment
Birth of active labour market policies reflect Swedish experience
Refusal to join the Euro.
Damaging to welfare state (opposite to UK)
Swedish standards of welfare are higher

12. Pension reform ( )
1998: Pension Reform introduced (implemented 2001)
2.5% of contribution to earnings-related state pension converted into personal ‘pot’.
Contributors may determine whether to invest personally, or to allow state to do so
: market downturn: all lose savings (but state investors lose less)
Result: more contributors return ‘pot’ to state for investment
State responsibility re-enters by the back door.

13. Map of the 2006 Swedish parliamentary election results by county.

15. Nordic Models in Turbulent Times
‘The crux of the Nordic model has been the actors’ capacity for co-ordinated, concerted policy adjustment – facilitated by relatively balanced power relations and trust – which has enabled coherence and complementarity between policies in key areas’ Denmark, Sweden, Norway and Finland (and after)

17. Conclusion
Economic convergence with EU = social policy convergence with EU?
Will current crash push Sweden to joint the Eurozone
Women anti-EU: this represents principle threat to their jobs
‘Liberalisation’
Watering down of alcohol policy
Higher unemployment
But Swedish welfare still most generous in Europe – even after following similar path.