The government has been generous with the budget because of the coming election, according to chair of the Confederation of Swedish Enterprise (Svenskt Näringsliv), Leif Östling, who calls it “a typical Social Democrat election budget”.
Collector Bank’s chair Lena Apler agrees, “You can tell we are approaching an election year They are flirting with families and pensioners.” Meanwhile Rune Andersson, chair of Mellby Gård predicts the economy will overheat and wants to see more austerity.
Leif Östling is not impressed with the budget from a business perspective either. “The business world is getting quite a large number of tax increases over the year.” Former chair of Svenskt Näringsliv Jens Spendrup points out that there needs to be more new business in the country because that is where new jobs are created.
Leif Östling wants a review of the tax system for wage earners, pointing out that it makes it difficult for Swedish companies to recruit from abroad.
Finance minister Magdalena Andersson has been arguing for a more aggressive distributive policy to address growing gaps in society (see SPR 2/1 Early Ed.) and has urged business to stop working against tax increases.
Now professor of economy at Stockholm University, Lars Calmfors, has backed the minister. Sweden remains one of the most equal countries but gaps are growing. The number of Swedes earning less than 60 per cent of the average grew more in Sweden than in all other EU countries between 2000 and 2013. “A significant part of that increase happened after the financial crisis and the alliance government’s incoming. Our starting point was extremely small income gaps but I still think it is a worrying development,” he says.
However the Confederation of Swedish Enterprise makes a different analysis and is completely against tax rises. Head economist Bettina Kashefi says social problems should not be dealt with by raising taxes but by getting people into work.
CEO and chair of the Confederation of Swedish Enterprise, Carola Lemne and Leif Östling, write in DI today that 460,000 jobs must be created in the next few years if Sweden is to meet the government’s target of having the EU’s lowest unemployment by 2020. They write, “For various reasons, such as age, “education first and job later” is not the right solution for everyone. The alternative to several more years at a school desk cannot be being consigned to benefit dependency. There must be more paths to jobs.”
They highlight reform proposals such as creating introductory jobs for immigrants, increasing flexibility in SFI (Swedish language courses), developing job matching, extend RUT and ROT deductions, making it possible for asylum seekers to work, redistributing resources to vocational courses and opening up the Public Employment Agency to competition.
“If 100,000 more new jobs are to be created and contribute to Sweden’s growth more efforts are needed than what the government has so far demonstrated”.
Closing Sweden’s borders will not solve the major challenges that lie ahead, warn the Swedish Trade Union Confederation (LO) and the Confederation of Swedish Enterprise (Sv. Näringsliv). Both organisations consider that the government must act now and introduce uncomfortable reforms in the wake of huge influx of refugees to Sweden.
“As many people as live in a city the size of Linköping have come so far this year. Look at how much housing, infrastructure and welfare there is there, with its own university hospital, and we’re seeing how much we’ll need to invest now,” says Karl-Petter Thorwaldsson, chair of LO.
“In order to give these new arrivals a chance we must get used to bigger differences (in salaries, ed.) than we have today,” says Carola Lemne, head of Sv. Näringsliv, who wants the government to use the respite it has created in refugee reception to push through major structural reforms.
The situation is so serious that the government must raise the ceiling on public spending, contends Robert Bergqvist, SEB chief economist, warning that to introduce savings at this time will have extremely negative consequences.