Sweden did indeed suffer from the
economic crisis, but less than many other countries. And even though
unemployment rose, the trend seems to be turning.
“This report shows how it is possible to handle difficult situations
if you are prepared, have carried out the necessary reforms and learnt
from previous experience,” said OECD’s secretary general José Angel
Gurría when he presented the organisation’s report on Sweden’s
economy.
One explanation for Sweden’s relative success is that the country
saw through many necessary reforms in the wake of the crisis towards
the end of the 1990s, and as a result managed relatively well. But a
small, open economy will always be vulnerable and it is important not
to become complacent. Sweden needs to take special notice of its high
youth unemployment and be aware that many are at risk of ending up as
social outsiders – particularly young people.
Mr Angel Gurría said there was room for improvement in the way the
Swedish labour market operates. The Swedish labour market model allows
society’s parties to play an important role, which in turn eases the
adjustments needed in times of major macro-economic shocks because the
system brings security to workers.
Yet the social safety net does not catch everyone, and according to
the OECD this can damage people on the fringes of the labour
market.
OECD has several suggestions to how to prevent unemployment getting
a grip. Some cover education systems and apprenticeships. Another
suggestion is to lower employers’ taxes. There is also a suggestion for
slight changes to the welfare model which today gives a lot of
protection to older, sometimes not very productive workers to the
detriment of young workers. There is also criticism of Sweden’s minimum
wage levels, which the OECD feels are far too high, making it harder
for those without a job to enter the labour market. More could be done
to make sure the minimum wages reflect the workers’ productivity. The
OECD is positive to an independent minimum wage commission which could
study the wages’ effect and issue advise.
OECD’s dilemma
An obligatory unemployment benefit fund with closer ties to the job
centre is also recommended.
“OECD has a dilemma. It embraces the Swedish model and thinks it is
good. But the organisation’s recommendations attack some of the model’s
core institutions like the way salaries are agreed, the role of the
unions and the right to negotiate,” says Senior International Economist
at the Swedish Trade Union Confederation, Lena Westerlund. She was one
of the commentators during the presentation of the OECD
report.
She feels it is far-reaching it its recommendations to how the
Swedish model should change – like changes to the structure of the
agreement between the parties, an obligatory unemployment benefit fund,
and suggestions which could limit the unions’ ability to negotiate
labour issues.
“The one thing we can be sure of is that the suggestions in this
report would lead to a greater salary gap and weakened unions,” she
says.
Deregulation, for instance a weakening of employment protection laws
and lower minimum wages, is not the way to go if you want to fight
youth unemployment. There is no evidence that this would be the case,
says Lena Westerlund.
Young people have trouble entering the labour market, but that has
more to do with an unsuccessful education than with wage levels.
Her conclusion is that young people need support and networks and
that there must be more focus on discrimination. Lowering wages for all
young people is no solution, she feels. This would only lead to greater
gaps.
“The priority rules [people who have worked the shortest period of
time are the first to be hit by redundancies] redistribute unemployment
between older and younger workers, but they mean we have a higher
employment rate among older people than most other OECD countries, and
this is important,” say Lena Westerlund.
