Makeover for the ‘Swedish model’
Sweden’s enviable socio-economic model is almost the opposite of ours, with a highly educated, well-paid and strongly unionised workforce, but its struggles with racial and gender equality are achingly familiar.
Sweden’s enviable socio-economic model is almost the opposite of ours, with a highly educated, well-paid and strongly unionised workforce, but its struggles with racial and gender equality are achingly familiar.
At a rally in Florida in February 2017, Donald Trump claimed that, as a result of taking in large numbers of refugees, Sweden was “having problems like they never thought possible”. The US President implied that, the previous night, the Scandinavian beacon of liberalism had suffered a terrorist attack, which, on closer study, turned out to be a figment of the leader of the free world’s imagination. Even for a man prone to unpredictable statements, it was a bizarre intervention.
As former prime minister Carl Bildt tweeted at the time, “Sweden? Terror attack? What has he been smoking?” The world raised a collective eyebrow, shook its head, and moved on, reassured that Sweden was doing just fine.
In the space of a couple of years, from 2014-2016, this northern European land of about 10 million people had admitted a quarter of a million refugees and asylum seekers. That is an extraordinary figure. In proportional terms, it would be the equivalent of New Zealand absorbing a population nearly the size of Dunedin.
“The numbers are remarkable,” says David Crouch, a British journalist who lives in Gothenburg and has written an entertainingly informative book about Sweden entitled Almost Perfekt: How Sweden Works and What We Can Learn From It.
As Crouch points out, it was a conservative politician, Fredrik Reinfeldt, who called on his fellow Swedes to “open your hearts” to the mass of people fleeing wars, particularly in the Middle East. “You can’t imagine a conservative leader in any other country saying that,” says Crouch.
Sweden has an honourable record of taking in refugees, dating back to World War II when nearly all of Denmark’s Jewish population was able to flee across the Kattegat Strait to neutral Sweden. It also welcomed more than its share of refugees from the Balkans during the wars of the 1990s.
But what happened in 2014 and 2015 was on another scale altogether. It has tested Sweden’s celebrated social cohesion to a degree that suggests Trump may, for once, have been only half wrong. Last month, it was announced that, so far this year, Sweden has suffered 100 explosions. And they weren’t gas explosions, either.
They were deliberate attacks, the product of home-made bombs and grenades – the preferred weapons in the turf battles waged by Sweden’s growing drugs gangs. As Amir Rostami, a criminologist based at Stockholm University, told the BBC, grenades are synonymous with war zones. The only other country theoretically at peace in which grenades are common is Mexico – home of militarised drug cartels.
For a country that invariably tops the lists of good governance, transparency, lack of corruption and just about every other indicator of sound socio-economic health, it has been embarrassing for Sweden to find itself ranked alongside Mexico as a place for settling narcotics disputes with explosives.
Although Sweden doesn’t produce crime statistics with racial breakdowns, it’s widely understood that the majority of perpetrators of the grenade attacks are from ethnic minorities.
For many years, Sweden’s government and media tried not to bring attention to troubles relating to migrants. It wasn’t quite censorship but it did lean towards promoting positive images. Crouch says attitudes changed dramatically in November 2015, following the Bataclan terror attack in Paris.
“Suddenly, people began to ask, ‘Have we let a lot of Islamist terrorists into the country?’ Overnight, the brakes were slammed hard on the refugee policy,” he says. “There was nothing short of panic. Sweden
being silent on the idea of integration, that died in late 2015. And, since then, they haven’t really talked about very much else.”
So far this year, Sweden has suffered 100 explosions – the product of home-made bombs and grenades.
WEALTH WITHOUT EQUALITY
However, Crouch maintains that it would be misleading to portray Sweden as a country in the grip of deep social conflict. In many respects, it is a victim of its success.
For the latter half of the 20th century the “Swedish model” was renowned for its social democracy, state ownership, high taxes, excellent welfare system and effective redistribution of wealth. Governed for 80 of the past 100 years by the centre-left, the state, writes Crouch, “strived to be the folkhemmet or ‘people’s home’”, a cradleto-the-grave vision of paternalistic support.
It was, by any standards, a society with a conspicuously narrow disparity in wealth between the shop floor and executives. But, in the 1980s, that model began to fracture. As with many other countries around the world, including New Zealand, Sweden instituted market-led reforms, and then, in the 1990s, a housing boom and bullish stock market saw rapidly increasing capital income and an entrepreneurial class begin to reap a much greater slice of the rewards.
In this century, writes Crouch, “Stockholm has developed more billion-dollar tech companies, or ‘unicorns’, than any other city in Europe.” They include Spotify, Skype and King (the makers of video game Candy Crush). Today, Sweden has about 200 krona billionaires (roughly NZ$160 million). They come from manufacturing, technology, clothing and other areas.
Another reason that industry is in good shape in Sweden is that there is a cultural antipathy towards short-termism. Crouch retells an anecdote of a senior US executive, Keith McLoughlin, who was appointed chief executive of Electrolux, the Swedish washing machine and refrigerator giant. He decided to speak to the company’s directors individually to get feedback on his 100-day plan.
His approach perplexed his new colleagues, one of whom told him: “I want to give you a tip. For a Swedish director to hear about a 100-day plan makes us very nervous. We want to hear about your 100year plan.” Swedish investors tend to take the same approach. There is a keener social sense of being custodians rather than just making quick profits.
So, business is flourishing in Sweden, but equality is not. As Crouch notes, the gap between rich and poor in his hometown
of Gothenburg has quadrupled in four decades; growth in inequality since the 1980s is the largest among all OECD countries.
Swedish politicians are increasingly concerned about the situation, not just for social reasons, but also economic ones – many institutions, including the International Monetary Fund, now believe that inequality inhibits growth.
In his book, Crouch sets about examin
From 2014-2016, Sweden, a land of about 10 million people, admitted a quarter of a million refugees and asylum seekers.
ing exactly how the Swedes reinvented their economic model, and what challenges it now faces. A resident for six years in Sweden’s second city, Crouch says that although he is married to a Swede, it took him time to understand Swedish society.
He arrived thinking of the Swedes as socially liberal, but over time he began to see that they are “conservatives with a small c”. For example, there is a state monopoly on selling alcohol, meaning that Swedes have to go to one of the large state-run offlicences if they want to buy a bottle of wine to drink at home. It’s a restriction that is supported by a healthy majority of Swedes.
“There are more golf clubs in Sweden than off-licences,” says Crouch. “In some parts of the country you have to order your alcohol days or even weeks in advance.”
Although Sweden is seen as a secular state, the church is hugely popular, even among atheists. Similarly, although it values democratic participation in all walks of life, Sweden is a constitutional monarchy.
At first, having lived in London and Moscow, Crouch felt that he had moved “to the end of the world”. That’s a phrase with which Kiwis are all too familiar. It usually says more about the dislocation of the person using it than the position of the country they’re describing. Crouch was not happy in his first year in Sweden, but having adjusted to his new home, he can’t imagine anywhere he’d rather live. The more he gets to know the country, the more he comes to love it.
WORKERS BEFORE JOBS
As a former Financial Times journalist, Crouch wanted to know what had happened to the old Swedish economic model. And, specifically, whether market reforms had killed off the harmonious relations between business and unions. He learnt that, after a period in which the two sides were antagonists, they came together, almost behind the scenes, to forge a new deal in the mid-1990s.
“The rest of the world was heading in a very different direction,” says Crouch. “The Berlin Wall had fallen, communism had fallen. But, in Sweden, the two sides put Humpty Dumpty back together again. They realised that mutual co-operation was an effective way of running the economy.”
This new economic model contained several counterintuitive elements. The Swedes themselves compare it to a bumble bee. It shouldn’t be able to fly, but it does.
The first thing to say is that it is a highincome economy and, against global trends, most Swedes are members of trade unions. Industrial relations are relatively peaceful and strikes extremely rare. But what makes the set-up particularly notable is the unusual role played by unions.
In most economies, failing sectors cut wages and successful industries increase them. By and large, that’s not true in Sweden. Instead, unions negotiate centralised pay settlements.
Representatives from unions sit on the boards of businesses, but they are surprisingly modern in their outlook. They actively welcome globalisation, digitalisation and international trade deals and even the disruption that often accompanies them.
“The unions have this soundbite that they roll out,” Crouch says. “‘We’re not scared of new technology. We’re scared of
“In some parts of the country you have to order your alcohol days or even weeks in advance.”
old technology.’”
He quotes Eva Nordmark, former head of the Confederation of Professional Employees: “Our view has never been to protect jobs, but to protect our members. Our focus is on your next job.”
Yes, the head of Sweden’s biggest whitecollar union – until becoming the country’s Minister for Employment in September this year – with 75% membership in the sector, was fairly relaxed about the prospect of the workers she represented being made redundant. That’s not something you’ll hear many union leaders say elsewhere around the globe.
In Sweden, industry and unions have come to a dynamic agreement in which businesses either improve productivity or fail – because the option of lowering pay has been removed from the table.
And when they fail, there is a wellestablished process of retraining and re-employment, overseen by a body called the Trygghetsrådet, or Security Agency. It may sound a little sinister, like some kind of spy outfit, but in fact it swiftly transitions workers between jobs. If there is a period of unemployment, the benefit system is, by most Western standards, very generous.
In other words, Swedish workers tend not to feel part of the so-called precariat, that new class of employees struggling to
In most economies, failing sectors cut wages and successful industries increase them. By and large, that’s not true in Sweden.
maintain a living in the harsh winds of the gig economy.
Crouch has often witnessed the positive attitudes displayed by Swedish workers in jobs that, in many other societies, are seen as low-status – airline customer care, for example. The reason, he says, is that workers are more highly trained, better paid, and therefore derive greater job satisfaction. Even the job of a waiter is one that requires extensive training. In Sweden, there’s no such group as the unskilled.
I ask him if he thinks Sweden’s ability to adapt quickly to a global market, while retaining protection for its workers, is a function of its relatively small population.
“From the point of view of selling copies of my book, I’d like to say that it’s not important. But the truth is, probably, yes. For the movers and shakers in the country, it’s quite a limited pool of people and they all know each other. And if they don’t know each other, they know somebody who knows. It’s very easy to make personal relationships that can make a difference. The small size of the population makes collaboration easier.”
If Sweden has recently seen a rise in eco
If Sweden has recently seen a rise in economic inequality, it continues to battle to close the gap between the sexes.
nomic inequality, it continues to battle to close the gap between the sexes. In many societies the pay differential between men and women is attributed to the fact that women bear the burden of looking after children. But the Swedes have been determined to shift the balance of parental responsibility. In 1974, Sweden became the first nation in the world to allow paid paternity leave.
As then Prime Minister Olof Palme said: “In order that women shall be emancipated from their antiquated role, the men must also be emancipated.” However, despite decades of state encouragements, fathers still account for only a quarter of parental leave. That’s far more than the rest of the developed world, but still a long way from the Swedish dream of gender equality.
Sweden also leads the world in state provision of heavily subsidised child care and kindergartens. Crouch interviews Swedish women who’ve lived abroad with small children where they have found that child care is too expensive to enable them to work. In Sweden, the female workforce is largely liberated from such concerns.
NORDIC MELANCHOLY
One intangible effect of these developments is the sense that, as the Norwegian writer Karl Ove Knausgård once put it to me, Swedish society has become “feminised”. When I interviewed Knausgård a few years ago in