Now Even Swedes Are Questioning the Welfare State

Now Even Swedes Are Questioning the Welfare StateNationalists are gaining support as more people complain about the sustainability of the cradle-to-grave system.

By Amanda Billner, Rafaela Lindeberg and Niklas Magnusson of Bloomberg. Excerpts:

"Sweden is a nation in surplus and the government has still been raising taxes, with the top marginal rate now reaching 60 percent."

"Paying some of the world’s highest income-tax rates has been the cornerstone of Scandinavia’s social contract, with the political consensus in Sweden to save money for when the economy is less healthy. Yet the country is showing strains all too familiar in other parts of Europe with nationalists gaining support and Swedes increasingly questioning the sustainability of their fabled cradle-to-grave welfare system.

Resentment has built over the influx of more than 600,000 immigrants over the past five years, many from war-ravaged countries like Afghanistan and Syria, a huge number for a country of 10 million people."

"There are also soaring crime rates, gang violence, complaints about education and pregnant mothers even being turned away from maternity wards due to a lack of capacity. The number of people waiting longer than 90 days for an operation or specialist treatment has tripled over the past four years.

“The Swedish social contract needs to be reformed,” a dozen entrepreneurs including Nordea Bank AB Chairman Bjorn Wahlroos and Kreab Founder Peje Emilsson wrote in an op-ed in the Dagens Industri newspaper on May 31. “Despite high taxes, politics isn’t delivering its part of the contract in important areas. We get poor value for money.”"

"With elections due on Sept. 9, polls show a slump in support for the governing Social Democrats, in power since 2014, though an alliance of four other parties may be able to form a minority government.

But with immigration and healthcare topping surveys as the biggest issues facing the country, a party with neo-Nazi roots, the Sweden Democrats, has surged and may hamper any efforts to form a functioning government. In some polls, the Sweden Democrats have even overtaken the Social Democrats as the country’s biggest party, with backing from more than 25 percent of voters.

Sweden provides heavily subsidized health care, free education and more than a year of paid parental leave. If people get sick or lose their jobs, the premium they have paid into the welfare system via their taxes is returned in benefits.

Most Swedes are comfortable with what they pay and what they get, though a survey by pollster Demoskop published in February showed that the proportion of respondents who thought taxes were too high jumped to 45 percent, up from just 27 percent in 2014."

"In the southern part of Lapland, one police car covers an area almost the size of Denmark."

"Money isn’t the issue. Sweden’s finances are in enviable shape by European standards. The economy grew 3.3 percent on an annual basis in the first quarter, among the fastest in western Europe.

The Social Democrat-led government reversed some income-tax cuts instigated by the previous leadership. That enabled it to post surpluses every year since it came to power.

The total tax burden in Sweden rose to 44.1 percent of gross domestic product in 2016, from 42.6 percent at the end of the previous government’s tenure in 2014. That’s the fifth-highest level among 35 OECD countries.

“An important priority we’ll make is that we won’t lower taxes in the coming years, precisely because of the need to finance welfare,” Fredrik Olovsson, a leading Social Democrat and chairman of the parliament’s finance committee, said at a seminar in Stockholm.  “I don’t think the level of taxes we have today is the absolutely highest we can have.”"