General Welfare:
Trends & Opportunities

Eero Carroll




From the perspective of general-welfare politics, the 2002 Swedish election turned out to be something quite different than what Swedish pundits and opinion researchers had predicted. Indeed, Sweden's largest daily newspaper, Dagens Nyheter, concluded afterward that opinion-research institutes had been "unusually far off" in their estimates. Most had underestimated support for the Social Democrats by 2-3 percent, and overestimated votes for the Conservative Party by 2-5 percent (see Election Results).

Imperfections in sampling techniques may acount for some of the discrepancies. But it is also possible that pundits and opinion-researchers alike were biased against the Swedish model of general welfare and its principal architect, the Social Democratic Party. This could well have made them less aware of growing public opposition to the siren song of tax cuts offered by the Conservatives, and also to the recovery of support for the Social Democrats since the election of 1998. Both trends were underestimated.

A key factor in the election was the last-minute mobilization of Social Democratic activists and voters, primarily in response to the perceived threat of massive tax cuts and further cutbacks in the general-welfare system. At this stage, Göran Persson chose to reverse his earlier criticism of mounting tax pressure to launch strong attacks on the Conservatives’ tax-cut proposals. He proclaimed that improved general welfare and massive tax cuts were incompatible: "One cannot have both-- one must choose."

This message appears to have been favourably received, indicating continued strong support for Sweden’s general-welfare system, including such programmes as comprehensive childcare services and income-related social insurance benefits. A sizeable majority of the population benefits from such programmes and is willing to pay the taxes to finance them.

There are indications that the Social Democrats’ upswing for would have been even greater if their reputation as architects and defenders of the general-welfare state had not been tarnished by the cutbacks they have imposed, particularly during 1994-1998 period. The Persson government may have to reconsider its enthusiasm for the European Monetary Union (EMU) if the system is to be safeguarded in the future: Membership in the EMU implies a servere risk of deflationary budget and exchange-rate policies of the sort that were largely responsible for the economic crisis of the 1990s, which in turn led to the above-noted cutbacks.

Major concerns

Support for the general-welfare system is reflected in the results of an exit poll conducted by Swedish Public Television (SVT) on election day. The table below shows the percentage of voters for the various parties who felt that the indicated issues were ”very important” in determining their choice of party. For example, 66.5 percent of Conservative voters felt that the issue of taxes was very important, whereas only 29.6 percent of Left Party voters did so.
Of the fifteen issues addressed by the SVT exit poll, the six reviewed here reflect some of the most important distinctions between voters. The results indicate that schools/education was regarded as very important by the highest percentage of voters for five of the parties (see figures in italics). For Social Democratic voters it was health care. For the Conservatives it was taxes, by a very wide margin-- roughly double the proportion among the three other parties of the bourgeois opposition.

Christian Democratic voters, for example, seem to regard social-service issues as very important-- to an equal or, in some cases, even greater extent than those who voted for Left (formerly Communist) Party. On the other hand, Christian Democratic voters were also inclined to regard law and order as an important issue. Taken together, these two tendencies indicate a ”social conservative” profile.

Not shown in this table is the issue of employment/ unemployment, which was regarded as "very important" by majorities of those who voted for the Left and Social Democratic parties. For the bourgeois parties, it was a very important issue for large minorities (upwards of 43 percent), but for only one-third of Green voters.

The Swedish mainstream press neglected employment issues, but placed a disproportionate emphasis on the more stimulating debate over immigration policy; partly as a result of that media attention, immigration/integration is likely to become a major issue for voters in future elections. The same may also be true of law-and-order issues which, in this election, were of great concern to several small parties that fell far short of the threshold for representation in parliament. A couple of minor anti-immigration and law-and-order parties did, however, make significant gains at the local level and are now represented on some municipal councils.

The principal conclusions to be drawn from Swedish survey data are that support for the general-welfare system remains very strong among a large majority of voters, and that the potential for a tax revolt is very limited. The same tendency is also apparent at the international level: For example, the International Social Survey Project's opinion research on the ”Role of Government”-- conducted in dozens of countries in 1985, 1990 and 1996-- found that stable average majorities of 66-96 percent agreed with the statement that it should be the government's responsibility to actively intervene to provide jobs, health care, pensions and unemployment benefits (Kvist and Jaeger, 2002).

Of course much of this probably depends on the uses to which tax revenues are put and the way in which issues are framed. But it is evident that, whatever threats there may be to a well-developed and adequately financed systems of general welfare, they are not supported by public opinion in Sweden.

European Monetary Union

A crucial issue that received hardly any attention during the election campaign was the question of Swedish membership in the European Monetary Union (EMU), which went into effect at the start of 2002 in twelve of the fifteen EU member-states.

Advocates of EMU membership, Prime Minister Persson among them, claim that it provides a means of combating the tyranny of international money markets, and thus serves as "a shelter" for general-welfare systems. But there are many who disagree. The current EMU member-states have yet to experience a major economic recession, and it remains to be seen whether the rigid discipline of the EMU will do more harm than good. Several EMU countries-- including Germany the most important of all-- are already finding it difficult to comply with the rules. The economies of the three EU member-states that are not yet participating in the system have been performing much better than the twelve EMU members.

The main risk of EMU membership is increased unemployment caused by declines in the exports of those member-states for which the euro’s value in relation to other world currencies does not reflect the competitiveness of national industries. The last time Sweden tied its currency to a European standard, the result was the economic crisis of the 1990s. The risk is greatest for smaller countries, like Sweden, that are heavily dependent on export trade.

The EMU does not pose a direct threat to general-welfare programmes such as pensions, health care, unemployment benefits, etc. But it implies indirect pressure to ”harmonize” the economies and taxation policies of all member-states, as well as a strict anti-inflation policy that ignores the consequences for employment rates (see for example Dimicoli 1998).

Prominent economists such as Nobel laureate Amartya Sen have questioned whether it is possible to reconcile rigid anti-inflationary policies with other objectives of society, including economic growth. Although there is general agreement that extremely high inflation rates should be avoided, ". . . there is no clear evidence of the negative growth effects of low inflation (less than 15-20% annually); [but there are] negative impacts of a near-zero inflation rate on the rate of employment" (Elson & Cagatay, 2000, p. 1353; Sen, 1998).

A high rate of employment is a fundamental requirement of a general-welfare state like Sweden, as its experience during the 1990s painfully demonstrated. For this and other reasons, membership in the EMU poses a very serious threat to the kind of society that received a resounding vote of confidence in the recent election.

Privatization and cutbacks

Central to the Swedish general-welfare system are comparatively high tax rates, a well-developed public sector, and low unemployment. But in reaction to the economic crisis of the 1990s, the Social Democratic government that regained power in 1994 imposed a series of cutbacks which, among other things, resulted in large-scale layoffs in the public sector. (For an account of the causes and consequences of the 1990s’ economic crisis, see ”The Return of Laissez-Faire” and ”The Politics of Self-Delusion” in The Price of Everything.)

The cutbacks resulted in damage to key social programmes, although it almost certainly would have been greater if the centre-right government of 1991-94 had remained in power. But the negative impact of the cutbacks has yet to be undone, and it is clear from the recent election that a majority of Swedes place a high priority on restoration of the system.

That may not be difficult to achieve. Despite the cutbacks and the problems they have caused, the basic structure of the general-welfare system has remained intact (see Nordic Welfare States in a European Context). Some elements of privatization and other neo-liberal policies have been introduced, however. These include the recent pension reform (see The Market for Social Insecurity), changes in the indexing of social benefits, and regressive reforms of taxes and transfers.

On the other hand, basic programmes of sickness and unemployment insurance remain intact, albeit at somewhat lower levels of compensation than during the pre-crisis years. Attempts by Social Democratic governments to weaken employee protection laws, reduce unemployment benefit periods, and reduce compensation rates from 80 to 75 percent of income have been partly abandoned in the face of stiff opposition from within the party and the labour movement.

Another positive trend is that many social services appear to be recovering from the cutbacks of the 1990s, but the overall picture is mixed. For example, a public inquiry concluded in 2001 that, "childcare service development in the 1990s can be described in terms of both expansion and contraction". The proportion of children aged 3-9 in subsidized child care increased from 49 to 82 percent, depending on the specific age category.

At the same time, however, the proportion of children in publicly financed but privately administered day-care centres and preschools increased from five percent in 1990 to fifteen percent in 1999. There was also an increase in user fees-- although even a doubling of user fees resulted in a cost to parents that was no more than eighteen percent of total operating costs. Recently, a nationwide ceiling on childcare user fees went into effect, as a result of which most parents will end up paying less for child care.

There has been a somewhat more disturbing trend toward privatization of public schools, although the proportion of private schools is still very low. At the primary level, the proportion of pupils in ”free-standing schools” that are privately operated with public funds increased to only 3.8 percent in 1999. Expenditures for primary education were reduced by five percent between 1991 and 1999, and teacher-pupil ratios declined by nearly twenty percent during the same period. Changes in resource allocation were less dramatic in secondary education; there, expenditures actually increased by ten percent during the 1990s.

The financing and administration of health and social services have been hotly debated issues for the past few decades. During the 1990s, responsibility for a large portion of health care and social services was transferred from the national and regional levels to municipalities, which are now free to contract services with private suppliers-- although the bulk of funding still comes from tax revenues. This sort of publicly financed ”privatization” has expanded rapidly in some municipalities, most notably Stockholm, but the majority of health and social services still remain within the public sector and the recent election may signal a reduction in the pace of privatization.

In any event, the resources allocated to care services increased during the previous decade. But there has been a sharp decline in the number of personnel: A net total of 60,000 jobs, primarily in lower-skill occupations, disappeared from health care during the 1990s. There are also substantial regional differences in access to care, a trend that appears to be increasing.

Contradictory picture

The overall picture is somewhat contradictory. The quality of care has improved in some respects, and the number of treatments and procedures has increased. But queues and waiting times have also increased, and the number of hospital beds in long-term care facilities has been reduced by half. The above-noted public inquiry concluded that, "This apparently contradictory development is due to a substantial decrease in the average duration of care coupled with an increase in the number of treatments provided by non-institutional health care”.

In addition, treatment methods have improved and mortality trends have been favourable. But user fees have been increased, and private health-care insurance has been expanding among high-income groups. The latter development poses a serious threat to the long-term social solidarity and political stability of the public health-care system.

In the area of elderly care, the proportion of services provided by private operators has increased fourfold during the 1990s. But this was from a very small starting point, and private services still comprised a small portion of the total by the end of the decade-- for example, only nine percent of home-help services to the elderly. There is a strong trend toward oligopoly in the market for publicly financed private services: The four largest firms currently account for half of the total.

The proportion of the elderly receiving services began a sharp decline more than two decades ago. That trend continued throughout the 1990s, although at a somewhat slower pace. In recent years there has been a growing emphasis on more informal arrangements, especially among the less well-off elderly who cannot afford the services provided in the new marketplace. This has led to greater burdens on women who provide care to aged parents and spouses.

To summarize the current state of affairs: There remains very strong support among the Swedish population for the general-welfare system. Accordingly, there is widespread resistance to proposals for more ”flexible” labour markets, reduced taxes and other neo-liberal articles of faith. Despite the cutbacks and reductions in services occasioned by the economic crisis of the 1990s, the programmes and institutions of general welfare remain basically intact, albeit structurally weakened. The unmistakable message of the recent election is that the voting public wants the system to be preserved and, if possible, restored.

The future of social democracy

Although support for general welfare remains strong, it is subject to a number of threats from both internal and external sources. How to deal with them is largely a matter of political will, especially that of the dominant Social Democratic Party. The question is whether the party leadership will respond to the message of the recent election and retreat from the neo-liberal tendencies it has demonstrated in recent years, especially since Sweden’s entry into the European Union.

Those tendencies reflect a general shift to the centre by European Social Democratic parties in an effort to broaden their political base. There is still strong support for this strategy among a powerful faction of the Swedish party. However, the arguments in favour of returning to traditional Social Democratic values and policies are at least as strong, and have been reinforced by the outcome of the September election.

For one thing, there is mounting international evidence that the "middle of the road” has become too congested for Social Democrats to gain much advantage from it. That route has been taken by virtually all European Social Democratic parties, and the results have not been very encouraging. Of the seven Social Democratic governments that have gone to the polls since October of 1999, six have lost power and one (Tony Blair’s in Great Britain) lost votes. As noted by Swedish political commentator, Ingrid Hedström: “It is now quite crowded in the political middle, where Social Democrats, Christian Democrats and Liberals advocate the same socially-oriented market economy with but minor variations."

There is also evidence that the shift to the political centre may not yield as many additional votes in Sweden as was once believed. The results of the SVT exit poll referred to indicate that those who voted for centrist bourgeois parties have shifted to the right during the past decade. For example, when asked to place themselves on a left-right political scale, over two-thirds of this year’s Liberal voters said they were rightists; the corresponding figure was about 50 percent in 1994 and 62 percent in 1998.

On the other hand, there has been a distinct shift to the left among those who voted for the Green Party. In 1994 only 45 percent of Green voters identified themselves as leftist in 1994; in 1998, that figure rose to 54 percent, and this year to 64 percent. Thus, the ”swing party” upon which the Persson government must rely in order to remain in power has now acquired a voter profile which, potentially, corresponds more closely with traditional social democracy than with neo-liberalism.

This is especially significant, given the fact that the basic division of Swedish politics into a ”socialist” and a ”non-socialist” bloc is a fairly stable condition. There has been hardly any change in the total number of seats allotted to each bloc since the last election.

Another important factor is the return of blue-collar workers to the Social Democratic Party, after abstaining or voting for the Left Party in the previous election. Nearly a quarter of the Social Democrats’ new voters in the September election had voted for the Left in 1998.

Perhaps most importantly, a lack of clear distinctions between political alternatives appears to increase protest-voting and non-voting, in Sweden as elsewhere. There has been an increase of votes for splinter parties, and the rate of voter participation continued its gradual decline since the 1980s (although at 80 percent of eligible voters, it is still high by international standards). As indicated by recent developments in Austria, France and other countries, protest voters may turn to right-wing or even fascist parties if genuine progressive alternatives are not provided and public confidence in the commitment of Social Democratic parties to general welfare cannot be restored.

Finally, it may be noted that low voter turnout is usually to the disadvantage of parties on the left. This is mainly because non-voting tends to be more common among the low-income and low-education categories that comprise the core constituencies of Social Democratic and Left parties. Non-voters in Sweden now outnumber the number of votes received by all but one of the seven parliamentary parties. It is highly unlikely that a strategy that consists of increasing the congestion in the political centre will lure them to the voting booths.

Eero Carroll, is a post-graduate researcher in sociology, currently associated with the Swedish Institute for Social Research at Stockholm University.

Selected References

Carroll, Eero. “International organizations and welfare states at odds? The case of Sweden, 1970-2000.” In Armingeon, Klaus & Michelle Beyeler, eds. The OECD and National Welfare States in Western Europe, 1970-2000. London: Edward Elgar. Forthcoming.

Dimicoli, Yves. 1998. "Unicité ou Union Monétaire Européenne: La Voie Demeure Ouverte pour Infléchire et Dépasser." La Pensée 315:5-28.

Elson, Diane & Nilufer Catagay. 2000. "The Social Content of Macroeconomic Policies." World Development 28(7):1347-1364.

Kvist, Jon & Mads Meier Jaeger. 2002. "Up for the Challenge? Western European Welfare States Under Pressure." Paper presented at the XI Nordic Social Policy Research Meeting: ”Redesign of the Welfare State? Policy Reforms and their Consequences.” Espoo, Finland, 22- 24 August 2002.

Lindbom, Anders. 2001. “Dismantling the Social Democratic Welfare Model? Has the Swedish Welfare State Lost its Defining Characteristics?” Scandinavian Political Studies 24 (3), 171-193.

Sen, Amartya. ”Human development and financial conservatism.” World Development 26(4), 733-742.

Statens offentliga utredningar [Swedish Public Inquiry Reports]. 2001. Välfärdsbokslutet för 1990-talet: Slutbetänkande, Kommitén Välfärdsbokslut. [Final Report of the Public Commission on the Status of General Welfare during the 1990s.] SOU 2001:79. Stockholm: Fritzes.

—14 October 2002