“Swedes are very pleased with, and very strongly support, the welfare state,” Barbro Hedvall, an editorialist in Sweden’s newspaper of reference Dagens Nyheter, told AFP.

Since winning a general election in September 2006, Prime Minister Fredrik Reinfeldt’s coalition has abolished wealth and property tax, cut income taxes, introduced tax breaks for domestic help, tightened rules for sickness benefits and announced plans to relax rent control in Stockholm.

It has also launched a privatization programme for the state’s holdings in six companies aimed at cashing in 150 billion kronor ($25 billion).

But job creation has been the government’s top priority, and one of its biggest moves has been to reform unemployment insurance to increase premiums and decrease payouts to the jobless, in a bid to encourage low-income earners to seek work rather than rely on benefits.

Despite all these changes, Sweden remains definitely a cradle-to-grave welfare state, with universal health care and free education, experts say.

Politicians and voters across the spectrum remain heavily influenced by decades of Social Democratic policies — the party that created the welfare state and governed Sweden for 64 of the past 77 years.

A recent proposal by the junior coalition member Centre Party to limit today’s universal child allowance payments to only needy families was swiftly and broadly rejected for violating the egalitarian principles on which Sweden’s modern society is built.

And when the unemployment insurance reform left almost a quarter of the labour force without jobless insurance, the government said it would introduce a mandatory scheme for all employees from July 2009.

“Values change slowly,” said Dick Kling of the right-wing think tank Timbro.

Hedvall agreed.

“The foundations of the welfare state have not changed, they’re still the same. We all pay into a joint pot for sickness insurance, parental leave, and when it comes to unemployment insurance it’s always been optional,” she said, adding that the rules have merely been tightened to combat abuses.

She recalled that even Social Democratic administrations have in the past introduced major reforms to modernize the system.

According to Kling and Hedvall, an across-the-board income tax cut that gives most Swedes about 1,000 kronor ($167 dollars) more in net salary at the end of the month has been the government’s most significant reform.

“That has been a drastic change … Usually when you talk about the welfare state you only talk about publicly financed welfare, but a lot of welfare is also stuff you can buy with your own money,” Kling said.

But Bo Rutström of the left-wing think tank Agora said the welfare state was slowly being dismantled.

“There are clear signals that we’re moving from universal, collective solutions to individual solutions,” he said.

“Lower subsidies leave people locked-in and cause passivity, which contrasts with the previous welfare model’s priorities of education and (job) training,” he added.

“There may be more people in the workforce now, but that’s mostly because we’ve been in a period of strong economic growth,” Rutström said.

Economic indicators suggest the government’s policies are paying off and the country is well-placed to face a potential global economic downturn.

The jobless level is falling and the goal of 80 percent employment is expected to be reached next year. Sick leave levels have decreased, public debt in 2007 was one of the lowest in Europe at 38 percent of gross domestic product, and the country reported a record budget surplus of 134 billion

kronor ($ 22.5 billion) last year.

The one thing not in the government’s favour? Opinion polls.

The four-party coalition has trailed far behind the Social Democrats for more than a year. A recent Synovate survey put support for the government at 41.6 percent, compared to 54.8 percent for the Social Democrats and their allies.

Rutström said the polls showed the 2006 election was largely “a protest vote” against former prime minister Göran Persson, in power for 10 years, where voters “didn’t really think about the consequences.”

Hedvall said meanwhile that tax cuts “are practically a sensation in Sweden, since our governments almost always raise taxes … and the strange thing is that that hasn’t made any (positive) difference in the polls. I can’t explain it.”

By AFP’s Pia Ohlin