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Echoes of Clinton in Social Democrats’ welfare reform bid

The Social Democrats have proposed major changes to Sweden's welfare system, a move that reminds liberal commentator Nima Sanandaji of reforms enacted by former US President Bill Clinton.

Echoes of Clinton in Social Democrats' welfare reform bid
Are the Social Democrats trying to emulate US President Bill Clinton, who signed sweeping welfare reform legislation in 1996? File photo: AP

In my last column, I discussed the difficulties of distinguishing between right and left in Sweden’s election politics, at least when it comes to the Social Democrats. The example I used is how the party recently promised to cut the scope of the Swedish central government by 10 billion kronor ($1.5 billion). But it doesn’t stop there. The Social Democrats have gone from challenging the scope of government bureaucracy to criticizing overutilization of the social safety net.

The Social Democrats in the capital region of Stockholm recently published a "Contract for the future – for the Stockholm region". The first of four points is entitled: "No one who can work should be on social security". The Dagens Nyheter (DN) newspaper reported that, on the national level, the party has gone even further. A new goal is to sign an “education contract” with those under 25-years-old who have not completed their studies. According to DN, "Those who are not ready to fulfill their studies according to an individual study plan will not be granted social security".

This idea, put forth by former Social Democratic school minister Ibrahim Baylan, was rapidly attacked by the left. Daniel Suhonen, president for the left-leaning think tank Katalys and himself a Social Democrat, criticized the proposal as being "very right-wing".

Of course, the Social Democrats do not simply want to put pressure on youth who depend on social security; they also want to direct various forms of aid to help these individuals succeed to attain their upper-secondary school degrees. The idea seems to be to connect public handouts to a requirement that young people participate in education programmes. And presumably, exceptions will be made for those who, for various reasons, cannot be expected to participate.

We shouldn’t be surprised if the Social Democrats eventually retract their proposal, or at least clarify it, in the wake of initial criticism. And many question if the party really wants to introduce such a welfare reform, as it goes against the idea that basic safety nets be granted to all, regardless of their individual behavior.

But should we really be surprised? In the United States, the  “Personal Responsibility and Work Opportunity Act”, which marked a fundamental shift in both the methods and goals of federal cash assistance to the poor in the US, was supported by the Republicans but signed into law by Democrat Bill Clinton in 1996.

Changing the fundamentals of social security might, if implemented correctly, retain basic safety nets while reducing the risk of long-term welfare dependency. Most likely, the Social Democrats are striving towards this goal. And like Bill Clinton, they might have a better chance of actually implementing such a change than a center-right government. As the famous saying goes, “only Nixon could go to China”.

It might seem as a shock that Swedish Social Democrats would go so far in challenging generous public benefits. But then again, in neighboring Denmark, which has an ever bigger welfare state, this has been a common practice during the latest few years. Social Democrat Finance Minister Bjarne Corydon last year explained: “If we are to ensure support for the welfare state, we must focus on the quality of public services rather than transfer payments”.

Of course, these ideas can be seen as a way of winning over centrist voters during the election campaign. And they likely have limited support within the party ranks. But they are, nevertheless, put forth by leading Social Democrats. This shift seems very similar to the move towards the center by the Moderates, as they begun morphing into the “New Moderates” in 2005.

An important issue in the upcoming election, of course, is how this new line in Social Democrat policy sits with the left-wing of the labour movement. And for that matter, if the left parties win the election, how will the Social Democrats co-operate with the Left Party, where radical left ideas are still prominent and welfare reform isn't even on the agenda? The only thing that is clear is that Social Democrat party leader Stefan Löfven really wants to make the distinction between right and left in Swedish politics even more difficult. 

Dr. Nima Sanandaji, a Swedish writer of Kurdish origin, has written numerous books and reports about policy issues in Sweden. He is a regular contributor to The Local.

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WORK PERMITS

Business leaders: Work permit threshold ‘has no place in Swedish labour model’

Sweden's main business group has attacked a proposal to exempt some jobs from a new minimum salary for work permits, saying it is "unacceptable" political interference in the labour model and risks seriously affecting national competitiveness.

Business leaders: Work permit threshold 'has no place in Swedish labour model'

The Confederation of Swedish Enterprise said in its response to the government’s consultation, submitted on Thursday afternoon, that it not only opposed the proposal to raise the minimum salary for a work permit to Sweden’s median salary (currently 34,200 kronor a month), but also opposed plans to exempt some professions from the higher threshold. 

“To place barriers in the way of talent recruitment by bringing in a highly political salary threshold in combination with labour market testing is going to worsen the conditions for Swedish enterprise in both the short and the long term, and risks leading to increased fraud and abuse,” the employer’s group said.   

The group, which represents businesses across most of Sweden’s industries, has been critical of the plans to further raise the salary threshold for work permits from the start, with the organisation’s deputy director general, Karin Johansson, telling The Local this week that more than half of those affected by the higher threshold would be skilled graduate recruits Swedish businesses sorely need.   

But the fact that it has not only rejected the higher salary threshold, but also the proposed system of exemptions, will nonetheless come as a blow to Sweden’s government, and particular the Moderate Party led by Prime Minister Ulf Kristersson, which has long claimed to be the party of business. 

The confederation complained that the model proposed in the conclusions of the government inquiry published in February would give the government and political parties a powerful new role in setting salary conditions, undermining the country’s treasured system of collective bargaining. 

The proposal for the higher salary threshold, was, the confederation argued, “wrong in principle” and did “not belong in the Swedish labour market”. 

“That the state should decide on the minimum salary for certain foreign employees is an unacceptable interference in the Swedish collective bargaining model, where the parties [unions and employers] weigh up various needs and interested in negotiations,” it wrote. 

In addition, the confederation argued that the proposed system where the Sweden Public Employment Service and the Migration Agency draw up a list of exempted jobs, which would then be vetted by the government, signified the return of the old system of labour market testing which was abolished in 2008.

“The government agency-based labour market testing was scrapped because of it ineffectiveness, and because it was unreasonable that government agencies were given influence over company recruitment,” the confederation wrote. 

“The system meant long handling times, arbitrariness, uncertainty for employers and employees, as well as an indirect union veto,” it added. “Nothing suggests it will work better this time.” 

For a start, it said, the Public Employment Service’s list of professions was inexact and outdated, with only 179 professions listed, compared to 430 monitored by Statistics Sweden. This was particularly the case for new skilled roles within industries like battery manufacturing. 

“New professions or smaller professions are not caught up by the classification system, which among other things is going to make it harder to recruit in sectors which are important for the green industrial transition,” the confederation warned. 

Rather than implement the proposals outlined in the inquiry’s conclusions, it concluded, the government should instead begin work on a new national strategy for international recruitment. 

“Sweden instead needs a national strategy aimed at creating better conditions for Swedish businesses to be able to attract, recruit and retain international competence.”

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