For the Confederation of Swedish Enterprise’s chief economist, Sven-Olof Daunfeldt, labour migration is essential if Sweden is to meet the challenges of the next decade, particularly big investments in infrastructure and electricity systems, and the greening of industry in northern Sweden.  

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“We need to recruit talent to Sweden, and experts, because we were going to need to make big investments in Sweden during the coming years, and this means that we also need a lot of competence,”  Daunfeldt told The Local’s Sweden in Focus podcast. “And we don’t have that in Sweden: we need to recruit from abroad, and the problem in Sweden right now is that we don’t have a national strategy for attracting talent to Sweden from abroad.” 

When Daunfeldt speaks with the innovative companes that are crucial to Sweden’s future growth, he says they complain of three main obstacles to international recruitment: high income tax, housing shortages, and trouble getting work permits. 

“Taxes on high incomes are very, very high in Sweden,” he said. “This means that a lot of people choose to to go to some other country to work because they get more, they get a higher salary after tax, which is the thing that is important.” 

READ ALSO: Is Sweden losing the European race to attract highly skilled foreigners?

When this was combined with the high cost of housing, many potential recruits felt that they would be worse-off in Sweden, he said. 

“The third issue is that the Migration Agency is taking too long to handle work permits: That’s actually been getting better now, but it has been a huge problem.”

SEE MORE: Sweden’s Migration Agency celebrates cutting waiting times for work permits

What Daunfeldt has found frustrating is that rather than make international recruitment easier the government has been raising the barriers. 

Sweden on November 1st brought in a new work permit salary threshold set at 80 percent of the median salary, or 28,480 kronor a month, leading to a 2,000 percent increase in the number of work permit applications rejected because the salary was too low. In June next year, the govenment plans to raise the threshold to the full median salary of 35,600 kronor.

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Daunfeldt rejected the argument of the Swedish government that the salary thresholds would only impact low-skilled labour and said it was wrong anyway to assume that low-skilled labour was not needed in Sweden.  

“We also need people with more low-skilled labor, and we have a huge problem with the new wage floor,” he said. “I think 50 percent of those that have a salary under that wage level are actually graduates, so highly qualified people are actually earning less than the 35,000 kronor that the government is talking about.”

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The system of exemptions proposed earlier this year in the conclusions of a government enquiry, would “definitely” not solve this problem, he said. 

“We have tried this before, and it doesn’t work, because you can’t have the government or some bureaucrat choosing which which jobs are suitable for people from abroad and which are not. It is businesses that need to select the people that they want – the government cannot do it.” 

What makes these proposals even worse, he complained, was that they risked undermining the Swedish model, which is based around wages being set in collective bargaining between his organisation and the Swedish Trade Union Confederation. 

“This means that, actually, the Swedish government will introduce a minimum wage for certain types of workers that is kind of legislated — which is totally against the Swedish model. Previously they were very much against legislating for a minimum wage from the European Union, but now they have themselves legislated for a minimum wage. So it’s kind of absurd, the whole situation.”

READ MORE: Why Sweden doesn’t have a minimum wage and how to ensure you’re fairly paid

He also rejected the government’s argument that raising the salary threshold would force companies to hire more of those who are already in Sweden but unemployed. 

“If that had been the case, they would already have had this these jobs. [Companies] would hire [unemployed people in Sweden] if they thought that they were available for those positions. But the problem is that many of those that are long-term unemployed in Sweden are low-skilled, they are low-educated, and and they have a huge problem coming into the Swedish market.”

As well as harming businesses and growth, he said it was “very disturbing” that the hike in the minimum salary threshold would force many former refugees to return to the country from which they fled just as they were starting to get established in Sweden. 

“People that are here that are on the minimum salary, they are the ones who should be worried,” he said. “You have a lot of refugees that have not got refugee status and have had a temporary work permit to be a labour migrant instead. And they are now facing the possibility to have to go home to the country from which they’ve fled.” 

Despite all these arguments, Daunfeldt said he did not expect the government to drop plans for the median salary threshold. 

READ ALSO: Swedish migration minister defends raising work permit salary threshold

“I’m quite skeptical. I very pessimistic at the moment. It seems that they have decided already on this crazy policy. So unfortunately, I think they want to have this new wage floor.” 

The salary threshold also, he warned, risked harming the very people it was intended to protect: workers already in Sweden.

“One of the big investigations we have done at the Confederation of Swedish Industry is this paper where we look at the productivity in firms, when they actually hire experts from abroad on a high salary. And what we can see is that this increases the productivity within the firm from 6 percent to 11 percent.”

“What is also interesting is that for up to five years after you hire this expert from abroad, you can actually see that the salary for the other workers in the firms increases from between 1 percent to 2 percent.” 

Despite these problems, however, Daunfeldt said that there was some progress being made on attracting competence to Sweden. 

“On the whole, Sweden is a fantastic country and we need so many workers. I think it will be easier for those that are more high-skilled to come into the Swedish labour market, because there we can see that the government is actually listening. And I think they will try to do certain things to attract more high talent people to Sweden, and I can see that they’re listening to that.”

This was a relief, he said, as a majority of companies in Sweden say recruiting the right competence is their biggest barrier to growth. 

“We have had an investigation at the Confederation of Swedish Industry where we have asked our companies about the growth barriers [they face], and actually 56 percent of the firms said that being able to hire personnel with the right competence was a growth problem for them today. That’s very disturbing, especially now, when we also have high unemployment and a lot of people that are not in the labour force.” 

Daunfeldt said that the government’s plans to decrease the threshold for highly skilled foreigners to take advantage of the lower “expert tax” regime would certainly make Sweden more attractive to the more highly paid foreign experts.

But he said that a better solution would be to simply reduce the top rate of marginal tax for all workers in Sweden. 

“This will also bring huge benefits to Swedes because they will work more and they will get educated,” he said. “The premium to go into higher education in Sweden is very low at the moment, so I think that the best solution will be just to decrease marginal taxes for everybody who is working in Sweden.” 

Sven-Olov Daunfeldt was interviewed by The Local’s publisher James Savage for the Sweden in Focus podcast.