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Sweden announces ‘historic’ 100 billion kronor budget to revive pandemic-hit economy

Sweden's government has allocated more than 100 billion for its 2021 budget in a bid to give the economy a needed boost amid the coronavirus crisis.

Published: 27 August 2020 15:27 CEST

Sweden announces 'historic' 100 billion kronor budget to revive pandemic-hit economy

Finance Minister Magdalena Andersson noted that the budget was not "free money". Photo: Claudio Bresciani/TT

“Our starting point is that we are going to put forward a budget that is historic in its scope,” Finance Minister Magdalena Andersson told a press conference on Thursday afternoon.

She did not go into details as to how the 100 billion would be allocated, with the full budget set to be presented in September.

“We will do it through strong investments in more jobs in welfare, care, schools, and of course in the climate,” she said.

The tax cuts and benefits dividing Swedish politicians ahead of the autumn budget

There was also tentative positive news as the government adjusted its forecasts for how the Swedish GDP will develop.

It is still expected to decline by 4.6 percent this year, with a predicted growth of 4.1 percent in 2021. That's a significant improvement on the previous forecast of a 6 percent drop in 2020 and 3 percent growth in 2021.

“The assessment is that activity in the Swedish economy reached its bottom in April-May, and we have seen a certain recovery. We are now looking a little more positively at the economic situation compared to in June. There is still continued great uncertainty, and obviously it depends how the pandemic develops,” said Andersson.

Meanwhile, the unemployment rate was projected to reach 9 percent by the end of 2020, to further rise to 9.5 percent next year. This is a slight improvement on the previous forecast of 9.3 percent this year and 10.3 percent in 2021.

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Sweden's Migration Agency rejects role in work permit salary threshold exemption plan

In the conclusions to a government inquiry into setting the median salary threshold, judge Ann-Jeanette Eriksson proposed that the Migration Agency be made responsible for drawing up annual national and regional lists of professions which should be exempted from the threshold.

The list of proposed exemptions could then, she recommended, either be passed to the government for a final decision, or else apply immediately.

In its response to consultation, the Migration Agency said that it did not believe that it was the right agency to draw up the list.

“The Migration Agency considers that the task of preparing these proposals should be given to the Swedish Public Employment Service which is the expert agency on labour market issues,” the agency said.

“As the expert agency, the Swedish Public Employment Service has much broader competence when it comes to judging the demand for labour.”

The employment service could then consult the Migration Agency and other relevant agencies before passing the list to the government, it recommended.

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Everything you need to know about Sweden’s plans for tougher work permit rules

The Swedish Public Employment Service did not echo the Migration Agency’s call in its own response.

It did, however, recommend an alternative system proposed by Eriksson, under which the Migration Agency, rather than the government, would have the final say on which jobs should be exempted.

“The alternative proposal would mean a simpler process and shorter handling time”, the service said.

The Migration Agency, however, said it did not support this alternative proposal, without giving any reasons for this.

It did call for a consideration over “whether it might be necessary to consult with other authorities before the proposals are made to the government”.

The agency also called for more specific language on what “considerations around migration law” it should apply when deciding on which professions to exempt.

In some of its comments on the detail or proposals, the Migration Agency highlighted that the law should specify that work permit applicants need to be offered a salary that meets or exceeds Sweden’s median salary “at the time of application”, and also called for more specifics on how to define a “monthly salary”.

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Eriksson also recommended that Migration Agency be tasked with deciding which industries should be entirely excluded from the work permit system because they have historically had problems with the exploitation of labour migrants and abuse of the work permit system.

“The possibility of excluding certain groups of jobs is an important tool in the work against exploitation in the workplace,” the agency said of this proposal.

But it said that to carry out this task properly, it would need more information on what criteria should be applied when making such exclusions as well as increased powers to cooperate and share information with other agencies involved in combatting exploitation and abuse in the workplace.

“For this work to be even more effective, more tools are needed that enable more thorough controls. This is both about developing regulations that provide the Migration Agency with wider powers to carry out checks that facilitate cooperation and information exchange between relevant authorities and organisations,” it said.

When it comes to the impact of the proposals on its own internal workings, the agency said it agreed broadly with the Eriksson’s judgement that they would not increase the workload at the agency.

The extra work required to carry out its new tasks would, it said, be largely offset by the lower work load following from the proposed abolition of the spårbyte, or “track change” system which allows rejected asylum seekers to stay in the country and apply for work permits.

It did warn, however, that the changes could lead to even longer processing times for work permit applications.

“The Migration Agency would like to highlight that the proposed changes to the law, and in particular the salary threshold and the regional and national exemptions from this threshold might affect handling times for work permit cases,” it wrote.

“The regulatory framework around labour migration is already complex today and involves several decision points. Judging whether an application concerns a job for which there is a national or regional shortage will require a new decision point which will require education and preparation.”

To reduce the extra demand on resources, the agency called on the government to make the regulation “as precise as possible”, leaving as little room as possible for different interpretations, which would then allow the agency to speed up processing and even digitalise some decisions.

If the plans to raise the work permit salary threshold from 80 percent of the median salary to 100 percent go through, the idea is that they would come into effect in June next year (although work permit holders renewing their permits would get a one-year grace period).

But the proposal has received a slew of criticism from Swedish business organisations, which argue that it would make it harder to fill essential roles and attract international talent.

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