Now Even Swedes Are Questioning the Welfare State
Swedes are increasingly questioning the sustainability of their fabled cradle-to-grave welfare system.
(Bloomberg) -- When the maternity ward was closed at the hospital in the Solleftea district of northern Sweden early last year, the nearest alternative was 100 kilometers (60 miles) away by road. So the local midwives decided to teach expectant parents a new skill: how to deliver a baby in a car.
As an ante-natal course for leaner times, it would have been unusual even in a cash-strapped country, let alone in one whose economy is enjoying its longest period of growth in at least four decades and whose finances are flourishing. Sweden is a nation in surplus and the government has still been raising taxes, with the top marginal rate now reaching 60 percent.
“We have money,” said Hanna Hedvall, 45, who lives in Solleftea and worked as a midwife at the maternity facility for six and a half years. “We may not be able to have specialist care across the country, but here we are talking about rather simple things.”
Paying some of the world’s highest income-tax rates has been the cornerstone of Scandinavia’s social contract, with the political consensus in Sweden to save money for when the economy is less healthy. Yet the country is showing strains all too familiar in other parts of Europe with nationalists gaining support and Swedes increasingly questioning the sustainability of their fabled cradle-to-grave welfare system.
Resentment has built over the influx of more than 600,000 immigrants over the past five years, many from war-ravaged countries like Afghanistan and Syria, a huge number for a country of 10 million people.
There are also soaring crime rates, gang violence, complaints about education and pregnant mothers even being turned away from maternity wards due to a lack of capacity. The number of people waiting longer than 90 days for an operation or specialist treatment has tripled over the past four years.
“The Swedish social contract needs to be reformed,” a dozen entrepreneurs including Nordea Bank AB Chairman Bjorn Wahlroos and Kreab Founder Peje Emilsson wrote in an op-ed in the Dagens Industri newspaper on May 31. “Despite high taxes, politics isn’t delivering its part of the contract in important areas. We get poor value for money.”
There are warning signs across Europe of what can happen if disillusionment goes unaddressed. In Britain, popular anger over rising immigration and creaking public services fueled the vote to leave the European Union. Nationalist parties, on the march across continent, just swept to power in Italy.
Unless the system is protected, Sweden risks ending up joining them and ushering in populist groups, said Leif Ostling, the former chairman of the Confederation of Swedish Enterprise who quit in November after revelations of his tax affairs.
“There are big swings on the way,” said Ostling, 72. He has defended himself against public questions over an offshore account by asking what he gets in return for his money. “If there’s no will to understand the problem, you won’t solve it, and then I’m not prepared to pay any tax at all. And I think a lot of other citizens also feel that way.”
With elections due on Sept. 9, polls show a slump in support for the governing Social Democrats, in power since 2014, though an alliance of four other parties may be able to form a minority government.
But with immigration and healthcare topping surveys as the biggest issues facing the country, a party with neo-Nazi roots, the Sweden Democrats, has surged and may hamper any efforts to form a functioning government. In some polls, the Sweden Democrats have even overtaken the Social Democrats as the country’s biggest party, with backing from more than 25 percent of voters.
Sweden provides heavily subsidized health care, free education and more than a year of paid parental leave. If people get sick or lose their jobs, the premium they have paid into the welfare system via their taxes is returned in benefits.
Most Swedes are comfortable with what they pay and what they get, though a survey by pollster Demoskop published in February showed that the proportion of respondents who thought taxes were too high jumped to 45 percent, up from just 27 percent in 2014.
Carl-Fredrik Bothen, 43, and Adam Sierakowiak, 33, two fathers in Stockholm who are currently off work for six months with their babies, said they are both unhappy about the way welfare is handled. They don’t feel secure about getting the health care or pension they need and feel they’re entitled to.
Although taxes have been raised in recent years, welfare has deteriorated, they said.
“I don’t trust welfare at all, I need to build my own capital,” Bothen said while sipping his cappuccino at the NK department store in central Stockholm. “The problem with immigration is that our welfare state is not quite dimensioned for it. Of course we should help people, and we have a good situation here in Sweden, but we can’t handle an unlimited amount of people.”
That sentiment is amplified in more remote parts of the country. More than 400 kilometers north in Solleftea, midwife Hedvall said the local municipality raised taxes just before the maternity ward closed. She said politicians don’t care anymore once they come into power. The closure saved 16 million kronor ($1.8 million) a year.
In the southern part of Lapland, one police car covers an area almost the size of Denmark. That might have been enough in the past, but store-owner Camilla Appelqvist in the village of Dorotea said times have changed. She had three break-ins since February, the intruders clearing out the tobacco and snuff from the store.
When she called the police to attend the most recent incident at 3:30 a.m., she was told there was nobody available. Then she was asked to wait for the day team. The local police station is only staffed one day a week, she said. The advice she got was to improve security to people can’t get in, said Appelqvist, 46.
The deputy head of the local police of Southern Lapland, Michael Rystedt, said increased resources would be welcome, but the area is sparsely populated with a low crime rate. “To actually be able to arrest a thief during a break-in, you would need maybe 15 to 20 cars and 40 to 50 police working,” he said. “That’s just not reasonable in an area that consists mainly of forests.”
Money isn’t the issue. Sweden’s finances are in enviable shape by European standards. The economy grew 3.3 percent on an annual basis in the first quarter, among the fastest in western Europe.
The Social Democrat-led government reversed some income-tax cuts instigated by the previous leadership. That enabled it to post surpluses every year since it came to power.
The total tax burden in Sweden rose to 44.1 percent of gross domestic product in 2016, from 42.6 percent at the end of the previous government’s tenure in 2014. That’s the fifth-highest level among 35 OECD countries.
“An important priority we’ll make is that we won’t lower taxes in the coming years, precisely because of the need to finance welfare,” Fredrik Olovsson, a leading Social Democrat and chairman of the parliament’s finance committee, said at a seminar in Stockholm. “I don’t think the level of taxes we have today is the absolutely highest we can have.”
In Vasternorrland, a region of sprawling pine forests where Solleftea is situated, the ruling Social Democrats have lost significantly in the polls compared to the last election. In 2014, they won 48 percent, while a Sifo poll in April showed that support had fallen to 32 percent. A new local party championing health care polled 8 percent.
At the shuttered maternity ward, which used to average about one birth a day, there have been shifts of protesters in small groups day and night for almost 18 months.
To help mitigate the impact of the closure, the municipality started a project where local midwives are assigned to parents from the first ultrasound to the journey to give birth, traveling in a car behind when possible. Three mothers gave birth in their own cars this year and last year, and sixteen others have given births in ambulances,
Ellen Hedman, an engineer at the local municipality, was expecting her third child when the maternity ward at Solleftea hospital closed.
When August came and it was time to give birth, she thought about taking a tent with her on the journey 130 kilometers south to the town of Sundsvall just in case. The contractions started slowly, she said, and they made their journey with the midwife following in her car. She gave birth at the hospital and returned home the same day.
“It’s frightening that childbirth isn’t more prioritized,” said Hedman. “Of course when there’s fewer people you can’t always have it so close to home but how can you then make people choose life outside the big cities? It feels like the whole system is deteriorating.”
--With assistance from Jonas Bergman.
To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net
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