OPINION: Don’t be too quick to write off the Swedish model

“This is epochal, a broken possibility, the end of an era, a place we don’t live in any more.” So writes Guy Rundle, an Australian writer and commentator, about the result of Sweden’s election on September 11. In a similar vein, a French weekly magazine asks: “With this very convincing result for the far right, is this the end of the social-democratic model in Sweden?” 

Almost every time Sweden makes international headlines, for whatever reason, somebody somewhere announces that this is a historic turning point (as did American news outlet CNBC last week), the end of an era and the death of the Swedish model. “The idea of Sweden as a land of equal opportunity, safe from the plagues of extreme left and extreme right, is gone,” wrote Swedish author Elisabeth Åsbrink in the New York Times last week.

If I had ten Swedish crowns for every time someone had pronounced the demise of the Swedish model during my lifetime, I would not be very rich but I would certainly have a large jam jar moderately full of Swedish crowns. 

One of my favourite such declarations is from a man who has a genuine claim to be one of the brains behind the Swedish model itself. Rudolf Meidner was a Swedish economist and one of the co-authors in the early 1950s of the “Rehn-Meidner model” of centralised pay bargaining between unions and employers – seen by many as one of the distinctive foundations of Sweden’s economy, and one of the explanations for its success.

Meidner announced the death of his intellectual baby in an article called “Why did the Swedish model fail?”, written in 1993 after the country had experienced a crippling financial crisis and the free-market Moderates had come to power. “The Swedish system, balancing private ownership and social control, has broken down,” Meidner wrote. Ten Swedish crowns in my jam jar, please.

If anyone was qualified to pen an obituary for the Swedish model, surely it was Meidner. And in 1993, it seemed he had pretty good grounds for doing so. The close relationship between employers and unions that had underpinned post-war economic growth in Sweden had collapsed. 

The atmosphere of consensus and collaboration between the two “social partners” had been replaced by full-blown confrontation. First, in the mid-1980s. the engineers’ union broke away from central bargaining, then, a few years later, the national employers’ federation SAF closed down its central bargaining unit altogether. Kaput. Slut. Done and dusted. 

But behind the scenes, efforts were soon afoot to put Humpty Dumpty back together again. By the mid-1990s, strikes had broken out and salaries were spiralling upwards. Major Swedish companies now changed their tactics, while the government prodded union leaders to reach out to the employers again. The focus had to be on Sweden’s competitiveness, without which there could be no wage rises in the longer term.

The resulting deal between the two sides of Swedish industry, signed in March 1997, set out a shared vision for an economy that could deliver wage rises while strengthening industry by raising workers’ skills. The unions were back centre stage once more, and 25 years later the relationship is still strong. A survey of CEO attitudes to the unions in Sweden in 2017 showed an overwhelming majority in favour. 

While centralised wage bargaining marks an element of continuity in the Swedish model, there is more to it than this. The new model that emerged from the economic wreckage of the early 1990s has other defining characteristics. 

First, it is a shared creature of both left and right, created by political consensus. It is no longer true to say that the Swedish model is social democratic – keen-eyed business people and the liberal centre-right are happy to espouse its key features. 

The model has made it a priority to help women combine work with having a family. Starting in the 1960s from a need to fill a hole in the workforce, Swedish family policy was driven by the notion that sex discrimination is economically inefficient. This system was expanded by liberals and the right. In this century it has acquired a further justification, with governments of left and right espousing feminism as part of a wider ambition to be a beacon for human rights. 

Another feature of the model is the preponderance of industrial owners with a long-term view of business, hardwired through the system of dual shares. Instead of anonymous investment funds or small investors focused on making a quick buck, there are strong owners with a name, responsibility and a clear role. This approach is coupled with a management style that emphasises consensus and involvement. These factors have helped a small country create some of the biggest names in global industry. In the second decade of the millennium, they also combined to create a highly entrepreneurial environment. 

Armed with this understanding of what makes Sweden different, we are better equipped to assess whether the latest change in government will bury an economic model that has worked well for the past three decades, delivering growth, industrial peace and wages that have climbed inexorably since the mid 1990s. 

Will the new government cut Sweden’s generous parental benefits and encourage more women to stay at home? Not a herring’s chance in a pickle factory. Will it dismantle the relationship between unions and employers? Both sides are fiercely independent and hate government interference. Will it mess around with the ownership structure of Swedish industry? If it ain’t broke, why fix it?

If we cease to see Sweden as social democratic – the Social Democrats have had barely 30 percent of the vote since 2010 – let alone socialist, then we stop thinking that the “Swedish model” is dead simply because the Social Democrats have lost power. The far right’s influence on the new government’s attitude to immigration and immigrants is very concerning, but the Swedish model itself will survive. 

As the Financial Times noted: “Think twice before calling the electoral gains of the nationalist, anti-immigrant Sweden Democrats a dangerous turning point in Swedish and European politics. Democracy and the rule of law in Sweden are not at risk.”

The real task is to use the Swedish model’s strengths to solve the country’s many problems – not to throw the baby out with the far-right bathwater. 

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University.