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The standard of living has become markedly high under Sweden's social democratic system. The economy features a modern distribution system, excellent internal and external communications, and a skilled labor force. Timber, hydropower, and iron ore constitute the resource base of an economy heavily oriented toward foreign trade. The engineering sector accounts for 50% of output and exports. The public and the trade union controlled pension funds, non-profit organizations and the reserve funds of the trade-unions own more than 50% of Swedish capital. 80% of the workforce is organized through the trade-unions. The public sector accounts for 53% of the GDP. Trade unions have the right to elect two representatives to the board in all Swedish companies with more than 25 employees. Agriculture accounts for only 2% of GDP and 2% of the jobs. The government's commitment to fiscal discipline resulted in a substantial budgetary surplus in 2001; however, this was cut by more than half in 2002, due to the global economic slowdown and a decline in revenue coupled with an increase in government spending. The Swedish Riksbank is focusing on price stability with its inflation target of 2%. Growth is expected to reach 3.3% in 2006, assuming a continued global recovery. Swedish unemployment figures are highly contested, with the social-democratic government claiming that the figure is 5.6% and the opposition claiming a much higher figure. The official statistics on unemployment is 5.6% for 2004. These numbers do not, however, include unemployed people in government programs, people on extended sick-leave or people in different welfare programs Unemployment is thought to be closer to 11% when using a system of measurement similar to that of other European nations and the United States. Sweden is known for having an even distribution of income, with a Gini coefficient at 0.21 in 2001 (one of the most even income distributions in the industrialized world). |
What is known as the Scandinavian model is usually described as a middle way between socialism and capitalism. The state provides for tax-funded childcare, parental leave, a ceiling on health care costs, tax-funded education (all levels up to, and including university), retirement pensions, tax-funded dental care up to 20 years of age and sick leave (partly paid by the employer). Parents are entitled to a total of 480 days partly paid leave between birth and the child's eighth birthday, with 60 days reserved specifically for each parent, in effect providing the father with two so called "daddy-months". In addition, the ceiling on health care costs makes it easier, relative to other nations, for Swedish workers to take time off for medical reasons. The Swedish welfare system remains generous, but a recession in the 1990s forced an introduction of a number of reforms, such as education vouchers in 1992 and decentralization of some types of healthcare services to municipal control. The welfare state requires high taxes. Sweden has a two step progressive tax scale with a municipal income tax of about 30% and an additional high-income state tax of 20-25% when a salary exceeds roughly 300 000 SEK per year. The employing company pays an additional 32% of an "Employer's fee". In addition, a national VAT of 25% or 18% is added to many things bought by private citizens, with the exception of food (12% VAT), transports, and books (6% VAT). Certain items are taxed at higher rates, e.g. petrol/diesel and alcoholic beverages.
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As part of its social welfare system, Sweden provides an extensive childcare system that guarantees a place for all young children from 1-5 years old in a public day-care facility (förskola or dagis). Between ages 6-16, children attend compulsory comprehensive school, divided in three stages. After completing the ninth grade, 90% continue with a three year upper secondary school (gymnasium) leading sometimes to a vocational diploma and always to the qualifications for further studies at a university or university college (högskola). |
Sweden Information: Inside
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