Swedish elections to challenge Nordic Model?

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The centre-right alliance in Sweden has a slight lead over the ruling Social Democrat party in polls prior to elections on 17 September. The actual unemployment rate, welfare benefits and tax on labour are key issues.  

The opposition alliance’s political program does not amount to an outright rejection of the Swedish model that has been established over almost eight decades of near constant Social Democratic rule, only ever interrupted for a nine-year period.

Radical reform of the welfare state does not cut any ice with the voters, of whom an estimated 30% are employed by the state, and another 30% dependent on some social benefit. Thus, the Moderates have indeed become more moderate. 

It now dubs itself ‘the new worker party’ in a clear challenge to Persson’s party, and the radical cuts in unemployment benefits of  the previous election campaign, which the Moderates lost by a huge margin, are now long gone. 

Even if there is some focus on ‘incentives to work’ in the shape of tax cuts of €4 billion to make it more profitable to work instead of receiving welfare payments, the Moderates’ election program also focuses on protecting the environment, and it generally promises to keep up spending on public services. 

So, without wanting to do away with the cherished welfare state, the Moderates do represent a change of substance. 

PM Persson’s Social Democrats, by contrast, have promised to raise welfare spending by €2.7 billion. In spite of a generally good performance in terms of the economy with a growth rate of 5,6% in the second quarter of 2006, the opposition is challenging the Social Democrats on their claimed success in the field of employment.

Thus, the opposition maintains that the true unemployment figure is significantly higher than the official figure of 6%. The claim is backed by a McKinsey Global Institute study which assess the real figure to be between 15-17%. This counts people who are on early retirement and state funded employment-creating schemes.

PM Göran Persson has sought to paint a picture of the opposition as 'welfare killers': "The change in system with which the opposition alliance is going to the elections means attacks on pensioners and those who have retired early." 

Finance minister Pär Nuder: "We have done enough deregulation".

Opposition alliance leader Fredrik Reinfeldt: "What we lack is the incentive for work and entrepreneurship to combine with the other things that are very good. We don't want to take away things, we want to add things." 

Mauricoa Rojas, MP of the opposition Liberal party: "All Swedes are to some extent Social Democrats"

McKinsey  Global Institute report: "Sweden needs to move quickly to introduce reforms that would create favourable conditions for sustained productivity growth in the private sector, better performance in the public sector and the creation of jobs in the private services sector."      

Prime Minister Göran Persson has been in office for 12 years, but is now facing an uphill battle to remain in power. In the elections on Sunday 17 September he is pitted against Fredrik Reinfeldt, the 41-year-old leader of Moderaterne, who heads the  centre-right alliance, composed of Moderates, the Folk Party Liberals, the Centre Party and the Christian Democrats

The most recent poll indicates a neck-and-neck finish with 48.1% of the Swedes supporting the centre-right alliance, and 46.4% backing the Social Democrats and their backers in the Green and Left party affiliates. Some 20% of the electorate is undecided.

The Swedish welfare state has often been cited as one of the successful examples of the Nordic model, a generous welfare state, that has managed to combine a high level of income taxation with a solid economy and low unemployment.

The Swedes will go to the polls on Sunday, 17 September.

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