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The Mundus Brief is our summary of the important Swedish news stories over the past month
It’s the election – stupid!
Paraphrasing Bill Clinton’s 1991 election campaign, which was all about the economy, we find that Swedish politics in recent months, has become increasingly obsessed with the election. In fact, with the exception of visits from North Korea’s Foreign Minister and Löfven’s trip to meet Trump, we observe the iron grip of election politics in almost every decision from government offices. That would probably be true in any election year, but with Sweden’s future political constellations essentially impossible for anyone to predict, politicians of all persuasions seem to be running the political calculus over just about any decisions.
We will get to that in just a minute. But, first a plug for our report on the State of Expat Life in Sweden Survey, which we published in March. Many economic indicators are pointing to constraints in the labour market, and Sweden is at close to full employment amongst native Swedes. Business organisations are clear, the economy needs expats to grow. But Sweden as a country is quite unfamiliar with what it takes to entice foreigners to move here. Mundus investigated the details of expat life in Sweden. What did we find out? Read our blog post about the survey here.
Major political themes
As we reported last month, the top issues for voters in the 2018 election were;
Law and Order 19%
The economy came a distant fifth with 8%. Unsurprisingly, there was political action on all of the top 4 issues.
One recent statistic highlights why law and order is an issue for voters. Stockholm recorded twice the rate of fatal violence in 2017 compared with 2016. In addition to the 2017 terrorist attack on Drottninggatan, twice the number of people were shot in criminal disputes. Fatal violence is of course the tip of the iceberg. Swedes feel that their society is changing for the worse in many ways. In another affront to the Swedish system, two lay judges (nämndemän) came under immediate criticism when they freed a man of the charge of battery against his wife. In their judgement, the lay judges decreed that the man came from a ‘good family’, and said that as the woman had a foreign background, her evidence was less credible. The judges came from the Centre Party, which immediately sacked them. This part of Sweden’s legal system dates back to medieval times. Subscribers can read our description of the unusual and archaic system in the latest edition of the Monthly Policy Review.
Integration high on the agenda
A government-appointed investigator, tabled his proposal, calling for compulsory arrival centres to be created for asylum seekers, in order that they receive compulsory social information and that their educational and vocational background be mapped. The Minister for Employment and Integration, Ylva Johansson (S), supported the proposal, saying Sweden has not been sufficiently prepared for the reception and integration of large numbers of people. The proposed system is a long-way from the existing policy, where refugees can arrange their own accommodation.
A number of integration initiatives were announced last month. The government said that it had agreed with the social partners (unions and employer organisations) that it would fund 10,000 ‘etableringsjobb’, or ‘establishing jobs’, for the long-term unemployed and immigrants. At first blush the program looks to be a significant effort to assist disadvantaged groups. However, its start date, some 18 months into the future, suggests that the announcement was driven by election optics.
Further, Minister Johansson also announced that the Social Democrats were tightening their policy around state support for refugees who did not make themselves employable by learning Swedish. Refugees who don’t progress with their language skills will lose access to funding. The Moderates had already advanced similar moves.
Prime Minister Löfven announced that the government will invest more than SEK 2 billion a year from 2020 to reduce segregation in 32 vulnerable areas. Such areas are showing some signs of turning around, and residents are reporting feeling more secure from drug-trafficking, shootings and violence against women.
Cumulatively, the changes to the asylum system represent a radical overhaul when compared with the liberal regimes Sweden is used to. While the changes may have sound policy bases, it is also clear that the new policies have been rolled out by the Social Democrats to mitigate their exposed position that had opened up, when compared to both the Moderates and Sweden Democrats positions on immigration and integration. Somewhat ironically, Jimmy Åkesson recently claimed that the Sweden Democrats were closer to Social Democrats when it comes to migration policy than the Moderates, and that he was ready to form a government with them. The Social Democrats were not at all interested in this …
In one area the government did make it easier for some immigrants. The government has had to preside over a challenging labour market situation, with the courts and the Migration Agency deporting expats for very minor breeches of their visa terms. The government received some relief in December, with the courts deciding that looser terms could be applied, and added their own stamp, putting the emphasis on employers to ensure that visa terms were complied with.
Another election-focused policy announcement came on March 22, with the government announcing that it would give Swedish cities the right to ban diesel cars from their centres. This announcement followed major feuding within the government, with the Greens forcing the Social Democrats hand. Read our analysis in the latest Monthly Policy Review (MPR).
Also in this month’s MPR we investigate why EU issues don’t rate in Swedish elections, and what Sweden will do, when its closest EU ally departs following Brexit. Given that Swedish voters don’t get excited over EU policy, the parties’ positions are generally closely aligned and the issues have been largely neglected in the campaign. Löfven did however state firmly that he does not wish to see further national powers being devolved to Brussels.
Other news with a distinctly election flavour to it included the government’s announcement that it was to invest SEK 500 million to decrease waiting times for cancer patients, and the Social Democrats pledge for tougher discipline in schools, on top of a ban on using mobile phones. The popular flight tax, supported by more than half of Swedes, which adds hundreds of kronor to the cost of flights began on April 1, despite expert criticism that it had limited policy merits. However, the Exit Tax, which would have hit expats and Swedes relocating internationally was dropped, following tough criticism from industry.
Away from the election campaign, some news and events did continue. Prime Minister Löfven met with President Trump in Washington, early in the month, and with the tariff war in its first few days. Afterwards Löfven said that he had learned how disadvantaged the US feels. “They are really mad at the EU and it runs deep. It is important that we maintain a dialogue”. The North Korean Foreign Minister had an extended stay in Stockholm with negotiations to ease the growing tensions surrounding the country. Sweden also got involved in the diplomatic fight with Russia, expelling a diplomat in response to alleged Russian use of nerve toxin in the UK. Russia accused Sweden of being a possible source of the poison, which Foreign Minister Wallström dismissed as baseless. Wallström also said that Russia’s election was rigged in Putin’s favour. As we said in last month’s MPR, Swedes harbour deep fears about their eastern neighbours, which these events underline again.
Business and the economy
Further evidence of the economy’s prolonged boom was delivered in March with record export figures, lower unemployment and the somewhat unusual comments by the head of the National Debt Office, suggesting that Sweden should spend more, and take on more debt. Stefan Ingves, Governor of the Riksbank, sent the Kronor plummeting to new depths, by telling the Riksdag that he expected interest rates to remain low for an extended period of time. In another reminder of the problems in employment markets, Kommunal, a union, claimed that 135,000 more people need to be recruited to the Swedish welfare system in the next 4 years. “Shortcomings in school and healthcare are very real and at the centre of the challenges facing the welfare sector is the staff issue”, according to Tobias Baudin of Kommunal.
Sweden’s largest corporations, including major banks, trade corporations and industrial giants are increasingly investing in start-ups. SEB, Swedbank and Nordea as well as H&M and IKEA, are amongst the corporations that follow this trend.
During March, Mundus News reported that almost 96% of Nordea’s shareholders voted in favour of shifting from Swedish to Finnish domiciled status. Swedish financial firms see this as a dark day for the local finance industry. 60% thought it would be negative – only 5% thought it would be positive. Andreas Hatzigeorgiou, Chief Economist at Stockholm Chamber of Commerce said “The image is very negative. Having a headquarters for a large company like Nordea has benefited Stockholm and Sweden. The move is likely to weaken the economy and our competitiveness”.
A Chinese firm, GSR Capital, said that it will invest SEK 4 billion into Swedish electric car company Nevs. Nevs was formed from the ashes of the bankrupt Saab. The investment is yet another example of Chinese capital being very attracted to Swedish manufacturing expertise. GSR said that it plans to build a large battery factory in Trollhättan within five years, supplying up to 500,000 cars.
H&M’s bad run continued. Sales performance continued to be below expectations, and the company received bad press for increasing the CEOs pay during the period.
But the big business story of the month was the flurry of news and analysis of Spotify, in the lead-up to its listing on the New York Stock Exchange on April 3. Most of the coverage focused on Spotify’s losses, and how it could build a pathway to profitability, and on the unusual method chosen – Spotify avoided an IPO, with its expensive banking fees, opting instead for a direct listing. The listing day wa sdeclared a success, except for the New York Stock Exchange which managed to fluff the PR, flying the Swiss flag instead of the Swedish flag.