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Swedish social safety nets have weakened: report

Commuters on the platform at T-Centralen subway station, Stockholm, Sweden, are shown in this file photo

Associated Press

Sweden's cradle-to-grave welfare state has been called many things over the years: a model for equality in modern society; a burden on taxpayers and government; a free lunch.

The one thing it can no longer be called is the "most generous," particularly when it comes to unemployment insurance, according to a recent report.

Commissioned by a parliamentary committee evaluating the state of the country's social insurance schemes, the report weighs Sweden's plans against those of 18 other OECD countries. It finds that many of Sweden's social safety nets – once among the world's most generous – have fallen below those of other countries, including Canada.

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"Swedish social insurance used to lead western countries in terms of the level of compensation you get if you become sick or unemployed," said Joakim Palme, a professor of political science at Uppsala University and co-author of the report. "But that position has been lost, particularly during the last five years."

As recently as 2005, Sweden boasted the third most generous unemployment insurance scheme in the world. Today, the country is in the twelfth spot, behind Germany, Switzerland, France, Canada and others, according to the report by Mr. Palme and Tommy Ferrarini, Kenneth Nelson and Ola Sjöberg of Stockholm University.

Swedes are entitled to 80 per cent of their pay for the first 200 days of unemployment and 70 per cent thereafter. Benefits stop at 52 weeks. But due to a low salary cap that has not grown with average earnings, only a small portion of workers – about 12 per cent – ever receive the maximum allowable percentage of their salaries.

As a result, unemployment benefits typically come to about 55 per cent of former salaries, said Mr. Palme. Benefits from other social insurance schemes, such as sickness benefits, have also declined, he added.

"For many this is not a dramatic thing because you get supplementary insurance by other employment contracts by trade unions, but that doesn't cover everyone," Mr. Palme said.

"Our point is that the Swedish model as it used to be in the 70s and 80s, gave middle class employees the same protection as the working class. Now, those with above average earnings are increasingly dependent on vehicles outside the state, such as trade unions and private company plans."

Not surprisingly, the report has its critics. Indeed, there are few things more hotly debated in this country of 9.5-million than the health of the Swedish model.

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"What I object to is the idea of 'the more generous the better,'" said Ulf Kristersson, Sweden's minister for social security. "We had that attitude for quite some years and it led to very high levels of sickness leave insurance for very long times. That made problems for getting people back to the labour market."

Though Sweden's social insurance schemes have been changing for some time, the current centre-right government has made significant reforms in a bid to get more people working. Since winning a general election in 2006, Prime Minister Fredrik Reinfeldt's coalition government has tightened unemployment and sickness benefits and introduced an in-work tax credit.

Despite these well-publicized changes, Mr. Palme believes there is a gap between public perception and reality.

"I think decisions should be made according to a realistic picture of what the Swedish system is really like," he said.

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