75954outercyanmagentayellowblack sweden’s new s 2005 programme includes some of the most...

“What Sweden and the otherNordics have achieved is ofcrucial importance in the muchwider public policy debate of howthe European left should respondto the complex challenges beingimposed on modern societies byglobalisation and the impact ofcommunication and informationtechnologies on the world ofwork. Their success as both socialmarket economies anddemocratic societies continuesto confound the fashionabledogmas and orthodoxies ofprevailing neo-liberalism”

Sweden’s newsocial democraticmodelProof that a better world is possible

Robert Taylor

UNISON is the UK's largest trade union. We campaign on arange of issues at home and abroad. Whether working to raise theminimum wage in the UK or to fight HIV/AIDS in southern Africa, wework with others to make a difference in the world. If you are lookingfor a modern, progressive trade union then join us!

Find out more at: www.unison.org.ukor 0845 355 0845 (voice)0800 0 967 968 (textphone)

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ippr’s 2005 programme includes some of the most exciting policy proposals and rigorous political research of recent years.Buy our latest books to find out more, or visit us at www.ippr.org

tel: 020 7470 6123 • email: [email protected]

Social Justice Building a Fairer Britainedited by Nick Pearce and Will Paxton

In the most eagerly awaited policy book of2005, ippr brings together its ownunrivalled team of policy analysts withleading thinkers like Geoff Mulgan,Raymond Plant, David Miller and TaniaBurchardt, and asks them:

What can the governmentdo to build a fairer societyin the UK?

The result is a clear articulation of theprinciples of social justice and a blueprintfor radical reform.

Covering issues, from education, socialmobility and the welfare state to migration,environmental sustainability and taxation, thisbook is a rallying cry for a fairer Britain thatwill be impossible for any politician to ignore.

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Modernising with PurposeA Manifesto for a Digital Britain

by William Davies

A Digital Britain is not inevitable: it is a social and politicalchoice. We have the ability to structure the impacts ofnew technologies and use them to empower communitiesand individuals from all sectors of society. In this book,William Davies lays out a manifesto of practical policies tobuild an open and inclusive digital Britain.

AsylumUnderstanding Public Attitudesby Miranda Lewis

People’s views on asylum seekers are often shocking andfrequently misinformed as ippr found out from a uniqueseries of focus groups. The resulting book sheds newlight on the origin of these attitudes and makes positiverecommendations to promote a better informed debate.

The Commission on SustainableDevelopment in the South EastFinal Report

In this cross�party report the Commission on SustainableDevelopment in the South East sets out a range of policyoptions to maintain the prosperity of the region byaddressing the problems of success and promoting aninclusive economy. Essential reading for anyone interestedin regional policy and sustainable development.

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Beyond Black and WhiteMapping New Immigrant Communitiesby Sarah Kyambi

Immigration to the UK has been on the risein recent years. This has brought immense economic and cultural benefits,but also challenges. Policymakers need asolid understanding of changes inimmigration to manage these effectivelyand efficiently.

Beyond Black and White sets out acomprehensive evidence base forunderstanding the dispersal and keycharacteristics of new immigrants whohave arrived in the UK since 1990.

With over 100 full�colour maps and 30 graphs this volume provides anindispensible guide for anyone interested inimmigration and integration issues.

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Choice and Equity in Teacher Supplyby Anna Bush

The education of disadvanteged children is suffering fromthe high staff turnover of challenging schools. Anna Bushsuggests a series of pragmatic and incremental policyideas geared towards the recruitment and retention ofteachers in deprived areas.

Toward Zero ExclusionAn Action Plan for Schools and Policy Makersby Jodie Reed

Since 2001 permanent exclusions have risen. Those who arecommitted to achieving an education system that meets theneeds of every child must look for a new solution to dealingwith challenging behaviour. Towards Zero Exclusion is anambitious action plan of practical policy recommendations torenew the drive to reduce school exclusion.

Working Later Raising the effective age of retirementby Peter Robinson, Tim Gosling and Miranda Lewis

Working Later shows how difficult it will be to secure apolitical and popular consensus on pensions reform butshows how important it is to make any reformstransparent if the legacy of mistrust is to be overcome.

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The Electoral Reform Society campaigns for a stronger democracy,one that encourages people to vote and gives them the expectation that their votes will really count.

That will require a change to an electoral system to:n allow for the representation of all significant opinions,n extend voter choice and n make the elected more accountable to the electorate.

So far, Labour can be proud of its record in constitutional reform.When setting up the new institutions – the Scottish Parliament andthe London, Northern Ireland and Welsh Assemblies – it recognisedthe need to move away from the defective ‘first past the post’ method.

The General Election showed the failings of that system, when justover a third of voters gave the Government more than half the seatsin Parliament. It’s time for a better voting system for Westminster.

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Tel: 020 7928 1622

Email: [email protected]: www.electoral-reform.org.uk

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Contents

Foreword [4]

1 Introduction: no end of a lesson – Sweden in themodern world [5]

2 Sweden compared with the rest of its competitors [12]

3 The Swedish Model and its economicachievements [17]

4 The Swedish Model and the pursuit of a strongsociety [23]

5 Conclusions: the Swedish Model and the lessonsfor social democracy [30]

Endnotes [33]

Further reading [34]

About the author [35]

Useful contacts [36]

About Compass [37]

Joining form [38]

To the memory of Robin Cook 1946–2005A true European social democrat

75954_Sweden Booklet 6/9/05 4:37 pm

[4] www.compassonline.org.uk [email protected]

Foreword

The abiding political triumph of Thatcherism was theconviction that TINA (‘there is no alternative’). Itbecame commonly held across the political classesthat globalisation, free markets, the small state and theright to manage had finally triumphed over the nationstate, the public sector, democracy and the labourmovement. It was even proclaimed that there was nosuch thing as society. History, in the ‘final’ form ofstrong markets and weak democracies, hadapparently come to an end. After four straightelection defeats this was the pessimistic context inwhich New Labour came to power. Ever since the lefthas been paralysed by this powerful blow to its self-confidence. Crucially New Labour gave up the fight tomake people the masters of the market – rather thelimit of its ambition is to secure social justice but onlythrough economic efficiency as defined by thedemands of global markets. The result is an inevitabledecline in democracy, the public realm and socialmobility and an increase in inequality.

Put simply, the example of Sweden shows that abetter world is possible. Here Robert Taylor

demonstrates that in Sweden it is social justice thatcreates economic efficiency and that you get the publicservices you are prepared to pay for. He shows thatmodern trade unions are essential to an enterprisingeconomy and that pluralism and long termism are vitalin building a progressive consensus. Crucially, he showsthat it is the commitment to an ideology rooted in thevalues of equality, liberty and solidarity that provide theleft with the lodestar that enable us to adapt to a rapidlychanging world on our terms.

Swedish social democrats were never old Labourand will never be new Labour. Instead they combine acommitment to idealism with a determinedpragmatism. Crucially social democrats in Swedenhave decided to make the political weather ratherthan meekly decide how best to shelter from it.

Our Compass may be rooted in Britain, but as thispamphlet convincingly and eloquently argues, it shouldpoint towards Sweden – not a place of our dreams but aliving example of a thriving new social democracy.Don’t believe anyone who repeats the mantra thatTINA – there is an alternative – it’s called Sweden.

Neal LawsonChair, Compass


www.compassonline.org.uk [email protected] [5]

1

Introduction: no end of a lesson – Sweden in the modern world

It was fashionable ten years ago to talk glibly aboutthe death of the famed Swedish Model and theresulting crisis that it brought for the future of thatcountry’s social democracy. But over the past decadeSweden has undergone a remarkable economic andsocial renewal after a period of turbulence whichsaw relatively high levels of open unemployment.Once again, the country ought to become thesubject of immense interest in debates on the futureof European social democracy in the age ofglobalisation. It is no exaggeration to argue thatSweden has created what amounts to a new model,which carries with it important lessons for thedemocratic left everywhere. The deregulation,liberalisation and privatisation of economy andsociety is the dogmatic neo-liberal response to settlingthe problems of the modern world. But it is not themost effective way forward in the reconciliation ofeconomic success with social justice. This is whySweden today provides a serious counter-challenge tothe conventional wisdom that insists flexible labourmarkets, minimalist social regulation, low levels ofpersonal taxation and limited government spendingare essential preconditions for how advanced societiesshould respond effectively to the dual challengesposed by global integration and technological change.

A hundred years ago Sweden and the othercountries of northern democratic Europe wereamong the most poverty-stricken on the continent.Between 1840 and 1914 more than one millionSwedes migrated to North America, mainly toWisconsin and Minnesota in the United States, insearch of a better life. Their departure providedeloquent testimony to the backwardness of thecountry they had left behind them.

But during much of the last century after the1920s Sweden, along with the other Nordic nations,

was transformed through its own efforts. From beingone of the poorest countries in Europe it becameamong the most successful political economies in theworld as measured by an impressive range ofinternational comparative statistics. Today Swedenalongside neighbouring Denmark, Norway andFinland remains an affluent and equitable societywith a higher standard of living for theoverwhelming majority of its citizens than almostanywhere else. Swedes can claim to enjoy not onlythe longest life expectancies for both men andwomen outside Japan (78 years and 83 years,respectively), as well as widespread materialcomfort, revealed in their patterns of personalconsumption, but also a relatively equitabledistribution of income and wealth between theircitizens and families.

It was really during the first three decades afterthe end of the Second World War that Sweden andthe other Nordic countries were able to constructcomprehensive and generously funded welfarestates, based on the application of the universalistprinciples of common provision for all citizensirrespective of their income and status and fundedthrough progressively redistributive forms oftaxation and national insurance systems. Under theoften paternalistic direction of a rational andenlightened state, Sweden led the way in theconscious formation of what were genuinely socialdemocratic societies. This admirable developmentreflected a conscious and deliberate governmentstrategy to translate the abstract concept of socialcitizenship into a practical reality.

This twentieth-century success, which becameknown as the Swedish Model, derived in particularfrom the creation of prosperous and sociallycohesive countries but without the need for any


direct challenge to the fundamental features of anopen market economy and representativeparliamentary democracy with high levels of popularparticipation. Moreover, Sweden and the otherNordic countries did not sacrifice their economicwell-being in pursuit of any elusive egalitariandream. The ruling Social Democrats in Sweden andtheir sister parties in the region when in governmentwere always principled pragmatists and not Utopian socialists. As small nation states, theNordics were well aware that their ultimate successstemmed from a full and successful integration intoa wider global economic system as believers andpractitioners of open trade and genuineinternationalism. This was certainly apparent asearly as the end of the nineteenth century and thecommitment to a multilateral trading system grew inimportance after 1945 as Sweden in particularbecame an active economic participant in anincreasingly integrated world.

The country’s evolutionary and gradualistapproach was based on a coherent and judiciousbalance in the shaping of its public policy priorities.The role of the democratic state in Sweden was ofcrucial strategic importance. It created the necessaryclimate for the establishment of co-operation andcollaboration between capital and labour, betweenits institutions and its citizens. It also established aprogressive policy agenda that was centred on apractical application of what was believed toconstitute the public interest. The activeencouragement of intricate social and economicnetworks of power and influence among efficientand competitive privately owned companies in atriangular relationship with an enlightened state anda well-organised and strong trade union movementwas a precondition for economic success. In Swedenrepresentative autonomous national institutions ofemployers and trade unions representing employeesas producers but also as citizens worked in harmonytogether in the creation of a common interest. Indoing so they were to provide the necessaryinstitutional means for the construction of acorporatist but democratic and pluralistic modelbased on the principles of a humanistic rationalism.

As one Swedish writer has written recently:

Few social experiments have caught the imagination of

politicians and students of political economy like the

Swedish Model. To successive generations of the centre-

left searching for their Third Way Sweden was

something of a paradise. This exotic Nordic country was

a kind of real life Utopia, an idyllic country full of

beautiful people with a Social Democratic government

which worked, a nation combining high rates of

economic growth with unprecedented levels of

equality.1

The Swedish Model’s undoubted achievements inthe 1950s and 1960s were built on the steady andfirm application of economic strategies thatencouraged the creation of productive and efficientworkplaces through co-ordinated collectivebargaining over a widening negotiating agendabetween strong and progressive trade unions andsocially responsible employers. The emphasis was onthe development of a disciplined system of wagebargaining at the centre, which was based more onnotions of social solidarity and equality betweenworkers in different sectors, companies and regionsthan on the free play of market forces of supply anddemand. Swedish trade unions developed anegalitarian programme for their members thatstressed not only the need to narrow paydifferentials but the added importance of the ‘socialwage’, which was funded by the state through hightaxes on the better off to encourage a convergencein income distribution. The old Swedish Modelprovided the institutional means for the successfulpursuit of industrial restructuring and greaterconcentration of ownership in the companies asprivate capital moved from inefficient anduncompetitive sectors like textiles to themanufacture of products in demand on globalmarkets such as cars and trucks.

But Swedish Social Democratic governments alsosought to dampen down any potential internaldivisions between the social classes through thepursuit of demand management economic policies.Their aim was to achieve growth rates that ensuredthat the country maintained full employment. Such astrategy was designed to stimulate and reinforceconfidence and stability in the economy. In the 1960sSweden and the other Nordic countries were able to



combine impressive economic expansion year afteryear with policies that sought to establish genuinesocial cohesion between their citizens. In doing sothey transformed themselves into some of the mostdynamic and equitable societies in the world.

But during the 1970s the Swedish Model cameunder increasingly acute stress in the face ofgrowing international financial pressures, risingwage push inflation and a vulnerable anduncompetitive currency which began to generate afeverish uncertainty. Sweden’s growing army ofcritics argued that the country was becoming over-dominated by what they saw as an excessivelyexpanding and monopolistic public services sectorthat they claimed was crowding out privateenterprise from investment resources and stiflingindividual initiative. The country was said to becoming under the irresponsible power of the tradeunion movement, which was asserting boldambitions for domination and control over thepolitical economy that in turn threatened to damagethe workings of a relatively free market. Wage pushinflation became a source of real concern among thepolicy-makers. Deficits in trade and the balance ofpayments added to the widespread anxiety.Devaluations of the currency were used to maintaincompetitiveness. Worries also grew that Sweden andthe other Nordic states had now reached the outerlimits of what was possible in the advance of thestate through high taxation and spending for thewell-being of modern economies that did notthreaten democratic values. The burdens of tax andspend were said to have grown too onerous and itwas alleged that they were weakening the will tosave and undermining personal freedom of choice. Itis true that open unemployment still remained lowby international standards in the 1970s, butopponents of the Swedish Model argued that theonce strong Lutheran work ethic was coming undersustained attack with evidence of an increase in thenumber of welfare dependants and threats of labourmilitancy. Suddenly foreign outsiders turned frombeing rather unrestrained enthusiasts of the countryinto indiscriminate critics as they began to arguethat the Swedish Model was no longer one to beadmired and emulated but instead a warning, and

that Sweden was a problem country whose generousvalues and practice of social democracy were nolonger enough to guarantee success.

Such a commonly held view was alwaysexaggerated and overdone at the worst of times. TheSwedish Model may have fallen into somedifficulties but the death notices turned out to besomewhat premature. Indeed, the country revealedthat despite the relative adversity it was inherentlyflexible and dynamic enough to renew itself withoutany need for unhelpful strictures from abroad. As aresult, at the beginning of the twenty-first-centurySweden remains well positioned strategically toadvance its lasting achievements still further. Thereason for this is that the Swedish Model establishedand expanded ways of thought and action that werethe most likely to respond successfully to theincreasing forces of globalisation and technologicalchange as they made a dramatic impact on itsproduct, labour and financial markets. The resultingvibrant economy and relatively equitable socialsystem it had formed in the so-called post-wargolden age ensured that Sweden was flexible,adaptable and innovative enough to meet thechallenges of the modern world with anunderstandable optimism and self-confidence.Sweden and the other Nordics still remain amongthe best equipped of modern societies because oftheir very resilience and dynamism, which stemsfrom specific cultural traditions and histories andabove all through the establishment of thehegemony of the progressive and flexible ideologyof social democracy. The Nordic countries proved along time ago how it has been possible to pursue awinning national strategy that could somehowcombine individual prosperity and business successwith the pursuit of social justice and provision of agenuine sense of security for all their citizens.

The necessary drive for modernisation in anydemocratic society requires as much emphasis beingplaced on the formation of a coherent public policyfor the advance of genuine social equality as it doeson one that is designed to stimulate open markets,entrepreneurial energies and corporate profitability.Today democratic policy-makers across the worldare wrestling with the same fundamental problem:




how to reconcile the need to achieve and sustaineconomic growth and business competitivenessthrough a commitment to structural reform of thepolitical economy with the agreement and active co-operation of those who are the most affected by theimpact of change. Modernisation through consensuslies at the heart of the new Swedish Model as muchas the old, and those of its neighbours.

Much of the current public policy debate inBritain on this critical question of how to achievepopular consent for necessary economic and socialchange is poisoned by spin, manipulation of the factsand an unappealing hyperbole. We have witnessedthe rise of a New Labour nationalism that is basedon the unconvincing and questionable assumptionthat this country has become the envy of ourallegedly more sclerotic European continentalneighbours and therefore has no apparent need tolearn any constructive lessons from the experiencesof others. Such an official British attitude is not onlybased on ignorance and bluster but it is alsocontrary to any recognisable reality. The recentlyconceived British Model is founded on profounddelusions, a cavalier abuse of the facts as well as aninsufferable arrogance, which stretches across muchof our political class. Indeed, its endless propagationin public debate has turned into a serious obstacle toholding a sensible discussion about the future ofsocial democracy.

This is why we need to question the growingconventional wisdom about the superior virtues of a supposed British Model within the context of awider discussion on the relevance and strategicimportance of Sweden’s creation of its new model ifwe want to develop a credible social democraticresponse to modernisation. There are other andbetter ways than those of our own on how torespond successfully to pressures without any needto abandon our core progressive beliefs centredaround an amalgam of liberty, equality andsolidarity. We must stimulate a more intelligent andwide-ranging debate on the progressive centre-leftthat can focus on how we should embrace andaccommodate global integration and technologicalinnovation. But this strategic approach can onlymake any sense if it is based on a rational and

nuanced discourse as well as on empirical, verifiableand objective evidence. Of course, it would beabsurd to suggest that Britain could simplytransplant the values and practices of Sweden andthe other Nordic countries into its own complexpolitical economy and society. But it would beequally naïve to assume that we can or shouldexport our so-called British Model elsewhere acrossthe countries of continental Europe. Cultural andsocial differences, and above all a wide range ofdiverse national historical experiences, make such anendeavour both futile and counter-productive.

But on the other hand we need to abandon manyof the simplistic assumptions about our continentalEuropean neighbours that continue to dominate toomuch of the current British public debate in what is agenuine struggle between varieties of capitalism. Thecurrent misplaced denigration of France, forexample, is a good example of British blindness tounwelcome realities. French levels of labourproductivity, its investment in research anddevelopment and its state spending on health andeducation remain significantly superior in volumeand value to our own. The false image of a rigid anduncompetitive France based on an outmodeddirigisme of the state may reassure our political classbut it remains a sad caricature of the truth. A similarnational myopia can be found in official Britishattitudes to the contemporary achievements ofSweden and the other Nordic countries. Here we canoften detect an unpleasant mixture of patronisingcondescension and what looks like a deliberateblindness to a scrutiny of the empirical evidence. It istrue that there are those on the democratic left inthis country who are ready to make some favourablecomments on specific experiences in Sweden andDenmark, such as their comprehensive childcarefacilities for working families or their active labourmarket measures to bring the unemployed back intopaid work through training and subsidised workexperience, but they do so without giving sufficientattention to the wider perspective and to recenthistory to find out how those countries havemodernised themselves so successfully.

Depressingly few in the British labour movementhave ever displayed much genuine and consistent


interest in, let alone any real understanding of, theSwedish Model. In the late 1930s the New FabianResearch Bureau dispatched an inquiry team toSweden to examine the wonders of its so-calledMiddle Way (as defined by the American journalistMarquis Childs in a book with that name publishedin 19362), which appeared to have conquered thescourge of mass unemployment and was activelyconstructing a national welfare state withoutabandoning its basic democratic socialist principlesbetween a rigid collectivism and free-wheelingindividualism. An admiring volume was published asa result of that Fabian visit3 but the onset of theSecond World War ensured it enjoyed only a limitedimpact. Senior Labour figures like Clement Attleeand Herbert Morrison admired the Nordicexperience but they did so mainly from afar. TheParty’s arch revisionist Tony Crosland in the 1950salso took a keen interest in Sweden and wrote aboutit briefly but positively in his seminal work The

Future of Socialism, published in 1956.4 He regardedthe country as a flourishing social democracy thatproved how egalitarian goals could be pursuedsuccessfully without the need to resort to stateownership and control of the commanding heightsof the economy. At its zenith in the 1960s and 1970s,the country’s much-admired model drewenthusiastic acclaim internationally from socialdemocratic modernisers as diverse as Willi Brandt inWest Germany and Michel Rocard in France, as wellas union leaders such as George Woodcock, theTUC’s general secretary, and Walter Reuther, theUS Autoworkers Union president.

At this stage I ought to declare an interest. I wasNordic region bureau chief for the Financial Times

based in Stockholm for five years – from March1988 to December 1992. It was an eventful time towork as a British correspondent in what has alwaysbeen a rather misunderstood and under-reportedarea of the world. During my years there I witnessedand reported on the sweeping modernisation ofSweden and the other Nordic countries that wastaking place in their relations with the outside worldand in particular towards the European Union. BothSweden and Finland applied to become EUmembers in 1991, something they were both to

achieve in January 1995. Norway was also anapplicant but its people rejected EU membership ina national referendum. In the business world after1987 the Nordic region went through waves ofcorporate mergers and amalgamations as a growingnumber of important and large Nordic-owned trans-national companies sought to readjust andrestructure themselves in response to fierce marketcompetition stimulated by greater globalintegration. The region’s financial markets wererapidly deregulated and liberalised and opened upto international capital. Regulations were mademore flexible, especially in Sweden, in order toencourage inward investment and to enable foreigncompanies to buy their way into home-grown firms.The creation of a broader social base for shareownership in a growing number of publicly listedcompanies began to erode the traditionalprotections that had been previously upheld for thebenefit of indigenous owners of capital. Swedish andother governments invariably (though not always)pursued prudent budgetary policies to curbinflationary pressures and trim their own spendingprogrammes, but none of them did so byabandoning basic social market principles as theyadjusted their political economies to the changingdemands of the business community on whom theaffluence of their societies depended.

The Nordic countries during the late 1980s andearly 1990s also experienced considerable politicalturmoil. In September 1991 the ruling SocialDemocrats in Sweden lost the general election. Asthey had been in government for all but six of theprevious fifty-nine years since September 1932 thiscame as a shock to many Swedes. A coalition ofcentre-right political parties under Moderate Partyleader Carl Bildt as prime minister came into power.Unfortunately for them a financial crisis, mainly tothe result of international speculative turbulence inthe country’s vulnerable banking sector, hit Swedenhard a year later in the autumn of 1992. A numberof British journalists – especially from the rightwingtabloid newspapers – even flew into Stockholm for afew days in order gleefully to confer the last rites onwhat they declared to be the death of the SwedishModel as interest rates shot up briefly to 400 per




cent. But British critics shared profound difficultiesin determining just how the Swedish Model ought tobe defined. There was a tendency to view the Modelas a static and mechanistic concept rather than beingan infinitely adaptable and dynamic construct whoseunderlying achievement was its ability to be able toadjust itself successfully in response to thechallenges and pressures imposed on it from theoutside world.

In fact, since the mid-1990s the Swedish economyhas enjoyed a substantial and impressive recoveryfrom the recession in the early years of that decade,the worst to hit the country since the early 1930s. Inrecent times the country has achieved some of thehighest economic growth rates in the world, a strongupsurge in its labour productivity in manufacturing,the creation of a substantial financial surplus on itscurrent account, a healthy trade balance and anactive labour market policy of training and jobsubsidies, which has cut back open unemploymentsignificantly, although in the past year the level ofjoblessness has risen again. Back in governmentafter September 1994 the ruling Social Democratsonce more applied their traditional combination ofpragmatism and idealism to resolve their country’stroubles with a resulting enviable success. It is noexaggeration to argue that Sweden has created whatamounts not just to a modified model but to a newmodel, though one that is still based on thoseunderlying values of freedom and social cohesion,prosperity and solidarity that characterised itsoriginal form.

In Sweden today the mainstream oppositionparties do not advocate neo-liberal strategies. Onthe contrary, they have accepted – if only tacitly –the basic social democratic approach. In some recentpast general elections they campaigned forgovernment on a radical right or neo-liberal agendaof rolling back the welfare state and cutting taxesand pubic spending but they lost decisively at theballot box as a result. Indeed, the opposition partiesin Sweden have recently formed a new electoralalliance that appears to accept current levels ofwelfare spending and opposes tax cuts except for theless well off. If they were to win the 2006 generalelection they are likely to emphasise continuity and

not any fundamental change in the defence andadvance of the new Swedish Model. Their resultingcoalition government would not challenge butaccept the contours of the social democratic state.

What Sweden and the other Nordics haveachieved is of crucial importance in the much widerpublic policy debate of how the European left shouldrespond to the complex challenges being imposed onmodern societies by globalisation and the impact ofcommunication and information technologies on theworld of work. Their success as both social marketeconomies and democratic societies continues toconfound the fashionable dogmas and orthodoxies ofprevailing neo-liberalism. In Britain it has becomealmost an unquestioned conventional orthodoxy –from the ranks of New Labour through the youngTurks of the Liberal Democrats Orange book to theConservative Party – that modern market economiescannot flourish and survive in the age ofglobalisation unless they create flexible labourmarkets through deregulation, open up what remainsof the work of their public sectors to private profit-making providers and sub-contractors, drastically rollback the central directing role of the state anderadicate as much of the public sector as possibleoutside the maintenance of law and order, andencourage risk taking and wealth creation inbusiness through the dilution or repeal of socialregulations that are designed to protect workers andconsumers but perceived to hold back the dynamicsof entrepreneurship. The deregulation andliberalisation of the modern economy across thewestern world is now hardly questioned by policy-makers and media commentators who believe –almost as an act of faith – that countries mustabandon any residual commitment they may stillhave to collectivist values of social cohesion andequality if they want to survive and prosper in thefuture. As a result, our current public debate aboutthe competing models of capitalism in Europe hasbecome over-simplistic. The stark, familiar picturethat contrasts a dynamic and booming Britain offlexible and lightly regulated labour and capitalmarkets with sclerotic and failed states in continentalEurope strangled by bureaucratic red tape andossified social structures and ways of work


organisation is not just misleading but plain wrong. Ithas become a dangerous substitute for hard thought.

In fact, the picture is much more complex andnuanced than most British politicians and mediacommentators like to suggest. The importance of theSwedish Model in particular is that it demonstratesthrough example that it is perfectly possible touphold and practise social democratic values ofsocial cohesion, liberty and equality in the process ofmodernisation and that those values remain ofcrucial importance to a country’s ultimate economicsuccess. In other words, we do not need to abandonor emasculate the left’s achievements of the recentpast in order to establish more prosperous andequitable societies.

In the second half of the twentieth centurySweden and the other Nordic countries createdsome of the most competitive and productivemarket economies in the world as well as some of

the most prosperous and egalitarian. Theirideological conviction that it was perfectly possibleboth to encourage the development of markets aswell as build comprehensive welfare states provideda civilised and effective response to the problems ofthat earlier period that were posed byindustrialisation and the rise of urbanised societies.The real and current achievement of Sweden andthe other Nordics is that they have shown how theirbasic values – shaped by earlier experiences of whatwere quite distinctively different societies dividedmore painfully by class, wealth and power – remainof urgent relevance in facing the challenges of ournew, post-industrial information age. This is why weneed to know far more about the nature ofSweden’s current impressive performance if we wantto renew and modernise European social democracyin the face of the serious neo-liberal threat to socialjustice and the prosperity of all our citizens.




2

Sweden compared with therest of its competitors

Sweden remains one of the most economicallysuccessful and relatively affluent countries in theworld. The facts of its current performancecontradict the conventional wisdom that it is notpossible to operate relatively high rates of taxationas well as administer substantial and generous publicexpenditure programmes on welfare, health andeducation without threatening a country’s economicdynamism. The comparative international statisticsreveal an impressive picture of both Swedish andwider Nordic achievement. If we examine the mostrecently available facts we can better appreciate themagnitude of what has been accomplished.

The most prominent success of the SwedishModel lies in the workings of its labour market. Thecreation of full employment for all became thehighest priority for the country’s governments sincethe early 1930s depression. It remains so today.Sweden continues to allocate a higher proportion ofits gross domestic product to active labour marketprogrammes than any other country in the world. Asa result, Sweden along with the other Nordic stateshas already reached the overall 2010 target of a 70per cent employment rate for adults of working age,which was set by the European Union heads ofgovernment Lisbon summit conference in 2000. Butthe Swedish government has set itself a moreambitious target with an 80 per cent employmentrate by 2010 for the adult age population between 20and 64. Even more impressively, Sweden and itsneighbours – Denmark and Norway – are the onlythree European countries that have reachedemployment rates for women based on full-timeequivalents that are now above 60 per cent.

The unemployment statistics reveal an equallyimpressive picture in Sweden. During the Model’sgolden age in the 1950s and 1960s the country

enjoyed virtually full employment and resultinglabour shortages of key workers. In the early 1990sopen unemployment climbed to nearly 10 per centbut in recent years it has fallen back to around 5.5per cent. This remains high by Swedish standardsand the numbers out of work rose during the brief2002–03 recession and they have done so againrecently. The government’s target is to reduce thefigure to 4 per cent but it has admitted this will notbe achieved in the foreseeable future. The moststriking achievement, however, can be seen in thesmall proportion of long-term joblessness in Swedenas measured by the proportion of people who havenot been in paid work for at least twelve months ormore. All the Nordic states have some of the lowestproportions of their labour forces among EuropeanUnion member states that are classified as long-termunemployed. In the United Kingdom today nearlyone in four of the registered jobless have notexperienced paid work for over twelve monthswhereas in Sweden the figure is 18 per cent.

But it is not only Sweden’s relative recentachievement in tackling open unemployment andraising its employment rate that underlines thecountry’s performance relative to its competitors.The growth in its labour productivity rate and thatof the other Nordic countries is also striking. Onlythe United States and Ireland have achieved acomparable record during recent years. Certainlythe United Kingdom lags well behind the Nordicregion in its productivity performance. In 2003Finland’s growth rate was 2.6 per cent, followed bySweden with 2.5 per cent and Denmark with 2.1 percent. The British growth rate was 1.7 per cent forthat year while in Germany it was only 0.9 per centand in France 0.8 per cent. The longer-termperspective confirms the substantial advance in



labour productivity in manufacturing in the Nordiccountries. Between 1994 and 2003 the annual growthrate averaged 5 per cent in Sweden. By contrast thegrowth rate was only 2.2 per cent in Britain over thesame period of time.

Another impressive comparative achievementhas been in Sweden’s modest level of wage increasesand low unit labour costs, which has improved thecountry’s competitive advantage on world markets.And yet Sweden continues to have one of the mostpowerful trade union movements in the world. Themajority of its workers (getting on for 85 per cent)are organised and collective bargaining remains themain method by which their wages are determined.But in recent years pay settlements have beenresponsible and restrained. From the mid-1990s thecountry moved away from a flirtation withdecentralised bargaining as both companies andtrade unions recognised the perils of a wages freefor all and competitive wage bidding. Instead it wasagreed to restore a more flexible form of wage co-ordination backed up by a mediation procedure. Asa result unit labour costs have remained competitiveand compare favourably with the country’s maininternational rivals. In Sweden there was even anactual fall of 0.6 per cent in unit labour costs in 2003while in Finland unit labour cost growth was a mere0.6 per cent and in Denmark 2.1 per cent. Comparethis with a 2.8 per cent increase in Britain and 4.8per cent in the United States.

An important feature of Sweden’s comparativeadvantage in modernisation has been itscommitment to gender equality at work and insociety. Women in Sweden are among the mostempowered of any in the world. The latest statisticsfrom the World Economic Forum found the fiveNordic nations occupied the top five global positionsin the extent of female empowerment, in a surveythat covers 58 countries. Sweden was the mostadvanced followed by Norway, Iceland, Denmarkand Finland. Britain was in ninth position in thetable. The aggregate rating is determined by theextent to which women have achieved full equalitywith men in five distinctive areas – economicparticipation and opportunity, politicalempowerment, educational attainment, health and

well-being. The impressive record of Sweden and theother Nordics is no accident. It stems from apersistent and enlightened public strategy toconquer gender inequalities that has been pursuedsuccessfully for more than forty years.

The fundamental commitment to stability andsecurity that characterises Sweden has not meantany rearguard defence by either firms or workers ofold industries and archaic labour intensiveemployment practices. On the contrary, some of themost impressive indicators of the modernity ofSweden and the other Nordic countries can befound in their global rating positions in the extent towhich their people make use of information andcommunications technology in their daily lives. The2004 survey carried out by the independent WorldEconomic Forum rated Finland as head of thenation state league table. Sweden came in fourthplace after the United States and Singapore,respectively, while Denmark was eighth. The resultswere calculated on the basis of seventy differentvariables on the ‘network readiness of people,businesses and the public authorities’.

The impressive performance in the application ofinformation technology in Sweden and the otherNordics is accompanied by an equally positive focuson the level of expenditure on research anddevelopment. In 2003 – the latest year for suchcomparative statistics – Sweden topped theinternational league table rating with 4.3 per cent ofits gross domestic expenditure being allocated forresearch and development. This compared withFinland on 3.4 per cent and Denmark with 2.2 percent. Interestingly the record in France andGermany was superior to that of Britain. Those twocountries spent 2.2 per cent and 2.3 per centrespectively of their gross domestic product onresearch and development compared with 1.8 percent in Britain.

Investment in knowledge also found Sweden andFinland were close to the American figure. In 2004Sweden devoted 7.2 per cent of its gross domesticproduct to knowledge investment compared with 6.2per cent in Finland and 6.8 per cent in the UnitedStates. In contrast Britain devoted 4.3 per cent of itsgross domestic product to such investment, which


was significantly less than Germany (4.8 per cent)and France (4.6 per cent). By internationalstandards, Sweden can claim to enjoy the highestproportion of a country’s labour force employed inknowledge intensive jobs followed by Norway andDenmark, with Finland in fifth position. Table 1illustrates the extent of IT in business services in theNordic countries.

Table 1 The Nordics and information technology

2002: IT sector share in value added as a percentage

of total business services

Telecoms Computers ICT Total

Sweden 4.5 5.7 2.5 12.6Denmark 3.2 2.6 3.9 9.7Finland 5.9 4.0 2.7 12.6Norway 3.2 3.5 2.6 9.3UK 4.2 5.0 2.7 11.9France 2.8 4.0 2.3 9.1Germany 3.2 3.6 0.0 6.8Source: OECD 2004

Needless to say, Sweden and the other Nordics havemuch wider individual ownership of personalcomputers than other western countries. More thanthree-quarters of their people now use themcompared with half in the United Kingdom and theUnited States. The proportion of the population whoare internet subscribers is twice as high as in thiscountry.

A range of comparative statistical tablesproduced annually by The Economist IntelligenceUnit further emphasises the supremacy of theSwedish achievement in communications andinformation technology. In its 2004 league table thecountry came fourth in the EIU’s innovation index,following the United States, Taiwan and Finland. TheUnited Kingdom was in 13th position behindGermany but ahead of France. This measure isformed from a compilation of human resource skills,market incentive structures and the degree ofinteraction between business and scientific sectors.In a separate information and communicationstechnology index Sweden came in third position in2004 after Iceland and Finland. This was made up ofthe use of information technology as well as per

capita measures of telephone lines, internet usage,personal computers and mobile phone users. TheUnited Kingdom trailed in 15th position in thatparticular index.

Further evidence of Sweden’s modernisation canalso be found in the number of patents granted toresidents. The number in force per 100,000inhabitants in 2000 – the last year for comparativedata – was an impressive 1,097, which put thecountry in third place behind Luxembourg andSwitzerland and far ahead of the United Kingdom,which came in 13th place.

Other comparative data provides evidence of theextent to which Swedes enjoy a greater quality intheir lives. Zurich Cantonal Bank has been carryingout a comparative sustainability survey every yearsince 1999 and this indicates the relative success ofSweden and the other Nordic countries in creatingmodern societies that combine social cohesion witha high quality of life for most of their people. TheBank’s 2004 report was based on an assessment of ahundred individual indicators covering social andenvironmental performance in thirty advancedcountries. The environmental areas covered includedwater quality, the amount of energy consumption,the level of carbon dioxide emissions, air quality,levels of environmental protection, the standard ofpublic transport as well as corporate and publicpolicies on environmental issues. The social indicesincluded levels of crime and corruption, civil rights,living standards, life expectancy, gender equality,international commitments on aid, arms andrefugees, levels of alcohol and tobacco consumption.

Sweden achieved first place in the Bank’s 2004sustainability league table, followed closely byDenmark. Their high ratings were mainly due totheir undisputed record on the range of socialindicators, especially in the achievement of genderequality but also in health care, standards of livingand human rights. By contrast, the United Statescame bottom of the sustainability league just behindMexico and Turkey. It was the social rather thanenvironmental rating that ensured Sweden came outwell ahead of other countries in the survey. Thesurvey also pointed in particular to that country’shigh spending on research and development (4.6 per



cent of gross domestic product) and the socialresponsibilities displayed by their companies. Inaddition Sweden benefited from the impressive sizeof its educated female population in the labourmarket as well as from a generous overseas aidbudget, its enlightened attitude towards politicalrefugees and a low level of arms exports. Swedishenvironmental policies also lifted the country to itspremier position in the league table. The lowemission levels of greenhouse gases, its aboveaverage performance in biodiversity and theproportion of farmland devoted to organicproduction were further admired features of theSwedish experience.

The annual human development report publishedby the United Nations development programmeprovides an authoritative picture of the quality oflife in the world’s nation states. In 2004 Norwaycame top of its human development index, followedclosely by Sweden, Australia and Canada. TheUnited States was in eighth position and the UnitedKingdom in twelfth, just ahead of Finland.

The relative social achievement of Sweden andthe other Nordics can be seen in some but not all oftheir health statistics. Take infant mortality, forexample. In 2002 Sweden suffered only 2.8 infantdeaths per 1,000 live births, followed by Finland with3.0 and Norway with 3.9. Contrast this with a figureof 5.3 per 1,000 live births in the United Kingdomand 6.8 in the United States. Over the first five yearsof the present decade Sweden averaged 3.4 infantdeaths per 1,000 live births just behind Japan andSingapore but far ahead of this country and theUnited States.

One of the most impressive comparative statisticsremains the extent to which Sweden and the otherNordic countries – in line with more than a centuryold tradition of global philanthropy – continue to bethe most generous in their provision of internationalaid, far more so than the United Kingdom or theUnited States. All five of the Nordics meet theUnited Nations target of a nation’s 0.7 per cent ofgross domestic product being devoted to foreign aid.Sweden – despite its small size – devoted as much as0.83 per cent in overseas aid in 2004, substantiallymore than the United Kingdom. The country was

the fourth most generous in its aid budget in thatyear, just behind Saudi Arabia, Denmark andNorway. It is actually the world’s eighth largestdonor of aid to developing countries in absoluteterms. The country needs to hear no moralisinglessons of what ought to be done from the Britishgovernment. If the United Kingdom achieved theproportion of gross domestic product allocated toaid that Sweden does it would have something toboast about.

Of course, the better quality of life in Swedencomes at a price but it is one that it seems Swedesare willing to pay. The high position of Sweden andthe other Nordics in the comparative internationalstatistics is apparent in their levels of taxation andpublic expenditure. Total tax revenue as apercentage of gross domestic product remains thelargest in all of the Nordic countries, even though ithas fallen back from the levels of thirty years ago.The latest comparative figures on this from theOrganisation for Economic Co-operation andDevelopment (OECD) reveal that Sweden is topwith 51.9 per cent followed by Denmark on 49.8 percent and Finland on 46.0 per cent. In Norway theproportion is less at 43.3 per cent. In Britain theproportion was only 37.3 per cent compared with45.0 per cent in France and 36.8 per cent inGermany.

Sweden’s production workers are heavily taxedby international comparison. In Sweden taxes on theaverage worker as a percentage of labour costsamounted to 46.6 per cent in 2003, compared with44.5 per cent in Finland and 42.7 per cent inDenmark. By contrast the figure in Britain and inthe United States was 31.1 per cent. Taxation onincomes and profits combined was also relativelygreater in the Nordics. In Denmark it amounted to29.5 per cent, in Norway 19.9 per cent, in Sweden19.3 per cent and in Finland 19.0 per cent. In Britainthe figure was only 14.8 per cent, but this was higherthan in France at 11.4 per cent and 10.6 per cent inGermany.

The most striking international comparisonbetween Sweden and other advanced westerneconomies lies in the degree to which the country ismore equal in the distribution of income. A recent



study carried out by the OECD reported thatinequality in the distribution of householddisposable income in western countries increasedslightly during the second half of the 1990s and thatrelative poverty – measured at half median income –also grew to cover 11 per cent of the OECDpopulation.5 Sweden and the other Nordics were noexception in experiencing a widening of incomedistribution but the comparative statistics reveal thatthose countries continue to remain significantlymore equitable than their competitors. This is themost striking when you examine what is the widelyaccepted indicator of income inequality – the so-called Gini coefficient. This figure is based on aspread from 0 in the case of perfect equality, whereeverybody in the society gets exactly the same shareof income, to 100, where all income goes to thosewith the highest income. Sweden was about 24 andthe other Nordics recorded in 2002 figures of around 26, which was 15 per cent less than theOECD average value. By contrast Britain was about31 and the United States as high as 36. The studyfound that Sweden and Finland experienced thestrongest increase in income inequality, with awidening in the top quintile from the rest betweenthe mid-1990s and 2000. But those figures aremisleading unless you recognise that in both

countries the levels of income equality were stillmuch higher than elsewhere.

This array of comparative statistics helps to placeSweden in an international perspective. The countryalong with its Nordic neighbours can fairly claim tobe one of the most efficient, affluent and equitablecountries in the world. The Economist IntelligenceUnit produces an annual quality of life index basedon a range of economic and social indicators. Themain one is income but the others cover health,freedom, unemployment, family life, climate,political stability and security, gender equality andfamily and community life. In 2005 Ireland came infirst position in the table but Norway was third andSweden fifth. The United Kingdom was only 29th inthe table, just behind France and Germany.

Sweden and the other Nordic states are hardlyperfect societies or ultra successful economies butacross a wide range of international indicatorscompiled by independent and impartial research andforecasting bodies they rank among the best in theworld. It seems their blend of market economics andsocial welfare politics is continuing to succeed despiteglobalisation and the speed of technological change.

Now we need to take a closer look at Sweden’snew model and examine how it provides lessons forsocial democracy.




3

The Swedish Model and itseconomic achievements

Sweden and the other Nordic countries are open,thriving and efficient economies operating on globalmarkets. Their prosperity stems from the businesssuccess of their competitive private companies in thewider world. Without an impressive export andinvestment performance it is improbable thatSweden would now be among the most affluent. Asmuch as 45 per cent of Sweden’s gross domesticproduct derives from its exports. But the country’seconomic revival since the mid-1990s has dependedon the ability of its governments to pursue sensiblyprudent and responsible financial policies withoutundermining their publicly funded welfare states.

Sweden in the so-called ‘golden age’ of its earliermodel during the 1960s and 1970s suffered theconsequences of a relatively high level of wage pushinflation. Today the country is experiencing only amodest increase in its consumer price index and realwage growth while its currency remains both strongbut also competitive. In 2004 Sweden’s consumerprice index averaged a mere 0.4 per cent rise and in2005 it is expected to run at only 0.5 per cent. TheMinistry of Finance believes that such a low rate ofprice increases stems from restrained voluntarywage bargaining between the social partners ofcapital and labour. The nominal rate of wage risessince the end of the recession in the mid-1990s washalf as high as it had been during the speculativeboom of the 1980s.

The Swedish economy looks as if it is now beingwell managed. The country is now enjoying asubstantial surplus on its current account. That trendis expected to continue over at least the next threeyears. In 2004 this amounted to as much as 6.8 percent of Sweden’s gross domestic product and thefigure is forecast to climb to 7 per cent by 2007. Thecurrent achievement stems from buoyant exports,

which grew at the phenomenal rate of 9.5 per centlast year. This result was mainly due to the largeworld demand for the country’s manufacturedtelecommunications equipment. The trend isforecast to continue healthily until at least the endof 2007. The picture is broadly similar in the otherNordic countries. All four of them are now in thetop seven in the world with the largest balance ofpayments surpluses. They also enjoy low inflationrates by international standards, low interest ratesand modest wage growth. The prudent managementof the political economy across the Nordic regionhas been the necessary precondition for theircurrent modernisation drives.

The Swedish picture looks equally buoyant in thelevel of its current investment trends. A 4.7 per centgrowth rate in investment in the business sector wasrecorded in 2004 and in 2005 it is expected to climb to7.3 per cent, with more than 9 per cent in the goodsproducing sector. The forecast suggests overallbusiness investment will remain at over 5 per centnext year and remain that high until at least the end of2007. Interestingly this investment growth is occurringover a wide range of the country’s export industries –pulp, paper and paper products; mining and quarrying;as well as chemicals and transport equipment.

An especially impressive achievement can befound in the size of the inward flow of foreigninvestment over recent years. Between 1994 and2003 Sweden enjoyed an actual balance in itsinvestments with a Skr1.4 billion inward growthcompared with an outflow of investment overseas ofSkr1.3 billion. The internationalisation of business inSweden was substantial during that period. Thecountry’s leading companies – Volvo, Saab, Ericsson,Electrolux – are now under the control of foreignmajority ownership. It is estimated that as many as


three-quarters of the Swedish workforce in theprivate sector are now employed by companies whodepend for commercial success on their overseasoperations. Moreover the country’s openness hasestablished important networks of collaboration inresearch and innovation through the creation offoreign–domestic partnerships. The picture is similarthough less extensive in the other Nordic countries.It does not seem that their welfare state modelshave turned out to be a disincentive for foreigninvestors and companies.

Moreover, Sweden’s own public finances in recentyears have registered a regular surplus on its currentaccounts. As the Ministry of Finance argued in its 2005budget statement: ‘Surpluses in the public economywhen times are good make it possible to avoidcutbacks in harder times – when welfare services areneeded most. Sound public finances are also aquestion of fairness to future generations.’6 In fact,since 2000 Sweden has enjoyed a growing surplus,ensuring that it stays well within the lending andborrowing limits set by the European Union’s growthand stability pact. In 2004 its net surplus rose to 2.1per cent of the country’s gross domestic product. Since1997 the Swedish government itself has set a ceilingon its expenditure and its public finances have stayedwithin that limit. The soundness of the public financeshas enabled Sweden as well as Denmark to becometwo of the handful of European Union states whohave already reached the ambitious 2000 EU Lisbontargets for growth and competitiveness. It does notseem as if the country has suffered from remainingoutside the constraints of the euro zone after thevoters rejected membership of the common currencyin a national referendum.

The current good management of the state’sfinances was the necessary precondition that enabledthe Swedish government to launch an ambitiousprogramme of renewal and innovation in June 2004.It recognises that the country must competeinternationally on the basis of knowledge, skills andcreativity. This is being achieved in part through ahighly active government industrial policy. Thisapproach has not meant subsidising losers orpropping up failed or decaying industrial sectors andcompanies. On the contrary, the Swedish state is

keen to stimulate new industries and products thatcan compete on global markets. As much as Skr2billion of public money is being allocated by the stateover the next ten years to encourage the formationof new firms ‘in the borderland between ideas andproduct’. A new innovation company –Innovationsbron AB – has been established by thestate to carry out that purpose. The SwedishIndustrial Development Fund is also being used tohelp in the provision of more risk capital. TheSwedish government declared that 2005 would be ayear to promote design. But it has not abandonedthe country’s traditional and still importantindustries – wood and forestry products, metallurgyand auto production. In close strategic alliance withthe country’s trade unions and private companies, itis developing programmes for modernisation inthose sectors as well. In addition, a new holdingcompany is being formed by the Swedishgovernment, which aims to increase the transfer ofknowledge between higher education and industry.Government-backed industrial development centresnow exist in more than nineteen regions of thecountry and they are taking a special interest inpromoting the activities of small firms. Swedencontinues to have a state-owned industrial sector,which the government insists must operate on strictlycommercial lines and it is also being harnessed fullyin the government’s new innovation strategy.

As the Swedish government policy paper oninnovation published in October 2004 argued:‘Neither market forces nor policies alone can createmore innovation. A coherent policy aimed atfacilitating renewal requires co-operation andinteraction between people, enterprises, theeducation system and the public sector at national,regional and local level.’7 In this process theSwedish state has become the driving creative force.But its key determining role should not be seen inisolation from the dense and wide network ofautonomous institutions that have determined theevolution of the Swedish political economy since the1938 agreement, or the ‘historic compromise’ thatbrought the powerful trade union movement into anational understanding with private sectoremployers on how Sweden should be managed. Of



course, most of the corporate world based onmanufacturing that shaped the Swedish Model inthe first three decades after the end of the SecondWorld War has gone. Wages and benefits are nolonger determined through national levelnegotiations. Moreover, companies have abandonedany pretensions to unilateral management of theiraffairs. The moves to a more decentralised but stilldisciplined approach to workplace change and thegreater use of an active worker and trade unionparticipation have not been reversed – on thecontrary they continue to colour the distinctivecharacter of the Swedish business system. Indeed,the current ability of companies to respond soeffectively to the modernisation challenge owes agreat deal to the traditions and practices establishedmore than four decades ago. The early version of theSwedish Model proved flexible and protean enoughto outlast the political economy of bigmanufacturing firms and centralised decision-making that dominated its beginnings. Theinstitutions that were established then did not ossifyand decay. The market pressures for moreindividualism and autonomy were contained withinthe deeply rooted corporatist and democratic ethosof the Model.

Sweden likes to emphasise how the strength of itssystem of employment relations and labour marketsare based on the presence of strong and progressivetrade unions. Organised labour remains animportant reason for the country’s business success.During most of the twentieth century the tradeunion movements of all four Nordic countries wereunapologetic modernisers in the world of paid workon behalf of the interests of their members. Theywere self-confident and secure enough in theirlegitimacy to welcome industrial and workplacechange rather than resist or obstruct what needed tobe done to ensure business success. Indeed, it wastheir positive attitude to the internationalisation oftheir country’s economies that ensured peaceful andinnovative transformations in their occupational andindustrial structures. The Swedish trade unions – likethose of other Nordic countries – have alwaysbelieved in open markets, private and publicinvestment in research and development in new

products and industries, and in a positive strategy ofworkplace co-operation and participation tohumanise work and to raise the adaptable skilllevels of their members, as well as restructurebusiness in response to external competitivepressures. In Sweden, unlike elsewhere, this strategydid not stem from a position of weakness ordefensiveness in organised labour’s relations withbusiness. On the contrary, the trade unions oftenseized the initiative in pressing for workplacemodernisation that improved not only businesscompetitiveness but also the real wages and benefitsof their members. As a result, the quality of workinglife agenda has been seen to be at the centre ofSwedish collective bargaining ever since the 1960s.This approach helped to make many of the country’sworkplaces some of the most environmentallyfriendly and healthy in the world despite the currenthigh levels of sickness absenteeism.

The centrality of Sweden’s trade unions must,however, be seen within a broader picture ofcorporate modernisation. The gains that they wereable to make did not arise from a bitter warbetween capital and labour exclusively under thebanner of workplace justice. On the contrary, all theNordic labour movements argued that the forms ofworker security and well-being accomplishedthrough the negotiation of a broad bargainingagenda for their members was vital if the companiesthey worked for wanted to restructure andmodernise in order to meet the competition theyfaced on markets at home and overseas. It is truethat in the 1960s and the early 1970s the tradeunions pressed governments to regulate theworkplace through new laws to ensure that the fruitsof the achievements made in the large companieswere extended to all employees, irrespective of theperformance or circumstances of the employerswhom they worked for. The cause was certainlyoften articulated in the radical language of socialjustice and the rights of labour. In Sweden thisapproach shifted the trade union movement to theleft. As a result, the manual trade unionconfederation LO (Landsorganisationen i Sverige)pressed for the introduction of a scheme of so-calledwage earner funds in industry in 1975. Initially that



bold plan envisaged the gradual takeover of privateindustry by the trade unions over twenty years but itwas watered down heavily under pressure fromemployers and the apparent indifference of tradeunion members and a Social Democratic Party thatfeared such an approach would undermine itselectoral popularity. Eventually a compromise wasreached in 1985 that fell far short of the originalpurpose of the fund project, and the whole debateon trade union dominated industrial democracycame to an end.

Today in Sweden and across the Nordic countriesthe trade union movements argue the case forworker rights and participation in corporatedecision-making not only as an integral part of asocial justice agenda within a progressive workplaceprogramme but very much as a modernisationimperative to enable firms successfully to meet thechallenges of globalisation. The state funded Investin Sweden agency, established in 1996 to encourageforeign investors into the country, makes a strongpoint in its promotional literature to emphasise thepositive good that the country’s trade unions maketo the achievement of corporate success. It arguesthat they ‘provide the foundation for socialcohesion’ that is so vital in ensuring co-operativeand profitable change in the workplace.

Sweden’s business achievement also owes muchto the constructive attitude of the country’semployers who practise and do not merely pay lipservice to notions of corporate social responsibility.A less recognised result of co-operative but strongemployment relations in the Nordic models are theexistence of cadres of highly professional andprogressive managers in its export-led companies.The open and consensual style of their managementof adaptable and well-organised employees hasprovided such firms with a competitive advantage.Far more companies across Sweden and the rest ofthe Nordic region have abandoned the olddiscredited command and control systems ofmanagement that still remain surprisingly commonin Britain. They not only preach the virtues of flathierarchies, workplace diversity, informal team-working, direct communication and commitment butthey apply such human resource management

techniques in a coherent and holistic way withpositive effect. There is an obvious and imaginativesymbiosis between progressive trade unionism andmodernising management in the emergence of suchan innovative and dynamic approach to theorganisation of work. This has become a crucial andoften overlooked part of the Swedish Model and thewider Nordic experience. In short, the pervasiveinfluence and creative strength of trade unionism inmutual co-operation with openly progressivecompanies has worked effectively to stimulate themost advanced forms of work humanisation andcorporate success.

It is important to emphasise how much thisimpressive achievement in Sweden has not occurredat the expense of a clear advance in the influenceand power of an independent, autonomous andvibrant trade union movement, which continues tobuck the widespread trend of union decline inmembership density and collective bargaining powerthat is happening across most western economies.The trade unions in Sweden and the other Nordiccountries in strategic alliance with companiesremain at the core of the modernisation process andby doing so they have helped to ensure itsuncontested success. It is not a coincidence thattrade unions in Sweden and the rest of the Nordicregion represent the majority of people at work andyet continue to thrive in the development of affluentsocieties that emphasise risk taking, innovation,entrepreneurship and research and development innew product markets. Strong representativeinstitutions of labour not only go hand in hand withthe modernisation process in Sweden and elsewherein the Nordic region but they actually remain theprecondition for its ultimate success. If the region’strade unions were growing ever weaker and beingforced to battle on the defensive, facing meltdown inthe private sector and without organising strategiesfor recruitment in the burgeoning private services,then the Nordic success story would have remainedan unfulfilled dream.

But it is also necessary to recognise theimportance of corporate strategies in the businessachievements of the Nordic models. Firms across theregion practise good management techniques in the



way they organise and reward work. As Peter Auerat the International Labour Organisation hasargued, ‘mature’ companies are not in favour ofapplying unilateral hire and fire policies towardstheir own employees that are based on short-termresponses to a sudden share price change or anunexpected shift in consumer preferences. Suchflexibility is not seen as an asset to the firm. On thecontrary, successful companies are those that alreadyhave ‘employment retention policies in place,regulate their turnover and appreciate experience’.8

Of course, such a strategy is not always possible.Swedish companies also need to restructurethemselves in the face of competitive pressures likethose in other countries. But many of them haveestablished and negotiated structural readjustmentprogrammes that seek to avoid compulsoryredundancies except in the most extremecircumstances. Instead, the emphasis is placed on jobrelocation, training in new skills for employees,provision of help in job searches and generousfinancial support and compensation for thoseadversely affected by the consequences ofworkplace change. Such an enlightened approach inSweden has helped workers and their trade unionsto recognise and respond positively to workplacemodernisation.

It is not just the progressive role played by tradeunions, companies and their employees in theNordic region in ensuring the peaceful transition ofworkplace change that is of such importance tocapital in its response to the ever-widening demandsof the global market, however. We now need to turnto the other pillar of the Swedish Model – to itspursuit of the ‘good life’ in a strong and democraticsociety and its serious efforts to translate theconcept of social citizenship into a practical realityfor everyday living. The formation of moreegalitarian and socially cohesive societies is not seenas a threat to the success of the Nordic style of asocially collaborative market economy. On thecontrary, it needs to be emphasised that its veryexistence has made it much easier for the countriesof the region to accommodate and embrace theforces of globalisation and technological innovation.The business achievements and maintenance of the

welfare state sides of the Swedish and other Nordicmodels do not merely co-exist. As we shall see, theydepend on an interaction between each other inorder to achieve ultimate success. The October 2004Swedish innovation policy document explained:‘Sweden’s social security systems and its tradition ofconsensus between the social partners have put us ina good position to manage a structuraltransformation. Historically far-reaching structuralchanges have been made in a spirit of consensusbetween the social partners which was born out of ashared insight into the necessity of maintaining acompetitive business sector.’9 Too often observers ofthe Swedish Model tend to focus too much on theoperations of its welfare state and fail to recognisethat this cannot be treated in isolation from thecountry’s business and economic achievements.Moreover, the close inter-connection between thesocial and the economic does not merely stem fromthe fact that the comprehensive and relativelygenerous nature of social benefits by internationalstandards are paid for by high levels of taxation andpublic expenditure generated by entrepreneurialsuccess on global markets.

The link between the two faces of the SwedishModel lies in its strong commitment to the pursuitof active labour market policies under the directionof enlightened governments of all political parties.For the past half century Sweden has always madethe creation and maintenance of full employment itskey priority. All the Nordics believe strongly in theLutheran work ethic for their citizens. But they havealso mostly rejected the harsh Anglo-American viewthat a distinction needs to be drawn between work-shy scroungers and genuine job seekers. The systemsthey have established are not based on punitive oropenly coercive forms of social discipline with verylow levels of benefit for those without paid work.On the contrary, the financial support for theunemployed in Sweden in particular remainsremarkably generous by British standards. However,Nordic labour market programmes are concerned toensure that very few people actually need to receivesuch passive financial assistance. The emphasis is onencouraging the jobless to get back quickly into paidwork in the labour market and not remain passive



recipients of state financial support or on jobsubsidy or training schemes. The provision ofwidespread training and education facilities as wellas the existence of an increasingly intensive jobsearch approach for those who are unemployedprovides the key.

The next section of this report will argue that it isthe very interdependence between those two sidesof the Swedish and the other Nordic models thatexplains their undoubted success. The region’sofficial attitude to welfare and equity is not an

altruistic or sentimental gesture towards its less well-off citizens but a crucial part of a hard-headedeconomic and political bargain that is based stronglyon the enforcement of the work ethic and theconcept of an active social dimension. As the 2004Swedish government’s innovation policy paper hasexplained: ‘Well functioning social security systems,combined with good opportunities for skillsdevelopment, increase the prospects of achievingchange without excluding significant groups fromthe labour market.’10




4

The Swedish model and thepursuit of a strong society

Many observers of modern Sweden fail to recognisethat the country’s modern achievements derivemainly from the creative work of its extraordinarilysuccessful labour movement. The malleable SwedishModel has always been a conscious political project.The Social Democrats remain the most successfulleft-wing party in the democratic world. The Party’slongevity in government is quite remarkable. TheSocial Democrats ruled Sweden either on their ownor in coalitions for forty-four years from August1932 to September 1976 without interruption. Again,they formed the government between September1982 and September 1991. Since September 1994they have once more been in office. In other words,the Party has governed Sweden for all but nine ofthe past seventy-three years and it has done so in amulti-party parliamentary democracy that is basedon a proportional representation electoral system,which is not generally known for producing strongand decisive governments but weak coalitions. But itis not just their length of time in running the statethat should attract the attention of the lefteverywhere to the achievements of the SwedishSocial Democrats. It is the way in which they havedeveloped and refined their concept of socialdemocracy in response to changing times and thentranslated its core values into practice with thedemocratic approval and active consent of theSwedish electorate that is of the greatestsignificance. In the past, as now, the Party’s leadershave proved to be highly effective pragmaticidealists. Moreover, their success has always beenincremental and circumspect in the best tradition ofprogressive reformism. Swedish social democracywas never an ad hoc, hand to mouth or freneticresponse to unforeseen events. Its lasting strengthderived from its deliberative commitment to clear

and realisable strategic goals that were to beachieved over time. The Social Democrats sought tomould Sweden in a progressive way through thecreation of a wide consensus and not by impositionor executive fiat. It has always been sensitive to theoften conflicting tides of public opinion and socialand economic trends at work in a democraticsociety, and ever-conscious of the need to absorband reshape their collective response todevelopments that often appeared to endangersocial democratic values.

The deep historical experience and practice ofthe party in government has helped to ensure theSocial Democrats can display the intellectual rigourand self-confidence needed to revise and renewtheir basic ideology in the light of changingcircumstances. The current modernisation of socialdemocracy through the creation of what amounts toa new Swedish Model during the past ten yearsprovides a good example of what this has meant inpractice. The Party has produced a cogently argueddocument that not only sets out a highly attractivevision of Sweden’s social democratic future in thetwenty-first century but provides the ideologicalunderpinnings for the new Model.

In its November 2001 declaration, the Partysought to reconcile its fundamental principles to thenew world of globalisation and technologicalinnovation. The resulting revisionism has a coherentrelevance, which contains important political lessonsfor the wider European left and not just in Sweden.Freedom remains central to the Party’s socialdemocratic vision. The Social Democrat programmedeclares that:

Everybody must be free to develop as an individual to

govern their own lives and to influence their own

society. Freedom involves both freedom from external


compulsion and oppression, hunger and ignorance and

fear of the future as well as the freedom to participate

and to decide on questions together with others, to

develop as an individual to live in a secure community

and the freedom to live one’s own life and to choose a

future of one’s own.11

But the Party’s commitment to the concept ofindividual freedom for all the country’s citizens alsopresupposes they share a strong belief in the pursuitof genuine equality:

Equality means that all people despite different

preconditions are given the same opportunities to build

their own lives and to influence their society. This

equality presupposes the right to choose and develop

differently without differences leading to social ranking

and to social divisions in power and influence over

everyday life and in society.12

In other words, the abstract concepts of freedom andequality are seen to be interconnected in the creationof both a common good and a public interest. Butthe programme also adds that it is solidarity thatbinds the resulting strong society together:

Solidarity is the unity that originates from the insight

that we are all mutually dependent on each other and

that the best society is the one that is built on co-

operation, on mutual consideration and on respect.

Everybody must have the same right and opportunity

to influence solutions; everybody must have the same

obligation to be responsible for them. Solidarity does

not exclude striving for individual development or

success; it excludes the egoism that enables people to

exploit other people to their own advantage.13

As in the past, the Swedish Social Democrats arguetoday that the pursuit of freedom, equality andsolidarity can only be made possible through thecreation of a vibrant democratic society, which in theend assumes a clear primacy over the priorities ofthe market economy:

All power in society must start from those who together

form society. Economic interests never have the right to

set limits to democracy; democracy always has the right

to state the terms for the economy and to set limits for

the market. Social Democrats strive for a social order

where people as citizens and individuals can influence

both developments at large and community work at the

level of everyday life. We strive for an economic order

where every person as a citizen, a wage earner and

consumer can influence the direction and redistribution

of production, the organisation and conditions of

working life.14

These fundamental democratic values lie at the coreof the new Swedish Model as much as they did ofthe old one.

The new programme evokes the ultimate visionof social democracy with some eloquence:

Our aim is a society without divisions into lower or

higher orders, without class differences, sexual

segregation or ethnic divisions, a society without

prejudices and discrimination, a society where

everybody is needed and has a place, where everybody

has the same right and the same value, where all

children can grow up to become free and independent

adults, where everybody can run their own affairs and

in equal and solidaristic co-operation work for the

social solutions that serve the community best.15

But Sweden’s Social Democrats also argue in whatamounts to an ideological manifesto for the new agethat their underlying values have to be applied in acredible and coherent way so that they are rooted inthe realities of our dangerous and complex world.On the one hand, modern society may provide theopportunities for all individuals to realise their fullpotential as human beings, but on the other it canalso strengthen the unequal and insatiable power ofcapital. The Party does not hold a benign orcomplacent view of such market capitalism. Itadopts a highly critical attitude to the volatility ofinternational speculation, the concentration in theownership of large companies beyond democraticcontrol and the environmental degradation thatstems from unregulated capitalism’s inherentlydestructive forces. As in the past, the Swedish SocialDemocrats argue that it is necessary to constructcountervailing influences in society and theeconomy to limit the ability of capital to dominateand threaten democracy. The declaration asserts:‘Social Democracy is and it remains an anticapitalist party which has always built up thecounter weight to the demands of capital for powerover the economy and society’.16 But it alsohonestly acknowledges that those progressiveinfluences have grown weaker than they used to be.



Today’s political challenge on the democratic left isto find a way that can strengthen the democraticconstraints on the destructive force of globalcapitalism. The primary answer lies in thereassertion of the concept of the public interestthrough the progressive activities of an enlightenedstate, effective and strong trade unions, independentnon-governmental movements in civil society,professional associations and wider democraticforces at local, national and international level. Asthe programme states, ‘Swedish Social Democracyseeks to be part of this political force which makesglobalisation an instrument of democracy, of welfareand social justice.’

Interestingly the document draws on explicitinspiration from the works of Karl Marx andFriedrich Engels and what it describes as theirdevelopment model of the political economy. It alsomakes an important distinction between capitalismand the market. The former is described critically asa ‘power system’, which brings about exploitationand injustice through an exclusive focus on thecompelling need for making a return on capital tomeet the demands of shareholders. But the latter ispraised as ‘a system of distribution where goods andservices change ownership with money as themedium of exchange and the price mechanism is afast and effective signal system between producersand consumers’. The programme explains that whatthe Party seeks in Sweden is ‘an economy controlledby popular interests’, one where capital is not theundisputed master. This is why the creation andadvance of the democratic state is of such crucialimportance. It sets out clear limitations on theprimacy of both the power of capital and that of thefree market. ‘Social Democracy rejects adevelopment of society where capital and the marketdominate and commercialise social, cultural andhuman relations. The norms of the market mustnever determine people’s worth nor provide thenorm of social and cultural life’, argues the Party.17

The market cannot be free to act without anypolitical control on its activities because its inherenttendency is always towards concentration andmonopoly. Moreover, the price mechanism remainsinherently unpredictable and as a result it can

undermine the very stability that is required for themarket to function effectively in the interests ofpeople as a whole. The rules and regulations requiredto manage the market economy effectively have tobe made and enforced by ‘public bodies independentof the market’, so that the market is ‘only one part’of a much wider economic and social system.

The Swedish Social Democrats continue to insistthat social rights must be upheld as well and thesecan only be available for everybody in society if theyare ‘kept out of the distribution principles of themarket and distributed according to otherprinciples’. The programme argues that the country’spublic care services, education and health lie in thisdefined area along with the legal system, the ‘socialinfrastructure’, housing and culture. The choicebetween public interest commitments and themarket economy has to be decided by which of thetwo ‘provides the best result as regards justice andefficiency’. Above all, the non-market areas must bestrongly protected in the name of equality.

Such equality is linked to the provision of personalchoice in health and education, which in turn is beingmade compatible with a non-market approach topublic sector service provision. In an importantsection, which ought to be of particular interest toNew Labour theorists, the programme argues:

It is one of the main tasks of the public sector to

develop alternatives in its own services in order to

meet the different needs and wishes of citizens. But

co-operative, idealistic and individual alternatives can

also play a role. They must have access to public

financing if they follow the same rules as public services.

Other possible alternatives involve the opportunities for

citizens to choose schools, care and health services, not

the opportunity for individual producers to choose the

pupils and patients who are the most profitable. The

citizen’s access to welfare must not be determined by

the profit motives of individual companies.18

But the Social Democrats are concerned to ensurethat the diversity and open access to a wide range ofpersonal choices in the public services should notstrengthen the forces of social inequality:

Social insurance and the social services such as care,

schools and health can never be reduced to goods in a

market, where the task of society only is to distribute




taxation money towards individual purchases. Welfare

systems presuppose the responsibility of the citizens not

only for their own benefits but also for the rights of

everybody else. They must be designed in such a way

that this common responsibility can be exercised. The

so-called models of customer choices, which turn social

utilities such as schools, care and health into goods in a

service market, are inconsistent with the demands for

solidaristic responsibility. The principles of the market

and competition must not characterise the public

services. Democratic principles, openness and clear

terms governing responsibility must prevail. We cannot

accept the development towards increased elements of

private insurance in the area of welfare. They pose a

threat to universal welfare and create unacceptable

injustices when it comes to access to welfare for all

citizens.19

This statement sets out what are clearly definedlimits and obligations on the use of private provisionin Sweden’s public services. The Social Democratsremain strong champions of equality. This is why inthe continuing improvement of their country’swelfare state they seek to widen the life chances andsecurity of everybody in society and not merelythose who have the financial means to better theirlives. The Party remains committed to the concept ofsocial equality even if it has revised the institutionalmeans of pursuing that laudable objective. As aresult, today there is greater flexibility in the meansof provision with a key role in the delivery ofservices not just for the local authorities in Swedenbut to non-profit making bodies, co-operatives andother associations. The Swedish Model remains aninspiration to those on the democratic left whocontinue to believe in the pursuit of equality in thename of freedom. The Party programme states:

Schools, care and health play a central role in

redistributing the opportunities in life. Unequal

opportunities for education, care or health care are

inherited and magnified into unequal opportunities for

personal development, in social life and in the labour

market. Such social divisions harm the individual and

they harm society. Equal access to these utilities,

providing high quality for everybody is a key element

of equality policy. Care, schools and health must also be

aware of the importance of class and sex related

patterns of behaviour and work deliberately to change

them. This is why education, care and health care are

the concerns of society. The distribution of these

benefits must never be left to the price mechanisms of

the market and the supply of these benefits must never

be determined by the individual producer’s interests in

a profit of their own.20

While the new Swedish Model continues to seek anaccommodation with a more individualistic societyin Sweden in its welfare state reforms, it alsoemphasises that the management of democraticchange is best achieved through a clear focus on theneed to attain and maintain stability in the widestsense of that word. One of the primary features ofthe old Model was its determination to protectpeople from the consequences of adversity,especially those who lacked the material means tofend for themselves in a deeply class divided society.Per Albin Hansson sought to establish what hecalled the ‘People’s Home’ in Sweden during hisyears as Social Democratic Prime Minister from1932 until 1946. Over the next twenty years hissuccessor Tage Erlander continued that work underthe slogan – ‘The Strong Society’. Both menconstructed a social model that aimed to establish asense of security for everybody – from the cradle tothe grave – through universal provision of rights andresponsibilities and publicly funded benefits andservices. But this model was never a soft option thatthreatened the future of the market economy. Norwas it designed to provide a cushion or subsidisedlife style for those who were not prepared to play afull and active part in the labour market. On thecontrary, the Swedish Social Democrats have alwaysargued that the achievement of security – materialas well as psychological – remains anunderstandable human desire and not least becauseit is the most effective way to win the consent andco-operation of people to accept and participate inthe process of modernisation. The horrible word‘flexicurity’ has been coined recently to describe thisphenomenon. It is crucial to our understanding ofthe new model as it is of the old one. The vastinsurance-based public welfare system established inthe second half of the last century in Swedenunderpinned the country’s economic successes.



A similar approach was followed in the other Nordiccountries.

The ideological foundations of the new socialdemocratic revisionism have been backed up by arange of policies that are designed to develop astrong society through the commitment to aneffective and defined public interest, but which isless centralised and bureaucratic than the oldsystem. One of the most impressive features of theSwedish Model has been the advances it has madetowards greater gender equality. The SocialDemocratic Party programme repeatedly stressesthat the Party’s fundamental commitment is toequality and in particular to what this means forgender and ethnicity. Women as mothers andworkers are close to the centre of the socialdemocratic vision. The feminisation of Sweden maystill have a long way to go but the Party’s radicalpolicies to eradicate gender inequalities not only atwork and in society but within the family orhousehold are the most advanced in Europe.

It took a long time to reach the current status forwomen. The active family friendly welfare policies,which were a necessary precondition for theadvance of the equality cause, first began during the1930s under the newly elected Social Democratswho were concerned at that time with the country’sfalling birth rate and the likely adverse economicconsequences for meeting its future labour marketneeds. The advance to gender equality accelerated inthe 1970s when the party in government introduceda more comprehensive publicly funded childcaresystem for the whole of Sweden, a parentalinsurance scheme that ensured parental workingleave by law and an individual tax law so thatwomen were taxed in their own right and not jointlywith their spouses. That state-driven approach hasbeen crucial for the impressive advance in the statusand well-being of Swedish women. But perhaps themost important result of this policy was theundoubted enhancement in the self-confidence andindependence that women experienced. The genderequality agenda underpinned a cultural change inSwedish society in the role and power of men andwomen, which continues to this day. Of course, theoutcome has fallen far short of the ideal. Evidence

indicates that women remain less likely than men tohold senior positions in companies in the privatesector. But the huge public services sector practisesgender equality in its promotion and recruitmentand Swedish professional women are far less likelyto hit a career glass ceiling in their working livesthan in most other European countries.

Much of the country’s comprehensive socialstrategy derives from the official commitment togender equality. The most influential evidence of this can be found in its childcare system, which firsttook centre stage in the early 1970s. The governmentnow argues:

Public childcare is a natural part of everyday life for the

great majority of Swedish families. The aim has been to

provide quality childcare with full access to those

requiring it, run principally by local authorities and

financed out of the public purse. The main incentives

have been consideration for the well-being of the young

and a desire for greater equality between the sexes.21

In 2002–03 important reforms were made to thepublic childcare system so that it has now become apart of general welfare provision and available to allfamilies irrespective of income. The stated principleis that every child in Sweden who is aged one to fivehas the right of access to childcare and the publicfees that are charged must be kept relatively low sothat nobody is excluded. Moreover, after 1996childcare has been linked to the education system sothat pre-school children can begin the importantprocess of lifelong learning at an early age and anational curriculum has been devised that lays downcommonly agreed standards and values. Localauthorities are the main providers of childcarefacilities but they also pay out grants for private ornon-market co-operative undertakings to act asproviders. However, the fees that are charged insuch bodies cannot exceed those that are charged inthe municipal childcare centres. It is estimated thatin 2003 around 17 per cent of all Swedish childrenattending pre-schools were at those provided withinthe private sector. Today it is estimated that 80 percent of all one- to five-year-olds attend pre-schooland as many as three-quarters of six- to nine-year-olds receive school-age childcare. The cost of all thison the taxpayer is considerable. It amounted to



Skr46 billion in 2003, 13 per cent of the total amountspent by local authorities and nearly 2 per cent ofSweden’s gross domestic product. But since January2002 a maximum payment has been required, whichamounts to no more than 1 to 3 per cent of afamily’s income, depending on the number ofchildren. A fee cannot exceed Skr1,260 a month fora family’s first child. But in 2002 parental feesamounted to only 11 per cent of the gross costs ofproviding public childcare.

In recent years private provision has also madesome, though still limited, advances in themanagement of Sweden’s huge public welfare statethrough a process of sub-contracting and as a resultof the split in functions between the public fundingand the providers. It is estimated that the proportionof employees who work in the welfare sector forprivate companies has risen from 6 to 12 per centover the past ten years. But the experience hasvaried from one area to another and it has notoverwhelmed or dramatically undermined theexisting system, at least not until now. Indeed, thereare some clear and unmistakable signs of an actualrevival in a public policy approach to welfarereform. As Joachim Palme, director of Sweden’sInstitute for Future Studies, has argued, the countryis experiencing ‘greater backing for major publicundertakings in the various areas of social policy.Faith in private alternatives, however, does notappear to have increased.’22 There is clearly noapparent popular appetite for a wholesaledismantling of the public welfare system, which iswhy the opposition political parties have abandonedany neo-liberal or radical plans to cut taxes andenhance the private over the public in the provisionof services. But there can be no room forcomplacency.

Sweden – like every other modern country –faces a number of serious social problems in theyears ahead to which its governments will have torespond in the very near future. The modest birthrate and the massive growth in the size of the olderpopulation over sixty-five are going to place anincreasing strain on the finances of the welfare state.This was an important point made strongly in the2005 Sweden survey from the Organisation for

Economic Co-operation and Development. There isa real added problem of a shortage of labour tomeet the demands of the modern economy, whichcould undermine its strength. The Swedish Modelhas already been revised to embrace immigrants andtheir families to ensure they can be integrated intosociety. It would be wrong to suggest the Model wasmainly successful because of the relativehomogeneity of the population in the past. But thenecessary self-discipline and the regime of rights andresponsibilities that characterise the Swedishapproach will certainly be tested if the countrybecomes more multicultural.

Despite this it is untrue to say that Sweden todaytakes a harshly restrictive attitude towards foreignerswho wish to come and live and work in the country.In the past the country did display an unwelcomingapproach, especially in the 1930s when German Jewswere seeking desperately to escape from Nazism andcould find no refuge in Aryan Sweden. But thatpolicy of its time reflected the lack of muchexperience of inward migration as well as an obviousracialism. Back in 1910 Sweden was the Europeancountry with the smallest proportion of foreign-bornamong its citizens. The census of that year explainedthis by suggesting that it reflected Sweden’s ‘remotelocation’. After the Second World War officialattitudes changed significantly as boom conditionsproduced a serious labour shortage. Workers fromsouthern Europe were officially encouraged to cometo Sweden to fill manual jobs in manufacturing andacquire Swedish citizenship. Even so, in 1955 only amere 3.7 per cent of the population were foreignborn and in 1968 restrictive legislation put a stop toimmigration for economic reasons.

However, in the difficult 1970s Sweden took arelatively generous view of asylum for foreignrefugees who were escaping from oppression incountries like Chile, Iraq and Eritrea. The countryalso became the home for more than thirty years formany exiled members of the African NationalCongress. It came as no surprise that NelsonMandela travelled to Sweden soon after his releasefrom prison on Robben Island in 1990, to show hisgratitude to the country for its practical assistanceduring the years of apartheid. It is also worth


recording that during the early 1990s an estimated170,000 people migrated to Sweden from thedisparate parts of former Yugoslavia.

Today it is estimated that as many as one in fiveSwedish citizens are either foreign born or have aparent who is. Just over 11 per cent of the employedpopulation are estimated to be migrants. They aremainly working and living in the conurbations ofStockholm, Gothenburg and Malmo. Sweden maynot practise an open door migration policy. Itsofficials speak of ‘regulated immigration’. But thecountry has signed up to the Schengen accords of theEuropean Union and this involves acceptance of acompletely free labour market with all the countriesof the European Union. It is notable that Sweden –along with Britain and Ireland – has been one ofonly three EU member states that has not imposedany temporary restrictions or a transition stage forthe free movement of people from the new memberstates in central and eastern Europe into the country.

On the other hand, anybody who seekspermanent or temporary residence in Sweden fromoutside the EU and the European Economic Areamust first of all acquire a work permit as well as aresidential permit before travelling to the country.However, Sweden remains a relatively generousrecipient of political asylum seekers, operating anannual quota established by the United NationsHigh Commission for Refugees.

From time to time racist incidents occur inSweden that worry the authorities, but the countryhas not seen the appearance of any threateningpopulist movement of the radical right in its politicallife that seeks to incite racial and religious hatred.Moreover, the state remains determined to pursueenlightened policies of integration and assimilationthrough the provision of substantial financial supportfor language learning, cultural adjustment and labourmarket adaptation. By European standards, Swedenis genuinely multicultural despite the obvious strainsand anxieties that this produces. With the prospect ofa shrinking indigenous workforce and an ageingpopulation the country may have to come to termswith a much higher rate of inward migration than in

the past if it intends to advance its economic successand affluent life-styles. Up until now the prospect ofsuch a strategy has not aroused much nationaldisquiet. However, it is going to be a real test for theresilience of the new Swedish Model when Swedenbegins to plan for the growth of a much more diverselabour force than it has already.

Surveys suggest that Swedes are among thehappiest people in the world. Their appetite forsuicide, alcoholism and depression is exaggerated byoutsiders. What is most striking about the country,however, is that it nurtures a clear and distinctivesense of national identity. Nowhere in thedemocratic world outside the United States can yousee such a widespread affirmation of this throughthe prominent public display of the national flag,which even flutters atop poles in gardens in privatehomes across Sweden. The close identificationbetween social democracy and the nation remainssurprisingly strong. But this has ensured theencouragement of a rather benign and peacefulform of national identity, less defined by anyexclusive attempt to distinguish ‘us’ from ‘them’ butfounded on the creation of a genuinelyinternationalist image of well-being, altruism andmoral virtue. Such common feelings can occasionallyseem rather complacent. However, they have so farprotected Sweden from the ethnic tensions andcultural confusions of other European countries. Theradical right has failed miserably to make anysignificant inroads into the People’s Home. Ofcourse, this could change in the future but there areno signs that it will. The existence of a vibrantprogressive politics to the left of the SocialDemocrats in the shape of the Left Party (theformer Communists) and the Greens, who supportthe current government in Parliament, as well as thestrong ethically based Swedish Liberals andChristian Democrats, reflects a continuing broadpolitical consensus of moderation and restraint. Itsuggests the foundations of the new Swedish Modelremain as resilient as the old in pursuit of asuccessful market economy and a strong societybased on liberty, equality and solidarity.




5

Conclusions: the Swedish Model andthe lessons for social democracy

Sweden’s dynamic new Model proves it is not onlypossible but necessary for the achievement ofsuccessful modernisation that a country mustcombine the pursuit of economic competitivenesswith social cohesion in equal measure. But it alsosuggests that neo-liberalism, in its repudiation ofbasic social democratic values, is not the mosteffective way for creating affluent and efficientpolitical economies. Peter Auer from theInternational Labour Organisation has argued that:

It is not the countries that have reduced social spending

most, have curbed government intervention drastically

or minimised social partnership that are the leading

successes today. It is rather those that have retained

while adapting their institutions which now see their

economic success spilling over into the labour market.

It is not the flexibility of the market but the existence

and adaptability of institutions and regulations that

explain success.23

This perception is confirmed not only by therecent experience of Sweden and the other Nordiccountries but in other small nations as diverse asIreland, Austria and the Netherlands. The OECD inits national state surveys may criticise aspects oftheir economies but they also acknowledge theremarkable achievement of those Europeancountries in demonstrating how it is perfectlypossible to respond in a positive and equitable wayto the challenges posed by globalisation withoutabandoning the basic values of social democracy.Indeed, it needs to be emphasised that genuinesocial democracy, as Sweden illustrates, still providesthe most credible political strategy formodernisation because its fundamentalcommitments to the democratic values of liberty,equality and solidarity ensure the most effectivemeans for developing the public policies and

strategies that are required to ensure economicsuccess in the market economy.

During the depression years of the 1930s Swedenand the other Nordic countries began to createmodels of modernity that were designed to bringabout a return to full employment without anyresort to excessively deflationary financial policiesof austerity, balanced budgets, minimalist welfarestates or a social Darwinist ideology of the survivalof the fittest and the deserving among their citizens.They succeeded in creating such models during thefirst two decades after the end of the Second WorldWar only to be confronted by serious economicproblems caused by spiralling trade and currentaccount deficits, wage push inflation and excessivepublic spending to fund their burgeoning welfarebudgets. After enduring its worst recession since theinter-war years in the early 1990s Sweden renewedits once-famous model to meet new and differentchallenges in an increasingly open and globaltrading and financial system. Its example has oncemore become a standing contradiction to thepervasive dogmas of neo-liberalism because the newmodel has cast severe doubt on many of thecommon assumptions that lie behind the familiarrefrain that more external flexibility in labourmarkets is the only way to achieve greateremployment creation and commercial success. AsProfessor David R. Howell has written:

The unemployment problem cannot be blamed on

labour market rigidities imposed by the welfare state.

The evidence simply does not support the free market

view that convergence with the American model –

reduced wages, increased inequality and greater

economic security – is the only path to good

employment performance. Markets are essential to the

effective functioning of all modern economies but they



cannot function well without sensible regulation and

strong social safety nets.24

Of course, it would be wrong to suggest that Britaincould simply import Swedish style policies into itsown more disorganised and ad hoc politicaleconomy with its weaker intermediate institutionsand more rampant individualistic culture as analternative to pervasive neo-liberalism. Sweden’sexperience of social democratic hegemony throughthe performance of a democratic state, strongintermediate institutions and above all a broadlyaccepted tradition of solidarity, consensus andcompromise is significantly different from our own.But we ought to recognise from the current Swedishexperience what the important ingredients that areof wider application in any successful modernisationstrategy for the creation of a successful socialmarket economy can be.

Defending the concept of the public realmWe require a clear and firm commitment by thedemocratic state to the encouragement and defence ofthe concept of the wider public interest that liesbeyond the market economy. This means a revival inrecognition for the values of professionalism and anemphasis on the virtues of the public service ethic inpolicy making. Sweden has always benefited from arelatively high level of popular trust among its ownpeople at the workings of the institutions of itsdemocratic state. Some Swedes may worry aboutfalling participation rates in public life and complainabout the apparent decline in civic pride as well asgrowing anxieties about crime and social disorder butby international standards their country retains astrong and vibrant sense of democratic well-being.There is certainly much less evidence of excessivemoral corruption and cronyism on display, even ifthere are growing signs of some widening in incomeand wealth distribution among the richest from therest of the population. Sweden has become a muchmore individualistic and competitive society, moreconcerned with personal consumption than massproduction, when compared with what it was likethirty years ago. But it still remains a highly sociallydisciplined place with a relatively egalitarian structureof wealth and income. The workings of the democratic

state have not stimulated a widespread cynicism norany populist resistance in an upsurge of racist feelingsor tax cutting social movements. The provision andprotection of public space remains a continuing highpriority for the Social Democrats. The Party isopposed to the commodification andcommercialisation of every aspect of human life.Resistance to the excesses of the market society and aclear determination to set limits on its advances is notcampaign rhetoric but vital to its vision of the future.

Modernising social partnershipThe revision of the Swedish Model owes much of itssuccess to the ability of the country’s intermediateand autonomous institutions to modernisethemselves through an extension of social dialogueand consensus. The trade unions may have theirproblems in their relationship with the SocialDemocrats but they continue to embracetechnological change and co-operate in therestructuring of companies and promotion of workerempowerment. Organised labour seeks to improvethe quality of working life and not to obstructprogress but to welcome it. For their part, employerassociations, private companies, public authorities,financial institutions and the like remain importantpartners in the modernisation process. Sweden is aprime example of how necessary structural changein our global world can be achieved through thecreation of an institutional consensus.

An enabling stateA new and positive role for the democratic state hasbeen vital to the creation of the new SwedishModel. Historically the Social Democrats neverbelieved that the state should own and control themeans of production, distribution and exchange. Theold Swedish Model was founded after 1938 on thefoundations of an historic compromise betweencapital and labour, which established clear andagreed divisions of interest to unify the demands ofthe market with the needs of society. In thatvoluntary process the state did not act as anenforcer but as an enlightened enabler and catalyst.It has been performing the same function today indifferent and perhaps more hostile circumstances.



The new Swedish Model has indicated how the statecan take the lead and set an example in drivingforward the modernisation process both in thepublic services and in the wider political economy.The Swedish state provides much of the inspirationfor the creation of the information economy, forinnovation and creativity in the private sector and inthe construction of a freer but also more sociallyresponsible society.

Pluralism and long termismThe Swedish Model provides us with a sensible andenlightened way on how the democratic left oughtto reach political decisions of a progressive kind in amodern society. The emphasis ought to be on thecreation of a consensus, a broad agreement that hasto be achieved across the wider society beforebringing about particular policy changes. Swedenhas never believed in an elective dictatorship even ifit may often look like a benign one-party state. TheSocial Democrats have governed for the most partnot by dictat but through the achievement ofgenuine popular consent and co-operation. TheParty has avoided any tendency to populistauthoritarianism or a cult of the personality. TheSwedish way is always to inquire and investigatethrough the use of impartial research institutes,universities and professional experts in theexamination of specific issues and problems in thesearch for rational and effective solutions. It hasmeant including a wide and diverse range of peopleand institutions on deciding what has to be done. Itinvolves the active pursuit of democraticgovernment through an impartial and objectiveprocess of rational debate and argument. Theemphasis on the slow but steady evolution of changerather than the resort to ill-judged instinctiveresponses to daily newspaper headlines is whatcharacterises Swedish social democracy. This meansthat the Swedish Model as it has developed hasachieved a remarkably wide popular support insociety that transcends all of the political parties. Asa result, when economic and social reforms areintroduced and carried through they tend to becomefirmly rooted and thereby they tend to last. In otherwords, the Swedish Social Democrats are concerned

to ensure that the means they use to initiate andimplement change and their social and economicobjectives are as pluralist and democratic aspossible. This provides an impressive underlyingstrength to the country’s social market economy. Thedemocratic left everywhere should draw inspirationfrom such an approach on how to carry throughprogressive reform with active popular consent in amodern society. The underlying strength of theSwedish Model, old or new, stems from this oftenoverlooked but vital attitude of mind.

Social justice drives economic efficiencyAnother important lesson for the European left isthat the new Swedish Model is demonstrating to therest of the world how the pursuit of economiccompetitiveness and achievement of businessefficiency are compatible with the creation of greaterequality and social cohesion. There is a civilised andworkable alternative to the neo-liberal model withits relative lack of concern for the existence ofgrowing income and wealth inequalities, itsopposition to high taxes and public spending by thestate and its hostility to sensibly regulated labourmarkets that seek greater social justice for workers.The new Swedish Model has revised the traditionalconcept of equality but it has not abandoned anideological commitment to its achievement.Moreover, it has shown how the pursuit of a moresocially cohesive society is the necessaryprecondition for modernisation by consent. Theexternal forces of globalisation and technologicalinnovation have not been allowed to dictate anexclusive public policy response that requires evermore flexible labour markets, a minimalist state,weak social institutions and a more unfetteredsurrender of power and authority to capital.

The ideology of the left is freedomBut perhaps the most important lesson of all theEuropean left needs to draw from the recentSwedish experience is that the core values of socialdemocracy are more relevant than ever to the wayin which people can live their lives in the modernworld. Sweden has succeeded in creating a grandnarrative for a progressive process of modernisation


in response to the complex challenges of our times.It is based primarily on an idealistic and attractivefocus on the meaning of freedom in a democraticsociety. This is not a selfish, individualistic egoismconcerned with the mere satisfaction of materialwants and appetites through the acquisition of ever-more consumer durables. Nor is it based on a stiflingconformity of outlook and behaviour imposed on areluctant people by an excessively intrusive andpaternalistic state. It is a social freedom that while itbalances rights and responsibilities in the interests ofthe wider society also affirms a genuineemancipation for men and women of all classes,races and creeds from the rapacious power of anunregulated market economy. As the Swedish Social

Democrats pronounced in their 2004 interimprogramme:

We all share the experience of how life has its different

phases. Everyone is fragile at some point in time. We

need each other. We live our lives in the here and now,

together with others, caught up in the midst of change.

We will all be richer if all of us are allowed to

participate and nobody is left out. We will all be

stronger if there is security for everybody and not only

for a few. Together we will achieve much more than we

would do on our own. It is this basic view that has

guided Swedish Social Democracy through the whole

process of building the welfare state, from early

industrialisation to the globalised and rapidly changing

economy of today.25


1 Maurico Rojas, Sweden after the Swedish Model,

Timbro, Stockholm 2005.

2 Marquis William Childs, Sweden: the Middle Way,

Faber & Faber, London 1936.

3 Margaret Cole and Charles Smith (eds), Democratic

Sweden, Routledge 1938.

4 Anthony Crosland, The Future of Socialism, Cape,

London 1956.

5 Michael Forster and Marco Mira d’Ercole, Income

Distribution and Poverty in OECD Countries in the Second

Half of the 1990s, OECD Working Paper, 22 February 2005.

6 Swedish Ministry of Finance, Budget report 2005.

7 Swedish government, Innovation Policy 2004.

8 Peter Auer and Sandrine Cazes, Employment

Stability in an Age of Flexibility, International Labour

Organisation, Geneva 2003.

9 Swedish government, Innovation Policy 2004.

10 Ibid.

11 Swedish Social Democratic Party programme,

November 2001.

12 Ibid.

13 Ibid.

14 Ibid.

15 Ibid.

16 Ibid.

17 Ibid.

18 Ibid.

19 Ibid.

20 Ibid.

21 Report on child care policy, Swedish Institute for

Future Studies, Stockholm June 2005.

22 Joachim Palme, How Is The Swedish Model Faring?

Swedish Institute for Future Studies, Stockholm October

2002.

23 Peter Auer (ed.), Changing Labour Markets in

Europe, International Labour Organisation, Geneva 2001.

24 David R. Howell, in David R. Howell (ed.) Fighting

Unemployment – The Limits of Free Market Orthodoxy,

Oxford University Press, Oxford 2005.

25 The Social Democratic Programme

November 2004.

Endnotes



Further reading

You do not have to know the Swedish language tokeep abreast of developments in the country. Thebest guide can be found on the portal sweden.se,which opens the way to a remarkably wide range ofwebsites in English. The best are those provided bythe Swedish government, but the Swedish SocialDemocrats also have an English language section ontheir own website whose address issocialdemokraterna.se.

The annual Swedish budget statements and stateeconomic reviews are obtainable from the Ministryof Finance in Sweden. The publicly funded SwedishInstitute provides a rich and up to date series of factsheets in English that provide the reader with asubstantial knowledge of what is going on in thecountry. All these sources can be downloaded fromSweden.se

Unfortunately we have no new books specificallyon modern Sweden available in the Englishlanguage that either describe or explain themodernisation of the past ten years. However,Sweden after the Swedish Model by Mauricio Rojas,published by Timbro in Stockholm, Sweden, as apamphlet in May 2005, is very useful and a starkcontrast to the more critical view of the author in his

Rise and Fall of the Swedish Model, published in1998 by the Social Market Foundation in London.

A number of older volumes are still of somerelevance in our understanding the evolution ofcontemporary Swedish history. These include TheSocial Democratic Image of Society by FrancisCastles, Routledge, London 1978; Creating Social

Democracy: a Century of the Social Democratic

Labor Party in Sweden edited by Klaus Misgeld,Karl Molin and Klas Amark, Pennsylvania StateUniversity Press, Philadelphia 1992; The Political

Theory of Swedish Social Democracy – Through the

Welfare State to Socialism by Tim Tilton, Clarendon,Oxford 1990; Politics Against Markets – The Social

Democratic Road to Power by Gosta Esping-Anderson, Princeton University Press, Princeton1985; Social Democracy in Capitalist Society byRichard Scase, Croom Helm, London 1977; The

Swedish Social Democrats: Their Ideological

Development by Herbert Tingsten, BedminsterPress, Totowa NJ 1973, English translation of theSwedish edition published in 1941; and The Working

Class in Welfare Capitalism: Work, Unions and

Politics in Sweden by Walter Korpi, Routledge andKegan Paul, London 1978.



About the author

Robert Taylor was Nordic correspondent of theFinancial Times from 1988 to 1992 and is now anadviser to the European Trade UnionConfederation. He was labour editor of theObserver from 1976 to 1987 and employment editorat the Financial Times from 1994 to 2001.

More recently Taylor has been media fellow onthe Economic and Social Research Council’s futureof work programme, which he is drawing togetherfor publication in 2007. He was also researchassociate at the Centre for Economic Performanceat the London School of Economics and Political

Science where he worked on the LeverhulmeFoundation funded future of the trade unionsproject. He is researching a book on labour in theglobalising economy.

Taylor has written six books on labour markets,the world of paid work and industrial relations.These include The Future of Trade Unions in 1994and The TUC: From General Strike to New

Unionism. He is also author of ‘Social DemocraticTrade Unionism’, a pamphlet for Catalyst publishedin 2003. At present Taylor is completing a history ofthe parliamentary Labour Party.



Useful contacts

Compass is an umbrella of organisations andindividuals who believe in greater equality anddemocracy. Listed below are some of theorganisations who have been involved with Compassor who think are operating in an interesting andcomplimentary space.

Active Citizens Transform (ACT)[email protected] / 020 7278 5788

Catalyst catalystforum.org.uk /[email protected] / 020 77332111

Centre for Reform cfr.org.uk / [email protected] / 020 7631 3566

Citizen’s Income Trust www.citizensincome.org /[email protected] / 020 8305 1222

Citizens For Europe new-politics.net/campaigns/citizens-for-europe / [email protected] / 020 72784443

Comprehensive Futurecomprehensivefuture.fsnet.co.uk / [email protected]

Co-operative Party co-op-party.org.uk /[email protected] / 020 73570230

Demos demos.co.uk / [email protected] / 08454585949

Electoral Reform Society electoral-reform.og.uk /[email protected] / 020 79281622

Fabian Society fabian-society.org.uk /[email protected] / 020 72274900

Fawcett Society fawcettsociety.org.uk /[email protected] / 020 72532598

Foreign Policy Centre fpc.org.uk / [email protected] /020 73886662

IPPR ippr.org / [email protected] / 020 7470 6100

Joseph Rowntree Reform Trust jrrt.org.uk /[email protected] / 01904 625744

Labour Party labour.org.uk / [email protected] /08705 900200

Labour Students labourstudents.org.uk /[email protected] / 020 7802 1234

Local Government Association lga.gov.uk /[email protected] / 020 76643000

Make Votes Count makevotescount.org.uk /[email protected] / 020 79282076

NEF neweconomics.org.uk / [email protected] /020 78206300

New Local Government Network nlgn.org.uk /[email protected] / 020 73570051

New Politics Network new-politics.net / [email protected] /

New Statesman newstatesman.co.uk /[email protected] / 020 77303444

Opinion Leader Research opinionleader.co.uk /[email protected] / 020 78613080

POWER Inquiry powerinquiry.org /[email protected] / 0845 3455307

Progress progressives.org.uk /[email protected] / 020 78087780

Renewal renewal.org.uk / [email protected]

Save the Labour Party savethelabourparty.org /[email protected] / 01254 388474

SERA sera.org.uk / [email protected] / 020 72637389

Social Market Foundation smf.co.uk / 020 7222 7060

Soundings lwbooks.co.uk/journals/soundings/contents.html / [email protected] / 020 85332506

TELCO telcocitizens.org.uk /[email protected] / 020 7375 1658

The Smith Institute smith-institute.org.uk /[email protected] / 020 78234240

Unions 21 unions21.org.uk / [email protected] / 020 72789944



About CompassCompass is the new democratic left pressure group,whose goal is to both debate and develop the ideas fora more equal and democratic society, then campaignand organise to help ensure they become reality.

We organise regular events and conferences thatprovide real space to discuss policy, we producethought provoking pamphlets and we encouragedebate through online discussions on our website. Wecampaign, take positions and lead the debate on keyissues facing the democratic left. We’re developing acoherent and strong voice, for those that believe ingreater equality and democracy as the means toachieve radical social change. We are:

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è A pressure group focussed on changingLabour – but recognises that energy and ideas cancome from outside the party, not least the 200,000who have left since 1997.

The central belief of Compass is that things will onlychange when people believe they can and must makea difference themselves. In the words of Gandhi ‘Be the change you wish to see in the world’.

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Standing order instructionsPlease pay immediately by standing order toCompass’ account, Lloyds TSB, 32 Oxford Street,London W1A 2LD (a/c 2227769, sort code 30-98-71)the sum of £25/£10/other £ (please deleteas appropriate) and then annually, unless cancelled byme in writing.

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People’s views on asylum seekers are often shocking andfrequently misinformed as ippr found out from a uniqueseries of focus groups. The resulting book sheds newlight on the origin of these attitudes and makes positiverecommendations to promote a better informed debate.

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Since 2001 permanent exclusions have risen. Those who arecommitted to achieving an education system that meets theneeds of every child must look for a new solution to dealingwith challenging behaviour. Towards Zero Exclusion is anambitious action plan of practical policy recommendations torenew the drive to reduce school exclusion.

Working Later Raising the effective age of retirementby Peter Robinson, Tim Gosling and Miranda Lewis

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The General Election showed the failings of that system, when justover a third of voters gave the Government more than half the seatsin Parliament. It’s time for a better voting system for Westminster.

Electoral Reform Society,6 Chancel Street,London SE1 0UU.

Tel: 020 7928 1622

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75954innerCyanMagentaYellowBlack

“What Sweden and the otherNordics have achieved is ofcrucial importance in the muchwider public policy debate of howthe European left should respondto the complex challenges beingimposed on modern societies byglobalisation and the impact ofcommunication and informationtechnologies on the world ofwork. Their success as both socialmarket economies anddemocratic societies continuesto confound the fashionabledogmas and orthodoxies ofprevailing neo-liberalism”

Sweden’s newsocial democraticmodelProof that a better world is possible

Robert Taylor

UNISON is the UK's largest trade union. We campaign on arange of issues at home and abroad. Whether working to raise theminimum wage in the UK or to fight HIV/AIDS in southern Africa, wework with others to make a difference in the world. If you are lookingfor a modern, progressive trade union then join us!

Find out more at: www.unison.org.ukor 0845 355 0845 (voice)0800 0 967 968 (textphone)

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