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Sweden GDP per capita has grown slowly in the past few years. The GDP per capita gap is slightly below the level of the upper half of OECD countries. Income inequality is below the OECD average, but highest among the Nordics. Income has increased for all income groups in Sweden, but more strongly in the upper part of the distribution. Greenhouse gas emissions per capita and per unit of GDP are well below the OECD average and falling, and exposure to pollution is low. Some progress has been made in immigrant integration. Yet, the scale of humanitarian and family reunion immigration, together with a high skills gap vis-Ă -vis natives, calls for continuous efforts to coordinate policies and better tailor measures to individual needs. Education reforms have gone in the right direction, but more systematic and fundamental action is required. Improving school results and integration, including by lowering labour market entry barriers, is necessary to keep the employment rate high and avoid increasing inequality further. More efficient housing and rental markets would increase labour mobility and enhance productivity. Shifting the composition of the tax structure could increase its efficiency in an equity-friendly way. Growth performance, inequality and environment indicators: Sweden A. Growth Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio
2002-08 2.2 -0.3 0.0 0.0 -0.2 2.1 0.5 1.6 0.4
2012-18 1.4 0.8 0.5 0.3 0.1 0.9 0.1 0.8 -0.3
Level
Annual variation (percentage points)
2017 28.2 (31.7)*
2013-17 0.3 (0)*
8.7 (7.6)*
-0.1 (0)*
2016 1 (10.9)* 0 (0.3)* 0.1
Average of levels 2010-16 1.6 (11.3)* 0 (0.3)* 0.1
B. Inequality and environment
Gini coefficient3 Share of national disposable income held by the poorest 20%
GHG emissions per capita4 (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)
C. The gaps in GDP per capita and productivity are small Gap to the upper half of OECD countries5 Per cent 15
10
GDP per capita GDP per hour worked
5
0
-5
-10
-15
Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases; United Nations Framework Convention on Climate Change (UNFCCC) Database and International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases. StatLink 2 https://doi.org/10.1787/888933955389
244
Policy indicators: Sweden A. The employment rate is influenced by the place of birth
B. The house price-to-income ratio has been increasing rapidly
Percentage points difference to native-born, 2017
Percentage change over the period 2000-18q4
70
5 Men
Women 60
0
50 -5
40 30
-10
20 -15
-20
10 SWEDEN
Advanced economies
SWEDEN
Other Nordic countries
Advanced economies
Other Nordic countries
Euro area
0
Source: Panel A: OECD, Migration Statistics Database; Panel B: OECD, House prices Database. StatLink 2 https://doi.org/10.1787/888933956263
Beyond GDP per capita: Sweden A. Inequality has increased but remains lower than in most advanced economies Gini coefficient, 2016 or last available year¹
SWEDEN, 28.2 SVK, 24.1
ZAF, 63.0
Advanced economies median, 29.7
Emerging economies median, 46.2
B. Exposure to fine particulate matter is low Percentage of population exposed to PM2.5, 20172 % SWEDEN
Advanced economies
< 10 μg/m³ 10-35 μg/m³
Emerging economies
> 35 μg/m³
World 0
10
20
30
40
50
60
70
80
90
100
Source: Panel A: OECD, Income Distribution Database, World Bank, World Development Indicators Database and China National Bureau of Statistics; Panel B: OECD, Environment Database. Note: For the explanation of the sets of indicators above, please go to the metadata annex at the end of this chapter. StatLink 2 https://doi.org/10.1787/888933957137
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Sweden: Going for Growth 2019 priorities Enhance migrant integration. Humanitarian and family reunion immigrants to Sweden, notably women, are on average less educated than natives, and face language and cultural barriers.
Actions taken: Limited, but coherent, policies have been put in place to build migrants’ skills and facilitate their employment. Notable examples include the earlier provision of Swedish classes (2017), mandatory settlement in municipalities (mid-2016), fast-track recognition of foreign qualifications in high-demand occupations (strengthened in 2017 and 2018) and the streamlining of wage subsidies (2018).
Recommendations: Adapt language training, education, subsidised work and recognition of foreign competencies to individual needs, and coordinate them between municipalities and the Public Employment Service. Address strict employment protection and continue to streamline wage subsidy schemes. Increase the involvement of the social partners and civil society.
Reduce housing market distortions. Overly rigid planning and rental regulations impede labour mobility, reduce competition in construction and increase the risk of financial and macroeconomic imbalances.
Actions taken: The Financial Supervisory Authority has introduced further macro-prudential measures in 2017 and 2018 to contain financial risks. The government is gradually implementing a 22-point plan to support construction, including simplifications in planning and construction regulations.
Recommendations: Ease rental regulations and phase out mortgage interest deductibility to help contain the rise in household debt, improve financial and macroeconomic stability and access to housing.
Improve the efficiency of the tax structure. High marginal taxes on above-average income reduce incentives to work longer and weaken productivity growth.
Actions taken: No action taken
Recommendations: Cut marginal tax rates on above-average earnings by shifting part of the tax burden towards recurrent taxes on immovable property and inheritance tax, and by removing VAT exemptions.
Increase the efficiency of the education system. School results, as measured by PISA and other international tests, have fallen rapidly over the past decade, even though some improvement is visible in the most recent surveys. Children’s performance is increasingly determined by whom their parents are and where in the country they live.
Actions taken: Starting 2018, school providers (usually municipalities) will be obliged to designate a person responsible for schools, which should improve accountability. Legislation was also passed in 2018 to address problems of long or repeated absences among students. Targeted grants have been awarded to municipalities to raise the salaries of high-performing teachers and support schools with a less favourable mix of students.
Recommendations: Strengthen the institutional set-up of the school system, better target funding to pupils’ needs and expand regional governance structure. Take the socio-economic mix of pupils into account in entry and investment decisions, coordinate the entry and expansion of private schools and assign pupils to over-subscribed private schools by lottery or quotas to counter school segregation. Improve teacher education, strengthen continuous learning and instigate more cooperation, feedback and support between colleagues to raise teacher quality and the status of the profession.
246 Reform job protection for permanent contracts. Relatively stringent job protection for permanent contracts raises concerns about labour reallocation, productivity growth and exclusion of vulnerable groups such as migrants.
Actions taken: No action taken.
Recommendations: Reduce stringency in areas that unduly hinder productivity enhancements, such as the “first in, last out” rule, obligations related to internal reassignment and the priority for dismissed workers to be re-hired following justified individual or collective dismissal. Engage with social partners to reform employment regulations in the industries in which they are tightened by collective agreements.