2019 OECD ECONOMIC SURVEY OF SWEDEN
http://www.oecd.org/eco/surveys/economic-survey-sweden.htm @OECDeconomy @OECD
Key messages
• Policies should remain responsive to macroeconomic developments • Addressing structural weaknesses in housing and business regulations could enhance productivity and well-being • Reinforcing the school system and maintaining high workforce skills is essential for growth, competitiveness and social cohesion
2
Output growth is robust Real GDP growth
Y-o-y % change 8
Germany
Euro area
Y-o-y % change Sweden
8
United States
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
2005
2006
2007
2008
2009
Source: OECD Economic Outlook database.
2010
2011
2012
2013
2014
2015
2016
2017
2018
-8 3
Unemployment has declined Unemployment rate
% of labour force 16 ITA
DEU
FRA
SWE
Euro area
OECD
14 12 10 8 6 4 2 0
2005
2006
2007
2008
2009
Source: OECD Economic Outlook database.
2010
2011
2012
2013
2014
2015
2016
2017
2018
4
The employment rate is among the highest in the OECD % of population aged 15-64 90 80 70 60 50 40 30 20
Source: OECD Labour force statistics database.
ISL
CHE
SWE
NLD
JPN
NZL
DEU
DNK
NOR
CZE
EST
GBR
CAN
AUS
AUT
LVA
FIN
G7
SVN
USA
PRT
HUN
ISR
IRL
OECD
SVK
POL
LUX
KOR
FRA
BEL
ESP
CHL
MEX
ITA
GRC
0
TUR
10
5
The economy is operating close to full capacity % 90
Capacity utilisation in manufacturing industry
88
Resource utilisation (rhs)²
% 7.5
Output gap (rhs)š
6.0
86
4.5
84
3.0
82
1.5
80
0.0
78
-1.5
76
-3.0
74
-4.5
72
-6.0
70
2005
2006
2007
2008
2009
2010
2011
2012
2013
1. Percentage of potential output. 2. Deviation from 2005-2018 average in units of standard deviation. Source: OECD Economic Outlook database, NIER and Riksbank.
2014
2015
2016
2017
2018
-7.5
6
Labour productivity has been growing faster than in most other countries
Note: Productivity is measured as GDP per hour worked. Source: OECD, National Accounts, Productivity and Economic Outlook databases.
2017
100
2015
100
2013
105
SWE
FIN
2011
105 2017
110
2015
110
2013
115
2011
115
2009
120
2007
120
2005
125
2003
125
2001
130
1999
130
1997
135
1995
135
NLD
2009
140
DNK
2007
SWE
DEU
2005
G7
145
2003
USA
2001
JPN
1999
140
EU28
1997
145
1995=100 150
1995
1995=100 150
7
Global uncertainties shroud the outlook • Global slowdown • Trade tensions • Brexit • Financial market volatility
8
Monetary policy remains very expansionary Policy rates
Inflation
Source: OECD Economic Outlook database and Riksbank.
9
Government surpluses largely reflect the strength of the economy % of GDP
% of GDP
4
Underlying government net lendingยน
4
Government net lending
3
3
2
2
1
1
0
0
-1
-1
-2
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
-2
1. % of potential GDP. Source: OECD Economic Outlook database.
10
Recommendations on macroeconomic policies
• Continue to raise interest rates gradually, taking inflation and output developments into account. • Continue to run budget surpluses while the economy remains solid. • In the case of a downturn, use the space provided by the fiscal framework.
11
How’s life in Sweden?
Note: This chart shows Sweden’s relative strengths and weaknesses in well-being when compared with other OECD countries. For both positive and negative indicators (such as homicides, marked with an “*”), longer bars always indicate better outcomes (i.e. higher well-being), whereas shorter bars always indicate worse outcomes (i.e. lower well-being). Source: OECD (2017), OECD Better Life Index, www.oecdbetterlifeindex.org.
12
Perceived corruption is low Corruption Perceptions Index, 2018 100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
DNK NZL FIN SWE CHE NOR NLD CAN LUX DEU GBR AUS AUT ISL BEL EST IRL JPN FRA USA CHL PRT ISR POL SVN CZE LVA ESP KOR ITA SVK HUN GRC TUR MEX
100
Note: The Corruption Perceptions Index uses a scale of zero (highly corrupt) to 100 (very clean). Source: Transparency International.
13
Income inequality remains low Ratio of ninth to first disposable income decile, 2016 or latest
5 4 3 2 1 0
Other Nordics
Sweden
OECD
Source: OECD Income Distribution Database (IDD). 14
Sweden scores well on environmental indicators CO2 intensity1
Environment-related taxes, % of GDP
kg/USD, 2010 Sweden
OECD
0.4
Energy, 2014
Motor vehicles, 2014
Other, 2014
Total, 2000
3%
0.3 0.2
2%
0.1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0.0
1%
1. Production-based. Source: OECD Green Growth Indicators database.
0%
Sweden
OECD (median)
15
Recommendations on environmental and green finance policies • Raise taxes on industrial energy use. • Strengthen and further harmonise climate-related disclosure requirements, especially for financial intermediaries, including banks.
16
The housing market has cooled, but prices remain high and structural issues remain 1995=100 400 350 300
Canada
Norway
Euro area
New Zealand
Sweden
OECD
250 200 150
Source: OECD Economic Outlook database.
2017
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
50
1995
100
17
Recommendations on housing policy • Reform the recurrent property tax. • Phase out the deductibility of mortgage interest rate payments. • Ease rental regulations. • Simplify land-use planning procedures, balancing economic, environmental and social considerations. • Enhance co-operation between central and local government in landuse planning and increase incentives for municipalities to facilitate the timely release of development land. 18
Construction costs are high Construction price EU28=100 200 180
SWE
160 140
DEU
120
FRA
100 LTU SVK POL
80 60 40
LVA CZE
EU EST
GRC ESP PRT SVN
HUN
TUR
ITA
FIN
NLD BEL AUT
NOR
ISL CHE
DNK LUX
IRL GBR
20 0
0
20
40
60
80
100
120
140
160
180
200
Consumption price EU28=100
Reading note: Sweden’s construction price level is more than 60% above the OECD average compared to less than 40% for the consumer price level. Source: Eurostat.
19
Product market regulations are lean, but further streamlining could raise productivity 4
Sweden
OECD average
Average of 5 best performing countries
Average of 5 worst performing countries
3
2
1
0
Overall PMR indicator Public ownership
Involvement in business operations
Simplification and evaluation of regulations
Admin. burden on start-ups
Barriers in service & Barriers to trade and investment network sectors
Source: Preliminary OECD 2018 PMR database (as of 20-02-2019). 20
Recommendation on business regulations and competition policies • Continue to use digital tools to improve services, simplify procedures and shorten licences and permits processing times.
21
Labour market mismatch is increasing
Note: An outward (inward) shift of the Beveridge curve over time implies a decrease (increase) in the efficiency of labour market matching. Source: OECD Registered Unemployed and Job Vacancies dataset and Annual Labour Market Statistics, and Statistics Sweden.
22
Many jobs are at least partially at risk of automation % 70
Risk of significant change (50-70%)
60
% 70
High risk of automation (>70%)
60
Note: Jobs are at high risk of automation if the likelihood of their job being automated is at least 70%. Jobs at risk of significant change are those with the likelihood of their job being automated estimated at between 50 and 70%. Source: Nedelkoska and Quintini (2018).
SVK
LTU
TUR
GRC
JPN
DEU
CHL
SVN
ESP
ITA
POL
FRA
CZE
AUT
OECD
ISR
KOR
EST
0
IRL
0
BEL
10 CAN
10 NLD
20
DNK
20
GBR
30
USA
30
SWE
40
FIN
40
NZL
50
NOR
50
23
The low-skilled receive less training than others 70
All adults
Low-skilled adults
60 50 40 30 20
DNK
NZL
NOR
FIN
NLD
SWE
USA
GBR
CAN
DEU
IRL
CZE
EST
OECD
AUT
CHL
BEL
ISR
KOR
SVN
ESP
JPN
FRA
SVK
POL
ITA
GRC
0
TUR
10
Note: Low-skilled adults are defined as people scoring at or below a PIAAC literacy score of 225 points. Source: OECD calculations based on the Survey of Adult skills (PIAAC).
24
Nearly one adult in five lacks some foundation skills Japan Finland Netherlands Slovak Republic Norway Czech Republic Flanders (Belgium) Sweden Estonia Austria Denmark Korea Australia OECD Germany Canada England Northern Ireland Poland Ireland United States France Spain Italy 0%
Both low numeracy and literacy Low numeracy but literacy above level 2 Low literacy but numeracy above level 2
5%
10%
15%
20%
25%
30%
35%
40%
Source: Musset, P. (2015), “Building Skills for All: A Review of Finland�, OECD Skills Studies.
25
Recommendation on labour market and adult skills policy • Develop adult education, in cooperation with the social partners, including for people in unconventional forms of work.
26
Quality and equity in Sweden’s schools
School results may have bottomed out, but there is room for improvement Sweden’s test results in international skills surveys for children of school age Score points in PISA, TIMSS and PIRLS 590
Score points in PISA, TIMSS and PIRLS
PIRLS (reading)
PISA (reading)
TIMSS (mathematics)
PISA (mathematics)
TIMSS (Science)
PISA (science)
590
570
570
550
550
530
530
510
510
490
490
470
470
450
450
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Note: PIRLS denotes the national average results of fourth-graders in the Progress in International Reading Literacy Study. TIMSS denotes the national average results of eight-graders in the Trends in International Mathematics and Science Study. PISA denotes the national average results of 15-year-olds in the OECD Programme for International Student Assessment. Source: OECD (2016[4]), Mullis et al. (2017[19]; 2016[20]), and Martin et al. (2016[21]).
28
The school system reinforces societal trends towards segregation Between-school grade variation controlling for socio-economic background
Note: Grades are grade point averages of 9th grade pupils. Between-school variation is the share of total grade points variation explained by between-school average grade points variation. Source: Skolverket (2018[6]).
29
1990s reforms probably contributed to falling results Difference to PIAAC average by 10-year age cohort
Note: This figure shows that skills in the Swedish population compared to the PIAAC average peaked with the cohorts ending compulsory school (approximately at the age of 15) before the 1990s school reforms. Source: OECD Survey of Adult Skills (2012).
30
Steps have been taken to rectify the situation, but policies could have been more coherent • Strengthening reading, mathematics and science. • More detailed rules/curriculum, national tests and tougher inspections. – Makes sense, but increases the administrative burden and may stifle innovation and teacher autonomy at the local level. • Grants to benefit pupils from weak socio-economic backgrounds and to raise teacher attractiveness. – Central level involvement warranted, but fragmented system. • The School commission offers a more holistic approach. 31
Recommendations focussing on three areas of reform • Re-instate instruments for (soft) central level coordination. • Use choice and competition as a force for improvement, while mitigating segregation and other negative side-effects. • Make teaching a high-status occupation by raising teacher training quality, peer support, and accountability. Recommendations are mostly in line with those of the School commission. 32
Targeting of resources to socio-economic needs is insufficient in many municipalities Shortage of educational staff – difference between advantaged and disadvantaged schools
Note: Negative values indicate higher shortages in schools with low socio-economic status. As reported by school principals. Source: OECD, PISA 2015 Database, Tables II.6.2 and II.6.15.
33
Continuous improvements to teaching and school organisation is not the norm in all municipalities • Municipalities vary greatly in size, capabilities and political priorities. • An active approach to school leadership, teaching and accountability can improve results. • Example: Essunga municipality.
34
Potential gains from competition and private provision are not realised in Sweden – on average Change in mathematics test score associated with a one standard deviation change in the independent variables
Note: Standard deviations change in math scores for a standard deviation change in the exogenous variable. Source: Table 4 in AndrĂŠ, Pareliussen and Hwang, forthcoming.
35
School choice contributes to school segregation Private schools attract pupils with favourable backgrounds
Note: The figure shows schools sorted into deciles according to their socio-economic mix of pupils. Schools are not weighted by size. Source: Author’s calculations based on AndrÊ, Pareliussen and Hwang (2019[10]).
36
Teaching is not seen as a high-status occupation Percentage of teachers who agree that the teaching profession is valued in society
Source: OECD, TALIS 2013 Database, Tables 7.2 and 7.2 web.
37
Teacher appraisals, mentoring and peer-to-peer learning are patchy Share of lower secondary education teachers who report receiving feedback in their current school
Note: Feedback is defined broadly as any communication of the results of a review of an individual’s work, often with the purpose of noting good performance or identifying areas for development. The feedback may be provided formally or informally. Source: OECD, TALIS 2013 Database, Table 5.4.
38
Recommendations on education policy A stronger institutional set-up • Introduce a non-binding minimum norm of school financing, integrated with the national income equalisation system, to better target funding towards disadvantaged groups. • Develop a regional arm of the central government school governance structure tasked with systematic quality improvement, inducing local cooperation, continuous teacher training and inspections. 39
Recommendations on education policy (cont.) Steer competition and choice to deliver in line with the public good • Remove sources of bias in national test grading to create an objective benchmark for school performance, and use it to remove differences in grading leniency. • Weigh high and low grades symmetrically and suppress the requirement to pass in certain subjects to enter upper secondary education. • Take the socio-economic mix into account when investing in new schools and in school entry. 40
Recommendations on education policy (cont.) Teacher quality and standing • Strengthen teacher education with more instruction time, teacher practice and research. • Improve continuous learning and development through a regional school governance structure, systematic peer learning and continued mutually beneficial cooperation with universities.
41
FOR MORE INFORMATION AndrĂŠ, C., J. Pareliussen and H. Hwang (2019), What drives the performance of Swedish lower secondary schools?, OECD Economics Department Working Papers, forthcoming.
http://www.oecd.org/eco/surveys/economic-survey-sweden.htm OECD Economics OECD
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