Remarks by Angel Gurría
29 March 2019 - Stockholm, Sweden
(As prepared for delivery)
Dear Ministers, Ambassadors, Ladies and Gentlemen,
I am delighted to be back in Stockholm to present the OECD’s 2019 Economic Survey of Sweden. I would like to thank the Minister of Finance, Magdalena Andersson, and the Minister of Education, Anna Ekström, for joining us for the presentation of this Survey.
Sweden’s economic, environmental, income and gender equality, and well-being achievements are remarkable. GDP has expanded steadily, at an average rate of close to 3% over the past five years. Unemployment has also declined to 6.3% in 2018 (from 8% in 2013), and the employment rate was close to 80% in 2018. This is among the three highest employment rates in the OECD, and the highest in the European Union!
Sweden also performs well in all dimensions of well-being, and it is a frontrunner in the fight against climate change.
However, like many other OECD countries, Sweden also faces important challenges. Global growth prospects create uncertainty for Sweden and put at risk progress made this far.
There are also structural challenges, like in the housing sector. While housing prices have stabilised, the housing price-to-income ratio remains about 30% above its long-term average, while household debt continues to rise. Digitalisation provides opportunities to boost productivity, but almost one third of jobs could see significant changes because of automation, and another 8% could disappear altogether, which highlights the need to further develop adult education.
Sweden’s education system also faces important challenges. School results have been declining for the past two decades, and today, nearly one Swedish adult in five has low literacy or numeracy skills, or both. Emerging trends in society, such as immigration and rising income inequality, increase residential segregation and contribute to isolating pupils from different social backgrounds into separate schools.
Our Survey makes several recommendations to tackle this and other challenges. Let me mention three:
First, macroeconomic policies should remain responsive to macroeconomic developments
Assuming that the global economy remains healthy enough, policy stimulus should be scaled down further. The Riksbank should continue to raise interest rates gradually, taking inflation and output developments into account. The government should also continue to strengthen budget buffers while the economy remains solid.
In the case of a downturn, monetary policy margins are limited. But with government debt below 40% of GDP, there is space to provide some fiscal stimulus.
Sweden should also continue to address its structural weaknesses, like those in the housing sector. Mortgage interest deductibility should be phased out, land-use planning procedures be simplified, and rental regulations be eased while maintaining tenant protection against abuse.
In addition, business regulations and administrative procedures are lean. Further streamlining them would raise productivity, including by using the opportunities offered by digitalisation to improve services.
To improve the Swedish education system and make it more inclusive, our Survey recommends the implementation of a package of reforms, across three pillars:
The first, rebuilding a regional arm of the central government governance structure would enhance local cooperation, improve skills development, promote continuous quality improvements, and instil accountability at every level of the school system.
The second, competition in the choice of schools should be complemented by reliable and transparent information about school quality and better regulation. School entry and investment decisions should help create more diverse pupil groups, which calls for abolishing queuing time as the entry mechanism of choice to private schools.
Last but not least, teaching needs to become more attractive to address teacher shortages. Teacher quality should improve through better teacher education, strengthening lifelong learning and encouraging more co-operation, feedback and support between colleagues.
Ladies and Gentlemen,
The Swedish economy is dynamic, inclusive and resilient. Nevertheless, it is still dependent on the global economy’s continued expansion and openness. It is therefore essential to keep strengthening the economy’s internal engines of growth, to keep raising productivity and competitiveness, while promoting greater inclusion and social cohesion. Enhancing the Swedish education system will be essential for these purposes. Sweden is doing well, but we know it can do GREAT!
Sweden is an increasingly important global player and the OECD is always ready to support its efforts. The Global Deal founded by Prime Minister Stefan Löfven is a great example of what we can achieve together. Let’s achieve even more. The world needs it. Count on the OECD! Thank you.