Economic Survey of Sweden 2005


Published on 9 June 2005

Executive summary

An Economic Survey is published every 1½-2 years for each OECD country. Read more about how Surveys are prepared

The OECD assessment and recommendations on the main economic challenges faced by Sweden are available by clicking on each chapter heading below. Chapter 1 identifies the challenges for which the subsequent chapters provide in-depth analysis and policy recommendations.



Chapter 1.  Key challenges
Sweden’s key challenge is to maintain the core of its welfare system despite a greying population. Public finances will be squeezed from several quarters: a higher demand for social services as people get older; a reduction in the share of the population that is working; and ongoing tax pressures caused by globalisation and economic integration in Europe. The most attractive solution is to increase labour supply by reducing sickness absences, raising average hours of work and increasing the employment rates of those groups where participation is still relatively low; a supplementary solution is to improve value for money in public services. The chapter also reviews performance since the crisis of the early 1990s, including the remarkable surge in productivity in the business sector, and discusses why employment has not recovered to its pre crisis level. It concludes by discussing the trade off between equality and other social objectives.

Chapter 2. Strengthening fiscal policy
This chapter discusses the outlook for public finances given the pressures that will arise from the ageing of the population and the forces of globalisation. It looks at how public finances measure up against the government’s 2% surplus target and discusses what is needed to ensure that the current welfare system will be financially sustainable in the future. The key conclusion is that reaching the 2% target over the next few years will go a long way towards making the welfare system sustainable. But getting there requires some fiscal consolidation, and for the welfare system to be fully sustainable, additional measures are required. It would be best to bring about the necessary improvement of public finances through spending restraint and measures that boost employment and/or deliver better value for money from public services. The chapter also discusses what may look like an easy option – raising tax rates – but which may be costly and perhaps even counter-productive in the long term, because of the adverse impact on labour supply.

Chapter 3.  Best practice for reducing sickness and disability absences
Sweden’s single biggest economic problem is the high number of people absent from work due to sickness or disability. This chapter describes the problem and looks at what other countries have done to reduce absenteeism. It emphasises a mutual obligations approach to sickness insurance. This means placing greater responsibilities on the sick person, the employer and the social insurance office to get that person back to work as soon as possible.

See also ECO Working paper 442 How to reduce sickness absences in Sweden: lessons from international experience   

Chapter 4.  Raising hours worked
This chapter discusses other ways to increase labour supply, aside from reducing sickness absences. High labour taxes and the benefit system are contributing to reduce hours worked, and it is recommended that marginal tax rates be reduced by moving to other tax bases. Generous leave schemes also reduce working hours. Although labour force participation is high in general, there are still pockets where it can be raised, notably by getting young people through the educational system faster, improving the integration of immigrants and reducing incentives to early retirement. Labour supply would also benefit from stricter application of unemployment rules and from the elimination of ineffective active labour market programmes.

Chapter 5.  Improving quality and value for money in healthcare
This chapter reviews the strengths and weaknesses of the Swedish healthcare system and the challenges that it will face in the future. It discusses ways to improve access to primary care, including different methods for paying GPs, whether access is less equitable than in other countries and the role of patient fees. The maximum waiting time guarantee for elective surgery is reviewed, along with ways of reducing regional variations in quality. The extent of decentralisation is questioned, as that may be affecting the quality of care and value for money in some areas, including elderly and psychiatric care. Mechanisms for improving the hospital sector are also examined including fee for service (DRG) payment mechanisms and whether for profit hospitals would help. Finally, it considers ways to make financing more stable and sustainable.

See also ECO Working Paper 443 Getting better value for money from Sweden's healthcare system


A printer-friendly Policy BriePolicy Brief (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.

To access the full version of the OECD Economic Survey of Sweden:

  • Readers at subscribing institutions can go to SourceOECD, our online library.
  • Non-subscribers can purchase the PDF e-book and/or printed book at our Online Bookshop.
  • Government officials can go to  OLISnet's Publication Locator.
  • Accredited journalists can go to their password-protected website .

For further information please contact the Sweden Desk of the OECD Economics Department at The OECD Secretariat's report was prepared by  David Rae and Martin Jørgensen under the supervision of Peter Jarrett.



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