4 outsourcing to private contractors, also allowing more individualisation of fees and service. National general income insurance systems are financed by taxes and public fees, covering parental leave, unemployment, sick leave and pensions. The pensions system was reformed in 1994 and is now solidly sustainable, irrespective of demographic challenges ahead. The high taxes thus cover costs that anybody in a modern economy would and should pay. What could be more effective for costs and results? The US health care system costs 15.2% of GDP, while Swedes pay 9.4%. According to polls, people are more concerned about income security and the quality of service than tax levels. The fertility rate is among the highest in Europe at 1.77 births per woman. 50 years of immigration, principally through asylum and family reunion since 1970, have begun to transform a society that was previously highly homogenous. Challenges of social and economic marginalisation mainly affect recent immigrant groups. Compared with other European countries, Sweden retains an open door for asylum, bringing large influxes from conflict areas linked with established communities, from Iraq now and from former Yugoslavia in the 1990s. The labour market is governed by‘collective’ framework agreements between unions and FES-Analyse: Schweden employers, still allowing for individualisation of salaries for skilled staff. Equalising conditions for all firms in an industry, this‘solidary wage policy’ and a broad definition of interest by labour unions have provided for a long history of ongoing structural changes, while keeping strikes a rare occurrence. Unions seek to‘save people’ rather than‘save jobs’. The Swedish Krona(SEK) has been stable against the Euro since EMU entry was rejected in a referendum in 2003 and, contrary to predictions, interest differentials have shrunk. The‘No’ was largely a people’s protest against distance to the political and economic elite in Stockholm, Brussels and board rooms, their decisions and privileges, as later repeated in the French and Dutch referenda on an EU‘constitution’. As Sweden is doing fine without it, Euro entry remains politically dead in spite of potential benefits for a highly integrated economy. No initiative will be taken before the 2010 elections. Low interest rates, easy availability of consumer credits, labour shortage in some sectors, increasing housing prices and strong company profits/stock market values have all boosted perceived wealth and consumer spending, particularly in Stockholm and other urban areas. Government plans to abolish wealth and property taxes will further inflate bubble tendencies. And some socialism helps According to Pär Nuder, Minister of Finance 2004­2006, the political programme behind this success story was social democratic. It has six features that make Sweden competitive: 1. Strong public finances meeting a surplus target of two per cent of GNP are the basis for low inflation and real wage growth. 2. An open economy with a strong orientation towards trade, investments and free capital flows. 3. Reliable‘social bridges’ to cope with change, reducing the risks and adjustment costs of unemployment. Employees are encouraged to seize new opportunities. This rests on a high general level of education with life-long opportunities for further learning and catching up. In the 1990s, 100 000 unemployed(in a country with nine million inhabitants) without a secondary school degree got the opportunity to finish it with a grant similar to their unemployment benefit. Contrary to most other countries, everyone with a degree from secondary school can enter university. Choices made at the age of twelve will not exclude you. With the number of universities and colleges across the country expanding, the goal is that 50% of the Swedish population get higher education. Social benefits are designed as income insurances, giving most working people sufficient coverage. The system provides‘workfare’ incentives rather than passive welfare. Yet those having lost contact with working life often need reintroduction in order to find a suitable job, retrain or take up further schooling. 4. A culture of collaboration between‘social partners’ is underscored by an 80% trade union affiliation ratio, which in turn rests on the all­importance of collective agreements, not legislation, to set the frame for employment