FES-Analyse: Schweden So far the debate has focused on labour migration and its effects. There is actually broad agreement about keeping the labour market open to the EU and, gradually, to the world. However, the devil is in the regulatory details. Trade unions are suspicious that liberalisation will bring the full brunt of wage competition also to the domestic market, with people accepting structural adjustments more easily as jobs move abroad. With success in staying together on top of globalisation, almost all take for granted that the lack of‘working poor’ conditions distinguishes Sweden from other countries. That illusion might easily crack 13 under the multiple pressures of globalisation, if left without protective reforms. Political passivity will serve the purpose of right-wing liberalism. In Sweden, though, the majority is not yet prepared to see the welfare system go and will punish those seen to let it happen. Cohesion or differentiation – in wages and labour conditions, in education ambitions and opportunities, in taking on the opportunities and risks of modern life – is the underlying question of the current political issues. Experience of right-wing liberal policies will help the Swedish people decide what serves it best. Unsolved challenges In its first six months the Alliance government has only acted with resolve on matters they could agree upon. Where agreements are partial at best, the people are left in the dark. 1. Privatization of state-owned companies is of symbolic importance. In order not to expose sales to criticism of earlier government mistakes in asset pricing and creation of private monopolies, six jewels in the crown shall be the first to go. They are part-owned TeliaSonera telecom provider, Nordea bank and OMX stock market services, and wholly owned V&S alcoholic beverage producer and distributor(including Absolut – skål!), SBAB housing credits and Vasakronan office property developer. The combined sales value should exceed 20 billion€. Social Democrats argue against giving up nice annual profits for the state coffers, confirming their own limited ownership policies. Apart from SBAB aggressively lowering housing costs, most state holdings have been free to exploit market failures at the expense of consumers. The energy producer and distributor Vattenfall is the worst case, enjoying a cosy oligopoly with German E.ON and Finnish Fortum, all three much criticized for inefficiency and bad service. The critical issue is not ownership per se but competition policies and regulation in the markets concerned, and how to use sales proceeds. Will public finances be consolidated or taxes reduced for some only? 2. On family policies, there is little coherence. For the 1998 elections Persson surprised all, including his party, with promising a low maximum fee for guaranteed Kindergarten child care. The opposition was vehemently against this‘socialisation’. Their voters loved it. Today no local government defers tax subsidies for child care, an essential service for working parents. Alliance parties are more or less happy to steal social democratic clothes, while Christian democrats insist that local governments must be able to direct subsidies to stay-at-home parents (mothers) – their last ideological issue. 3. A more important and deeply controversial change, also within the Alliance, would be to move towards basic level income insurances only, leaving mid-income groups to purchase private coverage.‘General welfare’ keeping people in a broad majority of income brackets safe has been a key social democratic strategy. Capping child care fees proved its political effectiveness. Reforming unemployment insurance is a first attempt to move away from public insurance against lost incomes to just basic insurance against poverty. Some(notably, non-socialist) trade unions have offered their own unemployment coverage for those earning above the publicly insured top limit, making it a key membership argument. More unions are considering the same, as the state offers only a minimum. The government talks softly about merging all income insurance schemes, but that does not say anything about which income brackets it should cover. That battle is for later.