Nordic Countries Office Stockholm Västmannagatan 4 11124 Stockholm Tel. 004684546592 Fax: 004684546595 email: info@fesnord.se 4- 2007 Pär Nuder “Successful Social Democratic Financial and Economic Policy – the Swedish Experience” ∗ It is a great privilege to address you here at the Humboldt University. I’d like to thank the Stockholm office of the FES and the Institute for Northern Europe for making this possible. As a Swede it is certainly a moment of trust to talk in the spirit of Dag Hammarskjöld. Even though he is mostly, and rightly, remembered for his strong leadership as Secretary General of the United Nations, it should today be mentioned that Hammarskjöld was an economist and served many years in the Ministry for Finance. He strived for a new world order, but also for modernizing Sweden. Today I will try to share some experiences from Sweden during the years 1994-2006 when Social Democrats governed. As you may know, in the late 19 th century Sweden was one of Europe’s poorest countries. In a rapid speed though, Sweden was transformed into a modern industrialized country. A silent trilateral contract between the state, the business society and the trade unions made it possible to create The Swedish Model. Capitalism and high taxes. Profitable industries and strong trade unions. Flourishing private sector and a high quality public sector. Perhaps Sweden is a bit odd, also in our relation to Europe. In 1994 a referendum took place. The outcome was narrow, but still clear: A majority wanted to join the European Union. Nine years later a new referendum decided – in a much clearer outcome – that Sweden should not join the European Monetary Union. For us on yes-side it wasn’t possible to convince the Swedish electorate to join a club that had been worse off than Sweden. Euro and non-Euro. That’s only one example of the heterogeneousness within the European Union. Although we share certain common values, there are so many differences among national welfare state systems that the very notions of a European Model or Social Europe are, in my mind, rather dubious. The Belgian economist André Sapir grouped the old EU – the EU 15 countries – into four different social policy models in order to examine their relative performance along a number of dimensions. • The two Anglo-Saxon countries (Ireland and the United Kingdom) feature relatively large social assistance of the last resort. This model is characterised by a mixture of weak unions, comparatively high disparities in wages and a relatively high incidence of low pay. • The Continental countries(Austria, Belgium, France, Germany and Luxembourg) rely extensively on ∗ The present text was presented as a Dag Hammarskjöld lecture held by Sweden`s former Minister of Finance, Pär Nuder, in the context of a cooperation between the Nordic Office of Friedrich-Ebert-Stiftung in Stockholm and the Nordeuropa Institut of Humboldt University.