Labour market policies a challenge for Swedish government negotiations

There was a victorious atmosphere among Swedish centre-right parties on election night 11 September. The Moderates (M), Christian Democrats (KD) and Liberals (L) were jubilant. All three had lost some mandates from the 2018 election, but the results were still pointing to a centre-right victory and for them, a long-sought-after change of government. 

Because on their side, they also had the real winners – the Sweden Democrats (SD) – which became Sweden’s second-largest party with 20.5 % of the total votes. SD gained 3 % in the parliamentary elections but also did well in regions and municipalities – including in many municipalities within the traditionally Social Democrat part of the North of Sweden. 

Challenging government negotiations

The election results were confirmed a few days later with another slight increase for the centre-right parties. Including SD, they took 176 seats while the red-green parties took 173. Magdalena Andersson stood down as Prime Minister and talks between party leaders began with the aim of giving the Moderates' leader Ulf Kristersson the task of forming a government. 

Challenging government negotiations are now underway. Some of the pieces at play could be  public health insurance levels, unemployment benefits, labour immigration and the issue of regional safety representatives. The centre-right parties say they cooperate with SD because they agree on the main issues, but when it comes to benefit levels and labour market policies opinions differ.

During the election, the Moderates talked about marginalised people – the 700 000 foreign-born who depend on state support. Later, the party had to correct that figure as it contained students, part-time workers, and people on sick leave or parental leave. Sweden might have one of the highest unemployment rates in the EU, but at the same time, the country has a very high employment rate. 

According to Adnan Habibija, a researcher at the Swedish Trade Union Confederation, 100 000 people – not 700 000 – are outside of the labour market and long-term unemployed. Many of the 100 000 have been unemployed for years and one in three of them for more than four years, he writes in his blog.

Lower benefits and taxes an incentive to work

The Moderates and Liberals want to introduce a benefit ceiling – unlike SD. It should pay to go to work, and income tax cuts should help achieve this. KD has advocated a resettlement allowance for people on benefits and sick pay. SD welcomes tax cuts as a stimulus to get people into work but does not want to lower benefit levels. Party leader Jimmie Åkesson has even suggested that this issue is so important that he believes it would be difficult to support Ulf Kristersson as Prime Minister if the Moderates and Liberals cut benefit levels. 

SD wants to separate the unemployment benefit scheme from the trade unions and remove increased benefits for having more children, in order to incentivise women to return to work. SD also wants to tighten asylum seekers’ responsibilities.

Unlike other parties on the right, SD does not want to use public money to support training schemes, internships or job-creation programmes. SD also does not want trade unions to have the power to appoint regional safety representatives, but rather give that task to the Swedish Work Environment Authority.

SD’s strong negotiation hand

As the second-largest party, SD is in a strong position to negotiate and sees its chance to get more influence. The party has been open to joining a coalition, but for M, KD and L, cooperating with SD is controversial. The Swedish Democrats were formed in the late 1980s by extreme-right and populist parties. The party now describes itself as social-conservative with a nationalist foundation. 

Cutting immigration and getting foreign-born people to return to their home countries are strong and returning messages. The Liberals do not want SD in government and SD does not want to be i in government with the Liberals. If SD is to remain outside a coalition, but still support it in parliament, most believe compromises and concessions are going to be needed.

LO’s support for the Social Democrats’ election campaign

The election has been thoroughly analysed, not least because the results point to a divided country. SD gained ground in many municipalities, including those that have been Social Democrat-run for years. 

The Social Democrats still command the most support among LO members at 42.4 %, but the Sweden Democrats increased their support among workers and stand at 27.3 %. When Social Democrat members are no longer in the majority, it will be more difficult for LO to openly support the Social Democrats’ election campaign.

LO and the Social Democrats go way back. The party was originally formed by the trade union movement. LO President Susanna Gideonsson is on the Social Democrats executive committee. LO  donated 30 million Swedish kronor (€2.7m) to the Social Democrats during this election campaign and gave another 20 million for extra campaigning staff. 

“I am proud of the work LO organisations have done, we have spoken to 621 000 members altogether,” says Susanna Gideonsson in an article on LO’s website on 13 September, two days after the election. 

“At the same time, it is difficult to celebrate, beause we know there are clear proposals from parties to the right that go against what LO wants, and what ordinary people will benefit from. They want a weaker unemployment benefit scheme and cuts to health benefits, and are a direct threat to trade union influence over working conditions. This risks upsetting the balance in the labour market,” says Susanna Gideonsson. 

The campaign support has created debate, including in the newspapers Expressen and Dagens Industri.

“When LO goes against what the wishes of themembership majority and carries on campaigning for the Social Democrats, LO's role as a society-supporting trade union movement is weakened.  It jeopardises the Swedish model, a model which Sweden has asked the EU to respect,” writes Tobias Wikström, Dagens Industri, in a comment. 

A more split country emerges

This year’s election also showed that men and women vote differently. Men seem to be turning to the right and women to the left. With only women’s votes, Sweden would have had a red-green coalition government enjoying a 57 % majority. If only men voted, the centre-right majority would be 56 %. And if first-time voters between 18 and 21 had their say, the centre-right would take home 58 % of the votes.

On election night, the Moderates’ leader Ulf Kristersson pointed out the need for unity, albeit before the results were clear.

“What Sweden needs now is unity. There is a lot of frustration in our county. People worry about the economy, violence and global instability. We see political polarisation, but we want to unify, not divide, and find out what unites us,” said Ulf Kristersson.