Government newsletter: Knowledge for a stronger workforce
09 April 2014

Knowledge for a stronger workforce

An adult man teaching children. Photo: Johnér

Today the Government is presenting the Spring Fiscal Policy Bill and an employment and growth package of SEK 5 billion for 2015. The Government is continuing its efforts to put more people in work by investing in better knowledge in schools, increased accessibility and skills in healthcare and an even better business climate.

After numerous crisis years that have called for substantial stimulation of the Swedish economy, the Government is continuing its efforts to put more people in work. Jobs remain the greatest challenge facing Swedish society and affect the vast majority of us. It is through our jobs we contribute resources to our welfare. Being able to make a living also creates increased opportunities for individuals and families to have control over their daily lives.

In the autumn budget the Government therefore intends to propose investments of SEK 3.8 billion in education. In addition, the Government intends to propose investments of SEK 0.5 billion to increase the quality and accessibility of healthcare, and SEK 0.8 billion to improve the business climate.

Gradual recovery in Sweden and internationally

After several weak years the Government now expects growth to gradually pick up in the coming years as the international economy gains strength and Swedish households and businesses become more optimistic. Employment is therefore expected to continue to increase and gradually result in lower unemployment, as employment will likely grow faster than the workforce. The Government also expects public finances to improve as of next year.

But there is still great uncertainty about the economic outlook as a result of the uncertain situation in the global economy. The recovery is therefore still fragile.

Return to surplus - a new phase in fiscal policy

Unlike many other countries, Sweden entered the crisis with strong public finances. It was therefore possible for the Government to put in place vigorous measures to counteract the impact of the crisis, while other countries had to implement dramatic austerity measures.
But because the crisis resulted in a protracted recession, public finances have gone from surplus to deficit in Sweden as well. Forecasts indicate that this recession will have lasted a total of nine years before the economic situation turns upward again towards 2018.

Relative to other countries, the deficit in public finances remains small. However, the surplus target means that net lending must be adjusted to the economic situation. As the economy is now expected to recover again, public finances must consequently return to balance and surplus. Hence fiscal policy is entering a new phase with the aim of building up new protective buffers. But while there is a need to build up these buffers, the return to surplus must not be allowed to take place so rapidly that the fragile recovery falters.

The Government's overall assessment is therefore that the measures proposed in the Budget Bill this autumn should neither weaken nor strengthen net lending - the measures must be fully funded. If all measures are fully funded - krona for krona - general government net lending is expected to improve between 2014 and 2015 and reach a surplus again in 2018.

Government reforms since 2006

The Government's goal has been to put more people in work and reduce social exclusion. The goal has been a stable and efficient economy that provides a secure foundation for society to stand together and meet the challenges of the future.

The core has been measures to ensure that more jobs are created in Sweden and more people want to work. The Government has therefore introduced the earned income tax credit and changed the unemployment and health insurance systems to make it more worthwhile to work and increase the supply of labour. Reduced employment costs and measures making it easier and more attractive to start and run a company have been implemented to increase the demand for labour. Investments in infrastructure and research, as well as housing market reforms, have also been implemented to increase employment and growth. In addition, the Government has taken extensive measures to improve knowledge and skills in the Swedish school system.

To this can be added important measures to strengthen banks' resilience and thereby reduce the risk of new crises. The Government has also worked purposefully to reduce household vulnerability in the financial markets. Extensive measures have also been implemented to safeguard cohesion in society throughout the crisis years. Moreover, the Government has set up ambitious energy and climate objectives.

Despite the crisis, employment has risen by more than 250 000 people since 2006, and 200 000 fewer are caught in social exclusion. Poverty has also decreased at the same time as the welfare system has received increased resources

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