Supply and Demand: Swedish Government Workers Edition

Sweden

Our Swedish friends, inhabitants of the fifth largest country in Europe representing more than 10 million people, have a bit of a problem on their hands if projections turn out to be true.

Bloomberg:

Sweden’s got a major supply and demand problem.

By 2025, its entire workforce is expected to grow by 207,000 people—yet it needs more than that number just to staff its fabled welfare state. The worker shortfall could crimp services and raise labor costs, especially in a political environment less hospitable to immigration.

The mismatch is one of the biggest headaches facing Sweden’s next government. Past precedents don’t bode well. The workforce rose by 488,000 between 2007 and 2017, with less than a third of that increase absorbed by the public sector.

Local authorities recruiting 208,000 workers is “not a credible scenario,” said Annika Wallenskog, chief economist at the Swedish Association of Local Authorities and Regions. The real risk is that the public and private sectors end up competing for the same workers, she said.

The government is going to have to come up with some seriously big ideas on how to make up for future labor shortages. Immigration has also become an especially sensitive topic since the country re-imposed border controls in the wake of the 2015 refugee crisis.
Sweden needs to accelerate the speed of automation, increase employment and reform its welfare state, Wallenskog said. Otherwise “we won’t have enough people to continue working the way we do.”

The Swedish Government is not overly worried…yet:

“We have taken Sweden in a new direction. Investments in jobs, health care, schools and the climate have borne fruit. The Government is now making additional investments for a secure and sustainable Sweden,” says Minister for Finance Magdalena Andersson.

The Spring Fiscal Policy Bill and the proposals in the spring amending budget are based on an agreement between the government parties and the Left Party.
Sweden’s economy continues to perform strongly

The Swedish model continues to deliver results. Since 2014, Sweden has had higher growth than most comparable countries, and growth is expected to remain high in 2018. Employment has increased, with 250 000 more people in jobs during the same period, and the employment rate, (the proportion of the population in employment) is at its highest level in more than 25 years. Moreover, Sweden has the highest employment rate ever measured in an EU country. Youth unemployment is at its lowest level since 2003. The demand for labour will remain strong and unemployment is expected to continue to fall to 6.2 per cent in 2018.

Public finances have shown a surplus since 2015 and are expected to continue to do so in the coming years. The surplus is expected to amount to approximately 1 per cent of GDP in both 2018 and 2019, and then increase up to and including 2021.
“We expect to see increasing needs in the welfare system in the coming years, as we are living longer and more children are being born. This will be the major task of the next electoral period. That is why the Government is giving higher priority to investments in increased security for a Sweden that stands together than to major tax cuts for the richest,” says Ms Andersson.

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9 thoughts on “Supply and Demand: Swedish Government Workers Edition

  1. The real risk is that the public and private sectors end up competing for the same workers, she said.

    Oh my goodness, how horrible! Dogs and cats, living together, mass hysteria!

    eta – It seems to me a generous welfare state actually needs *less* staffing than a tightfisted one. If everyone is eligible based on a simple formula, you don’t need big bureacracies to determine who’s eligible.

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    • Well if the public and private sectors compete for the same workers, their pays are going to become commensurate. For some reason, no one likes it when civil servants are paid as much as corporate executives. It offends them for some reason. They feel that public servants should do things out of a sense of public spirited-ness and draw only a nominal pay that could allow them to live comfortably. But, when the public sector competes with the private sector, public sector pay will skyrocket because as an organisation, the public sector is a larger organisation than the private sector and equivalent positions in larger organisations tend to pay more. Compare entry level accountant salaries in one of the big 4 with entry level salaries in a small accounting firm.

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    • But you need large bureaucracies to administer them. Plus you need more nurses, more doctors, more cleaning ladies, more cooks, more apothecaries, more nursing homes etcetera etcetera.

      Being tightfisted *might* mean a larger bureaucracy, but it cuts down on costs and the need for people in other areas, at least in the public sector.

      On a somewhat different note; The problem that the Swedes have is basically the problem all western social democracies have, namely a aging population, low replacement birthrates and a social system that was designed for the reverse situation. The fundamentals will require a upheaval of the system and serious slashing of benefits and privileges. Which the aging voting public won’t like. At all.

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      • That I think is indeed the core issue, that the Bloomberg article kinda sorta alludes to, but the article is also kinda sorta a soup sandwich. (E.g. there’s going to be labor shortages due to immigration plummeting, but there’s also an increase in population due to immigration?)

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