Social Europe

politics, economy and employment & labour

  • Projects
    • Corporate Taxation in a Globalised Era
    • US Election 2020
    • The Transformation of Work
    • The Coronavirus Crisis and the Welfare State
    • Just Transition
    • Artificial intelligence, work and society
    • What is inequality?
    • Europe 2025
    • The Crisis Of Globalisation
  • Audiovisual
    • Audio Podcast
    • Video Podcasts
    • Social Europe Talk Videos
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Shop
  • Membership
  • Ads
  • Newsletter

The Swedish face of inequality

by Lisa Pelling on 17th January 2019 @lisa_pelling

TwitterFacebookLinkedIn

Sweden used to be revered for stemming inequality through progressive taxation and universal welfare. Now tax breaks for the wealthy and ‘free choice’ in public goods such as education cocoon the rich from the rest.

Swedish face of inequalty

Lisa Pelling

What does inequality look like? In Sweden, rising inequality can be easily detected in data on income distribution. According to the latest available comparable data, no other country has seen a faster increase in inequality since the 1990s.

But income data reveal just part of the story. Over the past few years, a number of policy changes have enabled dramatic inequalities in lifestyles to emerge in Sweden. The result is that the rich lead increasingly different lives. In a society which once was a symbol of equality, the changes are staggering.

Not long ago, only the super-rich could afford to have housemaids and send their kids to private schools. Nowadays, this is the norm among not only the top 1 per cent but the top 10 per cent of income earners. A couple of decades ago, only the super-rich had several mansions. Today, a typical top 10 per cent household owns a flat in the city, a summerhouse in the archipelago and a cottage at one of the ski resorts or a beach bungalow in Thailand.

Cheaper to be rich

The policy changes which have triggered these changes in lifestyles are of three kinds.

First, the rich have benefitted from massive tax cuts. As in many other OECD countries, inequality has been fuelled by the abolition of a number of heavily redistributive taxes. Today, Sweden does not levy taxes on gifts or endowments, it has no property tax and there is no other wealth taxation. In addition, the right-wing government in power from 2006 to 2014 introduced a series of earned income tax credits (EITC, jobbskatteavdrag), which substantially lowered tax rates for the rich. Those of the top 10 per cent who earn their income as business owners benefit from one of the lowest corporate tax rates in the European Union.

Second, on top of the tax cuts, the right-wing government introduced tax rebates skewed towards high-income earners. Those who can afford a mortgage are entitled to a rebate on their interest payments (ränteavdrag). All kinds of expenses related to maintenance and refurbishment of private homes are tax-deductible (ROT-avdrag), as are household services including cleaning, laundry and babysitting (RUT-avdrag). Indeed, housemaids are not only re-emerging for the first time since the 1950s—they are subsidised.

From 2014 until 2018, Sweden was governed by a red-green minority government, consisting of the Social Democrats and the Green Party. With the support of the Left Party, it introduced reforms to increase equality—for instance a substantial increase in universal child benefits. It also capped some of the tax rebates (for instance, that on household services was limited annually to 50,000 SEK, or €4865). But it did not reintroduce any taxation on wealth and it did not substantially raise income taxes for the affluent.

As a result, inequalities have continued to grow. Take housing. The continuation of tax deductions for maintenance and refurbishments of private homes, despite the current economic boom and severe labour shortages within the construction sector, have helped increase the costs of construction workers, plumbers, electricians and carpenters. Neither the tax rebate for interest payments on housing credits nor the one for maintenance is available to tenants, so they have faced higher rents, as landlords have to pay non-tax-deductible and inflated prices whenever they renovate or rebuild flats.

In short, it has become more expensive to be poor, and cheaper to be rich.

‘Choice’ and segregation

Third, high-income earners have greatly benefitted from fundamental changes in the Swedish welfare system during the past two decades. Most important has been the introduction of a voucher system for schools, primary health care and elderly care. Arena Idé recent published a report on its effects on schooling. Aided by freedom of establishment, the voucher system has channelled public money to private, for-profit schools, primarily in privileged neighbourhoods, at the expense of municipal schools in disadvantaged areas. Moreover, it has created a market for corporate schools which have specialised in making profits by attracting the well-prepared, ‘cost-effective’ children of well-educated native parents, while leaving the more costly kids of low-skilled, immigrant parents to the local, council-run schools.

As my colleague German Bender wrote last month, the voucher (or ‘free choice’) system is not cost-effective: it leaks public funds to private profits and has contributed to increasing inequalities in access to public services—and, hence, in health and educational outcomes. But its most severe impacts might be on how these changes have widened the lifestyle gaps within Swedish society.

In many ways, members of the top 10 per cent are now able to live lives which are radically different, and increasingly distant, from those of the rest of the population. How will widening social distances affect the values and attitudes of the affluent? How will it affect their willingness to contribute to social solidarity? These questions are at the core of a research project recently launched by the Irish think tank TASC in co-operation with the Foundation for European Progressive Studies. Progressive think tanks based in Ireland (TASC), the UK (Compass), Spain (Fundación Alternativas) and Sweden (Arena Idé) will combine data analysis with in-depth interviews with a strategic sample of the top 10 per cent income earners.

In the Swedish case, we will study a society where the social distance between the top 10 per cent of income earners, on the one hand, and the remaining 90 percent, is growing rapidly and radically.

Sweden’s new face

Today, the Swedish face of inequality rests on a person whose everyday life is spent on what is in many ways a different planet. It is someone who no longer has to cook, wash the dishes or carry groceries—whose shirts are washed and ironed by paid (and tax-deductible) labour. The face of inequality is a person who can afford to take a mortgage on not just one home but a second one too, and who gets a tax rebate for having his or her often spacious dwellings cleaned and maintained. It is a person who—without having to pay a tuition fee—can send his or her kids to socially segregated schools, where well-prepared, motivated children are taught by the best-prepared teachers. It is a person who qualifies for private health insurance, which makes it possible to jump the queue for examinations and treatments—also at tax-funded clinics and hospitals.

At this stage of the project on the values of the top 10 per cent, we cannot know what the affluent will tell us about their attitudes and political preferences. But it is likely that the dramatic divergence of living conditions will have political implications.

For one thing, people who spend their weekdays on the top 10 per cent planet will have limited understanding of the living conditions of the rest of the population—who struggle not only to make ends meet with a dwindling share of the nation’s total income, but to find time for household chores which the rich have long forgotten how to do. An even greater threat to social solidarity may be that these widening lifestyle gaps between the rich and the rest risk undermining the willingness of the affluent to contribute to society.

TwitterFacebookLinkedIn
Home ・ The Swedish face of inequality

Filed Under: Politics

About Lisa Pelling

Lisa Pelling is a political scientist and head of research at the Stockholm-based think tank Arena Idé. She regularly contributes to the daily digital newspaper Dagens Arena and has a background as a political adviser and speechwriter at the Swedish foreign ministry.

Partner Ads

Most Popular Posts

sovereignty Brexit and the misunderstanding of sovereignty Peter Verovšek
globalisation of labour,deglobalisation The first global event in the history of humankind Branko Milanovic
centre-left, Democratic Party The Biden victory and the future of the centre-left EJ Dionne Jr
Covid 19 vaccine Designing vaccines for people, not profits Mariana Mazzucato, Henry Lishi Li and Els Torreele
EU recovery package,Next Generation EU Light in the tunnel or oncoming train? Adam Tooze

Other Social Europe Publications

US election 2020
Corporate taxation in a globalised era
The transformation of work
The coronavirus crisis and the welfare state
Whither Social Rights in (Post-)Brexit Europe?

Foundation for European Progressive Studies Advertisement

Read FEPS Covid Response Papers

In this moment, more than ever, policy-making requires support and ideas to design further responses that can meet the scale of the problem. FEPS contributes to this reflection with policy ideas, analysis of the different proposals and open reflections with the new FEPS Covid Response Papers series and the FEPS Covid Response Webinars. The latest FEPS Covid Response Paper by the Nobel laureate Joseph Stiglitz, 'Recovering from the pandemic: an appraisal of lessons learned', provides an overview of the failures and successes in dealing with Covid-19 and its economic aftermath. Among the authors: Lodewijk Asscher, László Andor, Estrella Durá, Daniela Gabor, Amandine Crespy, Alberto Botta, Francesco Corti, and many more.


CLICK HERE

Social Europe Publishing book

The Brexit endgame is upon us: deal or no deal, the transition period will end on January 1st. With a pandemic raging, for those countries most affected by Brexit the end of the transition could not come at a worse time. Yet, might the UK's withdrawal be a blessing in disguise? With its biggest veto player gone, might the European Pillar of Social Rights take centre stage? This book brings together leading experts in European politics and policy to examine social citizenship rights across the European continent in the wake of Brexit. Will member states see an enhanced social Europe or a race to the bottom?

'This book correctly emphasises the need to place the future of social rights in Europe front and centre in the post-Brexit debate, to move on from the economistic bias that has obscured our vision of a progressive social Europe.' Michael D Higgins, president of Ireland


MORE INFO

Hans Böckler Stiftung Advertisement

Renewing labour relations in the German meat industry: an end to 'organised irresponsibility'?

Over the course of 2020, repeated outbreaks of Covid-19 in a number of large German meat-processing plants led to renewed public concern about the longstanding labour abuses in this industry. New legislation providing for enhanced inspection on health and safety, together with a ban on contract work and limitations on the use of temporary agency employees, holds out the prospect of a profound change in employment practices and labour relations in the meat industry. Changes in the law are not sufficient, on their own, to ensure decent working conditions, however. There is also a need to re-establish the previously high level of collective-bargaining coverage in the industry, underpinned by an industry-wide collective agreement extended by law to cover the entire sector.


FREE DOWNLOAD

ETUI advertisement

ETUI/ETUC (online) conference Towards a new socio-ecological contract 3-5 February 2021

The need to effectively tackle global warming puts under pressure the existing industrial relations models in Europe. A viable world of labour requires a new sustainability paradigm: economic, social and environmental.

The required paradigm shift implies large-scale economic and societal change and serious deliberation. All workers need to be actively involved and nobody should be left behind. Massive societal coalitions will have to be built for a shared vision to emerge and for a just transition, with fairly distributed costs, to be supported. But this is also an opportunity to redefine our societal goals and how they relate to the current focus on (green) growth.

What targets or objectives should be set and how might they be reached? How can we create a sustainable European growth model? How can we reverse the trend towards growing inequalities? What kind of Green New Deal is a realistic and feasible prospect for Europe? What elements of justice, solidarity and equity constitute a fair and sustainable social foundation? What are the roles of the market, the state, industry and civil society? And what role can trade unions play to build a sustainable future that addresses all of these dimensions?


FOR PROGRAMME CLICK HERE

Confirmed speakers include: Ursula von der Leyen, Mariana Mazzucato, Nicolas Schmit, Dominique Meda, Tim Jackson, Juliet Schor, Frans Timmermans and many more.


TO REGISTER CLICK HERE

Eurofound advertisement

Industrial relations: developments 2015-2019

Eurofound has monitored and analysed developments in industrial relations systems at EU level and in EU member states for over 40 years. This new flagship report provides an overview of developments in industrial relations and social dialogue in the years immediately prior to the Covid-19 outbreak. Findings are placed in the context of the key developments in EU policy affecting employment, working conditions and social policy, and linked to the work done by social partners—as well as public authorities—at European and national levels.


CLICK FOR MORE INFO

About Social Europe

Our Mission

Article Submission

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Find Social Europe Content

Search Social Europe

Project Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

.EU Web Awards