Half Empty or Half Full? the Swedish Welfare State in Transition

By Olsen, Gregg M. | The Canadian Review of Sociology and Anthropology, May 1999 | Go to article overview

Half Empty or Half Full? the Swedish Welfare State in Transition


Olsen, Gregg M., The Canadian Review of Sociology and Anthropology


Policy-makers and others concerned with social equality have long considered Sweden's welfare state quintessential, an exemplar of social security and redistribution. The Swedish welfare state clearly has been one of the most successful in reducing various forms of social inequality (e.g., Atkinson, Rainwater and Smeeding, 1995; Fritzell, 1993). Child poverty was lower in Sweden (1.6%), for example, than in most other European nations with developed welfare states, such as Germany (2.8%) and the Netherlands (3.8%), and considerably lower than in the UK (7.4%), Canada (9.3%) or the US (20.4%) in the mid-1980s (Danziger, Smeeding and Rainwater, 1995).(1) Sweden's social policies also have fostered a greater degree of gender equality along certain dimensions than have most other nations (Casper, McLanahan and Garfinkel, 1994; Gustafsson, 1995; Sandqvist, 1992).(2) However, by the latter part of the 1980s, it was also clearly evident that the Swedish welfare state had begun to strain and pull apart at the seams.

Accounts of the extent and causes of the restructuring underway over the past decade are widely divergent. Some reports have suggested that the Swedish welfare state "is currently subject to one of the most wide-ranging transitions in its history," while others maintain that there has been very little change of any consequence (see Olsson and McMurphy, 1993: 268; Rothstein, 1993). The disagreement among policy experts sometimes stems from evaluators' comparative frame of reference; those from nations with less developed welfare states often tend to minify retrenchment in nations like Sweden, however far-reaching, because they remain welfare leaders. At other times it results from a tendency to narrowly focus on only one general aspect of social policy, such as "income replacement rates," which remain relatively high. The present study addresses this contested issue by closely examining the most recent developments in two broad social welfare policy areas which together typify the Swedish approach to social policy: 1) unemployment and labour market policy, and 2) old-age care and pension systems. It will be argued here that while the Swedish welfare state has certainly not been "dismantled," it has undergone a series of critical modifications and is currently being consolidated.(3) It will also be suggested that the restructuring of the Swedish welfare state is related to the process of globalization currently underway. However, before turning to an examination of these two policy areas, it is useful to briefly review five distinctive dimensions of Sweden's welfare state which are presently under renovation.

The Swedish Welfare State: A Brief Overview

Despite its reputation as nulli secundus, the Swedish welfare state is clearly derivative, borrowing heavily from Beveridge in Britain and from the German social insurance approach developed in the late 1800s under Bismarck (Korpi and Palme, 1998; Olsson, 1994). The income security component of the Swedish welfare state thus has two distinct levels.(4) The first tier, a system of flat-rate, universal and largely government-financed benefits, provides only basic security, but a second tier of income-related, contributory social insurance programs is built upon this modest foundation. In the 1970s and 1980s, Sweden's income security programs became more generous (with higher benefit levels or income replacement rates), less restrictive (with fewer waiting days, longer benefit periods and less stringent qualifying conditions), and more universally provided (with higher coverage rates), than those in most other OECD nations (Kangas, 1991; Palme, 1990; Vaisanen, 1992; Wennemo, 1992). However, as will be seen, the idea of "citizenship" entitlements has been challenged in recent years and benefit levels have declined across most major programs.

The second, and perhaps most distinctive, aspect of the Swedish welfare state is the provision of a range of publicly provided, universal or near-universal social services at a level unsurpassed in the OECD (OECD, 1996b). …

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