Social Democrats
Svallfors, Stefan
Western progressives have long pointed to Swedish social democracy as an outstanding success story. As recently as the 1988 elections, the dominance of the Social Democratic Labor party...
...Its goal was to bolster a wage-and-price freeze...
...So far, the party's reactions have been cautious...
...But the damage was done...
...Today many workers reject further appeals for wage restraint...
...Unemployment is remarkably low...
...The Swedish Employers' Confederation (SAF) has undermined the highly centralized system of wage negotiations...
...Instead, undecided voters now make up about 20 percent of the electorate—an extraordinarily high figure for Sweden...
...Within parts of the labor movement there are rumblings about the need for a "solidaristic work policy," which would raise themes such as the working environment, the content of work, and codetermination...
...The Greens alone gained ground, winning parliamentary representation for the first time...
...Today many leading Swedish companies have a large part of their workforce, as well as their market, abroad...
...The central trade union leadership initially backed the proposal, but the negative reaction of the rank and file was strong...
...As things stand, a coalition government of the conservative Moderate party (with its base among professionals) and the Center party (with its orientation toward the "little people") is improbable...
...The Social Democrats could conceivably recapture a share of their lost electorate...
...In the political arena, social class remains the most important factor determining patterns in voting and public opinion...
...There are, however, a few bright spots...
...Some white-collar unions are militantly pressing for wage increases to reestablish the wage differential between their strata and blue-collar workers...
...Higher paid white-collar workers may have resented narrowing the gap, but they still benefited from a growing economy and certain social insurance programs (for example, sick pay) that were income-based...
...Meanwhile, capital has become more assertive...
...It was initially based on the notion that blue-collar workers, many whitecollar workers, and capital all .stood to gain from long-term although not friction-free—cooperation...
...fewer work days are lost to sickness...
...Some traditional Social Democratic policies 22 • DISSENT Reports from Abroad are difficult to push right now —for example, redistribution...
...True, the party slipped somewhat at the ballot box, but so did the centrist and conservative parties...
...The budget deficits of the early 1980s have been eliminated, and social welfare policy is firmly supported by the electorate...
...Two years later, polls indicate a sharp decline in support for the SAP...
...income equalization ground to a halt...
...SAP women voters found this backtracking hard to accept...
...To secure its future, the SAP must find a new project around which to rally the movement...
...In the end, the SAP's domestic policies will not be the determining factor...
...A solidaristic work policy may contain the embryo of a new Swedish compromise...
...The party leadership thinks this likely once the positive effects of the tax reform become apparent...
...Volvo, for example, recently announced cutbacks in production in Sweden because its factory in Ghent, Belgium is more profitable...
...The sharp drop in approval ratings of the SAP has not been accompanied by a corresponding upturn for the bourgeois parties...
...It remains to be seen whether the Social Democrats will reconnect with these traditional issues of the workers' movement...
...In sum, the Swedish Social Democrats face grim problems...
...There have been no drastic cutbacks, in contrast to other Western European countries...
...Doing away with all this had the support of virtually all Social Democrats, but the reform package ended up destroying most of the system's progressiveness...
...Because the tax rate for high-income earners was lowered, many Social Democrats believed that a fundamental principle was discarded...
...This would translate into an electoral plunge of more than 8 percent compared with 1988—the worst showing since the early 1930s...
...Inflation in Sweden is currently the third highest in Europe, following Spain and Portugal...
...Furthermore, the three "bourgeois" parties are probably more divided than ever...
...Lacking support from any other party in parliament, the government backed down...
...When the SAP returned to power in 1982 (after six years in opposition), workers agreed to a policy of wage restraint and profit maximization in order to wipe out a large budget deficit...
...The public sector is exceptionally stable...
...For them, the movement's identity depended on support for a system that redistributed wealth...
...Swedish capital has also become increasingly internationalized...
...During the 1980s, each class became less willing to compromise...
...The SAF insists on negotiating with individual unions rather than its traditional partner, the Trade Union Confederation (LO...
...The class compromise on which the "Swedish model" was built has begun to unravel...
...Rates governing the direct taxation of earned income were lowered as many deductions and subsidies were removed...
...Management's long-term agenda is for company-based bargaining, which would lead to serious rifts in the labor movement...
...Unemployment is high in Belgium...
...The immediate problem is that Social Democratic voters question the party's economic policies...
...Some progressive employers have responded favorably to these concerns because they see reforms as a way to increase the flexibility and quality of production and to cut absenteeism and job turnover...
...As a result of the SAF strategy, the solidaristic wage policy (equal pay for equal work nationwide)—a cornerstone of the Swedish model— has broken down...
...To many union members who consider the WINTER • 1991 • 21 Reports from Abroad right to strike their greatest source of strength, the proposal seemed a sign that the SAP no longer acted in their interests...
...Perhaps the SAP minority government's most serious tactical error was a proposal in spring 1990 to abrogate temporarily the right to strike...
...and the turnover is lower than in Sweden, where there is a labor shortage...
...The tax reform agreement indicates that the Social Democrats now prefer to turn to the right for parliamentary support—support that the splintered and unpredictable Left party (formerly the Left Party Communists) is no longer able to provide...
...For workers, the Swedish model meant full employment, generally rising living standards, a social welfare safety net, and a slow but steady equalization of incomes and living conditions throughout society...
...Behind all this is a larger problem...
...Further expansion of the public sector seems neither possible nor desirable...
...As a result, the stock market skyrocketed while real income stagnated or declined...
...While large parts of Western Europe have unemployment rates of about 10 percent, the rate in Sweden is less than 2 percent...
...For capital, a smoothly functioning labor market, flexible growth, and labor peace made income redistribution easier to swallow...
...The SAP leadership also ran into trouble when, as part of the struggle against mounting inflation, it shelved one of its most important campaign promises—to extend paid parental leave from twelve to fifteen months...
...The old tax system had become a jungle of deductions that permitted the highest income groups to pay less and less despite the system's strong progressiveness on paper...
...The future of the SAP is more uncertain today than it has been for a long time...
...Physicians, teachers, police officers, and nurses have won substantial raises from their public-sector employers...
...A good example is discontent over recent tax reform...
...In contrast to other countries, divisions between public- and private-sector employees or between tenants and homeowners have been negligible...
...What happened...
...This intensifies disenchantment among blue-collar workers...
...As recently as the 1988 elections, the dominance of the Social Democratic Labor party (SAP) appeared unchallengeable...
...The most promising path may be to return to the issues of work life and workplace democracy that the SAP put aside long ago...
...As long as they can find a less expensive and more malleable work force abroad, Swedish capitalists will have little incentive to reform in Sweden...
...The party is backed by just 35 percent of all Swedes...
...One consequence of employers' resistance to centralized negotiations, workers' discontent with backsliding on redistribution, low unemployment, and militant wage demands is rampant inflation...
...The party congress last September was dominated by practical issues that lacked a clear ideological profile...
...But even if the SAP does focus on the quality of working life, the strategy will fail if Swedish companies engage in "social dumping," that is, if they move to places where unemployment is higher and social welfare less generous...
...Consumer taxes and taxes on unearned income were raised...
...Instead, the character of Western Europe's integrated market and the future direction of Eastern Europe will largely determine the fate of the Swedish model...
...q WINTER • 1991 • 23...
...In addition, private companies devised a host of nontaxable perks to supplement privileged employees' paychecks...
Vol. 38 • January 1991 • No. 1
