2021 OECD ECONOMIC SURVEY OF SWEDEN
http://www.oecd.org/eco/surveys/economic-survey-sweden.htm
@OECDeconomy @OECD
Thematic focus: regional inequality
Key messages • Continue to support, in a targeted manner, people and businesses severely affected by COVID-19 until the pandemic subsides. • Implement the labour market reforms agreed by the social partners to support employment. • Lay the foundations for a sustainable recovery throughout the country by promoting digital and green developments. • Support regional development through strengthening multi-level governance and strategic cooperation between government entities, and reinforcing the role of universities as knowledge hubs. 2
GDP contracted less than in many other OECD countries Real GDP change in 2020 % 4 2 0 -2 -4 -6 -8
-12
IRL TUR LTU KOR NZL LUX NOR AUS ISR POL EST DNK FIN SWE CHE USA LVA NLD JPN SVK OECD HUN DEU CAN SVN CZE CHL BEL ISL AUT COL PRT FRA MEX GRC ITA GBR ESP
-10
Source: OECD Economic Outlook database.
3
Activity recovers slowly in some sectors Percentage loss in sales compared to normal Trough
Latest
Internet trade Trade, daily items Finance & insurance Real estate Manufacturing Construction Trade, total Total business sector Job agencies Services, ex. trade Trade, occasional items Advertising and marketing Restaurants Travel agencies Hotels -90
-80
-70
-60
-50
-40
-30
-20
Latest refers to 10-12 May 2021. Trough refers to the minimum value in bi-monthly surveys since 11-13 May 2020. The percentage loss in sales has been calculated by taking the midpoint of the response options: reduced by 1–25, 26–50 etc. Source: National Institute of Economic Research.
-10
0%
4
Unemployment has risen markedly A. Unemployment has risen 12
% of labour force 18
10
16
8
8
14
7
6
6
4
5
2
4
0
3
-2
2
-4
1
-6
0
-8
%
←Unemployment rate, LFS¹ ←Unemployment rate, SPES²
9
Employment growth (y-o-y) →
2015
2016
2017
2018
2019
2020
2021
12 10 8 6 4 2 0
JPN POL CZE NLD HUN MEX KOR DEU NZL GBR NOR ISR CHE SVN AUT BEL IRL DNK AUS USA LUX OECD PRT SVK EST LTU ISL FIN FRA CAN LVA SWE ITA CHL TUR COL ESP GRC
% of labour force 10
B. Unemployment rate 2021Q1 or latest quarter
1. Labour Force Surveys (LFS), population aged 15-74. There is a break in the LFS unemployment and employment time series resulting from the adaptation of the Swedish LFS to the new EU framework regulation from 2021 onwards. 2. Swedish Public Employment Service, population aged 16-64. Source: OECD Economic Outlook database; Swedish Public Employment Service.
5
Fiscal policy is propping up the economy Government net lending % of GDP 2
Sweden
OECD
Other Nordics
0 -2 -4 -6 -8 -10 -12
2019
2020
Other Nordics is an unweighted average of Denmark, Finland and Mainland Norway. Source: OECD Economic Outlook database.
2021
2022 6
Public finances are solid Gross government debt, Maastricht definition, 2020 % of GDP 250
200
150
100
Source: OECD Economic Outlook database.
GRC
ITA
PRT
ESP
FRA
BEL
AUT
HUN
SVN
EU27
DEU
FIN
SVK
IRL
POL
NLD
LTU
LVA
DNK
NOR
SWE
CZE
LUX
0
EST
50
7
Monetary policy is highly expansionary A. Policy rates
%
Sweden Norway
3.0 2.5
Euro Area United States
B. The Riksbank’s bond holdings
%
% of GDP
3.0
14
2.5
-0.5
-0.5
2
-1.0
-1.0
2021
4
2020
0.0
2019
0.0
2018
6
2017
0.5
2016
0.5
2015
1.0
2014
1.0
2013
1.5
2012
1.5
2011
2.0
2010
Covered bonds
Municipal bonds
Corporate bonds
12
2.0
Source: OECD Economic Outlook database and Riksbank.
Government bonds
10 8
0
2015
2016
2017
2018
2019
2020 8
House prices have been rising rapidly A. Selected OECD countries Y-o-y % changes
Y-o-y % changes 30 25 20
SWE
DNK
CAN
OECD
30
NOR
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15 2008
2010
2012
2014
2016
Flats
Houses
20 15
2006
Total
25
15
-20
B. Sweden
2018
2020
-20
2006
2008
2010
2012
2014
2016
2018
2020
Panel A displays quarterly data adjusted for inflation using the private consumption deflator, up to 2020Q4, Panel B nominal monthly data, up to April 2021. Source: OECD, House Price database and Valueguard.
9
Key recommendations on macroeconomic policies • Maintain support measures, such as reinforced short-time work and compensation for lost turnover, until the COVID-19 pandemic subsides. • Maintain strong fiscal policy support until the recovery is well established and gradually move back towards the budget surplus target over the medium term. • Maintain accommodative monetary policy until inflation is durably close to target, with activity on course to expand at a robust pace. • If household debt continues to rise rapidly, tighten macroprudential policy.
10
Reforms to boost employment and sustainable growth
The fall in the employment rate of young women has been most persistent % points 4
Change in employment rate from previous year (% points) 2019 Q4
2020 Q1
2020 Q2
2020 Q3
2020 Q4
2021 Q1
2 0 -2 -4 -6 -8
Men 16-64
Source: Statistics Sweden.
Women 16-64
Men 20-24
Women 20-24 12
Permanent workers’ employment protection is relatively strong Index of protection of permanent workers against individual dismissals, 2019 Index 3.5 3.0 2.5 2.0 1.5 1.0
CZE
ISR
PRT
NLD
TUR
BEL
ITA
LVA
GRC
LUX
SWE
CHL
FRA
ESP
MEX
POL
FIN
KOR
SVK
NOR
OECD
LTU
DEU
SVN
ISL
JPN
NZL
COL
IRL
EST
DNK
HUN
GBR
AUT
AUS
CAN
CHE
0.0
USA
0.5
The index ranges from 0 (no regulation) to 6 (detailed regulation). Source: OECD Employment Protection Database.
13
Key recommendations on employment policy • Implement the labour market reforms agreed by the social partners. • Strengthen adaptation of vocational education and training to labour market needs by reinforcing regional coordination structures. • Mainstream the pilot Equal Establishment programme for foreign-born women. • Implement the pension reform which raises the maximum age for the right to remain in employment and the minimum ages for receiving state old-age and basic pensions in line with developments in life expectancy. 14
Housing affordability is low, as in many OECD countries Housing price levels relative to yearly income, 2019
Number of years of per capita gross disposable income needed to buy a 100 square metre dwelling. Source: Houselev and OECD, House price database.
15
Household debt is high Household debt, percentage of yearly income, 2019 or latest %
300 250 200 150 100
0
LVA HUN LTU COL SVN POL CHL CZE EST SVK ITA AUT DEU GRC USA ESP JPN BEL FRA PRT OECD NZL IRL GBR FIN CAN LUX KOR SWE AUS CHE NLD NOR DNK
50
Income refers to net household disposable income. Source: OECD, National Accounts database.
16
Rent control is very strict 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2
SWE
COL
DEU
JPN
LUX
CHE
ESP
FRA
NOR
MEX
BEL
AUT
NLD
DNK
OECD
LVA
POL
AUS
PRT
IRL
CZE
CAN
FIN
USA
EST
CHL
ISL
NZL
GBR
ISR
0.0
SVK
0.1
The index ranges from 0 (least restrictive) to 1 (most restrictive). Source: OECD calculations. 17
Key recommendations on housing policy • Shift taxation further away from labour and towards environmentallyrelated taxes and recurrent taxes on immovable property, including through phasing out mortgage interest deductibility. • Ease rental regulations to incentivise rental housing supply, while maintaining tenant protection against abuse. • Enhance co-operation between central and local government in land-use planning and increase incentives for municipalities to facilitate the timely release of development land. • Simplify land-use planning procedures, balancing economic, environmental and social considerations. 18
Carbon dioxide emissions per capita are declining steadily Tonnes per person 25
Sweden
Global
Europe
United States
20
15
10
5
0
1900
1906
1912
1918
1924
1930
1936
1942
1948
1954
1960
Carbon dioxide emissions refer to emissions from burning fossil fuels to produce energy and cement. Source: Sveriges Riksbank, based on Our World in Data (OWID).
1966
1972
1978
1984
1990
1996
2002
2008
2018 2014
19
Road transport, industry and agriculture are the largest GHG emitters Million tonnes of CO2-equivalent
20
20
18 Other
Other
16
Pulp & paper
14 Heavy trucks
12
Chemistry
10 Light trucks
Cars
Refinery
8 6
Cement & related
4
Iron and steel
2 0
Transport refers to domestic transport. Source: Naturvårdsverket.
Transport
Own heating
18 16
Waste
14 12
Product use
10
18 16 14 12 10
8 6 4 2 0
20
Industry
Work machinery
8
Electricity and district heating
4
Agriculture
0
6
2 Other
20
Key recommendations on green growth
• Elaborate a roadmap for cost-efficient and technology-neutral decarbonisation of road transport. • Phase out reductions in carbon and energy taxes for fuels used in agriculture, forestry and fisheries.
21
Keeping regional inequality in check
GDP growth has varied considerably across regions Contributions to real gross regional domestic product percentage change, 2000-18, TL3 regions 70
Productivity
60
Employment rate
Share of working-age popualtion
Population
50 40 30 20 10 0
Data are adjusted for changes in the perimeter of some regions during the period. This has a minor impact on the results. Source: Based on Statistics Sweden Regional Accounts.
Kalmar
Gävleborg
Norrbotten
Blekinge
Västernorrland
Gotland
Dalarna
Jämtland
Värmland
Västmanland
Jönköping
Södermanland
Västerbotten
Örebro
Halland
Östergötland
Skåne
Sweden
Uppsala
Kronoberg
Västra Götaland
-20
Stockholm
-10
23
Regional disparity in GDP per capita remains relatively low Ratio of RGDP in the top 20% richest TL3 regions over that in the bottom 20% poorest TL3 regions Ratio
2018
4.0
2008
3.5 3.0 2.5 2.0 1.5 1.0
Source: OECD Regional Statistics database.
SWE
AUT
PRT
ESP
KOR
CHE
SVN
USA
NOR
JPN
DNK
NLD
CZE
LTU
ITA
GRC
BEL
FRA
EST
DEU
SVK
POL
LVA
GBR
HUN
COL
0.0
TUR
0.5
24
Well-being varies across regions Well-being regional gap, TL2 regions Ranking of OECD regions (1 to 440) top 20% middle 60% bottom
Central Norrland
Top region
Central Upper Norrland Norrland
North Middle Sweden Stockholm
Bottom region
Småland with Islands
Upper Norrland
Safety
South Sweden
Stockholm
Jobs
Housing
Community
Source: OECD Regions and Cities at a Glance 2020.
Stockholm
Regions (Riksområden) South Sweden
Stockholm
South Sweden
Education
Upper Småland with Islands Norrland
North Middle North Middle Sweden Sweden
South Sweden
Central Norrland North Middle Sweden
North Middle Sweden
South Sweden
Stockholm
Environment
Health
Income
Life Satisfaction
Access to services
Civic Engagement
25
Dependency ratios are increasing and diverging across regions Ratio of population aged below 15 or over 64 to population aged 15-64 (%), TL3 regions 85
Average
Median
Max
Min
80 75 70 65 60 55 50 45 40
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040
The minimum corresponds to the Stockholm region throughout the period. The maximum corresponds to different regions depending on the year. Source: Statistics Sweden and authors’ calculations.
26
Equalising transfers are slightly above peer countries’ average Percentage of total government expenditure % 10 9 8 7 6 5 4 3 2 1 0
AUS
JPN
DEU
KOR
SWE
ESP
AVG
NLD
CAN
CHE
LTU
IRL
LVA
EST
ITA
Source: Dougherty and Forman (2021), “Evaluating fiscal equalisation: finding the right balance”, OECD Working Papers on Fiscal Federalism, No. 36, OECD Publishing, Paris.
BEL 27
Sweden is among the world’s leading countries in e-government Top performers in e-government Index 1.00 0.98 0.96 0.94 0.92 0.90 0.88 0.86
JPN
NOR
ISL
SGP
Source: 2020 United Nations E-Government Survey.
NLD
USA
NZL
GBR
SWE
AUS
FIN
EST
KOR
DNK 28
Stockholm accounts for a large share of net job creation Share of TL2 capital regions in net job creation and total employment % 100
Share of net job creation¹
Share of total employment²
90 80 70 60 50 40 30 20
1. Net job creation in capital regions relative to nationwide job creation, 2006-16. 2. Total employment in capital regions relative to nationwide total employment, 2019 or latest. Source: OECD (2018), Job Creation and Local Economic Development 2018: Preparing for the Future of Work.
USA
MEX
DEU
SVK
TUR
NZL
CZE
ISR
CHE
POL
BEL
AUT
AUS
CAN
GBR
CHL
HUN
NOR
NLD
SWE
ITA
ISL
KOR
IRL
DNK
FIN
0
JPN
10
29
Key recommendations on regional inequality • Limit the use of earmarked grants to strategic areas. • Avoid excessively narrowly targeted and short-term grants. • Simplify the fiscal equalisation system and/or increase transparency. • Introduce monitoring on an ongoing basis to facilitate adjustments. • Develop further on-line public services delivery. • Enhance the public infrastructure for data and information sharing. • Strengthen incentives and support to raise the contribution of universities to regional knowledge and innovation. • Strengthen multi-level governance, including coordination of sector policies and cooperation between government entities and other stakeholders, to enhance strategic cooperation for regional development. 30
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