Swedish Gov't targets social wage

By Anita Ostling, Militant, 20 February 1995

STOCKHOLM, Sweden—The new Social Democratic government in Sweden has escalated attacks on the social wage of working people. Dramatic cuts made up the government's first budget proposal presented in mid-January.

Stockholm's main argument for gutting the programs that make up the social wage is the need to reduce its budget deficit and the national debt. We cannot get ourselves out of this economic morass without it hitting every single household, declared Sweden's Social Democratic finance minister, Goran Persson, as he outlined the austerity proposal.

Up until now, a number of allowances and entitlements in the social security system here have fully compensated for inflation. But beginning this year, compensation will be cut to 60 percent of the Cost Price Index. This primarily slashes into pensions for retired workers and the disabled. But it also affects guarantees to single parents and scholarships and loans for college and university students.

In 1994 a new compulsory payment was introduced for unemployment insurance. One percent was deducted from wages. This has now been abolished and contributions to unemployment insurance can be made voluntarily.

However, the government has introduced a compulsory payment to health- care and pension plans. This year 3 percent will be deducted from wages. An average industrial worker will be forced to fork over SKr500 a month (SKr1= US$0.14). By the year 2000 the deduction will rise to 10 percent.

Health care and pension plans have previously been financed mainly through payments from the state and employers. This new step moves in the direction of turning a social security entitlement into an individual insurance.

The budget includes a proposal to slash family allowances for the first time since their introduction in 1948. This is an entitlement for every child regardless of the income of the parent. The allowance of SKr750 per month per child is reduced by SKr150.

From universal to 'means-tested'

The family allowance has come under fire in the last few years. The now defunct right-wing New Democratic Party argued against it. So do leading figures inside the Employers' Association. Hiding their intention to go after the working class they demagogically argue that the wealthy should not receive the subsidy.

The government is attempting to open the door to a means- tested allowance. It says that those hit hardest may be compensated through another program where they will be forced to qualify.

A worker at Volvo's Aero Engine plant outside of Stockholm pointed out that the universal character of the entitlement had been fought for so that no children could be singled out as welfare recipients and separated from the rest.

The budget proposal also contains further cuts in sick leave and unemployment benefits.

In Sweden workers have the right to stay home with newborns for one year. But the compensation is now cut to 75 percent (down from 90) of wages, as is the compensation if you stay home with sick children.

Retired people will suffer from the belt-tightening. In addition to losing 40 percent of the compensation for inflation, funds for housing are cut and preferential prices for health care and medicines are largely taken away.

No unemployment benefits for youth

The most radical step in the budget would exclude people under 20 from jobless benefits. To qualify for unemployment compensation a worker must have been a member of a union for one year and been employed for at least five months of the year. But those under 20 who meet this criteria still won't qualify.

Unemployment in Sweden stands at more than 12 percent. The government projects bringing official joblessness down to 10.8 percent by 1998. Right now there is an upturn in the economy and hiring is going on in the exporting sector. Overtime is at record levels. But the domestic market is slow. Construction is at a virtual standstill.

During last year's election campaign all political parties advanced platforms focusing on the budget deficit and the national debt. They demanded concessions by working people to save the Swedish state from bankruptcy. This campaign particularly targeted young people, who were told to help the older generations to stop spending, which was said to be the reason for the deficit.

Bjorn Wolrath, director of the Skandia insurance company, campaigned against buying bonds issued by the Swedish state until the government took painful measures to lower the budget deficit. This led to increased interest rates. Swedish insurance companies are some of the biggest creditors to the state.

Immediately following the budget proposal announcement Wolrath came out against it claiming the government had not gone far enough. The cuts amounted to only Skr22 billion. Wolrath demands SKr60 billion before he'll buy.

Swedish cuts fail to convince markets, read the headline of the London Financial Times reporting on the Social Democrats' budget plans.

Over the past few years capitalists in Sweden have been on a crusade to intensify exploitation. Gutting the social wage is one element. The maintenance of high unemployment is another. About 65 percent of all new jobs during the upturn are temporary. The capitalists want more flexible working hours and the introduction of a two-tier wage system. But the employers have yet to transform this into forcing workers to accept radically worsened conditions on the job.

At a recent Militant Labor Forum here, several young people described the conditions under which they work.

Two young women spoke about their special youth training jobs, one in a child-care center and the other in a record store. They each make $500 a month and work full-time. The employer presses for overtime and threatens them with bad references if they don't accept. They have a right to use eight hours every month to go job hunting but the employer is against it. They are not allowed to join the union or qualify for unemployment benefits.

The government has also cut allowances for high school students. High school students were the first to respond to the budget plan. They organized demonstrations to protest the worsening conditions for youth. Between 3,000 and 5,000 young people participated in a demonstration in Stockholm. More protests are planned.