sou · H8B346 · 2020-08-07 00:00:00 — On top of this, there is the financial stress inherent in un- certain employment itself. Gender equality – unfinished business For much of the post-war period, and the other Nordic countries have pursued purposeful policies to bring about greater gender equality in society. These have been successful in more than one way: women have achieved a more equal position, at the same time as the increased supply of labour has helped strengthen the countries’ economic potential. Women are entering higher educa- tion to a greater extent and thus becoming the bearers of a growing share of human capital, with consequences in the long term for power relations both in and beyond the world of work. In several areas, however, progress is lagging behind. Women still take greater responsibility for the home and for children and adults in need of care, which, in combination with paid employment, creates a risk of stress. For many, a solution is to work part-time, resulting in less economic independence, poorer insurance cover and, in the long run, lower pensions. Involuntary part-time employ- ment, too, is commoner among women than among men. Women’s and men’s wages in the same or closely related occupa- tions have converged over a longer timescale, but widespread part- time work among women has meant that incomes have not con- verged in the same way. The growing significance of capital incomes, which show a skewed distribution in favour of men, has had the effect that convergence between the average incomes of men and women has come to a halt. In addition, predominantly female occupations generally attract lower pay than those that are male-dominated, when occupations requiring similar periods of education and similar qualifications are compared. In the allocation of managerial positions, women are still under-represented in relation to their share of employees, in both the private and the public sector. In social security systems, individualisation is now a dominant principle. In certain cases, however, it has only been partially im- plemented, or else benefits are calculated on a household basis. In such cases, there is a risk of traditional gender role patterns persist- ing or even being reinforced. The health of the Swedish population is generally good by interna- tional standards, but certain differences in health outcomes, too, have shown a tendency to increase. High levels of education and good incomes are correlated with better health. There are also geographical variations in health, which are more pronounced in lower income groups. Health problems linked to various forms of dependence – alcohol, tobacco etc. – have likewise tended to become increasingly concentrated among individuals on lower incomes. Women have higher sickness rates than men, although only after giving birth to children. Part of the explanation is probably their greater combined responsibility for work and the home, but child- birth itself may also be a contributory factor, especially among women who, before giving birth, are less well placed to face the pressures involved. Housing, neighbourhood and environment Housing has traditionally played an important role in welfare policy. We spend a large part of our lives in and around our homes, and their location and standard are major factors in shaping the way our lives turn out. A large proportion of the subsidies that had formed part of policies in this area were phased out in the early 1990s, sharply reducing the role of the state. One consequence of this was uneven and generally low production of homes. With the rapid growth in population since the turn of the century, the shortage of rented accommodation, in particular, for low-income earners has become increasingly apparent. A housing shortage now exists in most of the country’s municipalities, in certain cases a serious one. , and Planning estimates that an average of 64 000 new apartments per year will be needed over the period 2018–2027, with particularly large numbers required in the metro- politan regions. Assets in the form of owner-occupied homes have increased sharply in value in recent decades as a result of rising housing prices, but household debt has also grown. In addition, these assets are unevenly distributed across the population, more unevenly than incomes. Taxation favours owner-occupied housing, an imbalance that has become more pronounced in recent years. For low-income households, owning one’s home is not an option. The dominant problem on the housing market is therefore the shortage of rented accommodation at rents that are affordable for this category of . Beyond the immediate need for a home, there is a need for services, both public and private. From a children’s perspective, preschools and schools are primary needs, and for the population as a whole, health care facilities and public employment service, social insurance and tax offices. It is not just a matter of availability, but also of quality. Both schools and health care providers have had difficulty maintaining quality in areas with less favourable socio- economic characteristics. A weakened system of social insurance One of the pillars of what has been called the Swedish model of economic policy is a compromise between capital and labour. In line with the ‘Rehn-Meidner model’, trade unions have accepted the rapid restructuring that comes with an open economy and heavy dependence on exports, in exchange for a well-developed system of social insurance. That system is intended, in the short term, to provide financial protection for those affected by the restructuring, and in the longer term, to help them make the transition to other occupations and sectors. In this way, broad acceptance has been secured for a free trade policy. Internationalisation of the Swedish economy has if anything intensified in recent decades, owing to both EU membership and the general globalisation of production processes and financial markets. If the historic compromise had been respected, social insurance should have been strengthened to a corresponding degree, or at least not weakened. Since the beginning of the 1990s, however, it has been steadily eroded, with the result that the loss-of-income principle adopted on the basis of political agreement no longer applies in practice. Today, the system reflects a design principle be- tween loss of income and basic security. This has resulted in the emergence of collective insurance schemes as a complement to the public ones, an approach that results in poorer spreading of risk, weaker redistribution and higher administrative costs. The distribution of wealth The distribution of wealth is always more uneven than that of in- come, in that individuals with higher incomes have more scope to save and because inherited wealth also tends to accumulate over generations. Since statistics on wealth were scrapped along with the wealth tax in 2007, the state of knowledge in this area in has been poor. The increased significance of capital incomes, however, suggests a more uneven distribution. In , the natural ten- dency towards a concentration of wealth has been amplified in recent years by the abolition of wealth tax, inheritance tax and prop- erty tax, and by changes in the taxation of closely held companies, and the importance of inheritance has grown. In the lower part of the income distribution, trends have been unfavourable. People on low incomes generally take out smaller loans than those on high incomes, but at higher cost. Narrow may – in the event of unforeseen occurrences or issues such as problem gambling – result in an unmanageable burden of interest payments, fees and capital repayments. Social capital – trust As has been noted, the level of trust is of significance for economic life, and changes in this regard may be expected to have conse- quences in many areas. Several factors are currently operating in the direction of declining trust in Swedish society: •Trust is strongly linked to equality. With something of a time lag, rising inequality may be expected to result in falling levels of trust. •Growing internationalisation and more uncertain conditions on the labour market, combined with a gradually weaker system of public insurance, have resulted in greater insecurity for broad sections of the population, and with it declining trust. •The majority of immigrants come from countries with lower trust levels than , owing to lower economic standards and often less well-developed democracy. Even if the individuals who take the step of migrating to more or less distant countries are not representative of the population as a whole, this change in the composition of the Swedish population may be expected to result in a lower level of trust. •Second-generation immigrants encounter obstacles in education and employment that create a risk of frustration and a low level of trust. Evidence of discrimination on ethnic grounds can be found both in schools and in working life. A new feature of the political landscape – with potentially significant consequences for economic life and development – is a questioning of both liberalism and democracy. Such tendencies have been dis- cernible both in and in other countries that have been felt to be self-evidently stable democracies. There is convincing evidence that these tendencies have to do with the changes described – greater economic insecurity, increased inequality, and a sense of there being generally less scope to influence one’s own situation in life. Con- versely, the changes in political opinion that have occurred may be expected to have consequences for economic development and hence also for households’ market incomes. Various explanations for the growing inequalities observed have been put forward in research and political debate. The developments that have taken place are complex and multidimensional. Some seek the explanation in economic and technological factors, such as globalisation of production processes and financial markets, or a high rate of innovation that rewards large, research-intensive com- panies with considerable market power. Others argue that the explanation lies, rather, in political decisions. The distinction be- tween the two categories – economic/technological and political – is potentially misleading, as political decisions in recent decades have often been such as to increase the scope for market solutions and market players, thereby contributing to greater inequality. Rising inequality in the Nordic countries is mainly attributed to political decisions and, to a certain extent, a lack of decisions, such as a failure to adjust transfer payments in line with trends in real wages. In the short term, reduced redistribution through the tax and transfer systems has been the most important factor. a longer time frame, greater segregation in housing and school education will be of major significance for differences in childhood circumstances and living conditions later in life, as will the effects of technological and economic changes that are not met with adequate counter- measures. Which inequality is important? When the correlation between inequality and various welfare out- comes – health, social mobility and others – is analysed using various measures of inequality, a clear pattern emerges, as already indicated: what is important is the income share and other dimensions of welfare of the bottom four or five decile groups. Put another way, high minimum levels of education, health, income and other resources are favourable to social mobility, to trust and to economic growth. This does not mean that the upper part of the distribution is without interest. A strong concentration of income and wealth in the upper stratum may give a small group a disproportionate in- fluence over the development of society and thus have far-reaching adverse consequences in the long term for economic development for the population as a whole. Such tendencies are evident in US society and have also been discernible in . Market and the public sector As already observed, in every society based on a market economy there is a natural tendency for different forms of capital to become concentrated. This is visible in purely geographical terms: a town with somewhat more favourable conditions than a rival one attracts people, skills and economic resources and thus becomes even more attractive. It is also visible in competition between companies: other things being equal, a larger company has an advantage over smaller ones, since it can more easily deal with disruptions, has greater market power, and can offer better of promotion for qualified staff. Such differences exist between households as well: well-resourced ones with higher education and higher incomes can more easily exploit opportunities and cope with disruptions in in- come than those with more limited resources. What can offset such tendencies towards concentration, im- balances of power and inequality are public interventions of various kinds. Geographical concentration can be counteracted by infra- structure investments, an expansion of higher education and other regional policy measures. imbalances between companies can be counteracted by measures to promote competition and innova- tion support for small and medium-sized enterprises. The position of resource-poor individuals and households can be strengthened in the short term by transfer payments and in the longer term by education. •An important cause of the growing inequality at every level is that the nation state has been weakened by a series of political decisions over the last three or four decades. In ’s case, significant legislative powers have shifted upwards to the EU level. The fundamental principle of EU cooperation is that of the four freedoms – the free movement of capital, labour, goods and services. This principle may seem neutral at first glance, but it in fact favours capital at the expense of labour, as capital is more mobile. Labour mobility has been greatest among workers from low-income countries within the Union, which may adversely affect corresponding groups on the Swedish job market. •Various responsibilities have been delegated to municipalities, schools being the most notable example. This in itself increases the spread of outcomes, as, even with a system of economic equalisation, the capacities of different municipalities vary con- siderably. Differences in the political preferences of the local majority also have an impact. •Market-like solutions and methods of governance mean that the inherent tendency of the market towards concentration and in- equality also spills over into the public sector. •Some of the key policy areas mentioned above – housing policy, social insurance – have also been affected by the retreat of the state from earlier undertakings, often in the form of gradual changes caused by an absence of decisions. These factors combined are an important part of the explanation for the increased inequality both in and in other comparable nations, and the tendencies described have been more pronounced here than in most countries. A policy for greater equality – starting points and principles A liberal view of society with a children’s perspective The Commission has worked on the basis of a liberal view of society, meaning that the analysis undertaken needs to take individuals as its starting point, and not families, clans, nations or other groupings. The citizens of a liberal society are guaranteed certain fundamental rights, but in return have an obligation to take responsibility for their own lives. For these bundles of rights and obligations to be perceived as legitimate by the population as a whole, all citizens also have to be given a reasonable chance of realising their visions of a good life. It is important to underline that the fundamental rights in ques- tion are , that is to say, independent of gender and social and ethnic background, and also independent of the cultural context. A direct consequence of these starting points is that political problems relating to conditions in early life and through childhood and adolescence are to be seen from the child’s point of view. Parents normally represent their children, but where conflicts arise between the children’s interests and those of their parents, the best interests of the children must take precedence. Greater equality and strengthened economic potential are compatible goals The terms of reference for the work of the Commission rest on a conviction that it is possible to increase equality in society while also strengthening the country’s economic potential. The Commission’s analyses and the research and inquiry literature on which its report builds confirm the validity of this conviction. The division of responsibilities between the public and private sectors must be based on an objective analysis The boundaries between the public and private sectors have shifted in recent decades, without full account being taken of the com- plications arising from various forms of privatisation. A commonly held view has been that ’s tax-to-GDP ratio has been too high and that there is intrinsic merit in reducing it. Analyses carried out by the , however, show that different countries have very different ways of discharging public responsibilities, that these differences affect the amounts of tax levied, and that comparisons between countries’ tax ratios can consequently be directly mislead- ing. It is not surprising, therefore, that it has been difficult to find any simple relationships between, for instance, tax ratios and rates of economic growth; what is done in the framework of public-sector responsibilities is more important for the economic outcome than the tax ratio. Experience of trials of various market-like methods of gover- nance in the public sphere in recent decades also shows that they by no means always increase efficiency or reduce expenditure. On the contrary, some of these changes have driven up costs. Before responsibility for delivering public services is handed over to private providers, there thus need to be careful analyses of the basic conditions on which this is done. Since all contracts are in- complete, it is generally difficult, on a contractual basis, to bring the profit interest of the private enterprise concerned into with the political goals laid down for a given service. Other requirements which public services have to meet – equal treatment, objectivity and transparency – are also difficult to reconcile with the rules that apply in the private sector, such as commercial confidentiality and loyalty to one’s employer. Supervision and sanctions must therefore form part of the rule structure within which private actors have to operate. In certain situations, the conclusion will be that public responsibility can only be assumed for a service if it is operated in-house. The division of responsibilities within the public sector must be based on an objective analysis Alongside various forms of privatisation, it has been common in recent decades to delegate measures decided on by central govern- ment to regions and municipalities. Decentralisation of schools to municipal authorities is one important example, but responsibility for the large flows of migrants has also largely been devolved to those authorities. Delegation from central to regional or local government may have advantages, but requires a careful analysis of the public function in question. Here, too, there has sometimes been a failure to take into account what services are being delivered and what capacity municipalities or regions have to implement the policy decisions taken at a national level. Another consideration is that certain changes in central govern- ment undertakings or in taxation have had negative consequences for municipal finances. A lower level of ambition in the social in- surance system has resulted in a heavier burden on income support, which is administered by municipalities. Changes in taxation rules for closely held companies have adversely affected the municipal tax base, as wage income has been turned into capital income and thus been removed from that tax base. Where compensation is paid via state transfers to municipalities based on the ‘local government financing principle’, these payments are static, that is to say, they are not indexed, and therefore growth in an item of expenditure over time gradually increases the burden on the municipal sector, without any adjustment of the compensation paid. Full use should be made of the national room for manoeuvre under EU legislation EU membership has radically changed the basic conditions for political decision-making in . A substantial proportion of the new laws enacted by the Riksdag emanate from the EU level. According to an analysis carried out for this Commission, adapta- tion to EU law in several key areas has been pursued further than necessary, that is, further than the underlying directives have actu- ally required. Housing policy is one example. This has sometimes been to the detriment of equality. EU membership must also be properly administered in areas governed by the rules arising from it. Swedish authorities need to ensure that foreign commercial operators in the country follow the regulations that apply. In the transport and construction sectors, for example, supervision has been inadequate, with negative consequences for domestic companies and employees. Prevention is better than cure There is an old rule that says that prevention is better than cure. Modern analyses of initiatives to compensate for a less favourable social background and increase the likelihood of children success- fully completing their basic education, for example, confirm its truth. interventions, sometimes already at preschool age, have abetter chance of bringing socio-economic benefits. One difficulty that can sometimes arise is identifying the children who need special interventions and choosing effective ones. Selectivity is important; the fact that a problem has been identified at a group level does not mean that the entire group needs measures to tackle it. School failure can have very negative long-term consequences. It often results in difficulty gaining entry to the labour market to earn one’s own living, which in some cases leads to long-term welfare dependency and in others to a criminal career. The socio-economic costs of such careers are far higher than the costs of preventive measures during a person’s school years. In the area of economic crime, too, the benefits of prevention are confirmed. Effective legislation permitting information sharing be- tween authorities, information to the general public, and appropriate proactive supervision can prevent crime and keep down the socio- economic costs associated with it. Health care is another area where preventive interventions can bring a number of socio-economic benefits. Creating good condi- tions for health early on, for example by establishing healthy lifestyle habits in school students and discouraging different forms of depen- dence – alcohol, tobacco, drugs and gambling – reduces both human suffering and the costs to society of ill health. The same is true of working conditions and environmental factors in employment and housing. Administrative boundaries are needed for coordinated measures Administrative boundaries are necessary, both vertically between different levels and horizontally between sectors. Without clear boundaries, it is more difficult to allocate responsibilities and enforce accountability. Sectors are needed to enable those working in different services to develop and maintain the necessary expertise. There also need to be clear boundaries between the public sector on the one hand and civil society and the market on the other.