as a comparatively rich industrialised nation? what does the low level of capital formation imply for sweden ’ s chances of recapturing the leading position it had among industrialised nations at the beginning of the 1970s? it is important here to note that the structure of the business sector has changed. the industrial sector as a whole, including the basic industries, such as mining, ironworks and steelworks, and paper and pulp, have decreased as a proportion of gdp in favour of the expanding services industries. basic industries ’ share has fallen from 6. 5 per cent of gdp in 1970 to just over 4 per cent today, while service production in the business sector has increased from approximately 30 per cent of gdp to just over 40 per cent during the same period. we have therefore moved further and further away from capital - intensive production to production that is more dependent on human capital than heavy plant and machinery. another factor to take into account is the decline in housing construction, which has also contributed to the drop in the figures for capital formation. however, housing construction does not have the same importance for productivity growth as industrial investment, for example. this means that the dramatic decline in capital formation does not have to imply an equivalent fall in productivity growth. nevertheless, i still have the impression that we are focusing less on capital formation than before. this is indicated by the fact that structural change is currently relatively limited. the labour supply permit me now to discuss the other component that determines a country ’ s long - term growth capacity besides productivity, namely the labour supply. this is determined by the number of people in work and the number of hours they work. the number of hours worked rose during the years after the crisis at the beginning of the 1990s. this was partly due to greater demand for labour, to a rise in the working age population ( 20 - 64 years ) and relatively low numbers on sick leave. the trend in the number of hours worked has been broken in recent years, however. this is because the total number of people on sick leave has risen in sweden since 1997 - 1998. according to the most common measurement methods, sweden has the highest incidence of sick leave in the eu. there has also been an increase in work absence due to holiday and other leaves of absence as well as a decrease in overtime and additional working hours. meanwhile, the labour market has not made satisfactory use of the immigrant population in sweden. the employment rate among this group has been markedly lower than among native swedes. in addition,

’ s age structure in the years ahead is not only a challenge to future potential growth. it also has other implications. for instance, the population trend means that the proportion of people that are 65 years or older will increase from 17 per cent today to 23 per cent in 2030. at the same time, the working age population will decrease from 59 to 54 per cent during the same period. this implies that the working age population in sweden will have to support an increasingly large proportion of both the young and elderly. at present, each person of working age supports 0. 70 people that do not work - in other words, the young and old. by 2030, it is forecast that each person of working age will have to support 0. 84 people, which represents a rise in the dependency burden of 20 per cent. the whole increase in the dependency burden is due to the retirement of large numbers from specific generations, the 1940s generation in the years 2005 - 2015 and the 1960s generation in the years around 2030, at the same time as average life expectancy is expected to increase. so if we only take the elderly into account, each person of working age today supports 0. 29 people that are 65 years or older. by 2030, this is forecast to have risen to 0. 42. so the problems we are seeing today with the public sector ’ s financing are a trifle compared with what awaits us if nothing is done. the population ’ s age structure will entail great demands on welfare services and thereby a heavier burden on the public finances. in addition, a smaller supply of labour and a resultant lower level of production will mean a drop in receipts for the government. however, the problems would increase even in the event of even population growth. the structural shift implied by an ever larger production of services is also a problem in this context. workers in the services sector demand the same wage as other parts of the population despite considerably slower productivity growth compared with the industrial sector, which is exposed to competition. the latter is undergoing constant rationalisation through an increasing ratio of capital per employee - something that is not quite as feasible in the services sector. this means that the relative price of services is increasing over time, which is a particularly large problem when services, like in sweden, are largely provided by the public sector and financed via taxes. the wage rises that are being driven forward by the high - productivity industrial sector are spreading to services and could entail consequent increases in prices