Swedish govt promises welfare splurge in election year

[HARPSUND, Sweden] Sweden's centre-left coalition plans to use bulging public coffers to spend billions more on teachers, nurses and police ahead of next year's election.

While much of Europe is emerging from a period of austerity, Sweden has enjoyed years of strong growth, falling unemployment and rising household incomes, not to mention undiminished welfare benefits such as extended parental leave.

"Sweden's economy is booming," Finance Minister Magdalena Andersson told reporters on Thursday. "The results of that should benefit everyone." Boosted by a record low benchmark repo rate, the government said it expected the economy to expand 3.1 per cent this year and 2.5 per cent in 2018, both upward revisions from earlier estimates. Growth was 3.2 per cent in 2016.

Ms Andersson said unemployment would fall to 5.9 per cent next year as the government invested in job growth. It would continue to pay down debt, already among the lowest in the European Union.

Many European countries would be envious of such conditions, but Swedes are worried about declining school results, shortages of teachers and medics and the record numbers of migrants who have arrived in recent years in need of housing and jobs.

"Even if growth is high and unemployment is falling, many people are frustrated and believe things are going in the wrong direction," Karl-Petter Thorwaldsson, head of the umbrella union organization LO, wrote in an editorial in daily Dagens Nyheter. "The issues are social wellbeing and the welfare state."

Ms Andersson said the strong economy and tight budgets since taking power in 2014 meant the minority coalition of Social Democrats and Greens could spend an extra 40 billion crowns (S$6.74 billion) next year, when Swedes go to the polls.

"More people should have jobs ... we need more police and a stronger defence capability, but also we need to be able to rely on the welfare system when we need it," Ms Andersson said.

The government has already promised 5 billion crowns extra for health, schools and care for the elderly in the 2018 budget. The police will get 2 billion more and defence another 2.7 billion, to meet a growing challenge from Russia.

Taxes for pensioners will be cut, at a cost of around 2.2 billion crowns.

The total budget was around 917 billion crowns in 2016.

REUTERS