Economic Battle Lines Drawn Ahead of Elections

”It must pay to work”, is the mantra of Sweden’s right-of-centre opposition bloc as elections approach in September, taking aim at high taxes and welfare payments it says discourage employment.

”No one should be left out,” counters the Social Democratic Party of Prime Minister Göran Persson, pointing to benefit cuts he says are the flipside of opposition policies.

Ahead of Sweden’s general election, the economic debate has boiled down to two opposing views of how to make the welfare state work better and cut jobless levels.

Persson and his Social Democrats continue to back tax and spend policies, which they say provide a safety net that has combined with free market policies to give good growth.

The opposition alliance, led by the liberal conservative Moderate Party and its leader Fredrik Reinfeldt, says big welfare cheques have undermined the difference between working and being on benefits. The party wants a scaling back of taxes aimed at helping low-income earners and some cuts in handouts.

The problem for Reinfeldt, likely prime minister if the opposition wins the September 17th election, is that for six of the last seven decades, and for the last three elections, Swedes have backed the Social Democrats.

But with the opposition Alliance more united than in previous campaigns, things could be different this time.

The Moderates and three other right-of-centre parties - the Liberals, the Christian Democrats and the Centre Party - have managed to present a common front on most issues and are heading to the election as the Alliance for Sweden.

On the other side, the Social Democrats, in power since 1994, have suffered from fading public appeal that long familiarity often brings in politics.

According to political scientist Svante Ersson at the university of Umeå ”Governments tend to lose support after around a decade in office, so it was expected that the Social Democrats would lose the power of attraction.”

Another opportunity for the opposition is that the good growth of the last two years was not accompanied by an equal strengthening in the labour market, which Reinfeldt said showed the damage caused by high taxes and welfare benefits.

The reward for Reinfeldt and his allies is that despite a strong economy, rising house prices and consumption, the opposition is neck-and-neck, and sometimes ahead, of Persson and his allies in the Green and Left parties in opinion polls.

At this point before the 2002 election, the Social Democrats and their Green and Left allies had a lead of nearly 10 percentage points.