The unemployment debate we need in Sweden

Part 1: The Problem

Yet again, the election campaign ahead will be fought over jobs. With an unemployment rate approaching 10% this would always be the case. Unfortunately, the debate is already getting stuck in yesterday’s ideological conflicts, rather than pragmatically addressing the strategic issues of tomorrow. This failure to renew the debate matters, because how we tell stories matter. We are now losing an opportunity to use the political momentum around unemployment to address the two most important long-term challenges to Swedish society: social cohesion and sustainability. Rather than populistically promising to ”create jobs”, the parties should instead argue over how to prevent groups at risk from falling into long-term exclusion, and how to stimulate long-term job growth that will meet the sustainability demands of tomorrow.

The problem with the current debate is this: what voters ask for is not really in the power of governments to give. There is very little evidence that, so called, “labour market policies” - eg. employment protection, tax incentives, job matching schemes, etc - impact aggregate employment figures. In short, jobs are not “created” as the result of government policies, at least not in the quantities and time frame relevant to elections. But the debate is framed in those terms because it serves the ideological interest of groups like the main Labour Union and the Swedish Association of Enterprise. Their interest is not really unemployment numbers as such, but rather how much of the problem their members should pay for.

This of course is not to say that labour market policies don’t matter. They do, but not by affecting aggregate unemployment numbers. They provide crucial support to people who have lost their job (eg. unemployment benefits); they help redistribute the burden of unemployment between young and old (employment protection legislation); in the best of instances they help instil hope and meaning in the life of young people who may otherwise fall into crime and deprivation (eg. coaching and training schemes). Labour market policies do not however “create jobs”.

There is, in other words, a mismatch in the debate between policy instruments used and purported results, which is generally a recipe for not achieving much in any area at all.