Month: October 2022

Let’s make a deal

So many factors. So much fear.
source: https://www.cnbc.com/crystal-ball/

It’s perhaps hard to imagine now, but back in the 30’s Sweden had the highest number of labor conflicts in Europe. It did not jibe well with “the people’s home” or folkhem concept that the social democratic prime minister Per Albin Hanson was trying to establish. In that home, everyone was to work together and look after each other. Labor conflicts were disrupting that effort. The government pressured the Swedish Trade Union Confederation and the Confederation of Swedish Enterprise to sit down at a hotel in Saltsjöbaden and get an agreement done to stop the disputes. It was the beginning of “the Swedish Way.”

The Saltsjöbaden Agreement, and the agreements that have been negotiated every few years since, regulate and set the norm for wages and work environment conditions across all sectors, from hospital workers to painters to welders. It takes months to hash out every time, and it’s never been easy. This year will likely be rough. The formal meetings between representatives of workers and employers won’t be until 2023, but the two sides are organizing even now.

First shots, fears and worries

The first shot over the bow was by the workers’ umbrella union, LO, just the other day. The fourteen different unions that make up LO have agreed to coordinate their demands and present a united front. In addition, they have agreed to recommend a cash raise for workers making less than 27,100 sek/month, and to ask for a percent raise for better paid workers.

In response, the employers’ unions claimed the usual – that business isn’t that great these days, and it will only get worse. The chorus is One, businesses can’t afford to raise anyone’s wages; Two, it would make inflation worse; Three, it might make them have to let people go.

These threats and fears aren’t just being raised by business though. The Swedish Fed is worried about a wage-price spiral, in which rising prices cause workers to demand higher wages, causing prices to rise, causing demands for higher wages, causing prices to rise… on and on in a worsening spiral. The Swedish National Debt Office (Riksgälden), the country’s financial manager, stated on Thursday that it, too, expects a pretty moribund economy next year, as well as higher joblessness.

Other events may also have an effect on negotiations over the next couple of months. One is the recent announcement that the government will retroactively reimburse some energy costs for households in energy areas 3 and 4. This will be money in the pocket for consumers, but it may also have a negative effect on inflation. In addition, the government has announced a gas tax abatement as well as measures to reduce the required amount of biofuel that is mixed in with regular gas. Although neither nor both of these will dramatically lessen the price at the pump, it may reduce the pressure on employers to raise wages.

Interest, inflation, and expectation

Eclipsing these developments is, of course, interest rates. To help get inflation down, the European Central Bank just raised its interest rate to 1.5%­­­. The hope and plan is that when money gets more expensive, people and businesses will save more. They’ll reduce consumption, demand will lessen, and prices will stop rising so fast.  Not any less important, this action will also hopefully reduce inflation expectations. Psychology is big here: if the ECB acts like it takes inflation seriously by raising rates, it gives the impression that it is steadfast in its aim to reduce inflation. This is presumed to calm business down so that they keep their prices stable and workers keep their wage demands in check. Cause and effect wrapped up in a neat package.

It never works out exactly this way, of course, and it takes time, and there are lots of critical voices along the way. This is the idea, though, and everybody hopes it works.

It isn’t really likely that an effect of these factors will be seen in time for the final round in the Swedish wage negotiations. But it sure would be nice if we were in a better place by then.

Checking the list

“The three most important things. The five challenges. The top ten…” The lists of problems and places where the government “must act” are multiplying and they cover a lot of different areas.

The number one

The biggest challenge for Kristersson will, perhaps, just be keeping his government together. As outlined in this previous blog post, the divisions between the Liberal party and the Sweden Democrats party are numerous and fundamental. Despite this – or because of this – the Liberal party was granted a whole five minister positions in the Kristersson government. This is hitting rather above their weight (they received only 4.7% of the popular vote in the election), but Kristersson cannot afford a revolt by Liberal party members. They are sorely needed to make up the right constellation’s majority in the parliament. Of course, the same goes for the Sweden Democrats. Kristersson can’t afford to lose them to the opposition either, and it’s a coin toss as to which of the two parties might bolt. Keeping them happy for the next several years is going to be incredibly challenging on several fronts.

Learning to play nice

As was to be expected, two elected representatives of SD have already caused controversy in the last week. Rebecka Fallenkvist made a splash with her completely inappropriate comments on Anne Frank’s sexuality, and Elsa Widding stated during a parliamentary session that there was no scientific basis for climate change. Rebecka Fallenkvist, by the way, is the same person that shouted “helg seger” on election night – an obvious Nazi reference that she wasn’t able to find a convincing excuse for.

The Liberal party, meanwhile, had trouble getting their heads around cooperating with the Sweden Democrats even before these latest mic drops. A not insignificant percentage is entirely opposed to the ongoing effort to fit in. Party leader Johan Pehrson’s new position as Minister for Labor Market and Integration is an effort to give the Liberal party a serious say in decisions regarding integration, a subject they have been interested in for a long time. For example, a language requirement for citizenship was something the Liberal party was in favor of already twenty years ago. It was later shot down as being culturally bigoted. Their upcoming national meeting in late November will likely be difficult and interesting, especially if certain Sweden Democrats keep airing their thoughts in public.

Kristersson has also another big group to keep happy. They have been fed visions of tax cuts, nuclear power and, in the here and now, compensation for high energy prices. This group will be even harder to satisfy.

Promises, promises…

Despite pre-election promises, there are very few that really believe tax cuts are possible anymore. Sweden’s economic challenges are well documented, also in this blog. An economic slump of unknown length looms large in basically all prognoses. This means saving pennies wherever they can be found, but at the same time spending to keep businesses in business and families from freezing and being hungry this winter. There is some money in the state bank – some say 20-30 billion kronor due to a Swedish praxis of saving a certain amount every business cycle – but spending it injudiciously will make inflation worse. It will be up to Elisabeth Svantesson, the new Minister of Finance from the Moderate party, to make that call.

For the moment, there are two dates to mark on the calendar. On November 8th, the budget is presented, and on November 15th, the state-owned Swedish power authority (Svenska Kraftnät) is due to present their ideas on where to find the wherewithal to compensate Swedish households for high electricity prices. Both of these things will illuminate the road that Kristersson’s government, and the rest of us, will be traveling, as well as on what problems and places they will be acting.

A Paradigm shift

Victory walk by party leaders Johan, Jimmie, Ulf and Ebba.
foto: Jessica Gow/TT.  https://tinyurl.com/ysdujr7w Tidningen Syre

A new Swedish government was announced Friday. The Moderate, Christian Democrat and Liberal parties will all steer the ship of state. Having said that, the presence of the Sweden Democrats was felt immediately. As expected, they will not be sitting in the government, but after an initial introduction of general policy directions by Prime Minister-in-waiting Ulf Kristersson, the microphone went first to the Sweden Democrats’ party leader, Jimmie Åkesson.

What followed was a long list of changes in migration, crime and punishment policy that SD, speaking together with the other three party leaders, expects to see to fruition. While not new, the different suggestions have probably never been heard strung together like that before. Åkesson called it a “paradigm shift,” and many would agree.

Safety and security first

The banner heading was “increased safety and security.” To that aim, Åkesson’s list included doubled sentences for crimes committed by gang members (like California’s STEP act), the end of all “crime rebates” (like the one which reduces the punishment of several crimes to only the sentence of the biggest crime), the institution of zones in which the police can body search someone (like in Denmark) on only a faint suspicion, some form of anonymous witnessing (also like in Denmark), and instituting a crown witness program (reduced sentences in exchange for information – like in Norway and the Netherlands). Sweden might also begin to out-source jails to other countries. For non-citizens, deportation might be on the table for a larger number of crimes.

The minimum

Regarding asylum rights, Åkesson was careful to state that the right to seek asylum would not be abridged. The rights and privileges granted to asylum seekers, however, were not going to exceed what European Union regulations stipulate. This meant, explained Åkesson, that the rules regarding asylum seekers and their ability to bring over family members would be stricter. Stronger identity documentation would also be demanded, and an investigation into if and how asylum seekers could be asked to fund part of their asylum costs (like they do in Denmark) is to be set in motion.

In addition, quota refugees (refugees who are relocated to third countries under the auspices of the UN) will be reduced from over 6000 to under 1000 – over 80%. Further, initial residency permits will be time-limited, not permanent, which has mostly been the case previously. Åkesson also talked about providing incentives for certain people to leave the country, especially, he said, those who haven’t integrated well. Finally, Swedish citizenship will be more difficult to obtain, requiring more time in the country, no criminal record and perhaps even “good behavior,” language proficiency and/or knowledge about Sweden – requirements that have not been asked for before.

Other problems

These pronouncements are all flags that the Sweden Democrats have waved for years. Many of them have also been waved by other parties to some degree. Many of them are already in place in other friendly countries. Not all of them can be instituted directly and several of them will land in committee for who knows how long (maybe forever). But in Sweden, many of them have also been called xenophobic, or worse, even by members of the parties now in the government (how that’s now going to work).

The new government is not all about these issues, though, nor even about how to handle the Sweden Democrats. Sweden’s problems are the worlds’ problems – rocketing inflation, the security situation with the war on Ukraine, the high cost of electricity, supply chain problems, the weak currency compared to the dollar, recession fears – plus a domestic and gang-related crime rate that’s never been seen before. All hands on deck will be needed.

What’s a chair?

The Swedish government and ice: Things we don’t know
source: https://tinyurl.com/bddyepfp

We know so little. We don’t know why the universe exists. We don’t know why we fall in love, or why prime numbers are so weird, or even why ice is slippery. We also don’t know who’s in charge of Sweden right now.

Ulf Kristersson’s right block won the election nearly a month ago, but they haven’t managed to actually field a winning team yet. Kristersson pops up like a human Ulf-in-the-box and says “nothing’s ready until it’s all ready” and then ducks back down again. Meanwhile, the Social Democratic party keeps holding press conferences on Nord Stream like the governing party they aren’t, really.

Who will sit in the government is a great unknown. We do know, however, that the Sweden Democrats will be chairing several heavy-weight committees: the justice, business, employment, and foreign affairs committees. These positions look important and eminently respectable – and therefor elevate the Sweden Democratic party several huge steps from its dirty, extremist history. The parliamentary system of government in Sweden, however, makes committee work slightly more visible than powerful.

The deets

In Sweden, elected members of parliament become members of one committee or another: Here the details and wording of motions and propositions are negotiated. There are 15 committees, plus one for the EU. In each committee there are 17 members seated proportionate to their respective strength in parliament.

The chair

The chair of each of these committees wields the gavel, but can largely only bang on the desk. The real work of passing budgets and laws in Sweden is done by the government. For example, it was not a problem for the last Social Democratic government that some committees were chaired by Moderates. The government got its will through committees with nary a bleat from the parties or the press.

The government sits on, and has the advantage of access to, enormous investigative and information resources (what fun would it be otherwise?). In many cases, and even now, we can assume, many questions have been worked out in advance. The members of the committees can be expected to bring them up and work together to get them done.

This isn’t to say that chairing a committee is only symbolic. Chairing a committee does have pluses, but as is so often the case, also more work. The chair arranges the agenda, arranges for guests to address the committee, meets and greets, is sometimes the only person in the committee to meet a source, and through all of this, gets training, practice, and insight. It’s valuable, in other words, but mostly indirectly advantageous. It’s the long game.

In addition, being the chair gets lots of visibility when reporters crowd around wondering what the committee is talking about. Being a chair but not in the government also handily allows them to not have to take the fall if the results don’t work out.  A win-win for the Sweden Democrats.

In tied cases, the chair of a committee will be the deciding vote. What party holds the chair will then very much decide what goes forward to parliament. But it is the parliament where the final decision on a budget or law’s final yea or nay is decided.

In Sweden’s parliament the right-led block has a majority now – but not a strong one. Lots of interesting things can happen but they’re not likely going to come from a committee chair position.

Where they will come from is just another thing we don’t know.