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The Swedish model in turbulent times: Decline or renaissance?

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  • Dominique ANXO
  • Harald NIKLASSON

Abstract

The main objective of this paper is to analyse the major transformations of the Swedish model. We argue that the current Swedish model appears today more in line with the three core components of the original Swedish model developed during the 1950s. In our view, the period 1975-1991 represents a clear deviation from the original Swedish model, a departure that culminated in the most severe crisis than Sweden has experienced since the 1930s. After this period of turbulence, the Swedish economy has undergone a particularly favourable development. Unemployment has been cut by half, inflation has been curbed and the country appears to have recovered from the deep economic crisis of the early 1990s. The changes in economic policy towards a more restrictive and anti-inflationary macro-economic policy, the reorientation of active labour market policies towards supply oriented measures and the structural reforms undertaken in the tax and social protection systems during the 1990s suggest a revival and renaissance of the traditional Swedish model. The modifications in Swedish industrial relations, in particular the clear tendency to a re-coordination of collective bargaining have also played a vital role in the Swedish recovery. These new developments appear to respond to a three-pronged objective: ensuring industrial peace; limiting the impact of transaction costs associated with the absence of coordination mechanisms and the negative externalities on employment and firm competitiveness of uncontrolled wage drift; and finally guaranteeing a principle of subsidiarity making it possible to adapt the provisions contained in industry-wide collective agreements to the productive and competitive constraints of Swedish companies. The various reforms of the social protection system undertaken during the 1990s have essentially taken the form of a temporary reduction of income replacement rates and, with the notable exception of the restructuring of the tax and pension system, have
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Suggested Citation

  • Dominique ANXO & Harald NIKLASSON, 2006. "The Swedish model in turbulent times: Decline or renaissance?," International Labour Review, International Labour Organization, vol. 145(4), pages 339-371, December.
  • Handle: RePEc:bla:intlab:v:145:y:2006:i:4:p:339-371
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    1. Oskar Nordström Skans & Per-Anders Edin & Bertil Holmlund, 2009. "Wage Dispersion Between and Within Plants: Sweden 1985-2000," NBER Chapters, in: The Structure of Wages: An International Comparison, pages 217-260, National Bureau of Economic Research, Inc.
    2. Calmfors, Lars & Forslund, Anders & Hemström, Maria, 2002. "Does active labour market policy work? Lessons from the Swedish experiences," Working Paper Series 2002:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    3. Bertil Holmlund & Donald Storrie, 2002. "Temporary Work In Turbulent Times: The Swedish Experience," Economic Journal, Royal Economic Society, vol. 112(480), pages 245-269, June.
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    2. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00880933, HAL.
    3. Lindecke, Christiane & Voss-Dahm, Dorothea & Lehndorff, Steffen, 2007. "Altersteilzeit: Erfahrungen und Diskussionen in Deutschland und anderen EU-Ländern," Arbeitspapiere 142, Hans-Böckler-Stiftung, Düsseldorf.
    4. Zierahn, Ulrich, 2008. "Reform der schwedischen Arbeitsmarkt- und Tarifpolitik," HWWI Research Papers 1-14, Hamburg Institute of International Economics (HWWI).
    5. Farkas, Beáta, 2011. "A közép-kelet-európai piacgazdaságok fejlődési lehetőségei az Európai Unióban [The development opportunities for the Central-East European market economies within the European Union]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 412-429.
    6. Ji-Won Song, 2022. "Subsidiary Agency in Gender Equality Practice Implementation: The Case of Korean MNE Subsidiaries in Sweden," Management International Review, Springer, vol. 62(1), pages 103-135, February.
    7. Baccaro, Lucio & Howell, Chris, 2017. "Unhinged: Industrial relations liberalization and capitalist instability," MPIfG Discussion Paper 17/19, Max Planck Institute for the Study of Societies.
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    9. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Post-Print halshs-00880933, HAL.
    10. Alexis Rydell & Rune Wigblad, 2011. "Company-level flexicurity during the restructuring process: a model," Transfer: European Review of Labour and Research, , vol. 17(4), pages 547-562, November.
    11. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Documents de travail du Centre d'Economie de la Sorbonne 13060, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
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    More about this item

    JEL classification:

    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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