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Swedish Political Brief December 2020

December Takeaways

  • The second wave of the coronavirus pandemic is putting severe strain on Sweden’s healthcare system, as the beginning of vaccination of risk groups approaches.

  • Conditions for, and profits made by, privately owned charter schools are being questioned and are likely to be at the centre of political conflict prior to the 2022 election campaign.

  • The government is helped by the two most important unions of the Swedish Trade Union Confederation’s (LO) decision to accept the agreement on modernised labour market regulation, previously reached by the Confederation of Swedish Enterprise and the white-collar unions gathered in PTK.

  • There is a broadly supported long-term defence bill decided by parliament, but political conflict remains regarding long-term defence spending ambitions.

  • The government is facing a parliament majority calling for a Swedish NATO membership option to be included in the national security policy doctrine.

  • The public opinion is very stable, leading the larger parties to look for possible game-changers before the 2022 general election. That could be the Liberal Party changing sides to survive, or the Centre Party being willing to form government with the Social Democratic Party.

Second Wave of the Coronavirus Pandemic

Sweden is presently in the midst of the second wave of the Corona pandemic, leading the government and authorities to sharpen the recommendations and social restrictions to contain the outbreak.

According to the Public Health Agency, 320,000 people have been confirmed infected and 7,514 have died of Covid-19.

The Christmas season is challenging, since it is usually a period with intense shopping in crowded malls, and a time for social gatherings.

In Stockholm, intensive care units are already under severe pressure, as 99% of the intensive care capacity is being used for patients with COVID-19 or other illnesses. The field hospital that was set up during spring has been disbanded. At the same time, 55,000 people in the Stockholm region are predicted to be getting the vaccine during January 2021, starting with people belonging to groups most at risk of severe Corona complications.

This pretty much summarises the situation in Sweden and other countries as well. There is a struggle to contain the outbreak and manage the healthcare situation, as we wait for the vaccine to finally arrive. But giving everyone their vaccine inoculations will take time, even in the best of circumstances.

It is estimated that Sweden can acquire 4 million vaccine doses before Easter, but since two doses per person are required, it will still not be enough to treat all 2.6 million people belonging to priority groups.

Coronavirus will continue to affect our lives during most of 2021. Until the population has been vaccinated, restrictions will need to apply. After everyone has been vaccinated, and given that the virus does not mutate, then the healthcare system will still need to manage the long-term negative health effects of the virus on people who have been ill. The need to manage the economic consequences of the pandemic for companies and public finances will also remain. The after-math will include evaluations of how the pandemic was handled by authorities and the political system, as well as Nordic cooperation and the EU. Very likely, the way the coronavirus pandemic was coped with will be discussed in the 2022 general election.

The economy took a blow during spring and the first wave of the pandemic, as we have previously written about. Many companies managed to hold out thanks to the support packages delivered by the government and the parliament. As we face the second wave of the Corona pandemic, many companies are balancing on a cliffs edge. They used much of their resources to pull through spring, hoping for relaxed restrictions and recommendations in the autumn. Instead, after a summer period with low numbers of contagion and following economic recovery during the third quarter, new restrictions have now been introduced and reduced the economic activity, overwhelming many restaurants, shops, hotels, and travel related services.

Sweden is trying to hold on and wait for better days to come.

Profits in Privately Run Charter Schools

As the government in Denmark recently reached an agreement with its supporting parties to prohibit profits in privately operated pre-schools, the Swedish debate on the matter intensifies. The Minister for Education, Anna Ekström, repeatedly criticises privately owned charter schools, blaming them for increased social segregation and for contributing to the lack of equality in the Swedish school system. She is especially harsh regarding the major school companies, operating many schools and making profits as a result.

She is signalling that the government, to her regret, is being prevented from prohibiting private profits made by charter schools during this four-year term but is looking to move ahead during the next term. She is supported by the Left Party and the Green Party, but restricted from moving ahead by the 73-point political agreement with the Centre Party and the Liberal party, on which the government is based.

The Moderate Party and the Christian Democratic Party are critical of the government’s intent to prohibit profits, claiming that would do away with the rights of parents and pupils to choose the most suitable schools.

The smaller charter schools, in the countryside, are more often owned and operated by parents and cooperatives. They claim their schools would be jeopardised if current proposals to reduce financing would win a majority in parliament.

It is claimed by a recent and much-debated government enquiry committee that publicly owned schools have to maintain the capacity to offer children from privately operated charter schools education, if those schools were to go out of business. The committee’s conclusion is that charter schools are presently over-compensated. The interesting thing is, however, that the smaller countryside schools often have been taken over by parents’ cooperatives when the municipalities were unable to continue to operate them. Thus, parents’ involvement has allowed the municipalities to escape costs of bussing students to other schools due to the closing of countryside schools.

Terms and conditions for privately operated charter schools will be thoroughly discussed prior to the 2022 general election. Future conditions will be decided when the next government is formed. Some parties will push for a prohibition on profits and reduced financing for privately operated charter schools, while others will fight to let the terms remain unchanged.

But the conditions for private schools will not decide the next government. The next government will instead decide the terms for private schools.

The issue will be part of a grander government negotiation. As mentioned, in 2019 a clause saying that proposals to prohibit profits would not be put forward during this term, was agreed. In 2022, a clause stating the opposite might be included in a forthcoming government agreement, if there is a political need for it. In any coalition negotiation, the parties will give and take, with the aim of forming the next government.

In the longer run, the issue will be decided by the way public opinion views privately owned charter schools. They are popular, with some 200,000 children in line for a place, but profits are still very sceptically viewed by the public.

That profits are presently so passionately criticized could also be viewed as a sign of the parties lacking answers to other important issues, such as social segregation and poor grades and academic results in many schools. Most discussions on school quality are therefore currently redirected towards the conditions for private charter schools, by both friends and foes.

Previously, the debate has been on proposals to limit the parents’ and pupils’ right to choose suitable schools, due to social segregation. Presently, the debate seems to be on how to limit the types of schools to choose from. Regardless, that could be the result of a prohibition of profits, since the large school companies say they would stop investing in schools.

Labour Market Law Unites and Divides

Another issue that was part of the 2019 73-point, four-party agreement, that paved the way for the present red-green government, was labour market reform and liberalisation. The governments’ approach to the reform has since been twofold.

A government enquiry committee has put forward its proposals for labour market reform and the employers’ organisation and the unions have been negotiating, in accordance with the Swedish labour market model, which is based on the fact that most labour market laws only apply if no agreement is reached between the trade unions and the employers’ organisation. The red-green government rejected the inquiry committee’s proposals and deemed them as unbalanced. The Centre Party and the Liberal Party, on the other hand, demanded the proposals be made law, should the employers and the unions not come to an agreement.

The negotiations on reforms ended with an agreement in between the employers’ organisation, the Confederation of Swedish Enterprise and PTK, the council for negotiation and cooperation representing private sector employees. The blue-collar union, the Swedish Trade Union Confederation (LO), decided unanimously to reject the agreement. But since then, the two most important unions of LO have decided to accept it.

This split and division are very damaging to LO, which has been the strongest labour market actor, and perhaps also the foremost non-party, political actor in Sweden. But the government is much helped by the broad acceptance.

The Centre Party is now calling for the agreement to be passed and made law without delays or alterations.

The Left Party, on the other hand, is threatening the government with a vote of no confidence, should it move ahead with labour market reform without the full consent of LO.

It is, however, hard to see such a request being voted through by parliament, since the opposition parties are all calling for labour market liberalisation.

One could conclude that the only political party that could liberalise the labour market laws is the Social Democratic Party, since it has been so strongly against such initiatives in the past and retains such close ties with the blue-collar union LO.

Long-Term Defence Bill

It has been a long and difficult road for the government to secure a majority for a long-term defence bill. The all-party Defence Commission unanimously presented a plan in 2019 for the future up-scaling of the armed forces, including a common will among the parties to finance the proposal. The government was, however, not onboard regarding the increased defence spending ambitions. As a result, negotiations have taken place in separate settings and the bill has been much delayed.

The opposition, including the Centre Party and the Liberal Party presently cooperating with the red-green government, has continuously called for increased defence spending, as the government has opposed the demands. It should, however, be noted that the government also wanted to increase defence spending significantly, but the opposition deemed the ambitions unsatisfactory.

In face of possible defeat, the government moved to accept increases along the lines of the opposition for the initial five years. The opposition calls for additional increases in the following years, and a 2% of GDP target for the longer-term defence spending.

The defence is accepted by parliament, but with a majority stating the need for additional financing.

This long-lasting debate on financing has led to the content of the bill being less discussed. Besides the money, the localisation of regiments has been a focal point of the debate.

There are critics pointing to the bill being very traditional regarding the direction of the development of the armed forces, neither securing enough technological upgrades of the forces, nor the availability of forces needed to meet rapidly arising threats to Sweden and the Baltic Sea region. A focus of the bill is to strengthen and expand the army. Another difficulty concerns Swedish national security policy doctrine.

A majority in parliament is calling for Sweden to have a NATO membership option included in the national security policy doctrine, parallel to the one Finland upholds.

The reason is the deepening bilateral defence cooperation with Finland, which highlights the different positions on NATO, that the two neighbour countries have had. The four parties of the former Alliance for Sweden, two of them now cooperating with the red-green government, have had a positive view on NATO membership for some time. The Sweden Democrats changed their stand to support the motion for an official NATO option.

The complication is that the government is responsible for foreign policy, and claims it will not follow the decision made by the majority in parliament, instead calling for broad political support for any changes of the doctrine. Another complication is that the wording of the doctrine has been changed several times over the last years, and on none of the occasions have those changes had broad political support to back them up.

National security doctrine is a fundamental issue for any state and government, and having a parliament majority supporting something other than the government’s policy is a blow to the credibility of the red-green government.

New Main Lines as Part of the Infrastructure Bill

In parallel with the ongoing consultation round concerning the National Plan for Infrastructure policy document, the Swedish Transport Administration also has a special task to investigate the conditions for new main lines between Stockholm and Malmö and Gothenburg, respectively. The inquiry, which will be finalized on 28 February 2021, includes making proposals on how they can be completed within a lower cost framework, and how financing should take place. In the various proposals, they have presented different ways of achieving this, with stations outside the cities, fewer stations, etc. All the different alternatives presented have been heavily criticized.

Recently, the Swedish Transport Administration had a series of meetings with the regions and municipalities involved, as well as with train operators. At the meetings, and during the following debate, clear criticism has been expressed from all actors. The Swedish Transport Administration has also itself stated that there is need to make changes. Minister of Infrastructure Thomas Eneroth has also said that the project will be carried out in accordance with the original planning in the Sweden negotiations. The final report will be one of the background materials for the Government's proposal for an Infrastructure Bill later in the spring of 2021.

The Government must therefore soon deal with the issue in connection with the Infrastructure Bill. There is strong pressure for the new main lines to be financed separately if they are to be built at all. One alternative is to work with capacity reinforcements along existing railways, combined with a few new stretches of track on the lines with the heaviest traffic.

Public Opinion

The year ends as politically uncertain as it begun. There are continuous ambitions by the opposition to vote the government out, but they have all fallen short. The reason is that for a majority to be formed against the government parties with fundamentally different lines of policy and interests must come together. They could possibly agree to vote the red-green government out, but would then disagree on what should happen next.

Support for possible government alternatives remains stable, as do party support.

As the year closes, the Left party has been able to shift to a new party leader, Noshi Dadgostar, with stable and slightly increasing support figures. The party continues to condition its support for the Social Democratic Party led red-green government, and is rewarded for it. The Social Democratic Party is likely to be content with a support approximately the same as the general election figure, given the difficult times for the country. The Green Party is deeply uncomfortable in its government position, failing to reach the 4% parliamentary threshold, and currently occupied with the process of electing a new female party spokes-person.

The crisis of the Liberal Party is ongoing, with no end in sight and internal divide regarding the strategy of the party. The Centre party is stable, the support not moving in any direction.

The Moderate Party comes in well above the last election result, probably feeling better internally than with its possible political partners. The Christian Democratic Party has lost support since the general election and could be long-term vulnerable due to a shift in policy, political language and choice to cooperate with the Sweden Democrats.

The support for the Sweden Democrats remain higher than the last election result, but the party struggles to find a natural political position during the coronavirus pandemic.

From the Social Democratic point of view, things are looking fairly good. The party’s support is relatively high, taking the pandemic into account. Even more important, the division in between the Centre Party and the Moderate Party remains deep and painful. The Left Party has not been able to move ahead with threats of votes of non-confidence.

From the Moderate point of view things are looking fairly good. The support is up compared to the last election, the government is kept under pressure politically. The problem is lack of a strong government alternative.

Basically, the political situation remains as it has been since the 2019 formation of the present government. The parties are not changing their stands, neither are the voters. The larger parties will be looking for possible game-changers before the 2022 general election. That could be the Liberal Party changing sides to survive, or the Centre Party being willing to form government with the Social Democratic Party.

Brexit

Brexit being Brexit means that much is unclear, only weeks before the transition period, following the United Kingdom’s exit from the EU, expires.

There has been progress made in the negotiations, but obstacles have remained, such as the level playing field, fisheries and jurisdiction, which are seen to go to the heart of British sovereignty. The EU wants to avoid unfair competition on its doorstep, holding the UK not only to present labour and social standards, but also to future EU standards. The EU retains the possibility of raising trade barriers if the UK should deviate from those EU standards.

Progress has been made regarding the Northern Ireland issue. British food products will be possible to trade to Northern Ireland with the help of Export Health Certificates, until 1 July 2021. Most goods will be tariff free, since they carry no risk of being exported to the EU. There will be a list with exceptions presented.

Prime Minister Boris Johnson visited EU Commission President Ursula von der Leyen last week to add momentum to the struggling negotiations, but without clear advances being made. Another dead-line was set and disregarded, the two parties now entering the negotiation end-game to try to resolve key issues. This far, it has been a question of waiting for the other party to blink first. Id no-one does, there will be a deal-less situation on 1 January 2021.

At the same time, as the Brexit negotiation is facing the rocks, the EU has had internal problems. These regard how the straying away from the democratic values and human rights, that the EU is based on, by Poland and Hungary, should be met. Finally, an agreement on the EU long-term budget was reached, saying that respect for these fundamental rights will be linked to support from the EU budget and the Corona recovery support measures.