Swedish model is riddled with inequitable flaws

Post-election discussion has focused both on potential coalitions and on the message the public sent to policymakers by not voting for the two historically dominant parties. There has been remarkable consensus within the media and civil society, including such disparate organisations as Ibec and the union Mandate, that the results reflect demand for better, more accessible public services and, more profoundly, a different perspective among policymakers regarding State responsibility for quality of life.

A secondary consensus is that Nordic countries offer a model to emulate for expenditure and taxation. The chief executive of Ibec, Danny McCoy, stated in a recent speech that “Ibec believes that a new social dialogue forum, similar to what has worked successfully in Nordic countries, and a new commission on taxation have the potential to help deliver sustainable solutions over the next decade across the economy, environment and society.”

But the “welfare state” or “Nordic model” implies more than public investment and taxation. This is a narrow interpretation. The welfare state model also signifies trust, namely that the public can rely upon the government to regulate, spend and plan to ensure public institutions function properly, whether on an everyday basis or in case of a crisis. The spread of Covid-19 has placed the need for this trust in sharp relief. Yet, trust in public and other institutions critical for a healthy society, like the media, has been declining on a global level for several decades. The lack of trust has arguably culminated in the electoral success of extremist parties, who manipulate distrust to their favour. They utilise their power to politicise courts and the media while targeting opponents with legal action and circumscribing freedom of speech, reinforcing suspicion that these institutions are untrustworthy.

Lower-paid stigmatised

The policies that propelled this distrust in wealthy countries arguably accelerated with welfare reforms and the corresponding Thatcherite narrative of individual responsibility versus the state. The reforms and narrative have dominated policymaking from the 1990s in the US, when the Personal Responsibility and Work Opportunity Act was passed under Bill Clinton, to the current UK Conservative government’s policy to switch to a universal benefit system.

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The “reforms” stigmatised lower-income, less-educated citizens and widened the social distance between higher-income groups who could access the education necessary for good jobs and relative economic security and those who could not.

Sweden has had the most dramatic rise in inequality rates since the 1980s of all OECD countries

If we return to Sweden, our model country, the conservative coalition government (2006-2014) also introduced “reforms”, for example earned income tax credits and tax rebates favouring high-income earners; it encouraged enrolment in private education through a voucher system. These policies contributed to already rising inequality rates in Sweden; in fact, Sweden has had the most dramatic rise in inequality rates since the 1980s of all OECD countries.

“In short, [in Sweden] it has become more expensive to be poor, and cheaper to be rich, ” according to Lisa Pelling of Stockholm-based think tank Arena Idé. It may not be a coincidence that, during this period, the far-right Swedish Democrats have become a considerable political force, gaining about 15 per cent of the popular vote in the 2019 elections and coming in third behind the more established Moderates and Social Democrats.

Therefore, as they look to the learnings from the welfare state model, policymakers in Ireland should be considering not just if, and how much, to invest in public services, but also how to generate trust in the government, in part but not solely through these public services.

Competence and ethics

This is not going to be an easy task. The Edelman Barometer 2020, an annual survey of trust, now in its 20th year, reported that none of the four institutions they investigated – business, NGOs, government and the media – was seen as both competent and ethical. In fact, government and the media were seen as both incompetent and unethical. The report notes that: “Distrust is being driven by a growing sense of inequity and unfairness in the system . . . Government, more than any institution, is seen as least fair.” Business was seen as more competent but not necessarily ethical. The report also found that respondents feel that businesses should pay “decent” wages and offer retraining; however, less than a third believed this would happen.

Ireland is increasingly a low-pay country with a high cost of living

Households in work, especially those in the private rental sector, are struggling to pay bills, much less save for the future. To add to this, they cannot access adequate services to alleviate the pressure they are burdened with. Correspondingly, the annual inequality report produced by Tasc finds that certain sectors, like hospitality, rely on intensive use of low-paid workers, much more so than comparable industries in other countries. Ireland is increasingly a low-pay country with a high cost of living.

A significant proportion of the Irish public now wants, and needs, more than investment in public services.

To respond, and to achieve the long-feted social welfare model, the next government must thus go beyond tax and spend as the policy means and ends. It has to demonstrate its commitment to also being effective and thus trustworthy. This could happen on a practical level by co-ordinating across departments, for instance, improving provision of lifelong education and access to financial services at the same time as regulating for rent control. On a more abstract level, these policies need to embrace a narrative of equity and fairness, where low pay, debt and financial precarity are recognised as collective problems rather than individual shortcomings.

If we get this right, Ireland’s change ambitions can perhaps look forward to going beyond the Swedish model.

Shana Cohen is director of Tasc, the Think Tank for Action for Social Change