OECD Economic Surveys: Sweden 2012

Table of contents
Basic statistics of Sweden, 2011
Executive summary
Key policy recommendations
Assessment and recommendations
	Key challenges
		Figure 1. Sweden’s growth performance has been strong
	The economy is performing well but is facing risks
		Growth is slowing down from high rates but should regain strength
			Table 1. Short-term economic outlook
		Labour market outcomes are good but some groups are at risk
			Figure 2. Unemployment remains high
			Figure 3. The foreign-born are not well integrated into the labour market
		Income dispersion is low but has risen
			Figure 4. Inequalities are low but rising
			Figure 5. The tax and transfer system reduces inequality considerably
		High household and corporate debt could lead to disruptive deleveraging
			Figure 6. Household debt has increased
			Figure 7. Real house prices have increased substantially
		The banking system is large, concentrated and dependent on short-term wholesale funding
			Figure 8. The banking system is large and concentrated
	Macroeconomic and financial policies
		Monetary policy for stability and growth
			Figure 9. Inflation has fluctuated around the 2% target
			Table 2. Inflation over the past 15 years in Sweden and the European Union
		Enhancing financial stability
		Upholding fiscal prudence while preserving the welfare system
			Figure 10. Sweden’s fiscal position is among the best OECD-wide
			Figure 11. The pension replacement ratio will be low for average income earners
			Figure 12. Efficiency gains could be achieved in health care
			Box 1. Main recommendations for macroeconomic and financial policies
	Labour market and social policies for greater inclusion
		Combining supply-side and demand-side labour market policies
			Figure 13. The minimum cost of labour is relatively high
		Improving the efficiency of support to the non-employed
			Figure 14. Unemployment and inactivity traps are relatively high
		Education policies to promote integration and ease transition to the labour market
			Figure 15. PISA results are lower for students with an immigrant background
		Further improving women’s employment opportunities
			Figure 16. The gender pay gap has remained constant in Sweden
			Box 2. Main recommendations for labour market and social policies
	Enhancing the efficiency of capital taxation and the housing market
		Improving the design of capital taxation
			Figure 17. Property taxation is low
		Addressing the structural problems in the housing market
			Figure 18. Price levels for housing investment are relatively high
			Box 3. Main recommendations for enhancing the efficiency of capital taxation and the housing market
	Raising the efficiency of climate change mitigation policies
		Figure 19. Taxes on energy in Sweden are high
		Box 4. Main recommendations for climate change mitigation policies
	Bibliography
	Annex A1. Progress in structural reforms
Chapter 1.
Labour market and social policies to foster more inclusive growth
	Inequalities are low but have increased
		Figure 1.1. Inequality and relative poverty indicators in OECD countries
		Box 1.1. Inequalities in Sweden along various dimensions
			Figure 1.2. Inequality indicators for Sweden
		Figure 1.3. The evolution of inequality and relative poverty in Sweden
		Table 1.1. Average annual real disposable income growth per decile, by country
		Table 1.2. Contributions of various income components to income growth per decile
		Figure 1.4. The impact of taxes and transfers on income inequalities
		Figure 1.5. The top 1% income share
	Some groups perform less well on the labour market
		Figure 1.6. Labour market performance indicators in OECD countries
		Figure 1.7. Unemployment rate in Sweden
		Youth
			Table 1.3. Scoreboard for youth aged 15-24
			Box 1.2. Measuring the share of youth at risk of being left behind and poorly integrated
				Figure 1.8. Estimated size of the group at risk: Left behind and poorly integrated after a temporary job
		Immigrants
			Figure 1.9. Permanent immigration flows by category of entry
			Figure 1.10. Gaps in labour market performance between natives and foreign-born in OECD countries
			Table 1.4. Characteristics of permanent residents by migration channel
		The disabled and sick
			Figure 1.11. Employment rates of people with disability and mental health problems
			Figure 1.12. Evolution of the stock of recipients of sickness and disability benefits
		Women
			Figure 1.13. Female labour market outcomes
			Figure 1.14. The glass ceiling
			Figure 1.15. Main determinants of the gender pay gap in OECD countries
			Figure 1.16. Concentration of female employment in certain sectors
		Older workers
	The earned-income tax credit provides stronger incentives to participate in the labour market
	Entry thresholds in the labour market are high for some groups of workers
		The minimum wage
			Figure 1.17. Trade union density and collective bargaining coverage
			Figure 1.18. Relative minimum cost of labour
in OECD countries
		Job protection legislation
			Figure 1.19. Job protection legislation and temporary contracts
			Figure 1.20. Characteristics of workers with temporary jobs
			Table 1.5. One-year mobility of temporary workers
			Figure 1.21. Characteristics influencing the mobility of temporary workers to permanent jobs
			Box 1.3. Explaining the mobility of temporary workers in EU countries and in Sweden
				Table 1.6. Explaining the transitions from temporary to permanent jobs or unemployment
	Support to the unemployed provides uneven social protection and incentives to take a job
		Figure 1.22. Unemployed receiving unemployment insurance benefits
		Box 1.4. Unemployment insurance in Sweden
		Figure 1.23. Inactivity and unemployment traps in 2010
	Job-search monitoring and the efficiency of ALMPs can be strengthened further
		Figure 1.24. Public expenditure on active labour market policies in OECD countries
		Box 1.5. Targeting youth risking long-lasting social exclusion
		Figure 1.25. Overall strictness of eligibility criteria for unemployment benefit
	The education system has a key role to play
		Figure 1.26. Gap in learning outcomes at age 15 between natives and foreign-born
		Box 1.6. Improving vocational education and training in Sweden
	Access to health care could be made more equal
		Table 1.7. Health status indicators
	Women’s employment opportunities could be improved further
	Conclusions
		Box 1.7. Key labour market and social policy recommendations to make growth more inclusive
	Bibliography
	Annex 1.A1.
Labour market and education measures recently proposed by the government
Chapter 2.
Housing, financial and capital taxation policies to ensure robust growth
	Sweden is well placed to achieve robust growth but faces some challenges
		Figure 2.1. GDP per capita gap between Sweden and the highest-income OECD economies
	The increase in house prices partly reflects structural problems
		Figure 2.2. Housing market developments
		Figure 2.3. Regional real house prices
		Figure 2.4. Construction prices and costs
		Box 2.1. Main features of the housing market and recent reforms
		Figure 2.5. New construction of dwellings by tenure
	High household and corporate debt create vulnerabilities
		Figure 2.6. Household debt
		Box 2.2. Consumption and wealth
			Table 2.1. Short-term and long-term impact of wealth on consumption
		Figure 2.7. Housing market and household indebtedness
		Figure 2.8. Household assets
		Figure 2.9. Types of loans, as a share of mortgages
	Addressing potential risks in the banking sector
		The banking system is large and concentrated
			Figure 2.10. The size of the banking system
			Box 2.3. The four major banks have different business models
				Table 2.2. Characteristics of the major banks, end-2011
		Financial supervision tools can be further strengthened
			Figure 2.11. Private credit growth
			Figure 2.12. Risk weight of mortgages under Basel II
		The institutional set-up and crisis management tools should be enhanced
			Box 2.4. Institutional set-up of financial supervision and crisis management
	Improving the efficiency of capital taxation
		Box 2.5. The rise in top incomes
			Table 2.3. Distribution of income and taxes, 2009
		Property taxation
			Figure 2.13. Property taxation
			Figure 2.14. Gap between market interest rate and after-tax debt financing cost
		Financial capital taxation
	Conclusions
		Box 2.6. Key recommendations on housing, financial stability and capital taxation policies
	Bibliography