Keys to Greater Attractiveness and Competitiveness

Keys to greater attractiveness and competitiveness

Report from IVA’s project Attractiveness for Sustainable Growth

Contents

Foreword...... 5

Summary...... 7

Leading position in toughening competition...... 10 Ability to transform is crucial...... 12 Fundamental economic and social issues...... 13

Attractiveness...... 14 Three types of attractiveness ...... 16 Regional attractiveness...... 17

Three radical changes in the external environment...... 20 Globalisation...... 22 Digitalisation...... 22 Sustainability...... 24

Changes in the 6+1 areas...... 26 Schools...... 28 Higher education and research...... 34 Infrastructure...... 40 Housing & living environment...... 48 Culture...... 52 Business climate...... 54 Innovation-friendly public sector...... 62

An attractive and competitive Sweden...... 69 Vision for the future...... 69 The challenge...... 70 Agenda for the future...... 71

Appendix...... 73 References...... 73 Steering Committee...... 76 Project management...... 76

Foreword

Over the past five years IVA has been running projects on the themes of innovation and competitiveness. The main focus of the Innovation for Growth (2009–2011) project was the importance of a Swedish national innovation strategy. In the Innovation Powerhouse Sweden project (2012–2013) the emphasis was on regional innovation strategies.

The purpose of the Attractiveness for Sustainable Growth project (2014–2016) is to propose ways of increasing Swedish competitiveness and attractiveness. This project also has a clear regional focus. This was the basis for the report entitled Mobilisation for Increased Regional Attractiveness published in February 2015. That report presented an overview of the strengths, weaknesses, opportunities and threats in Sweden’s regions in their efforts to become more attractive. The responses indicated that there is strong potential in the Swedish regions at the same time as ever-increasing international competition requires more emphasis on specialisation.

The following three questions form the starting point for this report: What does Sweden with its small export-dependent economy need to do to maintain a high level of prosperity? What will attract individuals to come and work in Sweden and contribute to our prosperity? What will determine whether or not companies choose to locate their businesses and operations here?

We believe that the Swedish social model – with its welfare solutions, ability to resolve problems and conflicts in the labour market and in politics, good climate for enterprise, openness, trust between citizens and the authorities, low corruption and informal and democratic leadership – is a strength for Sweden and a key to our attractiveness. But our economy requires the model to be constantly transformed, changed and developed.

Increased attractiveness goes hand in hand with increased competitiveness. In this report we present the 6+1 areas which we believe will determine our future competitiveness and we also propose a number of measures. The themes running through the report are: change, the need for a comprehensive and long-term approach, and the fact the changes will ultimately happen through individuals working in cooperation.

Globalisation and digitalisation are changing the economic conditions in all countries, not least in Sweden. Behind the demand for sustainable development is an awareness of a serious global environmental problem as well as new economic and social challenges.

At the time of writing this in 2015 we are in the midst of the biggest refugee disasters since WWII. Sweden is one of the countries that is going to great lengths to help the refugees. Our ability to handle great social challenges through broad mutual understanding and cooperation between the political sphere, the private and public sectors and civil society is being put to the test. The challenge is to successfully integrate immigrants into our labour market. If we succeed we will give these individuals a chance of a dignified life in Sweden, while allowing them to work and thereby contribute to the prosperity of their new homeland. Meeting this challenge requires more in terms of leadership, action and a new approach to the issue in all parts of society.

5 As we present our final project report our aim is to initiate a broad discussion about crucial issues affecting Sweden’s future. In the year ahead we will be doing this in a variety of ways throughout the country.

While working on the project we gathered facts and constructive comments that informed us as we prepared this report. We would like to express our heartfelt gratitude to everyone who has been involved.

The Steering Committee for Attractiveness for Sustainable Growth, November 2015:

Carl Bennet, Chairman, Attractiveness for Sustainable Growth, Carl Bennet AB

Tomas Billing, CEO, Nordstjernan

Pontus Braunerhjelm, Professor, Royal Institute of Technology (KTH) and the Swedish Entrepreneurship Forum (Entreprenörskapsforum)

Charlotte Brogren, Director General, VINNOVA

Ulf Ewaldsson, Head of Research and Development, Ericsson

Pam Fredman, Professor, Dean, Gothenburg University

Carola Lemne, CEO, Confederation of Swedish Enterprise (Svenskt Näringsliv)

Martin Lorentzon, Chairman, Spotify

Björn O. Nilsson, Professor, President, Royal Swedish Academy of Engineering Sciences (IVA)

Gunilla Nordlöf, Director General, Swedish Agency for Economic and Regional Growth (Tillväxtverket)

Eva Nordmark, Chairman, Swedish Confederation of Professional Employees (TCO)

Johan Rockström, Professor, Executive Director, Stockholm Resilience Centre

Anders Sundström, Chairman Swedbank

Håkan Sörman, CEO, Swedish Association of Local Authorities and Regions (SKL).

Karl-Petter Thorwaldsson, Chairman, Swedish Trade Union Confederation, (LO)

Johan Carlstedt, Project Director, Attractiveness for Sustainable Growth, Royal Swedish Academy of Engineering Sciences (IVA)

6 Summary

Sweden has gone from being one of Europe’s • The great global environmental, economic and poorest countries to one of the richest. Our pros- social challenges that are summarised in the perity is built on competitive companies that are demand for sustainable development. able to create products and services that are in demand internationally. We hold a strong posi- In section 6+1 we discuss challenges and propos- tion in many areas. But, while other countries are als in the 6+1 areas which we believe are crucial unleashing their innovative power at a faster pace for increasing competitiveness and thereby also than us, our competitiveness has declined over the attractiveness: past five years. Sweden’s history as an industrial nation is Education: Swedish schools are not performing one of utilising opportunities brought by trans- as well as schools in other countries. The system formation by addressing economic and social is also lacking in terms of providing equal stand- issues simultaneously. We recognise many of ards at all schools, which is affecting Sweden’s these issues in the current debate: migration, ability to provide all children with a solid edu- education, infrastructure, housing and the la- cational foundation. We believe that the key to bour market. change lies in: Attractiveness is a key concept in understanding Sweden’s future challenges. It under- • Improving education by raising the scores the need for us to look up and compare status of teachers. ourselves with the world around us. At the core of this are individuals and businesses, and un- • Improving the way schools are governed. derstanding how they impact and are impacted by the structural factors that determine our at- • Exploiting the opportunities afforded by tractiveness. digitalisation for renewal and development The focus of this report is how Sweden in education. will continue to develop as a welfare society through innovation and fresh ideas in the pri- • Improving relationships with the vate and public sectors. Three external factors surrounding community, especially will have a strong impact on our progress: business and industry.

• Globalisation brings with it a dramatic increase Higher Education and research: Swedish in international trade, global transactions and universities have many strengths, but there is more countries participating in the global room for improvement; some programmes have economy. few hours of instruction, there are few active researchers participating in undergraduate edu- • Digitalisation, automation and robotisation cation, while mobility within Swedish higher mean sweeping changes for companies and education is low and incentives for interdisci- public sector organisations. plinary research across institutional boundaries are weak.

7 • We have concluded that the Government needs gridlock is as strong. At the same time there is a to guarantee that funding for our universities very substantial need to stimulate new construc- is at an internationally competitive level, while tion and mobility in the housing market. also establishing clear objectives and owner directives. • We therefore propose a combination of measures to stimulate new construction, Digitalisation offers new opportunities – and including changes in the tax code for housing challenges – for research and higher education. in the existing housing stock.

• We believe that a national strategy is needed for Culture: The concept of culture is broad – digitalised learning in higher education. everything from how people are treated on the street, relationships at the workplace, the qual- Universities have an important mission of col- ity of our artists of all kinds, and our cultural laboration with industry and other parts of offering and heritage. We believe that equality, society. When globalisation and digitalisation openness, non-hierarchical and democratic lead- change the labour market, universities needs to ership and authorities that exercise their power increasingly be able to offer frequent programs while respecting citizens are important aspects for academics. of Swedish culture and also have a big impact on our attractiveness. • The discussion on how higher education should meet the talent and expertise needs of industry Business conditions: Competitive companies and the labour market in general must be are distinguished by their ability to constantly developed. evolve and offer products and services that the various markets demand. One key success fac- Infrastructure. Swedish transport infra- tor is having talented and skilled employees. structure has been neglected and needs to be Today the talent supply is one of the most improved. Road and rail investments made important issues facing Swedish businesses. over the past 25 years have not been sufficient Meanwhile, the labour market is going through to handle the increased traffic. We believe that rapid transition. new ways of quickly increasing the volume of investments should be tested. • We therefore propose various ways of increasing opportunities for lifelong learning, an improved • One way of doing this is through PPP (Public validation system to facilitate the ability of Private Partnerships) solutions designed so that companies to assess an applicant’s skills, and Swedish private pension capital can be invested picking up the pace of efforts to develop and in these solutions. improve language instruction for immigrants to Sweden. • Sweden’s digital infrastructure is internationally competitive, but there needs to be better Designing the tax burden in a high-tax nation coordination between the various authorities like Sweden is a balancing act. It is a case of responsible for this area. generating enough tax revenue to finance education and the welfare system without threatening Housing and living environment: The hous- incentives for business growth and for individu- ing market is seriously out of balance. A short- als to educate themselves and take on new chal- age of homes is threatening to put the brakes lenges. We also believe that it is important to on growth. The situation in metropolitan and understand that the tax code must be designed growth areas is particularly serious. Few policy in such a way that it does not damage Sweden’s areas are as thoroughly analysed as the housing international competitiveness. market and there are few areas where political

8 • Our proposals primarily address taxes that Our report concludes with an eight-point agenda specifically affect start-ups and growth for the future: companies. 1. Safeguard the foundation for our prosperity by An innovation-friendly public sector: The ensuring we have internationally competitive quality and accessibility of public services have conditions for our businesses. a strong impact on our competitiveness and attractiveness. At the same time, the pressure 2. Ensure revenue for our welfare system – design on the public sector to transform itself is sig- the tax code so that it provides sufficient nificant for reasons that are both demographic revenue for welfare without negatively affecting and financial in nature. We believe that there are the desire of individuals and businesses to take three key forces of change for improving effi on new challenges. ciency and developing a public sector that can continue to deliver welfare services with suffi- 3. Equip individuals for change and lifelong learning. cient volume and quality: 4. Give teachers a real chance to improve • An efficient and systematic focus instruction in schools – the classroom is the on innovation. place where quality is determined.

• Public procurement that stimulates 5. Set clear goals for international competitiveness new and better solutions. for Swedish universities.

• Exploiting the potential 6. Pay back the infrastructure debt with interest. of digitalisation. 7. Break down old obstacles to solve the Swedish housing crisis.

8. Pick up the pace of development of an innovation-friendly public sector.

9 Leading position in EXPORT DEPENDENCE GOODS DOMINATE BUT THE PERCENTAGE WHERE DO WE EXPORT TO? OF SERVICES IS INCREASING (% OF GDP) Goods exports by trade partner, total value, adjusted toughening competition for decline in 2014 (SEK billion). Norway: 118 50,0

40,0 Services Others: 385 Germany: 112 Sweden is in a strong position internationally. and North America. One challenge is achieving Total export In just over 150 years we have gone from the same success in other parts of the world. 30,0 United Kingdom: being one of Europe’s poorest countries to Although Sweden holds a strong position in Goods 1.125 80 one of the ten richest in the world. The many areas, other countries are developing 20,0 miljarder kr China: 40 conditions have changed over time. Today faster than us. We’re among the top ten, but 10,0 three radical changes in the external environ- our competitiveness has declined over the France: 49 Finland: 79 Belgium: 50 Denmark: 78 ment are affecting us: globalisation, digitalisa- past ve years. Although we’re best in Europe 0 tion and the challenges summarised in at innovation, other countries are increasing 1998 2000 2002 2004 2006 2008 2010 2012 2014 Netherlands: 57 USA: 76 demands for sustainable development. their innovative capacity faster than us. 0,13% Source: Ekonomifakta.se Source: Ekonomifakta.se/SCB via Macrobond Sweden is an export-dependent country. Our capacity for transformation has been a A little voice. Sweden Our prosperity is built on competitive compa- key factor in our transition from a poor represents just 0.13% of the A RICH COUNTRY GCP PER CAPITA 2014 nies with the ability to create products and country to a prosperous welfare society. The world’s population. There are Position in the OECD welfare league. USD thousands, purchasing power adjusted. around 25 cities in the world services that are in demand internationally. social challenges we now face will require both 1. Luxembourg with a larger population than 2. Norway Our main trade partners today are in Europe a collective effort and renewal. our entire country. 3. Switzerland 4. USA 5. Ireland 6. Netherlands 7. Austria 8. Sweden DECLINING 9. Denmark COMPETITIVENESS STRONG INNOVATIVE CAPACITY 10. Germany Sweden BUT OTHERS ARE CATCHING UP WITH SWEDEN 11. Australia WEF Competitiveness Report Ranking. 12. Canada Iceland Position 10 Innovative capacity relative to the EU. Global Innovation 13. Belgium (EU = 100) Index 2014. 14. 1 Switzerland 0 10 20 30 40 50 60 70 80 90 100 2 Singapore 150 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 3 USA Source: OECD Source: OECD 4 Finland 145 5 Germany 1 6 Japan 140 SWEDEN AT TOP OF IMPORTANT INDEXES BUT FALLING BEHIND IN SOME 7 Hong Kong Germany 8 Netherlands 135 2 Global Innovation Index Global Democracy Index Digital Evolution Index 9 UK Denmark 1 Switzerland 1 Norway 1 Singapore 10 Sweden 130 2 United Kingdom 2 Sweden 2 Sweden Finland 3 11 Norway 3 Sweden 3 Iceland 3 Hong Kong 12 UAE 125 2010 2011 2012 2013 2014 2015 2006 2008 2010 2012 2014 Global Creativity Index OECD Better Life Index Global Competitive Index 1 Sweden 1 Australia 1 Switzerland 2 USA 2 Sweden 2 Singapore Source: World Economic Forum, Source: Innovation Source: Global Competitiveness Report 2009–2015 Union Scoreboard Innovation Index 3 Finland 3 Canada 3 Sweden

10 Leading position in EXPORT DEPENDENCE GOODS DOMINATE BUT THE PERCENTAGE WHERE DO WE EXPORT TO? OF SERVICES IS INCREASING (% OF GDP) Goods exports by trade partner, total value, adjusted toughening competition for decline in 2014 (SEK billion). Norway: 118 50,0

11 LEADING POSITION IN TOUGHENING COMPETITION ATTRACTIVENESS THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

LEADING POSITION IN TOUGHENING COMPETITION

ABILITY TO TRANSFORM IS CRUCIAL

Sweden’s economic growth and increased pros- service companies with sufficient development perity are based on an ability to transform. capacity to handle the new situation. Meanwhile (Schön 2014) labour market policy initiatives were imple- Sweden has For businesses this means constantly adapting mented to help people who needed to transition historically built to new competitive conditions; for individuals it into new jobs, which often meant relocating to strong positions for itself in the world. means switching to new assignments, often in a different area. We have always new workplaces. Mobility is also an important The crisis in the 1990s resulted in further competed with driver of innovative capacity as individuals take structural rationalisation. A process began in international industry. Swedes are also self- what they have learnt from past assignments which many Swedish companies rationalised motivated and used to with them to use in new environments (Entre their operations and greatly increased their pro- being in international prenörskapsforum 2014). ductivity and competitiveness. contexts. We are not particularly The history of Sweden’s journey to becoming hierarchical in a prosperous welfare nation is one of constant business; we don’t transformation and internationalisation. create a lot of management levels. Industrialisation began in the second half of Big flows behind the net changes Being able to work in the 1800s in Sweden. Exporting became impor- from restructuring processes a decentralised way tant early on. Demand, particularly from the is one of our strengths. United Kingdom, for Swedish forest products, In order to benefit from the restructuring processes Carl Bennet, we need to have excellent conditions in which to iron ore and grain rose rapidly. Towards the end Chairman, Carl create new jobs and ventures that can compensate Bennet AB of the 1800s a number of Swedish manufactur- for the ones that are disappearing. Behind the ing export companies emerged. Products and relatively small net changes are large flows. Mats services gradually increased as a percentage of Essemyr has illustrated this in Omställningskedjan – GDP in the 1900s while raw materials declined. håller den? (The Transformation Chain – Will it hold?) Following very rapid growth in the 1950s and 1960s, Sweden was affected by a structural cri- In 2003 the employment figures were down by sis in the 1970s. Companies in the textile and 40,000. But this net loss statistic hides a complex pro- shipbuilding industries were closed down or cess in which 470,000 jobs disappeared and 430,000 moved abroad. Engineering industries with a were created. Just over 300,000 of the new jobs were centuries-long history in mill towns were forced created in growing businesses and 150,000 in brand new or relatively new enterprises. Among the jobs to close down their operations. Meanwhile that disappeared, just under 300,000 were in shrinking many technology companies were developing companies and around 170,000 were in operations into successful export businesses. that were discontinued altogether or companies in Extensive rationalisation and efficiency im- the process of closing down. (Essemyr 2014) provement also took place in industrial and

12 CHANGES IN THE 6+1 AREAS AN ATTRACTIVE AND COMPETITIVE SWEDEN APPENDIX

FUNDAMENTAL ECONOMIC AND SOCIAL ISSUES

Sweden’s history as an industrial nation is char- • Infrastructure: The key to industrialisation was acterised by handling fundamental economic the rapid growth of the railways in the 1800s, and social issues simultaneously. We recognise electrification and later the construction of the many of these issues in the current debate: road network. Today we are debating Sweden’s The dynamic situation in Sweden is a major infrastructure debt and the railway crisis. advantage for our • Migration: During the migration in the 1800s future international one million Swedes emigrated to North • Homes: In the 1800s waves of people were competitiveness as well. Despite the America. They raised themselves out of poverty moving from rural areas to take new industrial fact that we are a at home in order to make the journey across the jobs in the cities. Living conditions were often small country, we are Atlantic Ocean to start a new life. In the 1900s wretched. This quickly became a political relatively dynamic in a positive way; there was a big influx of labour into Sweden priority. Housing cooperatives, public housing we are, for example, from Finland and Southern Europe among other and miljonprogrammet (a housing construction good at adopting places. Political crises in Europe, Africa and South programme to build a million homes from 1965 new technology and renewal. Although America resulted to a large influx of refugees. to 1974), are examples of government initiatives Sweden is non- At the time of writing this in 2015 we are in the and programmes to provide more good quality hierarchical, we midst of the largest movement of refugees since housing. Today the standard of our homes is must allow people at all levels to think WWII. From being successful in labour market high. But a shortage of housing is once again a in new ways and to integration, we are now among the countries challenge. challenge things. that are not doing as well. The current situation Charlotte Brogren, is a massive challenge. (OECD 2012) • The labour market: The 1938 Saltsjöbaden Director General, Agreement between the various parties in the VINNOVA • Education: When elementary schools were labour market addressed how negotiations, established in 1842 they helped increase the conflicts and agreements between trade unions standard of education of large sections of the and employers should be handled. It created an population. Various education initiatives were important component in “the Swedish Model” – initiated to meet the need for skilled employees. where Swedish labour market conditions would The important education reforms did not be determined through negotiation between happen until the 1960s when comprehensive the parties involved. Today, ensuring a supply of schools were introduced. For a long time talent and matching jobs with talent are major Sweden’s high level of education was considered challenges in Sweden, especially in a job market an important competitive advantage. Today poor that is regarded as inflexible by commentators results on the PISA (Programme for International and analysts such as the OECD (OECD 2015:2, Student Assessment) surveys have led to a World Bank Group 2015). debate on the quality of Swedish education.

13 SWEDEN IN ELEVENTH PLACE IN STARTING SWEDEN IS COMPETING FOR Attractiveness AND RUNNING BUSINESSES EMPLOYEES WITH A UNIVERSITY

The Ease of Doing Business index is compiled by the World Bank. It measures how DEGREE Attractiveness is a key factor in meeting • How is the quality of our schools? easy it is to start and run businesses in various countries. In 2014 Sweden was in The percentage of individuals with a university degree willing Sweden’s future challenges. It underscores the • Do laws, regulations and taxes provide a 11th place while Singapore, New Zealand and Hong Kong took the top three places. to move to a country. need to look around and compare ourselves good climate for individuals and businesses? to other countries. Start a business Access to electricity Access to credit Attractiveness puts the focus on individuals Attractiveness is dif cult to measure exactly, 1 New Zealand 1 Korea 1 New Zealand and businesses as players in the economy and but various indexes and measurements give us Canada Taiwan USA 72% 2 2 2 63% how they relate to the world around them: an idea. Sweden is among the nine best 3 Macedonia 3 Germany 3 Australia 58% • What attracts people to move or remain countries in the index that measures a nation’s where they are? brand, how attractive it is to live and work Sweden...... 32 Sweden...... 7 Sweden...... 61 • How do businesses decide where to locate here and if Sweden is considered an attractive their operations? investment option and a place for innovation 41% Korea USA Germany Protection of Cross-border Managing insolvency and research. decline in foreign minority owners trade and bankruptcy Attractiveness is about how players are Other measurements send warning signals. direct investment. Foreign direct impacted by and impact the structural factors As a small country we experience tough 1 New Zealand 1 Singapore 1 Finland investment into Sweden 56% 54% at the core of competitiveness issues: international competition for university 2 Hong Kong 2 Hong Kong 2 Japan 48% declined by 41% from 3 Singapore 3 Korea 3 Germany • Is there a good supply of jobs? educated and highly quali ed employees, 2011 to 2013. • What is the standard of our infrastructure? and foreign direct investment in Sweden is Sweden...... 32 Sweden...... 4 Sweden...... 17 • Is good quality housing available? declining. Denmark Sweden Austria

Source: World Bank (2014), Ease of doing business index Source: BCG, Nordic Agenda 2014

DIRECT INVESTMENT IN SWEDEN IS FALLING SWEDEN'S BRAND IS AMONG THE 10 STRONGEST IN THE WORLD Development 2010–2013. Top 10 of 50 nations. UNITED KINGDOM Finland United Kingdom France Sweden Denmark SWEDEN 10 -25% -33% -36% -41% -76% 5 CANADA 3 Germany Norway Canada China USA Germany USA 1 GERMANY 130% 35% 28% 22% 8% JAPAN 6 Source: BCG, Nordic Agenda. 2014 1 4 FRANCE 7 ITALY WHAT DOES THE WORLD THINK ABOUT SWEDEN? AUSTRALIA United Kingdom 9 Can imagine living and working in A good country A leading research the country for an extended period to invest in and innovation nation 2 2 USA SWITZERLAND 1. Canada 1. USA 1. Japan 8 2. USA 2. Germany 2. USA 3. Australia 3. Japan 3. Germany 3 – – – – – – 9. Sweden 9. Sweden 10. Sweden

Source: Nation Brands Index 2014 Source: Nation Brands Index 2012 14 SWEDEN IN ELEVENTH PLACE IN STARTING SWEDEN IS COMPETING FOR Attractiveness AND RUNNING BUSINESSES EMPLOYEES WITH A UNIVERSITY

Source: World Bank (2014), Ease of doing business index Source: BCG, Nordic Agenda 2014

Source: Nation Brands Index 2014 Source: Nation Brands Index 2012 15 LEADING POSITION IN TOUGHENING COMPETITION ATTRACTIVENESS THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

ATTRACTIVENESS

THREE TYPES OF ATTRACTIVENESS

Economists and historians have long studied • Proximity to relatives and friends and the drivers of migration based on the push fac- aspects that make life easier and provide tor (what drives individuals from a country) in benefits or entertainment are important but In the era of relation to the pull factor (the force that attracts not as important as the abovementioned globalisation we are individuals to a country). Economic geography factors. competing with the whole world and it research has focused on what determines where • Social services and the offering are important is becoming more businesses choose to locate their operations. but not decisive factors. (Tillväxtanalys 2014) and more important The research distinguishes between three for Sweden to attract people and types of attractiveness: At the European level the factors that determine companies. Sweden how attractive a place is to live are similar to cannot choose – • Attractive to live – a place people want to those in Sweden: Sweden must be chosen. move to or choose to remain. Carola Lemne, CEO, • Attractive to do business – a place where • The job market is key. Extensive unemployment Confederation of companies want to establish operations. in a region or the predominance of agrarian Swedish Enterprise • Attractive to visit – a destination people want industries send a negative signal to people to visit. (Tillväxtanalys 2014) considering moving in. • A high level of education or high-tech industries The individual in focus in a region make it a more attractive option. In the research on the situation in Sweden there • Good transport options and a good living is a clear pattern in terms of what makes an area environment are important. an attractive place to live: • The natural environment and the climate also influence inflows – warm winters, fewer cloudy • The status of the job market is decisive factor. days and access to nature reserves are positive – People are moving to locations with a more di- factors (Tillväxtanalys 2014). versified private sector and a broad job market. – The unemployed tend to move to a greater Businesses in focus extent than people with jobs. Early economic geography research pointed to – Commuters are more inclined to move. This is economies of scale and transport costs as deci true in particular for those who have had a job sive factors when companies were looking at that involved geographical mobility. where to locate their operations. Today the cost • People largely move to locations that offer of transporting goods has fallen but the cost of university education. transporting people is still high.

16 CHANGES IN THE 6+1 AREAS AN ATTRACTIVE AND COMPETITIVE SWEDEN APPENDIX

Business attractiveness varies from sector to new opportunities large and small companies to sector. Limited concentration benefits and dis- collaborate on innovations. Examples of this are persed input goods result in geographically dis- Ericsson in Kista and AstraZeneca in Mölndal. persed companies in sectors such as agriculture. The emergence of companies and collaboration In this case the region’s assets (as in the case of in Lund at Medicon Village and Ideon are other good arable or pasture land in the US midwest) examples. The cluster of are important factors determining attractive- companies and research institutes ness. If an industry has obvious concentration Focus on visitors that are emerging benefits (like the chem-tech industry in Germa- Being an attractive destination has some of the around, for example, ny), businesses will form sector clusters. same criteria as being an attractive place to live the automotive industry in For businesses with significant concentration and do business. The cultural environment and Gothenburg or IT benefits and variable input factors (like the IT offering, nature and good transportation infra- and communication and gaming industries), being located close to structure all help make a place attractive to visit. technology in Kista are important for our other similar companies is important. Silicon A private sector structure that offers attractive future attractiveness. Valley and our own Kista are examples of this. services also helps make a place an attractive Exciting things We can also see how location decisions create destination. happen in clusters; they have jobs, networks and a lot of people. This type of environment is a stronger driver for top talent and I believe REGIONAL ATTRACTIVENESS people find them particularly attractive. In the introduction of this section we presented the 6+1 areas we are focusing on from a natio Ulf Ewaldsson, Head of Research statistics and indexes that measure Sweden’s at- nal perspective. and Development, tractiveness. Declining direct investments is a But the regional perspective is also important Ericsson warning signal of becoming less attractive to for individuals and businesses. This is where businesses. The fact that many growing Swedish they operate and where people live and work. If enterprises in the IT sector are being bought and Sweden as a whole is to be successful, the sum developed in Silicon Valley is another example. of all regional development must be as great as Sweden as a welfare state is attractive, but inte- possible. gration problems in the job and housing markets An obvious question is therefore how the re- have a negative influence on people’s decisions gions vary in terms of their ability to attract. about where to move. With help from Boston Consulting Group we In our report we discuss competitiveness in have measured attractiveness in four areas:

17 LEADING POSITION IN TOUGHENING COMPETITION ATTRACTIVENESS THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

• Human capital – factors of significance in • The economy (enterprise, growth, employment) developing, attracting and retaining the best has no clear link to the size of the region. Good talent, nationally and globally. employment opportunities – a crucial factor in • Business climate – factors that measure the being attractive as a place to live – were present characteristics of a location that have an impact in regions of all sizes. We need to on business growth opportunities. understand what • Capital and innovation – factors that support • There is no difference in school results between makes us attractive. We are blind to our an area and provide competitive advantages. regions of different sizes, although it is possible own strengths. We • Infrastructure – physical and digital for a region to develop a good education offering undervalue our infrastructure. in its schools, which is an important attraction secure, democratic society in which factor for both individuals and businesses. The corruption is among The information is based on official data and same is not true at the higher education level, the lowest in the statistics. The model has been used before for where large regions are more successful than world. We don’t even think about it Sweden. international comparisons which have included small ones. Björn O. Nilsson, Stockholm. At that time the comparison con- President, IVA sisted of thirteen big cities in Europe and North • Even if two regions are equally attractive America. Stockholm came second among the overall, the determining factors may change. European cities and sixth among the thirteen For example Östergötland has a balanced profile cities compared in North America and Europe and is slightly above the average for most of the (Westrup, J. et al 2014). areas. Uppsala’s profile is characterised by more We have compared the attractiveness of all of peaks and is well above average in education, Sweden’s regions, i.e. considering all 41 factors. demography and innovation. The regions were then divided into three groups according to population size. • Some small and medium regions have succeeded At first glance it looked as if attractiveness was particularly well in various areas: determined by the size of the region. But if we – Västerbotten has the best digital take the Stockholm region out of the equation – infrastructure in the whole country and is because it is unique in Sweden, both in terms of number two in transport, rail and air services. size and private sector structure, and because it – Uppsala is number two in innovation. is the centre of public administration and home – Halland is number two in physical of numerous national organisations – a more infrastructure. balanced picture emerges. On the basis of this we can conclude that there is very good potential In other words, small and medium regions have for the regions to exploit their unique strengths to managed to develop strengths in areas that are improve their attractiveness. We base this on the not primarily linked to their size and geographical following observations: location.

18 CHANGES IN THE 6+1 AREAS AN ATTRACTIVE AND COMPETITIVE SWEDEN APPENDIX

• In areas such as demographics, economy, digital • Lack of coordination of national initiatives. infrastructure and transport, attractiveness • Lack of national and international cooperation. varies greatly among the smaller regions. This spread underscores the potential for small The conclusion was drawn that there are four regions to be highly attractive as well. key areas of particular importance to increase regional competitiveness and attractiveness: Sweden is a small Initiatives to increase country but we have a tradition of being regional attractiveness • A focus on areas of excellence. innovative and we are Increased regional attractiveness is the theme of • Input from the support system with used to collaboration Mobilisation to increase regional attractiveness, a focus on areas of excellence. and partnerships between different a report presented by the project in February • Better strategic analysis of the external sectors of industry and 2015. The focus of the report was how to make environment in order to determine which between the private regions more competitive and attractive. investments and initiatives are internationally sector and municipal authorities. We have The report was based on interviews with ac- competitive. an open economy tors responsible for development and innovation • Cooperation and leadership enabling and we are still highly in all of Sweden’s regions. It presented the work transboundary regional initiatives. rated in innovation rankings. In areas being done on a number of issues, actualised in such as infrastructure, the design and implementation of regional de- In our project we are working on four pilot cases digitalisation and the velopment plans and innovation strategies. The to develop a method for identifying the need for environment we are traditionally strong, results of the interviews were used to create a joint initiatives and input from the support sys- but we need to be SWOT analysis which identified four weaknesses: tem within an area of excellence. In spring 2016 sharper and work in a we will report the results of our work. We will strategic way. • Lack of insight into the external environment. also analyse in more depth how Swedish regions Gunilla Nordlöf, Director General, • Unclear roles and decision authority. can become more attractive. Agency for Economic and Regional Growth

How those responsible for development and innovation see regional competitiveness and attractiveness

Strengths Weaknesses • Areas of strength and excellence • Complacency and weak self-esteem • Natural resources and climate • Talent supply • Living environment • Infrastructure

Opportunities Threats • Areas of excellence • Lack of insight into the external environment • National and international cooperation • Unclear roles and decision authority • More effective support systems • Lack of coordination in national initiatives

19 UNITED NATIONS GLOBAL GOALS FOR SUSTAINABLE DEVELOMENT

Three radical changes in NO ZERO GOOD HEALTH QUALITY GENDER CLEAN WATER 1 POVERTY 2 HUNGER 3 AND WELL-BEING 4 EDUCATION 5 EQUALITY 6 AND SANITATION the external environment

The focus of our report is Sweden’s continued Digitalisation, automation and robotisation End poverty in all its forms End hunger, achieve food Ensure healthy lives and Ensure inclusive and Achieve gender equality Ensure availability and development as a welfare society through mean radical changes for companies and public everywhere. security and improved promote well-being for all equitable quality education and empower all women sustainable management of innovation and new approaches in the private sector organisations. Digitalisation provides nutrition, and promote at all ages. and promote lifelong and girls. water and sanitation for all. sustainable agriculture. learning opportunities for all. and public sectors. Three radical changes in the opportunities to deliver brand new products external environment will have a strong impact and services, improve the efciency of proces- AFFORDABLE AND DECENT WORK AND INDUSTRY, INNOVATION REDUCED SUSTAINABLE CITIES RESPONSIBLE on our growth and progress: ses in all parts of a business/organisation, and 7 CLEAN ENERGY 8 ECONOMIC GROWTH 9 AND INFRASTRUCTURE 10 INEQUALITIES 11 AND COMMUNITIES 12 CONSUMPTION AND At the centre of the globalisation process is launch new business models. It also increases PRODUCTION the dramatic increase over the past few the pressure in terms of our capacity for decades in global transactions and the parti- transformation. cipation of more and more countries in the The need and demand for sustainability 167 goals are set out in the global economy. The result is increased highlights a number of global social challenges, Ensure access to affordable, Promote sustained, inclusive Build resilient infrastructure, Reduce inequality within Make cities and human Ensure sustainable historical document, reliable, sustainable and and sustainable economic promote inclusive and and among countries. settlements inclusive, safe, consumption and international trade, migration and capital ows, the solutions to which require sustainable 2030 Agenda for modern energy for all. growth, full and productive sustainable industrialization resilient and sustainable. production patterns. and changing cultures and attitudes. As a small, growth. The UN’s 17 Sustainability Goals from Sustainable Development employment and decent and foster innovation. work for all. export-dependent country, Sweden is greatly 2015 provide a good summary of these adopted by the UN in impacted. For us, globalisation means greater challenges. A sustainable Sweden will be more September 2015. CLIMATE LIFE BELOW LIFE ON PEACE, JUSTICE AND PARTNERSHIPS international competition in many areas, but it attractive and the global social challenges will 13 ACTION 14 WATER 15 LAND 16 STRONG INSTITUTIONS 17 FOR THE GOALS also provides individuals and businesses with provide opportunities for innovative Swedish entirely new opportunities. companies.

Take urgent action to Conserve and sustainably Protect, restore and promote Promote peaceful and Strengthen the means of combat climate change and use the oceans, seas and sustainable use of terrestrial inclusive societies for implementation and its impacts. marine resources for ecosystems, sustainably sustainable development, revitalize the Global sustainable development. manage forests, combat provide access to justice for Partnership for DIGITALISATION CREATES NEW POSSIBILITIES deserti cation, and halt and all and build effective, Sustainable Development. reverse land degradation, accountable and inclusive and halt biodiversity loss. institutions at all levels.

GLOBALISATION HAS DOUBLED GLOBAL TRADE SINCE 1960 Global exports as a percentage of gross world product (GWP). 30

25 Transformed Traditional industry Mobility – Bandwidth – Cloud industry 20

15 Digitalisation 10 5

0 ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı 1960 –62 –64 –66 –68 1970 –72 –74 –76 –78 1980 –82 –84 –86 –88 1990 –92 –94 –96 –98 2000 –02 –04 –06 –08 2010 –12 Source: World Bank (WDI) via Macrobond 20 UNITED NATIONS GLOBAL GOALS FOR SUSTAINABLE DEVELOMENT

Three radical changes in NO ZERO GOOD HEALTH QUALITY GENDER CLEAN WATER 1 POVERTY 2 HUNGER 3 AND WELL-BEING 4 EDUCATION 5 EQUALITY 6 AND SANITATION the external environment

GLOBALISATION HAS DOUBLED GLOBAL TRADE SINCE 1960 Global exports as a percentage of gross world product (GWP). 30

25 Transformed Traditional industry Mobility – Bandwidth – Cloud industry 20

15 Digitalisation 10 5

0 ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı ı 1960 –62 –64 –66 –68 1970 –72 –74 –76 –78 1980 –82 –84 –86 –88 1990 –92 –94 –96 –98 2000 –02 –04 –06 –08 2010 –12 Source: World Bank (WDI) via Macrobond 21 LEADING POSITION IN TOUGHENING COMPETITION ATTRACTIVENESS THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

GLOBALISATION

Globalisation is a collective term for only to survive but also continue to develop, transboundary flows such as trade, invest- grow and benefit from the intense international- ment, migration, flow of capital, information isation that globalisation involves, strong deve We need to mobilise exchange and technology transfer. Culture, lopment capacity is needed: to increase our the environment, attitudes and outlook on competitiveness. Globalisation has life are also included. • Society needs to adapt to the new structures that been on hold during Globalisation has mainly been made pos- global competition is creating. This puts new and the financial crisis. sible through lower communication and greater pressure on our transformation capacity. When the crisis is over the effects transport costs due to technical advances • Adaptation to the new structures requires of globalisation and political decisions. a strong ability to transform so that we can will become clear. Globalisation is not a new phenomenon. exploit our comparative advantages, i.e. benefit Swedes are not usually nervous about But the significant reduction in transport and from and develop Sweden’s strengths, such our internationalisation communication costs over the past few dec- economy and society. and globalisation. We ades has led to a dramatic increase in global • Economic policy needs to be designed to handle have a tradition. We started doing it 100 transactions and in more countries participat- the new conditions. A well-structured policy will years ago. ing in the global economy. The term globali- make Sweden more attractive by creating a sound Pontus Braunerhjelm, sation encompasses this intensification phase. foundation for an economy where businesses and Professor, KTH, individuals can use their innovative capacity and and the Swedish Entrepreneurship A government commission studying the issue creativity to help maintain a high level of prosperity Forum globalisation concluded that if Sweden is not for all. (Braunerhjelm 2009)

DIGITALISATION

Digitalisation is a technology shift with similar enabled new types of refrigerators, cookers and sweeping consequences as the electrification of other kitchen appliances to be developed. Sweden which started at the end of the 19th century. Digitalisation, automation and robotisa- Just like digitalisation, electrification changed tion mean sweeping changes for businesses the way many companies produced their goods. and public sector organisations and provide The new source of energy provided brand new new opportunities to: flexibility in the way operations were organised, in manufacturing methods and where produc- • Develop new types of innovative products tion operations were located. Occupations dis- and services. appeared and new ones emerged. People’s daily • Improve the efficiency of processes lives were changed now that it was possible throughout whole organisations. to turn on a light at night fall. Electricity also • Start using new business models.

22 CHANGES IN THE 6+1 AREAS AN ATTRACTIVE AND COMPETITIVE SWEDEN APPENDIX

Digitalisation has unique effects on the economy. • Impacting the conditions for entrepreneurs. (Breman et al 2014) There are more opportunities to quickly get from idea to product and to reach a global • Physical products become digital services, market. As a result, new types of companies which means lower costs to use, copy, are emerging, so-called micromultinationals distribute and transport products. In the (small companies with low production A paradigm shift is media sector, streamed music is replacing CDs costs and low entry barriers). And they are taking place in the technology world. through services such as Spotify or iTunes. international from the start. It has not seen such Printed books and newspapers are being sweeping changes replaced by e-services such as downloadable • The conditions for public services are for a long time. We are leaving the e-books from companies like Amazon, and impacted, for example through new home traditional product- news is now being consumed online. 3D healthcare options or healthcare robots. consumer society printers are changing production technology (Breman et al 2014) behind and becoming a digitalised society by, for example, replacing the moulding based on technical process, and no physical transportation is The research company Gartner (Gartner 2014) advances. This is a needed when a digital file can be sent and the has identified areas where digital technology big adjustment for both society and product can be “printed.” The changes in the will have a major impact over the next five industry, and that is manufacturing industry are often summarised years: why our industries as in the term “Industry 4.0.” must be able to attract Swedish talent. Ulf Ewaldsson, • Digital platforms are improving efficiency Head of Research and internationalising services that used to and Development, be local, including everything from booking Digitalisation is also Ericsson flights online to e-commerce platforms. creating new jobs Intermediaries are being left out when the In a report from the Swedish Foundation for supply and demand sides meet in more Strategic Research Stefan Fölster studied the efficient ways in platforms such as through effects of digitalisation and automation in Sweden Airbnb. Even jobs that were previously limi- from 2006 to 2011: ted to a local job market are changing due to new digital platforms. New value chains • Automation happened very rapidly during the are being created and old ones are being period and was the cause of 15 percent of the eliminated. job losses from 2006 to 2011. • Despite this, Sweden’s employment rate has • Changing and improving the efficiency of been high and better than in many other traditional production. Examples of this are countries. when energy consumption is adapted to more • Digitalisation itself is the reason for new jobs (for example, data specialists), jobs that were precisely match demand, logistics are changed added to handle the complexity that digitalisation through digital tracking, or robotisation in creates (for example lawyers) and jobs that are manufacturing industry is more advanced level created due to a general increase in income thanks to artificial intelligence. levels (for example tourism). (Fölster 2015)

23 LEADING POSITION IN TOUGHENING COMPETITION ATTRACTIVENESS THREE RADICAL CHANGES IN THE EXTERNAL ENVIRONMENT

• Demand for individuals with digital technology applications,” i.e. services that make it easier for expertise will increase significantly, especially in people to quickly access new combinations of social media and mobile technology. services and information online (Apple’s Siri is one example). • Various eHealth applications, such as online moni- Everything indicates toring of people with chronic diseases like diabetes. • Innovation based on interaction with custom- that we will Treatments can be more precise based on digital ers will have an increased share of investment experience more climate-related, information about the patient’s condition. capital. social and ecological shocks. To cope with • Great increase in demand for “digital assistant” • Marketing will be more individualised. these, our society needs to be more sustainable with more flexible and adaptable business models and social solutions. Our success SUSTAINABILITY in the future will be determined by our ability to transform One point of departure for this project is that • Inadequate cleaning of emissions from society and industry efforts to make Sweden highly attractive must agriculture, production and society is resulting in in a sustainable be based on sustainable growth. acidification of oceans and reduced biodiversity. direction. Keeping Sweden attractive is Overfishing is a contributing factor as well. therefore even more One consequence of this sustainability per- • Sufficient access to food and water to meet the important right now. spective is an approach that judges the effi- needs of a rapidly growing global population. Johan Rockström, ciency of the economy on its ability to gener- • When a greater percentage of the global Professor of environmental ate resources to ensure prosperity in the short population has a higher income, new groups science and Executive and the long term. And this requires the exist- demand the kind of material standards that Director of Stockholm ence of companies that are highly competitive have up to now been reserved for those living Resilience Centre internationally. in wealthy countries. Meeting this need by The sustainability approach determines using finite/virgin natural resources in the same what the basic conditions for economic way as we have been doing is not sustainable. growth will be. Laws, regulations and agree- In this new situation there is a risk of political ments at the national and international levels conflict between countries in various stages of translate the basic conditions into rules of the development. game for businesses and consumers. Con- sumer demand and values can also drive the Sustainable growth requires more action from economy in a sustainable direction. the various sectors in society:

The sustainability perspective puts the focus on • Politicians need to create rules and incentives a number of global social challenges: to stimulate the sustainable production (and consumption) of goods and services. The • Increased greenhouse gas emissions are causing challenge is to meet environmental standards temperatures to rise, which is having a drastic and promote innovative and creative solutions, effect on various societies around the world. while also making Sweden more competitive.

24 CHANGES IN THE 6+1 AREAS AN ATTRACTIVE AND COMPETITIVE SWEDEN APPENDIX

• The successful companies of the future need to shared, and in terms of adequate problem- develop resource-efficient products and business solving capacity among players in society. models and be competitive. Digitalisation will • More political cooperation is needed at the play a key role here. international level to meet global sustainability • Energy and transport systems must be based challenges. on long-term fossil-free solutions, stability and reliability. In our opinion, Sweden, like the other Nordic • Social services must be produced in an efficient countries, is in the “pole position” for success- and sustainable way. ful sustainable growth. We have the potential • The economy needs to create the necessary to have a fossil-free energy supply, sustainable conditions for social sustainability, i.e. both in cities, clean air, productive oceans and a sus- terms of welfare services that give individuals tained strong welfare society by the middle of a “decent existence,” welfare that can be fairly this century.

Resource Efficient Business Models – Greater Competitiveness IVA has other projects that are delving into the areas we address in the Attractiveness for Sustainable Growth project.

The starting point for the Resource Efficient Business Models – Greater Competitiveness project, is that the rise in the global population and the growing middle class are increasing the need to manage the earth’s resources in a different way. Industry has every opportunity to play a key role in this process of change. By developing resource-efficient and profitable business models they are contributing to enduring sustainable growth.

The project is focusing on two main areas: • Promoting the emergence of new business models with built- in resource efficiency to maximise the value of the resources. The project will also highlight examples of business models for resource efficiency in various industries. • Identify control mechanisms that incentivise development of these new business models. The focus is on both the type and structure of control mechanisms. The project will present proposals for measures and policy directives for both the private and public sectors that will lead to Sweden being a global role model as a clean and resource-efficient society by 2050.

The project period is 2014–2015.

25 Changes in the 6+1 areas

In the seven sections that follow we will address the challenges in the six areas we believe are crucial for increased competitiveness and attractiveness:

• Education (covered in the “Schools” and “Higher education and research” sections) • Research • Infrastructure • Housing and living environment • Culture • Business climate

We will also discuss the public sector. In the Swedish model we have chosen to use tax revenue to nance many of the welfare services and to provide them primarily through public programmes. We believe that in this area there is potential for signi cant development. We also need to draw attention to the processes of change that are underway and initiate new ones. The nature of our proposals varies – from highlighting the need to strengthen change processes and to change attitudes, to models and solutions in a certain area.

26 Changes in the 6+1 areas

In the seven sections that follow we will address the challenges in the six areas we believe are crucial for increased competitiveness and attractiveness:

• Education (covered in the “Schools” and “Higher education and research” sections) • Research • Infrastructure • Housing and living environment • Culture • Business climate

27 Schools UPPER SECONDARY EDUCATION MOST ATTEND MUNICIPAL SCHOOLS Percentage of the population, age 25–64, who have completed The percentage of pupils in municipal and upper secondary school education. independent schools.

A good education system is one of the most The old parallel school system – where 100 Compulsory (years 1–9) important factors determining how attractive primary, secondary and upper secondary a country or a region is. schools existed side-by-side – was replaced High quality schools – preschool to upper with the rst comprehensive school, and in the 80 secondary – play an important role in mobility 1960s came combined primary and secondary decisions, both for people moving within their schools. A series of reforms were implemen- 60 own country and those looking to move across ted in the 1990s, including municipalisation of 86% 14% national borders. When companies are looking the free school choice system. Today just over at where to establish new operations, educa- 88 percent of people in Sweden have an upper 335 000 40 tion options for their employees’ children is a secondary education. kronor (SEK) Upper secondary factor in their decision. The ability to choose For many countries Sweden’s educational was the average 20 from various programmes, including instruction system has served as a model. The positive annual salary for 74% 26% in English, also affects the choice of location. image has, however, become somewhat compulsory school (years 1–9) teachers A high level of education in the population as tarnished. The results of the PISA surveys have in Sweden in 2013. OECD a whole has long been seen as an important changed our self-image and the way the rest of

explanation for Sweden’s high competitiveness. the world sees us. Our ability to rally our USA Finland Iceland The introduction of elementary schools in resources to handle the current situation will Sweden Norway Portugal Municipal Independent

1842 was an important building block, raising determine how the schools of tomorrow will Czech Republic Source: Ekonomifakta.se Source: Ekonomifakta.se the level of education in time for Sweden’s help make Sweden more attractive. transition to an industrial society. SWEDISH SCHOOLCHILDREN'S KNOWLEDGE IN AN INTERNATIONAL COMPARISON

ONLY FIVE COUNTRIES IN THE OECD ARE INVESTING SLOW SALARY GROWTH FOR SWEDISH TEACHERS MORE THAN SWEDEN IN PRIMARY EDUCATION Starting salaries for teachers teaching years 1–6, 2014. Civics and Language Digital Annual cost of education per student in years 1–6. Reading Maths Sciences democracy studies Problem-solving pro ciency USD thousands (purchasing power adjusted) 60 20 000 50 ? 40 30 Sweden below the Sweden below OECD Sweden below Relatively good results Pupils in Sweden are Swedish students The results of the 15 000 OECD average. average. A large OECD average in in ICCS 2009. A performing at the top performed just below digital PISA tests in Several indications of percentage of pupils most recent PISA and comparison in a similar level in English average in the 2012 reading and maths 20 declining reading do not enjoy learning in TIMSS for pupils in survey indicates a according to the PISA test in are better than on habits and desire to maths, particularly the year 8. For pupils in knowledge result at European study, ESLC problem-solving. the traditional 10 read. Gender older ones. But year 4 in TIMSS the least in parity with ten 2011. However the pen-and-paper 10 000 disparity in PISA (15 motivation and result is slightly better years ago. Many of the results are weak in tests. This is 0 year-olds) is strikingly self-condence in the and is above the students' values are in Spanish. The survey evidence of good Denmark Norway Sweden OECD UK Japan large, uctuating and area is high. OECD average. line with democratic was only conducted digital prociency. with boys doing ones. once. worse than girls. 5 000 INCREASE IN TEACHER SALARIES AFTER 15 YEARS (%)

0 USD 16 12 14 33 46 78 USA Israel Norway Sweden Denmark Germany Denmark Norway Sweden OECD UK Japan Luxembourg Switzerland Abbreviation key: PISA – Programme for International Student Assessment ,organised by OECD ICCS – International Civic and Citizenship Education Study, organised by IEA Source: OECD, Education at a Glance 2014 TIMSS – Trends in International Mathematics and Science Study, organised by IEA, ESLC – European Survey of Language Competences, initiated by the European The International Association for the Evaluation of Educational Achievement Commission 28 Source: SKL 2015:1 Schools UPPER SECONDARY EDUCATION MOST ATTEND MUNICIPAL SCHOOLS Percentage of the population, age 25–64, who have completed The percentage of pupils in municipal and upper secondary school education. independent schools.

0 USD 16 12 14 33 46 78 USA Israel Norway Sweden Denmark Germany Denmark Norway Sweden OECD UK Japan Luxembourg Switzerland Abbreviation key: PISA – Programme for International Student Assessment ,organised by OECD ICCS – International Civic and Citizenship Education Study, organised by IEA Source: OECD, Education at a Glance 2014 TIMSS – Trends in International Mathematics and Science Study, organised by IEA, ESLC – European Survey of Language Competences, initiated by the European The International Association for the Evaluation of Educational Achievement Commission Source: SKL 2015:129 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

SCHOOLS

GREAT IMPROVEMENT POTENTIAL

Swedish schools are not performing as well as professions. (LR 2012) A heavy workload and schools in other countries. Breaking this trend is poor feedback for their work has negatively key if we are to increase Sweden’s attractiveness affected the image of the profession. There is Sweden and many and competitiveness. also a lot of talk about the declining respect for other countries will focus increasingly The system is also failing in terms of provid- teachers’ professionalism among parents and on knowledge. In ing equal standards at schools. This is affecting politicians. (OECD 2015:1) order to be a good our ability to provide all children with a solid country, knowledge and education are educational foundation. We believe the key to • Teachers have been given greater essential. This is, change lies in: administrative responsibilities that have taken however, one of the precedence over actually teaching. Although areas where Sweden has fallen behind • Improving education by raising the status of the number if instruction hours is largely the the most in recent teachers. same as before, other responsibilities are taking years. But knowledge • Improving the way schools are governed. up more and more of their time. This is affecting also needs to pay off and it is therefore • Exploiting the opportunities offered by digitisa- the working environment for teachers. There very unfortunate that tion for renewal and development in education. is also greater need for teachers to work more Sweden has among • Improving relationships with the community, efficiently and share the workload in new ways. the highest tax levels in the world. especially business and industry. (OECD 2015:1) Tomas Billing, CEO of Nordstjernan Improving instruction by raising • Few active teachers have a research the status of teachers background and even fewer have an active The OECD has determined that teachers are the connection to research in their particular absolute most important factor in the quality and subject. This is despite efforts to solve the results of schools. (OECD 2015) From this perspec- problem by introducing “forskarskolor” (research tive, Sweden has declined in a number of areas. schools for post-graduate research) in 2011 to provided 200 teachers with postgraduate • The number of applicants for teacher education education. All too few teachers are therefore – a very clear indicator of how attractive the getting the professional development they need teaching profession is – has been on a down in their subjects and the stimulation that active ward trajectory for many years, although it participation in a research environment provides. has increased in recent years. We have seen (Lärarnas tidning 2011) this decline over time in Sweden as well as in comparison with many other countries. It is parti There are, however, a number of development cularly evident in natural sciences. (UKÄ 2014) trends that point to possible ways to improve the situation: • The status of the teaching profession has declined. The relative salary growth for all • An increased focus on career development. teachers is lower than for many other academic The introduction of förstelärare (teachers with

30 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

expanded leadership responsibilities) is one sequently been changed, changes in teacher example. education, changes in supervision and inspec- tion processes, and the introduction of various • The negative relative salary trend has turned rounds of national testing. around and there have been various government The OECD’s conclusion is that no more organi- initiatives to raise salaries for certain teachers. sational reforms are needed. More cooperation Increased competition for teachers has also between all parts of the school “governance resulted in higher salaries. (Lärarnas tidning 2015) chain” is needed in order for the necessary improvements to be made. (OECD 2015) • An ongoing and intensified effort to ensure There are problems with the way the munici- that schools are workplaces where people can palities govern schools. According to the Swed- develop through, for example, collegial learning, ish Schools Inspectorate (Skolinspektionen is another important factor to retain teachers 2014), nine out of ten have shortcomings in their and increase incentives for future teachers and planning, following up and systematic and con- school principals. Collegial learning is also the key tinuous development of their schools. Often in- to achieving relatively quick change because the adequate communication between school prin- biggest quality discrepancies today are between cipals and governing body representatives (those individual classrooms. Initiatives such as Matema- responsible within the municipality) and a low tiklyftet (addressing the mathematics gap) and level of trust between them are having a nega- Läslyftet (to improve reading and writing skills) tive impact on leadership processes. Continuity are examples of this. (Lärarnas nyheter 2015) is needed in government initiatives in the area. (TALIS 2014, OECD 2015:1) • Placing education at the centre of the political Clear leadership that supports development debate will facilitate change. on a daily basis is key in implementing the necessary changes in today’s schools. Here the fact • Better statistics will enable detailed that, in an international comparison, Swedish comparisons of progress at different schools school principals spend less time than their for- to be made. (SKL 2015:1) eign counterparts focusing on education management is a serious matter. Swedish teachers Governance, leadership and development also receive less feedback on their work than There have been significant changes over the teachers in other countries. (TALIS 2014, OECD past 30 years in the way schools are governed. 2015) The 1990s saw municipalisation and the fria A lot of education research is being con- skolvalet (education reform that allowed par- ducted. But there are significantly fewer studies ents to choose a school for their child). Then whose results can be used to make direct chang- came a series of changes: two new school cur- es in schools, or where resources are invested riculums, including preschool and before and in structured development work based on exist- after school programmes, a new Education ing research results. (SOU 2014:02) The newly Act, a targeted grading system which has sub- formed education research institute, Skolforsk

31 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

ningsinstitutet, has an important mission to Research shows that it is necessary to develop drive this type of research. instruction while introducing digital tools such The possibility of using industry contacts as computers and tablets, otherwise school re- to allow schoolchildren to learn about life in sults will not improve. the workplace and to be inspired about career Schools are finding it hard to be at the fore- One problem for us choices is not enough. Lessons taught by guest front of development. Although we still do not at Spotify is that it industry professionals and field trips to compa- know the result of the many initiatives that is difficult for us to find housing for the nies do not happen often. Nor is there a natural have been implemented, research is under way programmers – often meetingplace for representatives from schools to find the answer. (Aniika Agelii Genlott and young people – we and industry to exchange experiences and ideas Åke Grönlund ongoing research, Grönlund el al recruit because so few homes are being built. on development in education. 2014) Another important Digitalisation can also reduce the administra- issue is schools. I Digitalisation and new technology tive burden for teachers, giving them more time think that school cur- riculums should be Over the past few years more and more schools to develop their lesson plans. Marking national changed so that there have brought digital tools into the classroom. exams using digital technology is one example is more mathematics But there is still a long way to go until the class- of a way to free-up time. and programming from year one. room is as digitalised as the lives of school Martin Lorentzon, children outside the classroom. co-founder of Spotify

CONCLUSIONS AND PROPOSALS

• Prioritise measures that will raise the status of development to meet the challenges of running a teachers. This is the key to increasing the quality school. of schools. Examples of ways to do this are: – Give teachers more time to teach by reducing • Invest more resources in education research their administrative responsibilities. that can be used to develop instruction and – Improve the way the workload is shared other aspects of school activities. between teachers. – Support measures to match career and salary • Produce a concrete action plan to increase development. cooperation between different levels in the – Increase opportunities for active contacts with education system and industry. This needs research environments. to happen through a joint initiative involving schools and industry. • Strengthen all levels of leadership in schools The Government needs to work with the • Develop a national strategy to exploit the municipal and private school governing bodies opportunities of digitalisation in the classroom to support school principal education and and allocate resources to implement it.

32 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

Falkenberg was the first in the country to invest in 1-1

Mona Yussuf and Tilda Carlsson from Skogstorp School in Falkenberg, one of the first schools to join the 1-1 project.

The jury on the Gold Staircase at Ljungby School in one of the developing Kerstin Angel (C), Chairman, Barn- och learning environments that Falkenberg is investing in. utbildningsnämnden in Falkenberg.

Cooperation at all levels and sustainability. This is the key issue in the long-term process of digitalisation in schools, according to Kerstin Angel (C), Chairman of Barn- och utbildningsnämnden (Board of Education and Children’s Services) in Falkenberg, which was the first in the country with its investment in 1-1.

“Now the challenge is no longer the technology, but implementing it in the classroom. And that it isn’t up to individual teachers but runs through the entire organisation,” says Kerstin Angel. In terms of having the same standards across the board, Kerstin also hopes that it will be a greater priority at the national level as well.

“We need a national digital agenda which also addresses the issue of school principal and teacher education, both undergraduate and postgraduate. Constant learning is needed. Things develop quickly. But we can’t wait; we need to keep taking small steps.”

This article is from Guldtrappans 2015 prisbroschyr. Text and photo: Carina Näslundh

33 FUNDING FOR EDUCATION AND RESEARCH SMALLER INCREASE IN GRANTS FOR EDUCATION COMPARED TO RESEARCH Higher education and research Government grants for Swedish research has increased by 40 percent. Index Research 150 Internationally competitive Swedish universi- Industrialisation in Sweden required new Denmark 140 ties with high-quality research and education knowledge and skills in engineering and are a key factor in Sweden’s attractiveness and economics. New university colleges focusing 130 Norway SEK 24 m SEK37m competitiveness. They are essential to ensure a on engineering and economics emerged during 120 2006 2013 supply of talent for the increasingly knowled- the 1800s. The big expansion of universities Israel 110 Education ge-intensive companies and public sector started in the 1960s and university education Taiwan 100 organisations. They are also crucial for the became available throughout the country. Index 2007=100 development of new knowledge for innovation Meanwhile education grant reform made it 90 SEK 22 m SEK 27m and development of society. possible for young people to pursue a higher 80 29.4 2007 2008 2009 2010 2011 2012 2013 High-quality higher education, research and education regardless of their parents’ nancial Source: OECD R&D DATABASE 2006 2013 Source: OECD R&D DATABASE development attract companies based in status. The result was a sharp increase in YEARS PERCENTAGE OF UNIVERSITY INCOME PRIVATE SECTOR R&D INVESTMENTS Sweden to invest here and foreign ones to people with a higher education. Today just over THAT COMES FROM THE PRIVATE SECTOR Swedes graduate late. Percentage of GDP establish operations in Sweden. Innovative 40 percent of Swedes between the ages of 25 4,0 The average age at which 2001 2007 2013 3,5 research environments at universities, institu- and 34 have a university degree. Swedes graduate from 3,0 tes and companies are essential in order to Universities are becoming increasingly university is 29.4, compared 2,5 recruit well-quali ed researchers. These international in both research and education. to the OECD average 2,0 environments are also essential if researchers Many programmes incorporate studying at a of 26.4 and 22.1 years 34% 12% 4% 1,5 in Belgium. are going to be willing to work in Sweden and foreign university. Just over 4 percent of 1,0 if research teams based in Sweden are going to Swedish students study abroad. 0,5 participate in international projects. 0 China Israel Sweden Israel Taiwan Sweden DK Germany China Norway Source: OECD R&D DATABASE Source: OECD, Main Science Technology Indicator

GRADUATION RATES VARY INDEX MEASURING DIFFERENT ASPECTS OF THE INTERNATIONAL BETWEEN PROGRAMMES COMPETITIVENESS OF SWEDISH UNIVERSITIES

FOREIGN STUDENTS SWEDEN Percentage of students who graduate. Competitiveness of Swedish universities. Number: 25,000 Percentage: 5.8% Shanghai Ranking Swedish From: China, Iran, Universitas 21 of World Universities Leiden Research Council Number of GERMANY Germany, Finland, India 89% 63% foreign students Number: 197,000 in the USA Percentage: 7.1% compared to UNITED KINGDOM From: China, Russia, Sweden. Number: 417,000 Austria, Percentage: 17.7% Bulgaria, Medicine Law University Academic awards Scienti c Frequently cited From: China, India, Poland AUSTRALIA system and citation frequency inuence publications Nigeria, Number: 250,000 USA, 2015: 5th place 4 Swedish universities 1 Swedish university in 7th place Sweden FRANCE Percentage: 18.0% USA Germany Number: 239,000 From: China, India, 2014: 2nd place among top 100 top 100,5 among top 300 Number: 785,000 Percentage: 10.2% Malaysia, 54% 81% Percentage: 3.9% From: China, Morocco, Vietnam, 45 countries The index takes into Bibliometric indicators Fourth place for number USA From: China, India, South Korea, Algeria, Tunisia, Indonesia compared. account factors such as for universities' of published articles in Saudi Arabia, Canada The index takes into academic awards (e.g. the scienti c inuence and relation to the Senegal account resources, Nobel Prize) and participation in scienti c population. Low results, international researcher citations. collaboration. percentage of non-cited Number: Foreign Percentage: Foreign From: The ve countries Engineering Psychology networks, and articles. students in the university students in where most foreign students education and country. relation to the total number. come from. research policy. Source: Unesco Source: OECD/Ekonomifakta.se 34 FUNDING FOR EDUCATION AND RESEARCH SMALLER INCREASE IN GRANTS FOR EDUCATION COMPARED TO RESEARCH Higher education and research Government grants for Swedish research has increased by 40 percent. Index Research 150 Internationally competitive Swedish universi- Industrialisation in Sweden required new Denmark 140 ties with high-quality research and education knowledge and skills in engineering and are a key factor in Sweden’s attractiveness and economics. New university colleges focusing 130 Norway SEK 24 m SEK37m competitiveness. They are essential to ensure a on engineering and economics emerged during 120 2006 2013 supply of talent for the increasingly knowled- the 1800s. The big expansion of universities Israel 110 Education ge-intensive companies and public sector started in the 1960s and university education Taiwan 100 organisations. They are also crucial for the became available throughout the country. Index 2007=100 development of new knowledge for innovation Meanwhile education grant reform made it 90 SEK 22 m SEK 27m and development of society. possible for young people to pursue a higher 80 29.4 2007 2008 2009 2010 2011 2012 2013 High-quality higher education, research and education regardless of their parents’ nancial Source: OECD R&D DATABASE 2006 2013 Source: OECD R&D DATABASE development attract companies based in status. The result was a sharp increase in YEARS PERCENTAGE OF UNIVERSITY INCOME PRIVATE SECTOR R&D INVESTMENTS Sweden to invest here and foreign ones to people with a higher education. Today just over THAT COMES FROM THE PRIVATE SECTOR Swedes graduate late. Percentage of GDP establish operations in Sweden. Innovative 40 percent of Swedes between the ages of 25 4,0 The average age at which 2001 2007 2013 3,5 research environments at universities, institu- and 34 have a university degree. Swedes graduate from 3,0 tes and companies are essential in order to Universities are becoming increasingly university is 29.4, compared 2,5 recruit well-quali ed researchers. These international in both research and education. to the OECD average 2,0 environments are also essential if researchers Many programmes incorporate studying at a of 26.4 and 22.1 years 34% 12% 4% 1,5 in Belgium. are going to be willing to work in Sweden and foreign university. Just over 4 percent of 1,0 if research teams based in Sweden are going to Swedish students study abroad. 0,5 participate in international projects. 0 China Israel Sweden Israel Taiwan Sweden DK Germany China Norway Source: OECD R&D DATABASE Source: OECD, Main Science Technology Indicator

GRADUATION RATES VARY INDEX MEASURING DIFFERENT ASPECTS OF THE INTERNATIONAL BETWEEN PROGRAMMES COMPETITIVENESS OF SWEDISH UNIVERSITIES

HIGHER EDUCATION AND RESEARCH

IMPROVEMENT POTENTIAL*

Swedish universities have many strengths. An • Swedish universities today have a high degree open and non-hierarchical culture is one of of autonomy. But some funding is still allocated them. But there is still room for improvement: with stipulations, particularly funding for Academia has been shorter programmes. Multiple stipulations are global for a long time. Swedish universities • In the humanities, social sciences and law, also attached to reporting and following-up on compete for students some programmes have very few hours of allocated funds. as well as researchers instruction. One in five social scientists have from other countries. Sweden’s attractiveness five or fewer hours a week (JUSEK 2015). • Incentives for interdisciplinary research across is therefore an important A survey from 2013 shows that half of all institutional boundaries are weak. This is issue. We need to get full-time students have fewer than nine hours especially serious in light of the fact that the people to come here. To do this we need to of instruction a week. There has been a slight great social challenges we are now facing require offer good programmes improvement since 2009 when Sweden was precisely this kind of cooperation. and conditions for those ranked in last place among 22 countries in the studying here. And we need good conditions for EU study on the number of instructor-led hours • The allocation of funds for undergraduate those who want to stay in higher education. (Bender 2013) education is inconsistent, making it more and establish themselves difficult for universities to properly implement here after graduating. But we should also be • Relatively few active researchers teach at the their own priorities. an attractive option undergraduate level. Unlike, for example, leading for people intending to universities in the US, it is not assumed that this • Research quality is the main factor determining have a career in their homeland or with an group will teach at lower levels. The reason is resource allocation. The universities’ mission of international company. related to both attitudes towards teaching and community engagement to benefit society has In any of these situations the credit system. (Wallberg 2015) little impact on how the portion of funding they they will take home with them a favourable image are competing for is allocated. of Sweden and will be • Swedish universities are characterised by valuable international low mobility. Many Swedish researchers • The availability of scholarships and job contacts for us. In many cases studying remain at their alma maters after completing opportunities after graduation are important in Sweden can also their PhD. They are often recruited to their aspects when competing for international contribute to development own university. In many other countries this is students from outside the EU. The amount of and prosperity in their homeland because they practically impossible. Recruiting externally and scholarships and number of foreign students take the knowledge and internationally is not an obvious aspect of the have increased following the big decline when skills they gain with them. culture of the institutions. (Högskoleverket 2011) fees were introduced. There are also more Pam Fredman, There is also low mobility between academia job opportunities in Sweden after graduation. Professor, Dean, Gothenburg University and other parts of society. But we could still do a better job of attracting international students to Sweden.

36 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

DIGITALISATION OFFERS GREAT OPPORTUNITIES

Digitisation offers new possibilities in research and complete tasks. Inspiration and knowledge can higher education. We want to highlight a number come from a much larger group of researchers of these while also addressing the challenges: and educators than those physically present at the university. New ideas are often born at transboundary • Opportunities are increasing for daily meetings. These can collaboration in research teams made up of • New target groups have more opportunities be meetings between people from research departments throughout to study at a university. Programmes can be different industries, academia and the world. Researchers also have more tailored for different types of professional industry, between opportunities to take advantage of research development and further education. the public sector and facilities remotely. The new MAX IV and ESS private sector, or between small and facilities in Lund are examples of this. Digitalisation • Competition between universities is being large businesses. is making it more important to create attractive affected by massive open online courses Cross-boundary research environments around these facilities to (MOOC) and other online learning tools. Growth collaboration is also important for Sweden’s attract a critical mass of researchers to Lund. analysis tells us that this is a young phenomenon future competitiveness. that is attracting a lot of attention. One problem Ideas often arise when • In the same way as in schools, digitalisation is is that MOOCs rarely provide formal university people with different backgrounds and enabling new types of meetings to happen credits. Despite the knowledge growth the experiences meet. A between students and teachers/professors. individual gains, the value of the qualification they lot of exciting things Lectures can be streamed online. More time can receive is often unclear in the job market. Nor are happening in the be spent on contact between professors and have they so far succeeded in recruiting new cross-boundary sectors. Charlotte Brogren, students, for example in practical exercises and groups of students, i.e. MOOCs are used by Director General, lab work. Teaching methods can be developed people who have already been involved in some VINNOVA based on the possibility to monitor how students way with higher education. (Tillväxtanalys 2013)

* In 2015 the project held a workshop in GREATER NEED FOR COOPERATION Gothenburg attended by representatives from universities. Unless Universities have an important mission of col- some work hours are spent at the university. otherwise indicated laboration with industry and other parts of so- Opportunities for workplace degree thesis or the assessments and ciety. They can also inspire employees in schools PhD work and practical experience provide new conclusions in this section are based and the private and public sectors by offering forms of knowledge exchange. Adjunct posi- on discussions at the professional development in a format where tions at universities are another way of bringing workshop.

37 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

in knowledge and expertise from the workplace. The increasing pace of change in the job mar- This also provides researchers and professors at ket is making it more difficult to know exactly the university with greater insights into develop- what a skills profile (and education) should ments in different sectors. look like to meet the needs of the future. We Globalisation and digitalisation are chang- therefore believe that there will be a need for a ing the job market. Universities must therefore frequent, forward-looking and perspective-rich offer more refresher programmes for gradu- dialogue between academia and the private and ates. In the “Business climate” section (page public sectors on how educational programmes 54) we discuss the increased need for these pro- are designed and on the need for employees grammes to allow individuals to improve their with new combinations of disciplines in the expertise and skills in different phases of their workplaces of the future. career.

CONCLUSIONS AND PROPOSALS

• Ensuring that grants to universities are A transparent model for the allocation of competitive internationally while establishing basic funding that rewards quality in the three clear objectives and directives: missions of universities – research, education and community engagement – may help to – Ensuring that basic funding from the improve competitiveness. Efforts have been Government for research and universities initiated by the Swedish Research Council, is at an internationally competitive level is VINNOVA and the Swedish Higher Education of key strategic importance. This applies to Authority (UKÄ). funding for education and cooperation, which, compared to research funding, has fallen – Universities should also be able to be more behind in recent years. flexible than today in the way they manage funding for research and undergraduate – Clear owner directives are also needed, as education while meeting the goals that have well as goals for research, education and been set. cooperation from the Ministry for Education and Research. The goals should indicate what • Give private and public sector employees is expected of the university but not how the incentives to spend part of their time at a goals will be achieved. university. Also, give professors and researchers

38 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

at universities similar opportunities to work programmes at a university. (See also the part-time in the private or public sector. “Business climate” section for the proposed role of universities for professional development and • Develop the dialogue about how higher refresher courses.) education can help to meet the future talent and skills needs of industry and the job market • Produce a national strategy for digitalised through both undergraduate programmes learning in higher education. and recurrent professional development

Research Outlook IVA has other projects that are delving into the areas we address in the Attractiveness for Sustainable Growth project.

The starting point for Research Outlook is: “The discussion on goals and mechanisms for Swedish research policy needs to be intensified. By providing concrete ideas and proposals for prioritised measures, the project wants to bring new perspectives to the current debate.”

Research Outlook, which is largely a continuation of Agenda for Research, works like a think tank. The research policy debate will be advanced by gathering a broad group of actors, addressing important issues and studying them in detail. The project aims to provide more opportunities for Swedish researchers to:

• Run internationally effective research • Offer higher education on a research-based foundation • Integrate research “consumers” in the process (the general public, media, industry, authorities, etc. on the basis of research results and research expertise.

The project period is 2013–2016.

39 SWEDEN FAR AHEAD IN USE Infrastructure OF DIGITAL TECHNOLOGY The Digital Economy and Society Index (DESI) is compiled by the Connection European Commission based on more than 30 factors. Connection Desi 2015 Sweden's ranking 4 and digital skills each contribute 25 percent of the total points. Desi 2014 3 Good infrastructure in the form of ef cient began at the end of the 1800s, the telephone Integration of digital technology accounts for 20 percent, and online transport systems, a good energy supply and network started to grow properly in the 1920s, activity for 15 percent. https://ec.europa.eu/digital-agenda/en/desi digital communication are crucial if a country or the network of roads and air traf c after WWII, region is to be able to attract businesses. It also and investment in digital infrastructure was rst plays an important role in enabling businesses launched at the end of the 1900s. Digital public services Human capital Desi 2015 Sweden's ranking 5 Desi 2015 Sweden's ranking 2 to be competitive, especially in an economy When the infrastructure was expanded, the Desi 2014 5 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Desi 2014 2 with the level of exports that Sweden has. business climate changed dramatically. It was Infrastructure is a very important aspect of no longer necessary to be close to an energy how attractive a place is to live. Safe and fast source like a river or to raw materials. The 60% roads, good public transit, ef cient water and location could now be determined by the increase in goods traf c. Integration of digital technology Internet use sewage systems all impact the everyday lives of speci c needs of the organisation/operations. Since 1993 investments in goods traf c have increased Desi 2015 Sweden's ranking 2 Desi 2015 Sweden's ranking 1 people living in an area. For people planning to Sweden’s economic map was re-drawn when Desi 2014 1 EU average Desi 2014 2 by around 60 percent. The move, the same factors greatly impact their old industrial hubs were replaced with new High performing gure for passenger traf c Sweden decision on where to live. ones. by rail is around 70 percent. Source: DESI 2015 Infrastructure also affects how attractive an Our ability to maintain existing and invest in area is to visitors. Transport capacity on roads, new infrastructure will play a crucial role in INVESTMENTS TO MEET INCREASED PRESSURE ON INFRASTRUCTURE rail and air is a factor in the size of festivals Sweden’s future attractiveness and competiti- and conferences an area can accommodate. veness. The railways are at the centre of the Sharp increase in passenger and Infrastructure investment's share of GDP. Expansion of roads and railways. Being able to quickly reach their destination is current debate. Although the challenges are goods traf c since 1993. Percentage of GDP EUR billion an important consideration when visitors are not as serious as those facing the railway 2.0 Japan 2.2 planning their trip. system, there are some challenges for roads, 1.8 2.01 Sweden’s industrialisation and fast growth are the energy system, air travel and bre-optic Korea 1.6 intimately linked to infrastructure development: network expansion for digital communication 1.8 Germany the expansion of the railways and electri cation as well. 1.4

1.2 1.4 RANKING OF NATIONS' INFRASTRUCTURE AS A WHOLE, ROADS AND RAILWAYS, 1.0 JAPAN 1.0 AND TELEPHONY & ELECTRICITY SWEDEN Ranking: 0.8 Ranking: 1.13

5 5 10 0.6 0.6 20 25 12 GERMANY 0.4 Ranking: SW HONG KONG 2000 2002 2004 2006 2008 2010 2012 2000 2002 2004 2006 2008 2010 2012 ED UNITED KINGDOM Ranking: E N Ranking: 7 8 9 1 2 1 Overall ranking 114,000,000,000 13 13 6 Share of 114 billion that was invested in World economic forum SINGAPORE infrastructure in 2011. One third for trains competitiveness index 2015. Ranking: and railways. Two thirds for buildings. Total Transport Telephony & electricity 1 2 3 4 5 6 7 8 9 10 2 3 5

Source: World economic forum competitiveness index 2015 Source: OECD Data, Transport infrastructure investment and maintenance spending 40 SWEDEN FAR AHEAD IN USE Infrastructure OF DIGITAL TECHNOLOGY The Digital Economy and Society Index (DESI) is compiled by the Connection European Commission based on more than 30 factors. Connection Desi 2015 Sweden's ranking 4 and digital skills each contribute 25 percent of the total points. Desi 2014 3 Good infrastructure in the form of ef cient began at the end of the 1800s, the telephone Integration of digital technology accounts for 20 percent, and online transport systems, a good energy supply and network started to grow properly in the 1920s, activity for 15 percent. https://ec.europa.eu/digital-agenda/en/desi digital communication are crucial if a country or the network of roads and air traf c after WWII, region is to be able to attract businesses. It also and investment in digital infrastructure was rst plays an important role in enabling businesses launched at the end of the 1900s. Digital public services Human capital Desi 2015 Sweden's ranking 5 Desi 2015 Sweden's ranking 2 to be competitive, especially in an economy When the infrastructure was expanded, the Desi 2014 5 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Desi 2014 2 with the level of exports that Sweden has. business climate changed dramatically. It was Infrastructure is a very important aspect of no longer necessary to be close to an energy how attractive a place is to live. Safe and fast source like a river or to raw materials. The 60% roads, good public transit, ef cient water and location could now be determined by the increase in goods traf c. Integration of digital technology Internet use sewage systems all impact the everyday lives of speci c needs of the organisation/operations. Since 1993 investments in goods traf c have increased Desi 2015 Sweden's ranking 2 Desi 2015 Sweden's ranking 1 people living in an area. For people planning to Sweden’s economic map was re-drawn when Desi 2014 1 EU average Desi 2014 2 by around 60 percent. The move, the same factors greatly impact their old industrial hubs were replaced with new High performing gure for passenger traf c Sweden decision on where to live. ones. by rail is around 70 percent. Source: DESI 2015 Infrastructure also affects how attractive an Our ability to maintain existing and invest in area is to visitors. Transport capacity on roads, new infrastructure will play a crucial role in INVESTMENTS TO MEET INCREASED PRESSURE ON INFRASTRUCTURE rail and air is a factor in the size of festivals Sweden’s future attractiveness and competiti- and conferences an area can accommodate. veness. The railways are at the centre of the Sharp increase in passenger and Infrastructure investment's share of GDP. Expansion of roads and railways. Being able to quickly reach their destination is current debate. Although the challenges are goods traf c since 1993. Percentage of GDP EUR billion an important consideration when visitors are not as serious as those facing the railway 2.0 Japan 2.2 planning their trip. system, there are some challenges for roads, 1.8 2.01 Sweden’s industrialisation and fast growth are the energy system, air travel and bre-optic Korea 1.6 intimately linked to infrastructure development: network expansion for digital communication 1.8 Germany the expansion of the railways and electri cation as well. 1.4

1.2 1.4 RANKING OF NATIONS' INFRASTRUCTURE AS A WHOLE, ROADS AND RAILWAYS, 1.0 JAPAN 1.0 AND TELEPHONY & ELECTRICITY SWEDEN Ranking: 0.8 Ranking: 1.13

Source: World economic forum competitiveness index 2015 Source: OECD Data, Transport infrastructure investment and maintenance spending 41 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

INFRASTRUCTURE

INFRASTRUCTURE INVESTMENTS

The National Institute of Economic Research Has Sweden invested enough? (NIER) has analysed infrastructure investment There is broad consensus about the fact that development since the 1990s and has drawn two Swedish transport infrastructure has been The level of conclusions: neglected and needs to be improved. Research knowledge in the population and has defined two perspectives on the issue. We how well schools, • Investment is equally important in increasing believe they complement each other. universities and production capacity as in improving people’s healthcare etc. work in society is important lives through increased accessibility and security The first perspective has two key for the country’s future etc. questions: How big are the investments that competitiveness. They have been made? Have they been sufficient? in turn determine the standard of “In a developed nation like Sweden investments in the vital physical infrastructure probably have a fairly minor impact The Centre for Business and Policy Studies (SNS) infrastructure, on production capacity and GDP. But equally in its Economy Policy Council Report 2012 housing, transportation and important is that investments help to improve stated that Swedish investment in buildings and telecommunication. people’s lives by providing improved comfort, infrastructure is at a low level in an historical Anders Sundström, accessibility and safety etc. Many years of delayed comparison. It is also low compared to compa- Chairman Swedbank investment will, however, have a negative effect on rable countries. SNS points to the fact that the potential production capacity.” financial policy framework has been a weak driver in getting the Government to prioritise • We have not invested enough and have per- sufficient investment. To remedy this, the SNS haps not invested in the right places to handle proposed that, in addition to aa spending ceil- the increased traffic volumes on our roads and ing, there should be an investment floor indicat- railways. ing the minimum level for public spending. (SNS 2012) “The combined capacity problems that exist indicate that the road and rail investments made The other perspective raises the have been essential but insufficient to handle the following question: Is the main problem increased traffic volumes. This could be because the the inability to choose the most profitable investments were not made where they could do projects from a public finances perspective? the most good.” (NEIR 2012) The Swedish Fiscal Policy Council in its 2015 re- Although investment in railways and roads has port claims that it is impossible to determine for been insufficient, there are other areas where sure if the level of infrastructure spending has more progress has been made. been or is too low. One key reason for the Coun- The expansion of fibre-optic networks for cil’s conclusion is insufficient information and fast digital communication is proceeding at a statistics. The main problem is that the Swed- fast pace. Despite weak profitability, airlines are ish Government’s investment decisions have managing to give customers a flexible and effec- for many years been ineffective from a public tive range of travel options. (NEIR 2012) finances perspective, and considerable resources

42 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

have been allocated to less profitable projects. • The total value of the infrastructure Swedish Fiscal Policy Council (2015) (the capital stock) has grown significantly In 2013, the Confederation of Swedish Enter- more slowly than GDP. prise presented its report Infrastrukturskulden • Wear and tear on the capital stock has (The Infrastructure Debt). It discussed infra- been faster than construction. structure investment from the 1950s to the pre- • An infrastructure debt of around sent day. The purpose was to study whether SEK 300 billion has accumulated. there was a pent-up investment requirement and if it was possible to make a financial esti- The report also addresses the Government’s mate of its size and whether it could be done. responsibility for long-term infrastructure in- The report shows that over the past 50 years: vestment and the need for alternative financing methods to pay down the accumulated • The level of collective Swedish investments in infrastructure debt. (Confederation of Swedish infrastructure has been more than halved as a Enterprise 2013) percentage of GDP.

NEW CHANNELS FOR INFRASTRUCTURE INVESTMENT

The trials and tribulations of the Swedish rail a well. And initiating such changes is ultimately system seem like a soap opera; people getting a political responsibility. stuck at stations because aerial lines have fallen The need for innovation and new approaches causing trains stoppages is an everyday occur- has been emphasised in the railway debate. The rence. Reports on problem companies are hav- same applies, of course, to other infrastructure ing shipping their goods by rail due to lack of areas. In the section under the heading “An capacity are also commonplace. innovation-friendly public sector” (page 62) we Since 2010 the Swedish Transport Adminis- emphasise that innovation-friendly procurement tration took over responsibility for planning the is a tool to promote innovation and new ideas. combined transport system of rail, roads, mari- We believe that innovation-friendly public- time and air traffic. The Administration is also private partnership (PPP) solutions can be an- responsible for maintaining public roads and other way to drive development. railways. There are many instances where the way a According to many analysts and government project is designed has motivated producers to commissions, in the case of the railways this new deliver innovative solutions because they are re- structure has led to a lack of adequate expertise sponsible for the whole life cycle of the project. and needs analysis as well as less efficient man- But questions about procurement methods and agement. (SOU 2015:14, SvD 21/4 2015) This in- project efficiency in relation to financing have dicates that more money alone cannot solve the also been discussed in Sweden as well as other railways’ problems; systemic changes are needed countries.

43 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

In Sweden there have only been two large PPP budget limitations. In South Korea in 2011 there projects so far – the Arlanda line and the ongo- were 600 ongoing PPP projects. The Netherlands ing New Karolinska Hospital project. The Unit- uses this system extensively, and in Norway PPP ed Kingdom has used PPP solutions for many solutions are part of the future strategy of the projects, even though they are still controversial. Government that came into power in 2013. In the USA, interest in them is growing, moti- (Tillväxtanalys 2014) vated by a desire to increase investment despite

IS THERE SUFFICIENT EXPERTISE IN SWEDEN TO IMPLEMENT INFRASTRUCTURE INITIATIVES?

Historically Swedish infrastructure invest- The expansion of the main lines in the 1800s was ments have involved close cooperation between a powerful injection for Swedish industry. Today the State and private Swedish companies, e.g. planning has started for Sweden’s new main lines between Televerket and LM Ericsson. They for high-speed trains. However, as there has been have helped build expertise and increase inter- insufficient investment in this area, it is doubtful national competition in their sector. that we have the expertise here at home to enable Today the conditions have changed due to Swedish companies to benefit from the project to increased international trade and competition any significant degree. combined with government funding rules that Other countries have established strategies to set limits for cooperation between the State and handle this type of situation. One example is the private enterprises. But the question remains USA where investment in defence and space has about how we should use large Swedish invest- provided a substantial boost for US companies, ments to build up and secure a supply of Swedish especially in the IT sector (see for example Maz- talent and expertise. zucato 2013).

SWEDISH PENSION CAPITAL TO INCREASE INVESTMENT IN INFRASTRUCTURE The system of one single national budget, one One solution is to have a separate investment expenditure ceiling and balancing goals re- budget. Advocates for this idea feel that it would stricts long-term investments. Infrastructure be easier to politically motivate government bor- programmes during a particular year will have rowing for long-term projects and be easier to to compete with a number of other areas and find structures for private involvement in them. will ultimately be determined by the size of the (Braunerhjelm et al 2015, SNS 2012) budget. The Swedish insurance companies, who man-

44 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

age our occupational pension plan assets, have are needed to make the investments possible. The up to now had limited possibilities to invest in cash flow that is the basis for the return on the Swedish infrastructure. But the occupational projects could come from fees (in Sweden only a pension commission has proposed that Sweden few projects are likely to be financed in this way) should introduce a new type of institution – oc- or from annual disbursements through national cupational retirement provision companies. The or municipal budgets. (Barr 2015) Pilot projects are rules for these should be based on the EU’s IORP Here, in other words, there are opportunities under way in ten Swe- dish municipalities to (Institutions for Occupational Retirement Pro- for essential infrastructure investment to be made develop work proces- vision) Directive. In most European countries, by putting pension plan assets to good use in Swe- ses and methods to pension plan assets are managed by an institu- den, at the same time as investors will receive a make the municipalities more attraction that is separate from the insurance company. good and secure return on their pension savings tive. The initiative is The commission is proposing a set of rules that because when interest rates are low they can be being supported by better reflect the underlying risk in infrastructure invested in assets that provide a slightly better re- the Swedish Agency for Economic and investment. This would make it more attractive turn than government or housing bonds. In our Regional Growth. One to invest pension plan assets in infrastructure. opinion, if this system is to work, the following important aspect is di- A decision on this new type of institution is needs to happen: gitalisation. We need to work on a broad expected in 2016. If it materialises and companies front on education like Alecta, KPA and Folksam Liv take advantage • The occupational retirement provision and supporting SMEs of it and its rules, half of all of the capital in the companies need to increase their expertise in in their digitalisation processes. Broadband insurance industry (more than SEK 1,000 billion) investing in infrastructure projects. Expertise in is essential. Then we would be shifted over to the new occupational managing investments in real estate has been at a need to look at how retirement provision sector. high level for some time. Similar expertise needs we can develop regulations, standards and The IORP Directive gives Sweden a greater abil- to be built up for infrastructure investment. security issues. ity to adapt the rules to Swedish circumstances. Gunilla Nordlöf, This applies, for example, to capital requirement • A sufficiently large number of PPP projects so Director General, levels for infrastructure investments. This type that insurance companies are incentivised to Agency for Economic and Regional Growth of long-term investment also matches the flows build their expertise and create a structure for in the insurance and pension business well, just these investments. as real estate has long been a common investment object for businesses. • The investments must be able to compete with In Sweden the investments will primarily be other long-term investments and be able to stand made in roads and railways. New PPP solutions on their own feet in terms of risk and returns.

DIGITAL INFRASTRUCTURE

Fast fibre-optic networks are essential to give In the deregulated telephony market the Gov- people and businesses in Sweden access to the ernment has an important role in guarantee- absolute fastest and most secure electronic coming free competition and an efficient market. munication. Among other things, the Government is sup-

45 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

posed to ensure that all operators can use the the responsibility is shared by multiple govern- national fibre-optic network and other public- ment agencies and coordination is not working ly-owned networks on equal terms. However, well.

ENERGY

After 2020 much of today’s nuclear and wind • Electricity must be produced with as little power will reach the end of its economic life. environmental impact as possible. In order to ensure that Sweden’s basic industries are competitive and carbon dioxide emis- • The cost of the system – the sum of the sions are reduced through the use of electric cost of producing electricity and bringing it to vehicles, extensive investment in new power consumers via the grid and distribution network production is required. At the same time the – must be internationally competitive. European Energy Union and an open, common energy market will provide new oppor- The energy commission needs to start by mak- tunities for Sweden. ing a broad assessment of how much electricity Basic industry needs access to electricity 24/7 Sweden needs and which energy mix our coun- every day of the year. In the current system this try should aim for. From a competitive energy is guaranteed by a mix of hydro, wind and nu- perspective, it is vital that the conclusions are clear power. A new system must be able to meet truly based on the analysis and not tinged by three criteria: the types of preconceived notions about “good” and “bad” energy sources that were injected into • The system must be stable and have high the energy debate leading up to the last election. delivery reliability. (Byman 2014)

CONCLUSIONS AND PROPOSALS

It is obvious that Sweden has not taken good Try new ways of increasing care of its infrastructure over the past 20 years. infrastructure investment Although we are above the EU average in invest- We need to invest more in different types of in- ments in, for example, roads and railways, we frastructure and do it faster. Examples of meas- need to do more if we as a country want to com- ures to achieve this are: pete with the best in the world. There is no simple solution to improving in- • Design more projects like PPP solutions that frastructure. We believe, however, that a com- make it attractive to invest Swedish pension bination of measures and initiatives is needed: capital in them.

46 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

• Utilise the opportunities provided by the EU by • Public broadband infrastructure is the creating new occupational retirement provision responsibility of one government agency. Today companies with rules that make it possible to it is shared by several agencies and coordination invest more private pension capital than today is not efficient. in new infrastructure projects. These types of investments would make it possible for a larger • Broadband expansion with sufficient upstream portion of appropriations in the budget to be capacity from the individual user producing used for essential maintenance. through the network and not just fast reception. Invest in digital infrastructure based on a comprehensive approach • Increased insurance investments in new In an international perspective, Sweden has knowledge areas such as cloud storage and big good digital infrastructure and high broadband data to make Sweden more competitive. usage. Moving forward we need a comprehensive approach to the investments we make. In- vestment should include measures so that:

Electricity Crossroads IVA has other projects that are delving into the areas we address in the Attractiveness for Sustainable Growth project.

The starting point for Energy Crossroads is that Sweden needs long-term rules for its energy supply. Beyond 2030, the oldest of all current nuclear power plants will be ready for retirement, as will the first generation of wind power. The electrical grid needs new technology and capacity. These substantial investments will take time and require foresight and planning. Decisions are therefore urgently needed from our politicians. The Swedish electricity system is at a crossroads.

Electricity Crossroads will:

• Prepare reports and analysis as a basis for Sweden’s energy policy. • Promote dialogue between groups with people with various roles in Sweden’s electricity system (“Energy Sweden”). • Drive the energy debate, incorporating new perspectives. • Help improve knowledge about the role of electricity in a sustainable energy system.

The project period is 2014–2016.

47 Housing & living environment FINISHED HOMES The number of nished housing in the form of houses or multi-dwelling units.

28K HOUSES 12K SMÅHUS 8K SMÅHUS People move for work or education. How high, the housing market is seriously out of 1991 38K MULTI-DWELLING 2008 20K MULTI-DWELLING 2014 21K MULTI-DWELLING attractive the housing situation or living balance. A shortage of homes is threatening UNITS UNITS UNITS environment is in a city or neighbourhood to put the brakes on growth. The situation in affects where people choose to live. A metropolitan and growth areas is particularly well-functioning housing market is therefore serious. an important criterion in making an area or We need to look at the housing issue from country attractive. an attractiveness and competitiveness During the end of the 1800s and beginning perspective. Spotify looking for buildings to of the 1900s rapid urbanisation put pressure provide housing for its foreign employees is a on the housing supply. The poor living condi- warning signal. In the same way as a serious 19% tions in the cities attracted a lot of attention. environmental event cannot wait to be xed The price of Functionalism, housing cooperatives, public the housing issue cannot wait either. If the cooperative housing housing, barnrikehus (an initiative to improve current growing housing shortage in metropo- is increasing rapidly housing for families with three or more litan regions continues, Sweden’s attractiveness in university towns throughout Sweden. children) and the miljonprogrammet (a and competitiveness will be threatened. Luleå is pushing prices housing construction programme to build a Few policy areas are so thoroughly analysed up in Norrbotten. million homes from 1965 to 1974) were all as the housing market and there are few areas examples of initiatives to improve living where political gridlock is so rm. But the standards and x the housing shortage. need stimulate new construction and mobility Today, although the standard of our homes is in the housing market is substantial. Source: SCB

HOME CONSTRUCTION AND Population PRICE PER SQUARE METRE FOR COOPERATIVE FALLING NUMBER OF LEASEHOLD FLATS IN STOCKHOLM POPULATION INCREASE HOUSING UNITS OCTOBER 2015 Homes 88 Change in number of leasehold ats in Greater Stockholm 1990–2012 Thousands. In SEK thousands. Price outside 54 big cities: 36 100,000 100 SEK 18,000/sq m. New construction

50,000 and reconstruction 80 55 38 36 Country 0 60 Central GreaterStockholm Stockholm Accumulated change in number of leasehold ats Central GöteborgGreaterCountry Göteborg −50,000 36 40 25 22

−100,000 Reorganisation 20 and demolition Country −150,000 Central GreaterMalmö Malmö 1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 2010 11 12 1970 1980 1990 2000 2010 Source: Boverket, Market Report, May 2014 Source: SCB, Befolkningsstatistik Source: Svensk Mäklarstatistik

48 Housing & living environment FINISHED HOMES The number of nished housing in the form of houses or multi-dwelling units.

50,000 and reconstruction 80 55 38 36 Country 0 60 Central GreaterStockholm Stockholm Accumulated change in number of leasehold ats Central GöteborgGreaterCountry Göteborg −50,000 36 40 25 22

49 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

HOUSING & LIVING ENVIRONMENT

Policy analysis of the housing market has been con- while the number of leasehold flats has remained ducted a number of times over the past few years. the same. Over the past decade the gap has wid- It provides a good sense of the current situation ened and the total number of rental flats has fallen. and is also our point of departure for this section.* Major lock-in effects on the owner and rental markets have contributed to the reduced supply. The housing shor- Due to the increase in the price of homes over tage is an obstacle HOUSING SHORTAGE the past few decades, households have substan- for recruiting the right talent. We need to tial latent tax debt that has to be paid if they create an environme- Demand for housing has increased drastically move from their home. If they stay where they, nt that gets people to over the past decade, particularly in the imme- are they avoid the tax payment. come, stay and thrive here. The challenges diate vicinity of metropolitan cities and those The inadequate addition of new leasehold flats vary from place to where the seat of government is located, as well combined with the rapidly rising cost for home- place. In Stockholm as university towns and regional growth centres. owners to move has resulted in low mobility in not enough homes are being built. At a mi- The increase is due to rising income levels, low the rental market and is making homeowners nimum we know that interest rates, low loan repayment requirements put off advancing in their housing “career.” The it’s a problem in recru- and fast population growth. Also, in an interna- result is that hundreds and thousands of people itment, particularly of young people who tional comparison, Sweden has been experienc- who cannot or do not want to buy a home are have no capital to ing very rapid urbanisation for a long time and in the housing queue, and there are simply not buy a flat. this has put increased pressure on cities. enough rentals available. Björn O. Nilsson, New home construction has not matched the Most leasehold flats are occupied by younger President, IVA ever-increasing demand in recent years. The gap and older people. This model is still an impor- between a growing population and home con- tant gateway into the housing market, also for struction is particularly tangible in the big cities. people coming to Sweden from abroad for work In Stockholm County the population has grown or for a research position in a city like Stock- over the past few years by around 35,000 a year, holm, where buying a cooperative flat is in many while only about 7,000 new homes have been built cases not a realistic alternative. annually. The housing shortage is a major socioeconomic problem. Today all sectors in the Stock- holm region are having recruitment problems be- THE HOUSING MARKET IS SERIOUSLY * cause of the housing shortage. It is affecting the OUT OF BALANCE These are Nybyggar healthcare sector, start-ups and small established kommissionen (Nybyggar enterprises – where the most new jobs are created. The housing market exists under market condi- kommissionen 2014), The housing shortage is therefore having a di- tions in terms of home construction, changes in Bokriskommittén rect impact on employment and the supply of tal- the housing stock, financing of new and distri- (Eklund 2014), National Board ent. It is also preventing some people from moving bution of existing homes. But rent levels are not of Housing report to less “hot” areas where the housing situation set based on market conditions. Låst läge på is better. People from big cities are quite simply Society has an important role to play in en- bostadsmarknaden (Boverket 2014), afraid to relinquish their position in the housing suring there is an efficient housing market and SKL’s Ökat market; the cost of returning would be too high. supply. But the responsibility is shared between bostadsbyggande the municipalities, the national government and – delat ansvar (SKL 2014) and now the contractors. It is a system with multiple problems: most recent edition SHARED HOUSING MARKET of a long-term • Production of enough new homes: Financing commission studying the housing market Since the beginning of the 1990s, the number home construction is a problem. In particular, (SOU 2015:48). of cooperative flats has increased by 50 percent, there is insufficient new investment in smaller

50 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

HOUSING & LIVING ENVIRONMENT

homes that can go on the market for a reasonable increase mobility within the existing housing price. More types of financing are needed and the stock: credit guarantee system needs to be reviewed. • Tax structure: The combination of a new capital Change the tax codes to facilitate mobility in the gains tax structure and abolishing property tax housing market. have resulted in ineffective and unequal taxation • Change the tax codes that effect people when of various forms of housing. Meanwhile, mobility they move to increase mobility in the housing in the housing market has declined significantly. market Changes need to be made primarily to • Pricing of leasehold flats: Greater competition is capital gains tax and interest payable on any needed in the building and construction sector and portion of capital gains tax that is deferred. production methods need to be developed. There • Overhaul the system to remove the non- is no reasonable explanation for construction costs uniform taxation of different forms of letting. in Sweden being around 40 percent higher than, for example, in Germany. (Boverket 2014) Incentivise new home construction by changing • Competition and productivity: Greater com- how rent levels are set so that rents better petition is needed in the building and construc- reflect the value of homes based on, for example, tion sector and production methods need to be location and quality. developed. There is no reasonable explanation for construction costs in Sweden being around Make it easier for weak groups to demand homes 40 percent higher than, for example, in Germany. through: (Boverket 2014) • A well-balanced system of housing subsidies. • Infrastructure: The infrastructure has not been • Greater utilisation of rent guarantees than today. sufficiently expanded and there is not inadequate • Consider creating a system for mortgage guarantees. coordination in housing planning. • Planning rules and processes: The construction Promote the further development of planning planning and appeals process needs to be made carried out by the municipalities as well as initiatives more efficient. Efforts to bring about change for efficient plan implementation through: involve authorities at both the municipal and • Financial stimulus. national levels. For example, conflict over the • Professional development and intensified protection of access to beaches/shores (strand- cooperation with local players such as business skyddet) or national interests (riksintressen) make owners and entrepreneurs, banks and brokers. construction more complicated and costly. Review the Planning and Building Acts to: • Make it easier for municipal authorities to draw CONCLUSIONS AND PROPOSALS up flexible zoning plans. • Make it easier for more design inquiries to reach The housing policy debate easily stalls on is- the building permit stage. sues relating to complex systems and technical • Be able, at an early stage, to require binding details. People are starting to wonder whether confirmation from the county administrative change is actually possible. boards that sufficient consideration has been Our conclusion, based on all of the analysis, is paid to national interests. that some fundamental changes need to happen in order to have efficient housing market. We Improve the efficiency of the appeals process by believe Sweden needs a combination of meas- taking away the county administrative boards’ ures to stimulate new home construction and role as an appellate authority in zoning cases.

51 Culture CULTURAL AND CREATIVE COMPANIES SUB-SECTORS Percentages for different sector groups. Breakdown of cultural and creative companies by sub-sector.

% Culture is a broad term. It covers everything for many cultural and creative sectors. A lot of from how people treat each other, relations- companies are now global right from the start 30 hips in our everyday lives and at work, to the because their domestic market is too small. Art and Communication Legal and science entertainment scope and quality of our cultural offering and One effect of this is that they have an interna- and information our cultural heritage. tional rather than a national identity. As a Broadcasting We believe that equality, openness, non-hie- result, in the music industry many of our 31% 31% rarchical and democratic leadership, and well-known artists are not spontaneously 24% authorities that exercise their power while associated with Sweden. respecting citizens, are all important aspects of The tourist industry is interacting with 20 Advertising Photography 12% and design Swedish culture and have a big impact on our developments in the cultural and creative Cultural and creative attractiveness. We also believe that it is industries. One example is the events and industries are growing 17% important to recognise and build on the streams of visitors when a city is the “Cultural 12 percent faster than the Culture and entertainment Manufacturing Commerce Film, video cultures that distinguish entrepreneurship and Capital.” Several of our big cities are pro ling rest of the economy in and TV EU member states. 14% Publishing enterprise in different regions – the spirit of themselves as event destinations and hosting 24% 7% 5% 13% small private enterprise in Gnosjö is one annual events. This requires a collective effort 10 example. at the regional level to build arenas and Graphic Architecture The cultural and creative sectors, including concert venues, increase hotel capacity and 9% Textile production manufacturing arts & entertainment, radio & TV; publishing, attract artists of a suf ciently high calibre. Textile 6% trading photography, design, architecture and of Cities and regions also have to market them- Letting and course, the gaming industry, play an important selves effectively in much tougher international Education property service 4% 4% role in de ning a country’s culture. The things competition. (Rabe 2014) 3% 3% that inform people’s decisions to visit or move The conference industry is helping to increa- 1% 1% Source: Tillväxtverket (2014) to a country are often a mix of hard facts and se knowledge exchange, often over national Source: Tillväxtverket (2014) the impact of cultural expression in lm, borders, and is thus contributing to knowledge INNOVATION – PERCENTAGE OF COMPANIES THAT HAVE DEVELOPED OR SOLD NEW OR SIGNIFICANTLY literature and art. growth in individual countries. International COMPANIES WITH 0–9 EMPLOYEES DOMATE IMPROVED PRODUCTS OVER THE PAST THREE YEARS In recent years many successes for Swedish competition for big conferences and congres- THE CULTURAL AND CREATIVE INDUSTRIES Percentages in 2014. enterprise in the cultural and creative sectors ses is very tough. In Sweden there are 22 In percent. Cultural and creative companies have attracted attention. One is computer convention bureaus working to attract big All companies games, an industry that employs 2,500 people events to Sweden operating under the Services Goods and whose products are used by 700 million Swedish Network of Convention Bureaus people all around the world. Other examples (SNCVB). Right now there is an initiative for are the Swedish “music miracle” and the national joint action for a greater focus from CULTURAL ALL AND CREATIVE success of Swedish detective novels and TV the ministries and authorities on the impor- COMPANIES COMPANIES series which now have their own “Nordic tance of hosting major meetings in Sweden, Noir” genre. and pooling resources to coordinate and Digitalisation is creating new opportunities develop our conference industry.

0 employees 10–49 employees 1–9 employees 50–249 employees

Source: Tillväxtverket (2014) Source: Tillväxtverket (2014) 52 Culture CULTURAL AND CREATIVE COMPANIES SUB-SECTORS Percentages for different sector groups. Breakdown of cultural and creative companies by sub-sector.

0 employees 10–49 employees 1–9 employees 50–249 employees

Source: Tillväxtverket (2014) Source: Tillväxtverket (2014) 53 Business climate STRUCTURAL CHANGES NUMBER OF NEW Percentage of jobs by sector. SERVICE COMPANIES 100 90 Services Between 1994 and 2014 the number Sweden’s competitiveness is determined by the entrepreneurship to ourish and for an 80 increased by 104.4 percent. In industrial expertise, innovative capacity and ef ciency of economy based on private enterprise – the 70 companies the increase is 66.3 percent. our businesses and the conditions under which foundation for Sweden’s industrialisation and 60 104% Sweden as a nation and the regions where prosperity growth. 50 Industry enterprises operate can offer. A crucial factor Big corporations have played an important 40 for our future prosperity is therefore ensuring role in Sweden’s economic growth over the 30 Agriculture, forestry and sheries PERCENTAGE OF COMPANIES THAT HAVE DEVELOPED AND SOLD NEW OR SIGNIFICANTLY IMPROVED 20 we have a very attractive business climate to past century. In relation to our population size, Public sector PRODUCTS OVER THE PAST THREE YEARS attract businesses and that Sweden is a highly we have an unusually high number of major 2,8% 10 Both goods and services 7% attractive place to live to attract talent. . international corporations. These and other of companies 1970 −75 1980 −85 1990 −95 2000 −05 2010 Source: SCB Back in the beginning of the 1800s large corporations (with more than 250 in the hotel and INDUSTRY HAS A LARGE COLLECTIVE Goods only 15% economists said that companies would employees) are responsible for 40 percent of restaurant industry in 2012. EFFECT ON EMPLOYMENT establish operations where the conditions value added and employ one third of Sweden’s Direct, indirect and total number of employed people (millions). Services only 27% were the best, i.e. where the comparative workforce. 1,2 1 037 897 advantages were the greatest. Development of Big corporations remain an important force 1,0 910 989 917 456 930 147 Employed in infrastructure, energy supply and in Sweden’s economy. But we are seeing a industrial production communications, combined with globalisation, change in the way big corporations act, 0,8 for non-industrial Neither goods nor services 51% have given companies many more business especially how they are working with smaller sectors. 0,6 location options compared to during the enterprises on innovation and new product Indirect employment industrialisation era. And nding talent is an development. Digitalisation has led to the in mining and manu- 0,4 facturing industry. increasingly important issue. emergence of growth companies with new Source: Tillväxtverket (2014) In the 1800s changes to laws and regulations business models that develop in a different 0,2 Directly employed. created the necessary conditions for way to big corporations. 2008 2009 2010 2011 AVAILABILITY OF LABOUR/EMPLOYEES Source: Hagman et al (2015) Easiest in Percentage of companies experiencing various the sectors. factors as signicant recruitment obstacles. ENTERPRISES BY SIZE Percentage of enterprises 2014 (Nov.) PERCENTAGE OF SMALL BUSINESS 70 PERCENT OF COMPANIES WANT THE BIGGEST COMPANIES ARE THAT WANT TO GROW TO GROW, BUT ONLY 38 PERCENT RESPONSIBLE FOR 39 PERCENT Medium-sized 32% enterprises: 0.5% 2005 2008 INTEND TO EMPLOY OF VALUE ADDED 46% 44% MORE PEOPLE Broken down by size Small enterprises: 3.0% Construction Large and sector. Only Number of enterprises: 0.1% net sales 32% employees Applicants with sufcient Applicants with specic Micro- professional experience expertise/qualications 0−19 enterprises: 28% 38% 77% 73% 32% 20−49 22.4% Single-owner Transport and 11% enterprises: warehousing 2011 2014 50−99 2013 8% 100−249 74.0% 31% 15% 10% Net sales and 39% employees 250+ 28% 30% Letting and Applicants with Applicants willing to 72% 68% property service the right education. move to the location.

Source: Tillväxtverket (2014) Source: SCB Source: Tillväxtverket (2014) 54 Business climate STRUCTURAL CHANGES NUMBER OF NEW Percentage of jobs by sector. SERVICE COMPANIES 100 90 Services Between 1994 and 2014 the number Sweden’s competitiveness is determined by the entrepreneurship to ourish and for an 80 increased by 104.4 percent. In industrial expertise, innovative capacity and ef ciency of economy based on private enterprise – the 70 companies the increase is 66.3 percent. our businesses and the conditions under which foundation for Sweden’s industrialisation and 60 104% Sweden as a nation and the regions where prosperity growth. 50 Industry enterprises operate can offer. A crucial factor Big corporations have played an important 40 for our future prosperity is therefore ensuring role in Sweden’s economic growth over the 30 Agriculture, forestry and sheries PERCENTAGE OF COMPANIES THAT HAVE DEVELOPED AND SOLD NEW OR SIGNIFICANTLY IMPROVED 20 we have a very attractive business climate to past century. In relation to our population size, Public sector PRODUCTS OVER THE PAST THREE YEARS attract businesses and that Sweden is a highly we have an unusually high number of major 2,8% 10 Both goods and services 7% attractive place to live to attract talent. . international corporations. These and other of companies 1970 −75 1980 −85 1990 −95 2000 −05 2010 Source: SCB Back in the beginning of the 1800s large corporations (with more than 250 in the hotel and INDUSTRY HAS A LARGE COLLECTIVE Goods only 15% economists said that companies would employees) are responsible for 40 percent of restaurant industry in 2012. EFFECT ON EMPLOYMENT establish operations where the conditions value added and employ one third of Sweden’s Direct, indirect and total number of employed people (millions). Services only 27% were the best, i.e. where the comparative workforce. 1,2 1 037 897 advantages were the greatest. Development of Big corporations remain an important force 1,0 910 989 917 456 930 147 Employed in infrastructure, energy supply and in Sweden’s economy. But we are seeing a industrial production communications, combined with globalisation, change in the way big corporations act, 0,8 for non-industrial Neither goods nor services 51% have given companies many more business especially how they are working with smaller sectors. 0,6 location options compared to during the enterprises on innovation and new product Indirect employment industrialisation era. And nding talent is an development. Digitalisation has led to the in mining and manu- 0,4 facturing industry. increasingly important issue. emergence of growth companies with new Source: Tillväxtverket (2014) In the 1800s changes to laws and regulations business models that develop in a different 0,2 Directly employed. created the necessary conditions for way to big corporations. 2008 2009 2010 2011 AVAILABILITY OF LABOUR/EMPLOYEES Source: Hagman et al (2015) Easiest in Percentage of companies experiencing various the sectors. factors as signicant recruitment obstacles. ENTERPRISES BY SIZE Percentage of enterprises 2014 (Nov.) PERCENTAGE OF SMALL BUSINESS 70 PERCENT OF COMPANIES WANT THE BIGGEST COMPANIES ARE THAT WANT TO GROW TO GROW, BUT ONLY 38 PERCENT RESPONSIBLE FOR 39 PERCENT Medium-sized 32% enterprises: 0.5% 2005 2008 INTEND TO EMPLOY OF VALUE ADDED 46% 44% MORE PEOPLE Broken down by size Small enterprises: 3.0% Construction Large and sector. Only Number of enterprises: 0.1% net sales 32% employees Applicants with sufcient Applicants with specic Micro- professional experience expertise/qualications 0−19 enterprises: 28% 38% 77% 73% 32% 20−49 22.4% Single-owner Transport and 11% enterprises: warehousing 2011 2014 50−99 2013 8% 100−249 74.0% 31% 15% 10% Net sales and 39% employees 250+ 28% 30% Letting and Applicants with Applicants willing to 72% 68% property service the right education. move to the location.

Source: Tillväxtverket (2014) Source: SCB Source: Tillväxtverket (2014) 55 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

BUSINESS CLIMATE

Competitive companies are distinguished by the skilled employees. This is why the talent sup- ability to constantly develop and offer products ply issue is covered extensively in this business and services that the various markets demand. climate section. We also address a number of This requires strong innovative capacity and ef- other important areas that determine the busi- fective business models. ness conditions, i.e. taxes, supply of capital and We need to ensure One success factor is a supply of talented and regulation. that the image of Sweden conveys that we have a strong competitive environment and a reliable supply of talent, especially SUPPLY OF TALENT with expertise in digitisation and A shortage of people with the right skills in the In the debate three key problems in efforts by sustainability. We encourage workforce is a big obstacle for growth for Swed- employers to find the right employees are often entrepreneurship ish companies. This was stated by 23 percent of cited: and acceptance for companies in a 2014 survey of business condi- failure, and provide the necessary tions (Företagens villkor och verklighet 2014). • Inadequate matching. conditions and The extent of the problem varies, however, from • Problems validating educational qualifications support to take ideas industry to industry (Tillväxtverket 2014). At and professional expertise. to the next stage and develop them. the same time fewer and fewer unemployed • Shortage of people with an education In other words, people have the qualifications to take the more in the field. there is a dynamic qualified positions. (Essemyr 2015) environment here which can get both In the Confederation of Swedish Enterprise’s Matching on the job market new and established recruitment survey from 2014, companies said Sweden’s growth and welfare model requires a companies to choose that one in five of their recruitment attempts large percentage of highly paid jobs with knowl- Sweden for their operations. failed (Confederation of Swedish Enterprise edge-intensive companies and organisations, Likewise there 2014). The surveys by both the Confederation particularly as people with a higher education needs to be room of Swedish Enterprise and the Swedish Agency contribute more to economic growth than those and acceptance for for Economic and Regional Growth (Tillväxt without. (Entreprenörskapsforum 2014) diversity, which as a rule is essential for a verket) show that the main reasons for recruit- There is an intense debate in Sweden on the creative environment. ment problems are: causes of the matching problem for university In the not-too-distant educated people and the scope of the problem. future society will be more multifaceted • Applicants with insufficient professional Daniel Berlin defines two main explanations for with multi-ethnicity, experience. the problem (Berlin 2014): different religions • Lack of specific expertise or qualifications. and traditions. If we can manage that, • Education not matching job requirements. • Poor synchronisation between the education we can build strong system and the job market. People are environments. The World Bank has also highlighted the educa- pursuing an education in fields where there is Pontus Braunerhjelm, tion gap in Sweden. 77 percent of jobs at Swed- little demand for expertise and employees, or Professor, KTH, and the Swedish ish companies included in the bank’s survey re- are over-educated and not sufficiently well- Entrepreneurship quired specialist expertise. But only 14 percent prepared for a career in the workforce when Forum of the workforce has an undergraduate degree. they graduate. Universities therefore need to In other words, people in the workforce are not pay more attention to the job market when obtaining their skills and knowledge from uni- designing the degrees and individual programmes versities (World Bank Group 2015). they offer.

56 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

• Employers have knowledge profiles that are too benefits there are now transition agreements be- narrow for applicants, and it is impossible to tai- tween different sectors in the job market. lor programmes to match the short-term needs The common denominator in these agreements of companies. University degrees enable people is that people are given the opportunity to switch to develop their critical and analytical thinking, to a new work assignments or get training before providing them with broad and useful knowledge they become unemployed. Companies need to that can be applied in many different contexts. Today, however, only those with permanent have talented people with a strong under- Employers need to emphasise this, rather than positions who become or risk being made redun- graduate education narrow requirements in terms of education and dant are able to take advantage of the transition and opportunities background, when they announce job vacancies. agreements. Temporary employees and those on for lifelong learning. Well-educated aca- sick leave do not have access to this option at all demics also need to Berlin concludes that facts support the descrip- (Sjöberg et al 2015). This makes it more difficult renew their education of the situation from both of these perspec- for people to enter new sectors and careers before tion, add courses or re-educate them tives. (Berlin 2014) a crisis in their own sector happens. selves. Labour market The public employment service also needs to do policy needs to be New need for professional development in more. People who become employed need more aimed at the well- educated as well. It is all categories in the job market programmes aimed at raising and improving not just the low skill Development on the job market in the future will their skills, such as professional development pro- jobs that are going present new challenges for the education system, grammes or incentives to start a business. 20,000 away. Today we are investing in people especially for universities. so-called exchange applicants have informed the who are far outside Today people in the workforce with a universi- employment service that they want to switch to a the job market. But we ty education and 20–25 working years left are los- different job. The labour market policy has noth- need to realise that it is worth investing in ing their jobs because of they have an inadequate ing to offer this group today. (Essemyr 2015) the working popula- skills set. This is typically due to the need for new tion as well. When skills as a result of digitalisation and automation. Today’s Swedish validation system they change jobs they also create opportu- There is every reason to believe that this is Validation is a much debated issue and is as- nities for those who growing trend. The mission of universities should signed part of the blame for the talent supply are far outside the job therefore be to expand their offering to include problems. This is also a key issue in the inte- market. professional development and “upgrading” of gration of well-educated immigrants into the Eva Nordmark, Chairman, Swedish professional and academic qualifications. Swedish job market. The need for a better over- Confederation But a recent study shows that universities to- view, coordination, processing speed has been of Professional day offer limited places in short programmes, expressed, including by IVA. (IVA 2011) Employees (TCO) that evening, weekend and summer courses are In 2014 the Government appointed Elin Landell extremely limited, and that they are reducing the to head a commission to propose clear systems number of places in part-time and distance learn- for qualification validation U( 2014:G). The coming programmes. (Bendar 2015) mission has expressed the following perspective The need for competence development also, of on the validation problem in Sweden today: course, applies to occupations where people have no university education. This relatively new situ- • Universities, with the Government as the govern- ation where restructuring has a direct impact on ing authority, are tasked with validating informal university educated people has affected those with qualifications before accepting applicants to their a lower level of education for a long time. programmes and for those who have already been The Swedish model is based on providing peo- accepted. But the extent to which this is being ple with assistance to deal with the consequences done today is very limited. We are different in this of restructuring. In addition to unemployment respect to, for example, Norway which is working

57 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

very actively in the area. The system for calculating • A cohesive validation process for healthcare credits for qualifications/skills gained from previous and medical professions. education programmes or professional experience • National coordination and development. does not work well in Sweden’s system today. Validation problems are hampering In the 1940s we had • The National Board of Health and Welfare the development of integration policy a labour shortage is tasked with assessing qualifications and skills Today demand is increasing for an efficient in- and needed to make sure that the for regulated professions (such as doctors) in tegration policy which will make it easier for most unprofitable the healthcare sector. The processing time for all immigrants to Sweden to pursue an occupa- companies were this today is very long. The Swedish Council for tion based on their specific abilities, especially wiped out by raising wages. This is an Higher Education has a similar responsibility for in new and growing companies. The idea is to ongoing process in foreign education qualifications in other fields. supplement existing educational qualifications Sweden, compared Poor documentation on the content of courses and professional experience with training and with other countries, and has resulted in and programmes makes this task more difficult. practical experience. Improving language skills us having a modern One reason is simply that a lot of people were efficiently and quickly is also crucial. set of industries. unable to bring their documents/diplomas with Faster entry into the job market will not only We have good job transition protection them when they left their country. increase tax revenue from a higher employment and capacity. I see no rate, but will also send clear signals that Sweden signs that the Swedish • The public employment service (Arbetsför is an attractive country that offers opportuni- model is about to disappear. medlingen) should offer help in assessing people’s ties for businesses and individuals from different Karl-Petter informal qualifications. The dedicated validation countries. Making use of the skills and expertise Thorwaldsson, process is, however, relatively limited today. of immigrants is also a key factor for entry into Chairman LO international growth markets, particularly for • In connection with the Validation Delegation small and medium-sized enterprises. 2004–2007, 25 industries developed models for Pushing for a more effective integration policy validation and to assess professional expertise. should also be seen in light of the fact that the About half of these are being used today. The Swedish job market is out of step. Most people fact that they are not being used in certain with a job can quickly find another one if they sectors is due, among other things, do low become unemployed. But an increasing number demand from public sector parties, such as the of long-term unemployed individuals with only public employment services and adult education compulsory school education are not getting programmes. into the job market. A growing percentage of this group consists of foreign-born individuals. • In the municipal adult education system, But people coming to Sweden with a university students can have their qualifications and skills degree are also finding it hard to enter the Swed- validated. The system works relatively well ish job market. Despite many years of solid work today in the care sector but not as well for other experience and a degree in an attractive field, it occupation groups. takes an average of seven to ten years to gain a footing in the job market. (Bevelander et al 2014) Commissioner Elin Landell’s conclusion is that One explanation for this is the long processing action is needed on several levels to achieve an times to validate qualifications in, for example, efficient validation system: healthcare professions. This slow process means that we are missing out on socioeconomic gains • A new vocabulary that differentiates between from the addition of skills and abilities that im- validation of informal and formal qualifications. migration brings. (SACO 2015) • Clear and permanent structures for validation There are also problems with the way the in education and the job market. Swedish Migration Agency differentiates its pro-

58 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

cessing of immigrants with various professional migrant workforce (BCG 2014). The large volume and skill backgrounds. The result is that Swe- of immigrants after the refugee crisis in 2015 has den is among the countries that are finding it the dramatically increased the need for faster inte- most difficult to benefit from the skills of an im- gration of immigrants in the job market.

Sweden is fantastic. Although the weather is not great compared to California or TAXES Barcelona, we’re able to attract the world’s best software We mentioned earlier that the tax burden in be directly involved in a business while also in- developers. But a Sweden is one of the highest in the OECD. A vesting in it, the tax incentives are therefore too few things need to relatively high tax levy is essential to maintain weak and this is having a negative effect on busi- be changed in order to increase Sweden’s a publicly financed welfare system like we have ness growth and vitality and competitiveness in attractiveness in in Sweden, although opinions vary among the the economy. (IVA 2013) the future. The most political parties on what the necessary and de- A change in how stock options are taxed is important thing right now is to simplify sirable levels are. one effective way for new fast-growing compa- shareholding. For Designing the tax system in a high-tax nation nies to bring in key individuals without the own- employees, income like Sweden is a balancing act. It is a case of ers or founders losing control of their company. from stock options is taxed in Sweden as generating enough tax revenue without threat- In Sweden the allocation of stock options as a income from work by ening incentives for business growth and for means of solving early stage transaction prob- up to 70 percent. In individuals to educate themselves and take on lems (i.e. employees receiving a portion of the the US the tax rate is 15–20 percent. For new career challenges. It is important, in other company’s value growth instead of a high sal- employers in the US words, to create a sustainable tax system with a ary in early stages) is not used to any significant there is no tax on reasonable total tax levy through a combination extent. The main reason is that stock options are stock options, while in Sweden they are of tax codes that do not harm entrepreneurship taxed as income earned from work. A govern- subject to payroll tax and business and that compares favourably with ment commission will present proposals on this and social security the rest of the world. in spring 2016. (IVA 2013) fees. Based on the fact that Sweden needs grow- Today equity in a company is subject to dou- Martin Lorentzon, co-founder of Spotify ing companies, the weak incentives for active ble taxation while loans are only taxed once be- ownership in the tax system is a problem. Pas- cause interest is deductible but not dividends. sive investments are normally taxed at a lower This is especially problematic for new ventures rate than active ones. For anyone who wants to that often need to be financed with equity.

SUPPLY OF CAPITAL

An efficient capital and credit market is essential investors to provide both expertise and capital. for business growth. This also applies to the ven- (IVA 2011) ture capital market. Government interventions In June 2015 Hans Rydstad presented a gov- may in these contexts theoretically be motivated ernment commission report on state venture by the possibility of correcting market failures. capital allocation (Rydstad 2015). He concluded Growing companies need capital in all growth that Sweden, in an international comparison, is phases. They have specific challenges in the early strong in terms of financing and access to capital stages. It is therefore preferable for early-stage for businesses. This is also confirmed in a study

59 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

called Företagens villkor (Business conditions) in of grants, loans and equity capital. In addition which access to credit or to external equity capi- to this is a financing requirement in the capital tal is low on the list of obstacles for growth as ex- range of SEK 5–50 million. Rydstad also believes perienced by big companies, although 25 percent that something needs to be done to improve the of SMEs state that this is just as big an obstacle as flow of loan capital to SMEs. His basic proposal I’m not certain the talent supply problem. (Tillväxtverket 2014) is a new fund for state venture capital investment that people are Rydstad’s conclusion is that more financial sup- where government investments always require aware of how great the pressure on port is needed in the very early states in the form private co-investment. (Rydstad 2015) Sweden is. People need to recognise the challenge and become more competitive. The tax system also needs REGULATION PRESSURE to be competitive compared to the systems in other Well-structured and applied regulation is an ef- Growth (Tillväxtverket) has a designated de- countries. fective control mechanism to achieve sustainable cision-making body called the Swedish Better Carola Lemne, CEO, development in society. Regulation in various ar- Regulation Council (Regelrådet). The Council’s Confederation of Swedish Enterprise eas also impacts the business climate in multiple task is to review and issue opinions on the qual- areas such as the job market, the environment ity of impact assessments to proposals that affect and construction. businesses. The Council will also, when request- At the turn of the century Sweden was among ed by regulators, review impact assessments in the best at product market deregulation. But a EU proposals that are expected to significantly number of countries have now overtaken us. affect businesses in Sweden. Thus the pace of change in other countries is Germany went one step further when the gov- higher in terms of removing regulations that limit ernment there decided in 2015 to introduce a entry to the market and thereby hamper growth so-called “one in-one out” rule. This basic rule in productivity. (Braunerhjelm et al 2012) will apply to all legislative proposals that involve Companies also experience laws and regula- business costs. All economic burdens placed on tion as one of the biggest obstacles for growth companies will be compensated for by legisla- (Tillväxtverket 2014). As of 1 January 2015 the tive measures that reduce their costs by the same Swedish Agency for Economic and Regional amount. (Regelrådet 2015)

CONCLUSIONS AND PROPOSALS

In addition to efforts to constantly improve edu- or take different jobs that require new skills. We cation in schools and universities, we believe that believe that existing measures need to be supple- we now need to focus on a limited number of ar- mented by ones that make things easier for both eas to improve the supply of talent for businesses: employees and entrepreneurs. Examples are:

Equip individuals for the job market’s rapid • Give people with a university degree the restructuring – increase opportunities for option of a 6–12-month academic professional lifelong learning development programme. In order for this Rapid restructuring means that more and more programme to really help put them in a strong people need to expect to have to switch careers position in the job market, the cost should be the

60 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

joint responsibility of the Government, the individual job market, validation, education counselling in native and the company. languages, interpretation and literacy. It is particularly • Make vocational training an effective tool in labour important to provide new and better opportunities for market policy job transition measures. women in the job market. • Develop the unemployment benefits system to improve • Improve the supply of talent to SFI and SAS (Swedish as real career transition insurance. A high level of benefits a Second Language) education. To attract talented teach- needs to be combined with a clear limit on the duration ers, the governing bodies and the Government need of unemployment insurance. The Government will again to work together to increase interest in the profession. need to take a bigger responsibility for income security This could involve educating more teachers, developing for the unemployed, making it easier for parties in the university programmes for Swedish language teachers for labour market to draw up transition agreements. newly arriving adults, and creating flexible professional • Continue to develop insurance solutions that give development opportunities for existing teachers. entrepreneurs and small business owners similar conditions to salaried employees, i.e. health insurance, Change the tax rules that severely unemployment benefits and pension plans. impact start-ups and growing enterprises The Corporate Tax Commission has now completed Improve the validation system to make it its work. The way our tax system is designed affects easier for companies to evaluate the skills and Swedish competiveness and attractiveness. Today Swe- qualifications of job applicants den has a high level of tax on work in an international The Swedish validation system needs to be made more perspective, while, for example, property tax is low. effective. This means improving the way individual We believe that globalisation with increased mobility of players cooperate and interact. A more effective valida- work and capital, combined with the consequences of tion system will facilitate matching for people chang- digitalisation, make it necessary to improve the balance ing jobs in the Swedish job market and those entering between various tax codes. it, such as immigrants. Examples of measures are: We have, however, chosen to limit our proposal to the type of taxes that are particularly important for • Provide more administrative resources to shorten start-ups and growing enterprises. processing times for immigrants with an university degree. A number of proposals have been suggested in the • Intensify efforts to improve and coordinate the tax debate. Some of these are of particular importance validation system in Sweden. for the conditions for start-ups and growing enter prises from an attraction and competitiveness per- Speed up the development and improvement of spective. Examples of desirable tax changes for this language education for immigrants in Sweden category of enterprise are: Language education is key if immigrants are to be able fully use their skills in the Swedish job market. Today • As far as possible, tax loan capital to the same extent as there is huge potential for improvement in language equity capital, and develop a bond market for SMEs. education for these groups. Examples of measures are: • Introduce employee stock option programmes for new and small businesses and tax them as income on capital. • Implement more initiatives where SFI (Swedish (A commission is working at this time on limiting the for Immigrants) language education is tailored for scope of allocation, type of company and business proficiency linked to certain vocational skills. This will phase to be included.) require cooperation over municipal boundaries because • Adjust owner and entrepreneur taxation so that they the participant pool will often be too small for individual do not differ too much from those in the countries that municipal programmes. are our main competitors. • Promote innovation in Swedish language programmes • The tax changes could be paid for by a change in for new arrivals. This could, for example, involve interest deductions and higher property tax, as well as developing new ways of increasing connections with the changes in VAT.

61 Innovation-friendly Work 61% Energy, environment and traf c 5% TRANSFERS AND PUBLIC FUNDING Capital and Alcohol and ACCOUNTS FOR JUST OVER business 11% VAT 21% tobacco 1% 40 PERCENT OF PUBLIC SPENDING public sector Public spending by recipient category. Percentage of total spending, 2013. Our welfare system is an important factor in These challenges require radical new ideas Sweden’s attractiveness, in terms of the quality about how to design future publicly nanced % and scope of our social protection system and services. welfare services. In many of the six areas that we consider to Social The public sector is large in an international be key to increase attractiveness and competi- TAX REVENUE protection* comparison and equivalent to about half of tiveness, we refer to publicly nanced services Sweden’s GDP. The future of our welfare in terms of their signi cance and improve- COMPOSITION system is therefore strongly linked to taxes ment potential. In this section look at it from 2014 *Includes: and public nances. the other perspective. We are focusing on 40 42% Transfers, nancial support in the Publicly nanced services – such as educa- important ways to develop publicly nanced 42% case of illness and disability, old goes to social age, surviving family members of tion, care and healthcare – are mainly produ- organisations through innovation and by using deceased, families and children protection. Around and housing. ced by municipal and county authorities or the opportunities of digitalisation to promo- 42 percent of public private sector players. Municipal, county and ting prosperity and attractiveness. spending in 2013 was regional authorities are facing big challenges What is needed here is knowledge, a genuine for social protection. due to increased cost pressure, changed interest and willingness to cooperate across demographics and new requirements from the boundaries between the public and private various user groups. Extensive initiatives are sectors. 30 also necessary in order to ensure a supply of Total tax SEK 790 billion talent and recruitment of future employees. revenue

Source: Ekonomifakta.se

Public EMPLOYMENT IN THE PUBLIC SECTOR BETWEEN 11–14% THROUGH PRIVATE SECTOR PLAYERS THREE OUT OF TEN WORK administration Percentage of total public sector jobs, 2013, 16–74 years. Purchasing of services from private sector players as a percentage WITHIN THE PUBLIC SECTOR 20 of the total municipal and county council costs. Education Municipality Percentage of people between 16 and 64 working Healthcare County council Primary municipal County within the public or private sectors. 16 administration 53.2% councils 16.5% Public 14 Private Infrastructure, Includes: Government economic 15% admin. 16.2% Social care 12 issues Education Government- 10 13% Preschools 2013 owned 10 12% Building and companies, 8 organisations Other construction 6 Social protection, Environmental and ventures 8,2% administration 8% 4 of justice Defence protection Municipality- Civil defence owned companies 2 Sanitation and organisations 5,9% 0 4% Rescue services 2007 2010 2013 1994 2014 Waste management 3% 3% Water and drainage Source: SCB Source: SKL, SCB and calculations from Ekonomifakta Source: AKU, SCB Source: ESV/Ekonomifakta.se 62 Innovation-friendly Work 61% Energy, environment and traf c 5% TRANSFERS AND PUBLIC FUNDING Capital and Alcohol and ACCOUNTS FOR JUST OVER business 11% VAT 21% tobacco 1% 40 PERCENT OF PUBLIC SPENDING public sector Public spending by recipient category. Percentage of total spending, 2013. Our welfare system is an important factor in These challenges require radical new ideas Sweden’s attractiveness, in terms of the quality about how to design future publicly nanced % and scope of our social protection system and services. welfare services. In many of the six areas that we consider to Social The public sector is large in an international be key to increase attractiveness and competi- TAX REVENUE protection* comparison and equivalent to about half of tiveness, we refer to publicly nanced services Sweden’s GDP. The future of our welfare in terms of their signi cance and improve- COMPOSITION system is therefore strongly linked to taxes ment potential. In this section look at it from 2014 *Includes: and public nances. the other perspective. We are focusing on 40 42% Transfers, nancial support in the Publicly nanced services – such as educa- important ways to develop publicly nanced 42% case of illness and disability, old goes to social age, surviving family members of tion, care and healthcare – are mainly produ- organisations through innovation and by using deceased, families and children protection. Around and housing. ced by municipal and county authorities or the opportunities of digitalisation to promo- 42 percent of public private sector players. Municipal, county and ting prosperity and attractiveness. spending in 2013 was regional authorities are facing big challenges What is needed here is knowledge, a genuine for social protection. due to increased cost pressure, changed interest and willingness to cooperate across demographics and new requirements from the boundaries between the public and private various user groups. Extensive initiatives are sectors. 30 also necessary in order to ensure a supply of Total tax SEK 790 billion talent and recruitment of future employees. revenue

Source: Ekonomifakta.se

INNOVATION-FRIENDLY PUBLIC SECTOR

SECTORS UNDER STRONG TRANSFORMATION PRESSURE

Municipal and county authorities have a large The focus must therefore be on improving the measure of self-determination, especially in their efficiency of public service production. right to levy taxes. But the Government also as- One advantage for signs them a number of tasks and regulates how • New manpower requirements are high as a Sweden is our ability they are to be executed. to transform in both result of the number of people retiring. Over the the private and The balance between government funding and next decade the municipal and county authorities public sectors. It is local tax revenue generated by local authorities will need to recruit 530,000 employees. about understanding to finance their statutory and other missions is customers and the external environment, therefore, for obvious reasons, subject to con- • The fast pace of urbanisation is increasing the breaking patterns and stant and ongoing debate between the Govern- pressure on public services to meet the needs testing new solutions. ment, county councils and municipal authorities. Then we can also be of an increasing number of city dwellers, while better at presenting The quality and accessibility of public services many small sparsely populated municipalities all of the innovative has a strong impact on our competitiveness and with shrinking tax revenue due to a declining environments we attractiveness. At the same time, the pressure on population still need to meet their commitments. have in Sweden that attract talent – from the public sector to transform itself is significant: data centres in the We believe that there are three important change north, test centres for • An ageing population and pressure on the factors to improve efficiency and develop a pub- the IT in healthcare in the west to ESS in the healthcare system and eldercare. lic sector that can continue to deliver welfare South. services of a sufficient volume and quality. They Håkan Sörman, • Large tax increases are not an option to finance are: CEO, Swedish Association of Local increased care and healthcare services. An impor Authorities and tant factor to consider is globalisation and the • An efficient and systematic focus on innovation. Regions (SKL) increased mobility of individuals and businesses. • Public procurement that stimulates new and In this situation we cannot have a tax burden that better solutions. is radically different from the world around us. • Unleashing the potential of digitisation.

INNOVATION AND ENTREPRENEURSHIP

Within the framework of business and regional • Strong innovation management by improving growth policy, the municipal, county and re- leadership and organisational structures for gional authorities have provided stimulus for innovation. innovation in new and growing enterprises. But initiatives and support should also be aimed at • Support innovation capacity by incentivising the public sector itself. There are several per- the development of strong public sector spectives that should be developed to strengthen innovation environments for growth, testing the innovation climate in the public sector: and demonstration.

64 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

• Faster implementation of smart, effective innovations in various areas, similar to the way solutions in more areas. many companies have systems for ongoing improvement. • Increased attention and support for everyday

We’ve always been an open country and we’re used to living in a competitive world. PUBLIC PROCUREMENT THAT STIMULATES NEW AND BETTER SOLUTIONS We’re also good at organising our private and public sectors. One important element in creating a better in- There is good potential to develop similar And we have a novation climate in the public sector is improv- groups in, for example, welfare technology and growing population, which is driving ing cooperation between the public sector on urban planning. growth. the one hand and private enterprise and other Efforts to promote more innovation procure Anders Sundström, parts of society on the other. ment have intensified in recent years. IVA has Chairman Swedbank Many believe that there are not enough of addressed this in some of its projects. (IVA 2011, these types of partnerships today. One reason IVA 2013) In several contexts the Norwegian is the fear that they will have a negative impact national supplier development programme on future business relationships due to the con- Nasjonalt program for leverandörutvikling flict of interest risk. (http://leverandorutvikling.no/om-program- Close partnerships between the private and met/) was identified as an important source of public sector could provide Sweden’s enterpris- inspiration for concrete initiatives leading to es with an essential test market or their first better procurement processes. Tech companies customer, enabling them to further develop and the Swedish Association of Local Authori- and commercialise a product or service. Today ties and Regions (SKL) and others have helped many companies experience problems with this develop a similar Swedish initiative due to be type of cooperation. launched in 2016 through the new National Many companies do not understand the way Agency for Public Procurement. the public sector works. There are also miscon- In its final report the IVA project Innovation ceptions about and unawareness of the oppor- Powerhouse Sweden proposed measures in four tunities the Public Procurement Act actually areas to develop innovation procurement: provides. The procurement legislation to be introduced in 2016 will, among other things, of- • A focus on public sector procurement fer new opportunities for cooperation between as a strategic tool. suppliers and clients though so-called innova- • Improved knowledge and expertise tion partnerships. among decision-makers, purchasers Another possibility is to have groups of cli- and suppliers. ents where the common needs of several public • Create arenas for increased dialogue players can be channelled into the market. In and innovation. Sweden there are successful examples of work- • Clarify the procurement rules. ing in this way in the energy efficiency area. (IVA 2013)

65 CHANGES IN THE 6+1 AREAS: SCHOOLS HIGHER EDUCATION AND RESEARCH INFRASTRUCTURE

DIGITALISATION OPPORTUNITIES

Digitalisation is fundamentally changing the • Digital alerts give pupils more individual conditions for many services, especially the support. publicly funded ones. Statistics Sweden (SCB) has concluded that in the privately financed • Effective administrative solutions give various service sector, productivity development has on occupational groups more time to spend on average been at 1.5 percent a year over the past their core activities. This applies in particular few decades. Studies indicate that IT usage and to service-intensive areas with high reporting increased competition are the reasons for this requirements such as care, healthcare, law trend. (Felländer 2015) enforcement and education. Digitalisation could have a positive impact on and advance public services. This requires wel- • The development of smarter cities is fare technology and digitalisation to be regarded being accelerated by taking of advantage of as core processes in service development and for digitalisation opportunities for sustainable joint initiatives to be implemented in a number urban development and traffic planning. of areas: • Smarter digital services for business • New eHealth solutions are already helping owners are reducing the administrative burden to improve efficiency and patient safety. in permit applications and reporting. Solutions that use new “welfare technology” can also increase autonomy in care and free up resources.

AGENDA FOR AN INNOVATION-FRIENDLY PUBLIC SECTOR

SKL has presented a proposal for a five-year • When publicly financed services are customised programme for an innovation-friendly public they create value by helping businesses and sector. It includes initiatives from the munici- individuals achieve their goals. Public sector pal and county sectors and the national govern- activities must therefore be developed so that, ment. The purpose is to increase innovation ca- to a greater extent than today, they are based pacity in public sector activities. SKL proposes a on the needs of citizens and businesses. programme with basic State funding of SEK 200 million a year (SKL 2015:2). • The Government should join the municipalities, We believe that the proposal is a good start- county councils and the private and non-profit ing point for intensified efforts to create a more sector in creating forums where new tools and innovation-friendly public sector. The basic ele- methods for development in society can be ments of the programme are: discussed, tested, developed and distributed.

66 HOUSING & LIVING ENVIRONMENT CULTURE BUSINESS CLIMATE PUBLIC SECTOR

• More cooperation is needed between • The Government should participate in municipal, county and regional authorities and partnership structures that enable knowledge knowledge environments within academia, to be built and risks shared in innovation science parks and innovative companies. procurement. Initiatives should be developed to support regional growth mechanisms, the EU’s structural • Employer policies in the public sector should funds and research programmes. be developed to further incentivise employees to actively contribute to the renewal and • More test and demonstration environments development of activities and organisations. within municipal, county and regional authorities will give innovative companies an opportunity to develop products and services in cooperation with those who need them.

Good Cities of the Future IVA has other projects that are delving into the areas we address in the Attractiveness for Sustainable Growth project. One of these is Good Cities of the Future.

Attractive urban environments attract talent, businesses and investment and are therefore important for Sweden’s competitiveness. This is the premise for IVA’s new project Good Cities of the Future. The project’s objective is to provide an increasing population with the right conditions to develop attractive living environments – in both growing and shrinking regions. Planning and decision processes will be reviewed, positive examples presented and driving forces of urbanisation analysed. Good Cities of the Future is aimed at politicians and officials responsible for developing society, business leaders and social development researchers.

Good Cities of the Future:

• Propose improvements to existing planning processes for cities and regions • Help ensure that these planning processes are implemented, through regional examples. • Identify and package community planning products and services for export. • If necessary, propose new research areas in sustainable social development and clean and resource efficient societies.

The project period is 2015–2017.

67 68 An attractive and competitive Sweden

VISION FOR THE FUTURE

→ Sweden will use the opportunities → Strong innovative capacity will change and offered by globalisation for businesses and develop Swedish society. Great innovative individuals. Knowledge-intensive companies capacity will make Swedish companies based in Sweden will take advantage of internationally competitive. Companies new export opportunities. Individuals will will distinguish themselves by offering enrich their lives by forging international workplaces where people can develop and contacts – both in Sweden and abroad. good conditions so that talented individuals from around the world will want to work → Sweden will benefit from digitalisation. for them. Future welfare services and the It will play a key role for competitive creation of an efficient, high quality public enterprises and new innovative welfare sector will be based on innovations. This services. It will help to increase the level will be an important factor in people’s of expertise and skills in the workforce, decisions to live and work in Sweden. which will attract investment. Digitalisation will also increase opportunities for a good → Many entrepreneurs and businesses balance between urban and rural areas. with a high innovative capacity will create marketplaces and innovative → All parts of Swedish society will be environments that will drive new product sustainable. This means good housing development. This will attract business, and living environments, exciting welfare research and talent and result in exciting, solutions and our companies being internationally competitive environments leaders in creating new products and in which to work and conduct research. services that live up to high sustainability standards and developing resource- → Sweden will be characterised by openness efficient business models. and diversity to attract individuals from all around the world to work here. Open- → Sweden’s entrepreneurs – enterprising ness and diversity will be crucial in securing individuals – are and will be allowed a supply of talent for the private and public to be important engines for growth. sectors. This will also help us to quickly take Regulations, conditions and attitudes will advantage of the professional and cultural incentivise entrepreneurs to take risks, expertise that exists Sweden. development businesses and create jobs in Sweden, and contribute to Sweden’s → Swedish leadership will remain prosperity. democratic, decentralised and inclusive.

69 Norway Sweden United Arab Emirates United Kingdom

Denmark Netherlands Taiwan Hong Kong

Canada Japan

Qatar Germany

New Zealand Finland

Belgium USA

Luxembourg C S Singapore OM ES PETITIVEN Malaysia Switzerland

THE BAROMETER OF COMPETITIVENESS

Norway Sweden United Arab Emirates United Kingdom

Denmark Netherlands Taiwan Hong Kong

Canada Japan

Qatar Germany

New Zealand Finland

Belgium USA

Luxembourg C S Singapore OM ES PETITIVEN Malaysia Switzerland

THE CHALLENGE

Sweden is in a strong position internationally. research, infrastructure, housing and living But we are a small country with challenges. We standards also needs to be high. A culture that is have fallen behind in the competitive league. A able to inspire and challenge will also contribute number of countries are about to take our lead- to our attractiveness and competitiveness. ing position as an innovation nation. Publicly funded services have a key role to Our ability to transform is the key to our play. Their quality affects our everyday lives. growth and prosperity. Today our capacity is Attractive solutions in healthcare, care and the being challenged by the changes brought by social protection system impact decisions by globalisation, digitalisation and the great social individuals on where to shape their lives and challenges – such as the climate issue, demo- futures. graphic development and urbanisation. In our report we have analysed challenges in One key factor for our future prosperity is a the 6+1 areas that are fundamental for our com- strong ability to attract. Individuals with many petitiveness. How we succeed in meeting them options in a globalised world must be able to will determine our future attractiveness. visualise their future in Sweden. Companies We believe that we should meet the challenges must be attracted by a supply of talented em- of the future with a combination of respect for ployees, exciting environments and clusters, and their scale and self-confidence in our ability as a favourable business climate. a society to meet them. We need to use all the Strong competitiveness and sustainable capital available in our tradition of broad politi- growth are based on having good conditions in cal solutions, responsible labour market parties which to do business. The quality of education, and a civil society that acts and has humanity.

70 AGENDA FOR THE FUTURE

In our report we wanted to describe the current that enable us to provide high quality welfare situation in a number of areas that, in our opin- services, which is an important component in ion, are crucial for Sweden’s attractiveness and our attractiveness and competitiveness. At the competitiveness. same time we need to design the tax codes to The barometer on the left measures the pres- avoid a negative impact on the willingness of sure in the competitiveness of different coun- individuals and businesses to take on new chal- tries. Sweden is in the area which in barometers lenges in Sweden. We believe that it is worth is often called “change.” issuing a reminder that the economy, which is Our aim is to help put Sweden once again where we can generate tax revenue, is a sensitive where the pointer indicates sunshine and fair and complicated mechanism. weather and not move towards storms and bad weather. Because it is only by becoming more Equip individuals for transformation competitive that we can create greater wellbeing and lifelong learning and prosperity. 3 Globalisation and digitalisation are We have presented a number of proposals speeding up restructuring in industry and soci- in our report. These are starting points for the ety. This is already affecting the supply of talent eight items in our agenda for the future: for companies. We have therefore added number of different proposals to enable people to par- Safeguard the foundation for our ticipate in lifelong learning. prosperity by ensuring we have an We have also emphasized the necessary im- 1internationally competitive business provements in schools and higher education, climate which is where the foundation for knowledge Our prosperity is built on competitive compa- is laid. And we have underscored the great op- nies. From a social perspective, their most im- portunities for Sweden if we can take advantage portant mission is to meet the needs of people of the education and professional experience of and the community for goods and services. But people from other countries better than we are companies that do not make any money cannot doing today. fulfil their basic social mission. Today, having a good supply of talent is one Give teachers a real chance to of the most important issues facing Swedish improve instruction in schools businesses. Our proposals are therefore first 4 The key to much-needed improvement in and foremost aimed at equipping individuals Swedish schools is the teachers. We have pointed and businesses for a job market under rapid re- out the need for professional development, col- structuring. We also want to improve matching legial learning and the efficient use of digital through better validation of qualifications and teaching materials. We have also demonstrated professional experience. And we emphasise the the importance of leadership. This applies to need to change the tax rules that are especially the relationships between school principals and important for start-ups and growing enterprises. administrators, between municipal and private school governing bodies, and not least between Secure funding for welfare services the national and local levels. by designing a tax system that 2 provides sufficient revenue without Set clear goals for international negatively affecting incentives for competitiveness for Swedish individuals and businesses 5 universities Our welfare model is based on high taxes in an Swedish universities must be guaranteed the re- international perspective. In international com- sources they need to be highly competitive inter- petition, Sweden’s challenge is to set tax levels nationally in all of their missions. The Govern-

71 ment therefore needs to set more clearly defined housing stock. Few areas have been as thor- goals for education, research and community oughly analysed as housing policy. There are engagement. But the researchers and educators few areas where solutions are being blocked so must themselves find ways of increasing com- effectively by special interests. And there are few petitiveness and attractiveness. areas where political courage and action are as essential as they are here. Pay back the infrastructure debt with interest Speed up the development of an 6 We have not invested enough in new innovation-friendly public sector infrastructure, nor have we adequately main- 8 The quality of publicly funded services is tained our existing infrastructure. We need to one of the key factors for Swedish competitive- invest more and do it quickly. We believe Swed- ness and attractiveness. But the public sector is ish pension plan assets can provide a way to facing great challenges. To meet these challenges precipitate this investment. We also emphasise we need fresh ideas, innovation and, not least, the need to test new models to implement infra- an ability to utilise the opportunities offered by structure projects. digitalisation to increase productivity. Success requires a dynamic public sector that is able to Get rid of the old deadlock and solve benefit from experiences from and exchange the Swedish housing crisis with the private sector. 7 The housing crisis is threatening growth and making us less attractive and competitive. The crisis could be solved through a combination of measures to incentivise new home construction and increase mobility in the existing

72 Appendix

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75 STEERING COMMITTEE

Carl Bennet (Chairman), Carl Bennet AB Gunilla Nordlöf, Swedish Agency for Tomas Billing, Nordstjernan Economic and Regional Growth Pontus Braunerhjelm, Swedish Entrepreneur- Eva Nordmark, Swedish Confederation of ship Forum and Royal Institute of Technology Professional Employees (TCO) Charlotte Brogren, VINNOVA Johan Rockström, Stockholm Resilience Centre Ulf Ewaldsson, Ericsson Anders Sundström, Swedbank Pam Fredman, Gothenburg University Håkan Sörman, Swedish Association of Local Carola Lemne, Confederation of Swedish Authorities and Regions (SKL). Enterprise Karl-Petter Thorwaldsson, Swedish Trade Martin Lorentzon, Spotify Union Confederation (LO) Björn O. Nilsson, IVA

PROJECT MANAGEMENT

Johan Carlstedt, Project Director Monika Wassén, Project Manager, Lisa Renander, Project Manager, Regional National Dialogue Development Jan Westberg, Communications Manager Monica Sannerholm, Project Coordinator

IVA-M 462 ISSN: 1102-8254 ISBN: 978-91-7082-909-3

Editor: Jan Westberg, IVA Interviews: Siv Engelmark Cederborg Illustration: Infobahn Photos: Anette Andersson, Sören Andersson, Mikael Axelsson, Thomas Carlgren, Lars Forsstedt, Jörgen Hildebrandt, Olof Holdar, Sten Jansin, Jann Lipka, Daniel Roos, Pär Rönnberg & Johan Wingborg Layout: Anna Lindberg & Pelle Isaksson, IVA

This report is also available for download at IVA’s website www.iva.se in co-operation with