THE GENDERED EFFECTS OF THE REREGULATION OF THE SWEDISH STATE: BEYOND THE 'DEATH OF A MODEL' DEBATE

KIMBERLY EARLES

A DISSERTATION SUBMITTED TO THE FACULTY OF GRADUATE STUDIES IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY

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1+1 Canada ABSTRACT

The dissertation goes beyond the 'death of a model' debate that emerged in the 1990s to determine the effects of recent changes to the Swedish , particularly in the areas of childcare, parental leave and pensions. It argues that what has taken place in over the past two decades is a process of reregulation, led by the state in an attempt to adapt to the current neoliberal global economic paradigm, while still aiming to maintain the social democratic goals of equality and full employment. The project uses a combination of secondary sources, primary documents, and interviews with those who have been involved in, or who are critical of, recent welfare state reforms in Sweden. Interviewees included politicians, scholars, researchers, bureaucrats and former bureaucrats, union economists, journalists, consultants, and activists, many of whom were directly involved in the creation of the parental leave system or the pension reform, or who have taken part in government-appointed commissions on these issues. In exploring the Swedish case, the dissertation confirms that states react differently to similar pressures, and demonstrates how important the state remains in terms of welfare state policy. The process of reregulation exposes how recent reforms have been state-led and how the state retains control over how to adapt neoliberalism within its own specific national context. It also explores how such processes are not gender-neutral, analyzing the importance of a state's dominant gender order in influencing the reregulation process, as well as the influence reregulation can have on gender relations in a given context. What this study concludes is that the gendered effects of the reregulation process have been both positive and negative. Both childcare and parental leave have been significant factors in allowing men and women to better balance work and family, at the same time encouraging women's labour force participation and men's role in child-rearing. On the other hand, by taking the typical male career pattern as the norm, the pension reform of the 1990s punishes those who work part-time or who enter the labour force late or leave early, the majority of whom are women.

IV ACKNOWLEDGMENTS

This has been a long process and I have many people to thank for their help and support throughout. First, I would like to thank my supervisor Leo Panitch for his encouragement and feedback, and for introducing me to the concept of reregulation. I would also like to thank committee members Stephen Hellman and Rianne Mahon for their guidance and support, and their help in setting up my fieldwork in Sweden. A special thank you to Rianne - without her inspiring work, this dissertation would not have been possible.

There are many people at York that I would like to thank: Sandy Whitworth, David McNally, Susan Henders, Ann Denholm-Crosby, Carolyn Cross, Marlene Quesenberry, Jlenya Sarra, as well as the GPSSA Women's Caucus & Feminist Speakers' Series.

Thank you to Sean Penney and Jeff Braun-Jackson for fostering my interest in the social sciences. And thank you to Byron Sheldrick, Candace Johnson, Janine Clarke, and Judith McKenzie at the University of Guelph for being great colleagues and friends.

There are also many people who I would like to thank for their part in developing the ideas in my dissertation: Hester Eisenstein at Socialism & Democracy, as well as the discussants at the various conferences where I have presented my work over the years, including Greg Albo, Andreas Bergh, Rosemary Crompton, Jonathan Gershuny Stephen Hellman, Rianne Mahon, Patrik Marier, and Ann Porter.

In April 2005 I travelled to , Sweden to complete my fieldwork. I want to thank Marta Szebehely and the Department of Social Work at Stockholm University for their partnership. I want to thank Urban Lundberg, J. Magnus Ryner, and America Vera- Zavala for providing me with many contacts in Sweden. Also, a special thanks to Barbara Hobson for sharing her home with me. Thank you to the Faculty of Graduate Studies, the Graduate Students' Association, and CUPE 3903 at York for the financial support. And the most heartfelt thank you goes to all of the people who gave their time to be interviewed in Sweden that summer.

Thank you to Tammy Findlay, my friend and guide through academia; to Maya Eichler, Ahmed Allawahla, and Martijn Konings for their support over the years; to Lara Karaian for the years spent together writing; and to Sara Swain, Monica Fitzpatrick, Andre Gaulin, Paul and Ketty Zafra, and Kimberley McKeown for being great friends.

Thank you to my parents and family for all of their support. A big thank you to Elli and Arlo. And the biggest thank you to Wes Hodgson, my amazingly talented partner in life, and the smartest person I know.

v TABLE OF CONTENTS

Abstract iv

Acknowledgments v

List of Tables and Figures viii

List of Acronyms ix

1. Beyond the 'Death of a Model' Debate: The Reregulation of the Swedish Welfare State Introduction 1 The Swedish model 4 Reregulation and the Swedish Welfare State 21 Methodology and Chapter Outline 33

2. Women in the 'People's Home': Women's Relationship to the Social Democratic Welfare State Introduction 40 Swedish Women and the 'People's Home' in Historical Perspective 49 Women's Employment and the Welfare State: Establishing the Pattern 63 Women and the Welfare State: Since the 1990s 70 Conclusions 83

3. The Reregulation of Swedish Childcare and Parental Leave: Implications for Women's Equality Introduction 87 Changes to Childcare Since 1990 96 Changes to Childcare in the Past Decade 107 Changes to Parental Leave Since 1990 117 Conclusions 125

4. The Swedish Pension System, 1959-1998: The Rise and Fall of the 'Jewel in the Crown' of the Social Democratic Party Introduction 128 Development of the ATP Pension System 133 Background to the Pension Reform 140 The Pension Reform 146

vi Constructing the New Pension System 150 The Pension Reform and the SAP 162 Conclusions 168

5. The New Swedish Pension System: The Challenge to Social Democracy Introduction 170 The Premium Pension: The Administration of Choice' 179 Outcomes of the New Pension System 187 Gendered Effects of the New Pension System 199 Sweden's Pension Reform: A New Model? 205 Conclusions 209

6. The Swedish Welfare State of the Future: Social Democratic or Neoliberal? Introduction 214 The Effects of the Introduction of'Choice' 218 The Future of the Swedish Social Democratic Welfare State 221 The Future of Swedish Gender Equality 228 Resistance and Political Mobilization 230 Conclusions 239

References Interviews 241 Primary Sources 244 Secondary Sources 251

VI1 LIST OF TABLES AND FIGURES

Figure 2.1: Women aged 20-64 by activity status and hours normally worked, 1970-2003 67

Table 2.1: Women in the Swedish parliament (%}, 1950-2006 71

Figure 2.2: Population aged 20-64 in and not in the labour force, 2003 77

Figure 2.3: Employees aged 20-64 by sector and link to labour market, 1987-2003 78 Figure 2.4: Men aged 20-64 by activity status and hours normally worked, 1970-2003 81

Table 2.2: Women and men aged 16-64 with part-time work (%), 1990-2004...... 82

Figure 3.1: Swedish fertility rate, 1890-2003 89

Figure 3.2: Children in municipal day care, 1972-2003 Ill

Figure 3.3: Insured persons claiming parental allowance, 1985-2003 118

Figure 3.4: Days for which parental allowance paid, 1974-2003 119

Figure 4.1: Pension System, 1959-1998 136

Figure 5.1: Pension System, 1998-present 172

Table 5.1: Effects of activating the ABM on the average pensioner, under the current rules versus under the government proposal, 2009 198

vni LIST OF ACRONYMS

ABM Automatic Balancing Mechanism ALMP Active Labour Market Policy ATP National Supplementary Pension [Allman Tilldgspensiori] DB Defined-benefit (pension system) DC Defined-contribution (pension system) EU European Union FBF Fredrika Bremer Association (Fredhka Bremer Forbundet) Fi Feminist Initiative (Feministiskt initiativ) GP Guaranteed Pension KD Christian Democratic Party [Kristdemokraternd] LO Swedish Trade Union Confederation {Landsorganisationen i Sverige) NDC Notional Defined Contribution (pension system) OECD Organization for Economic Co-operation and Development PAYG Pay-as-you-go (pension system) PWGP Parliamentary Working Group on Pensions {Pensionsarbetsgruppen) PP Premium Pension PPM Premium Pension Authority (Premiespensionsmyndigheteri) SACO Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation) SAF Swedish Employers' Association [Svenska Arbetsgivareforeningen) SAP Social Democratic Party [Socialdemokratiska Arbetarepartiet) SCB Statistics Sweden {Statistiska centralbyrdn) SEK Swedish kronor (currency) SSKF Social Democratic Women's Federation (Sveriges Socialdemokratiska Kvinnoforbund) SSU Swedish Social Democratic Youth League {Socialdemokraternas Ungdomsforbund) TCO Swedish Confederation for Professional Employees (Tjanstemannens Centralorganisation)

IX Chapter 1: Beyond the 'Death of a Model' Debate: The Reregulation of the Swedish Welfare State

1.1 Introduction

The Swedish welfare state has consistently been held up as the model of a social democratic welfare state in the postwar period. During this time, Sweden has developed a strong, comprehensive and universal welfare state supported by the twin pillars of full employment and equality. However, in the current era of neoliberal globalization, the

Swedish model has faced many challenges, and has undergone a number of changes. This dissertation provides an analysis of the gendered effects of the reregulation of the

Swedish welfare state since the early 1990s, particularly in the areas of childcare, parental leave, and pensions. The changes that have occurred in Sweden since the 1990s can be described as a process of reregulation, which is largely state-driven, in which the state retains regulatory control even in areas that have been opened up to privatization.

Thus, changes have taken place in the wake of neoliberalism, but the Swedish state is still very much involved in its role as regulator, decision-maker, financier, and service- provider. By analyzing the changes to the Swedish welfare state through the lens of reregulation, rather than deregulation,1 we gain a better understanding of the nature of the changes that have occurred. How gender is implicated in, and affected by, the process of reregulation also become clear. Because both the goal of gender equality and women's labour force participation are so vital to the Swedish model, Swedish women are affected

' Deregulation can be viewed as a process by which the state relegates a great deal of its control and regulatory authority to the private sector. 1 by changes to childcare, parental leave, and pensions policies in very specific ways. In addition, these policies have a direct impact on gender relations in Sweden, in terms of the division of paid and unpaid work.

The dissertation begins from the starting point that neoliberalism has replaced

Keynesianism as the dominant global economic paradigm. Thus, the point of the dissertation is not to explain this shift, but to analyze the gendered effects of the shift in the Swedish context. In order to do so, I will focus on three crucial social policy areas that are intimately tied to women's employment and gender relations. In terms of analyzing the current neoliberal challenge to Swedish social democracy, the national pension system is an obvious choice, as the post-war pension system was an important foundational policy for the social democratic welfare state, and this system has been overhauled in recent years. Childcare and parental leave, too, became significant policies for the Swedish welfare state in terms of moving closer to the social democratic goals of full employment for both men and women, and gender equality. The reregulation of these policy areas will be the main focus of the dissertation. Women's relationship to the welfare state, as well as gender relations within Sweden are also crucial in understanding this process of reregulation, and will be analyzed as such. An emphasis will be placed on women's employment - its development, its patterns, and its importance to gender equality. Throughout, the aim is to contribute to our understanding of the changes that have taken place since the 1990s, and the effects of these changes on women and gender

2 relations in Sweden. By determining that what has happened in Sweden is a process of reregulation, not deregulation, the picture of what has occurred and why becomes clearer.

Since the 1990s there has been a proliferation of scholars weighing in on the debate over whether or not the Swedish model, or Swedish welfare state, is dead. Within the debate there appears to be a consensus that important changes have taken place since the 1990s, but views diverge over the extent of these changes and whether or not they constitute the 'death of a model.' There is also great debate about the forces behind these changes and the future direction of the Swedish welfare state. Some of the most important changes took place during the early 1990s, including the defeat of the Social

Democratic Party (Socialdemokratiska Arbetarepartiet, or SAP) and the election of a centre-right coalition government in 1991, Sweden's application for membership to the

European Union (EU), and a severe economic crisis, which was the backdrop against which many cuts and changes occurred, such as the introduction of privatization as an element in the new pension system. All of these factors called into question the Swedish model.

An analysis of the death of a model debate will follow, as well as an analysis of the process of reregulation, which has been taking place since the 1990s. By focusing on reregulation, the limits of the death of a model debate become clear. This analysis demonstrates that the Swedish model, and the social democratic welfare state, are still very much alive, although in a somewhat modified form. The reregulation process has

3 introduced some aspects of neoliberalism into the Swedish welfare state, but the social democratic goals of equality and full employment, delivered through a universal and comprehensive welfare state remain largely intact. These core principles are crucial for women and gender relations in Sweden, as each is linked together to provide a more gender equal society, particularly in terms of paid and unpaid work. Thus, it is important to understand the process of reregulation that is taking place, rather than focusing the debate as to whether the Swedish model remains alive. The death of a model debate, while important, is too narrow to capture the nuances of the reregulation process and the significance of the changes that have taken place for social democracy and gender equality. Thus, after providing an examination of the Swedish model, an analysis of the death of a model debate will follow, before moving on to a discussion of reregulation.

1.2 The Swedish model

This debate is significant for a number of reasons. First, because Sweden is viewed as the ideal-type social democratic welfare regime (Esping-Andersen 1990) it is vital to analyze any changes that might pose a challenge to this regime. Second, because

Sweden has been identified as the most gender equal country in the world on a number of occasions,2 it is crucial to analyze any changes to gender relations and the goal of

" See the World Economic Forum. "Women's Empowerment: Measuring the Global Gender Gap," Geneva: World Economic Forum, 2005, and the World Economic Forum. "The Global Gender Gap Report 2006," Geneva: World Economic Forum, 2006. Both years the World Economic Forum concludes "Those that have succeeded best in narrowing the [gender] gap are the Nordic countries, with Sweden standing out as the most advanced in the world." However, in 2008, Sweden was ranked number three, as Norway rose from number two to number one, and Finland rose from number three to become number two; a close look 4 equality within the Swedish model. Third, because the Swedish model was built upon the premise of full employment, it is essential to understand how the model does and does not operate in the current era without full employment. And, finally, if the Swedish model has survived the challenge of neoliberal globalization, what can it offer in the way of lessons for other countries?

At this point a note must be made to clarify the use of the terms 'the Swedish model' and 'the Swedish welfare state' (or 'the social democratic welfare state') rather interchangeably within the dissertation. To be sure, the two do not signify exactly the same thing; however, the Swedish welfare state is a crucial component of the Swedish model. Since the Swedish model requires the social democratic welfare state in order to achieve its goals of full employment and equality, the debate surrounding the model often focuses on changes that have occurred within the social democratic welfare state. As such, I will refer to the two interchangeably when discussing the debate over the death of the Swedish model, while acknowledging here that the welfare state is but one component of the model.

While the potential death of the Swedish model is greatly debated, there is general consensus over what constituted the model. The central goals of the model reflect traditional priorities of the , such as full employment and at the rankings shows that Sweden remained consistent with previous years while Norway and Finland improved from previous years (Haussman, Tyson and Zahidi 2008). 3 In the immediate postwar period, the Swedish model was built on the premise of full employment for men, but since the 1960s, and 1970s in particular, the model has come to depend on, and encourage, full employment for both men and women. 5 equality. These goals, as well as the aims of security, de-commodification, labour training and mobilization, and redistribution, help to determine the rest of the model, which could be viewed as a "modified Keynesian policy," where labour market policy has a central strategic role in stabilization. As such, close cooperation between the labour unions and the SAP is a necessary part of the Swedish model. In terms of class equality, the SAP was responsible for developing a universal welfare system, based on generous transfer payments and a comprehensive public sector, while the main objective of the unions was an equalizing wage policy, directed at a solidaristic wage structure (Meidner 1993, 1994,

Stephens 1996, Mahon 2000).

The model also includes an encompassing, generous and comprehensive social security system and a broad spectrum of social services financed and organized by the state. The design and expansion of the Swedish welfare state was "a state-led, carefully planned process" (Blomqvist 2004: 141). The Swedish model has been described as neither strictly socialist nor strictly reformist, but a mixture of the two. It "is reformist in the sense that private ownership and free markets are accepted to a large extent, but it is socialist in so far as fundamental values of the labour movement [full employment and equality] are built into it" (Meidner 1993: 219). While the model is based in socialist ideology, at the same time it recommends practical methods to achieve its goals. As such, the model was hailed as a prototype of a 'Third Way' society, or "what Ernst Wigforss, a leading ideologist of the Swedish labour movement, called 'provisional Utopias'"

6 (Meidner 1993: 219). In an era of welfare capitalism, Sweden developed a social model that was regarded as a desirable form of mixed economy, a real Third Way between capitalism and state socialism (Lindberg 2005).

The fundamental structure of the Swedish model was a combination of full employment and equalizing wage policy4 through the Rehn-Meidner model5 and a universal welfare policy. Among other things, the Rehn-Meidner model called for the selective use of active labour market policies (ALMPs) which could "expand the supply of labour in markets or regions where demand was greatest... through the use of retraining programs, job placement and mobility grants for workers," and "increase the demand for labour in those areas where there was an excess supply... via the provision of substantial subsidies to encourage employers to hire the long-term unemployed and through temporary, government-sponsored job creation programs" (Olsen 1999: 247). In addition to the Rehn-Meidner model, "[ljabour's historical compromise with capital, formally institutionalized by the Saltsjobaden Agreement of 1938, allowed labour to pursue measures that redistributed wealth, ensured full employment and labour peace, and led to the creation of an elaborate and unrivalled 'cradle-to-grave' welfare state"

(Olsen 1994: 197). This model social democratic welfare state came to include health,

4 In the beginning, equalizing wage policy referred to class, in that the goal was to reduce the gap between the top and lowest wages, but over time equalizing wage policy also came to refer to reducing the gender gap as well. 5 The Rehn-Meidner model was named for its creators Gosta Rehn and Rudolf Meidner, both trade union economists working at the Swedish Trade Union Confederation in the 1950s when it was developed. 7 child and elder care, education, parental leave, sickness benefits, unemployment insurance, disability benefits, job training programs, and pensions, among others.

From the time of Marquis Childs' book, Sweden: The Middle Way (1936), the example of the Swedish model has been internationally attractive, and despite the fact that Swedish society has changed radically since the 1930s, the image of this model lives on. Some basic elements of the Scandinavian welfare states, typified by the Swedish welfare state, include comprehensive coverage, based on easy qualifying conditions, high income replacement rates, broad scope of citizenship rights, high service intensity and, from the 1970s, a high level of gender equality. In social welfare, Sweden has come to represent the archetype of a universal model, where all residents are included and the vast majority is insured primarily via the various public welfare systems (Stephens 1996,

Palme 2002). Yet, in recent years, the perception that Sweden is unique has been increasingly questioned in Sweden itself; and the crisis of the 1990s and the cutbacks and reforms introduced as a consequence have also been seen by the outside world as the beginning of the end for this model (Palme 2002).

The question of whether the social democratic Swedish model could survive the onslaught of neoliberalism has fuelled an ongoing debate over the death of the Swedish model, as the character of the welfare state has come under fire in recent decades. The economic crisis of the 1990s threatened a core principle of the model - full employment.

As unemployment increased, more people were forced to draw on the unemployment

8 insurance and social welfare systems while fewer people contributed to them, making the systems very expensive (Stephens 1996). As a result, there were reductions in income replacement rates in such programs as unemployment insurance, parental leave, and sickness benefits, as well as the introduction of waiting periods for unemployment and sickness benefits. Funding was also cut for public sector programs such as childcare, health care, and elder care. This led to much discussion (pro and con) of 'dismantling,'

'modifications,' 'fundamental change,' and 'crisis' within the Swedish welfare state on the issue of the death of the Swedish model. While most scholars have taken one position or the other, many have gone back and forth in terms of pessimism and optimism over the future of the model.

For example, in his piece in Studies in Political Economy, Wallace Clement

(1994: 95) argued that Sweden "is on the brink of a major regime change." Yet in a piece written the same year with Rianne Mahon, Clement argued that "a new 'model' has yet to take hold, and some key elements of the Rehn-Meidner model remain in force, albeit in modified forms" (Clement and Mahon 1994: 6).6 Rudolf Meidner, one of the architects of the Rehn-Meidner model, also appeared to be on the fence about the future of the

Swedish model in the early 1990s. In an essay called "Why Did the Swedish Model

Fail?" (Meidner 1993) he foresaw its continued erosion, but the following year, he wrote that "no fundamental change has taken place" (Meidner 1994: 341). This demonstrates

See also the differing opinions of Gregg M. Olsen throughout the 1990s in "Labour Mobilization and the Strength of Capital: The Rise and Stall of Economic Democracy in Sweden" (1994) and "Half Empty of Half Full? The Swedish Welfare State in Transition" (1999). 9 the uncertainty about the future of the Swedish model, particularly in the early to mid

1990s during the peak of the economic crisis. Writing later in the decade, about Western

Europe more broadly, Richard Clayton and Jonas Pontusson (1998: 98) summed up this uncertainty, when they argued that it remained to be seen "[w]hether the current contractionary environment represents a transitional phase or a more permanent condition."

One thing that all those writing about the Swedish model agree on is that there have been serious challenges to the model since the 1990s. Yet there remains debate over the causes of these challenges. For example, Magnus Ryner (1999) argued that neoliberal globalization has been central to the crisis of Swedish social democracy, but that the crisis cannot be reduced to globalization alone, as there are also important internal factors that must be considered, including the Swedish government's deregulation of capital and money markets in 1985, and the abandonment of the commitment to full employment in the early 1990s.7 Ryner argued that as a result of these external and internal forces, the

Swedish welfare state had been 'hollowed out.'

Others stressed internal factors such as the disintegration of the wage policy of solidarity, and changing the equality/full employment nexus via increasing unemployment, changing demographics and domestic recessions, alongside neoliberal

7 For an in-depth discussion of the internal challenges to the Swedish model, see the Welfare Commission. Welfare in Sweden: The Balance Sheet for the 1990s. Stockholm: Ministry of Health and Social Affairs, 2002. 10 pressures from within (Meidner 1993, Esping-Andersen 1996). During the 1980s and

1990s a debate emerged in Swedish academic circles around "Swedosclerosis - A

Particularly Malign Form of Eurosclerosis," as the title of a 1993 article by Ingemar Stahl and Kurt Wickman eloquently framed it. In his response to the Swedosclerosis thesis,

Walter Korpi (1996) argued that Swedish economics professors and economists have had a great influence on public policy by claiming they have empirical data to illustrate how

Sweden's taxation and welfare state policies have caused Sweden's economic growth to lag behind that of other comparable countries since the 1970s. Many of Sweden's most prestigious economics professors supported the Sclerosis diagnosis from the mid 1980s.

Thus, within Sweden there was little debate on the topic, with those taking a stand coming out in support of the thesis; however, there was some questioning of the thesis from economists elsewhere in the world.

Prominent support for the Sclerosis diagnosis came from the Assar Lindbeck

Commission,1 a commission of public inquiry appointed by the central government to

In fact, from 1971 to 1989 Sweden maintained approximately 2 per cent unemployment while the Organization for Economic Co-operation and Development average increased to more than 10 per cent (Wood 2001). However, the economic crisis of the early 1990s saw unemployment increase from 1.6 per cent in 1990 to 8.3 per cent by 1993 (Welfare Commission, 2002). 9 Eurosclerosis is a term which originated in the 1980s to describe the pattern emerging in Europe at the time of high unemployment and slow job creation despite overall economic growth; it also could be taken to mean overall economic stagnation. Eurosclerosis in the Swedish context, or Swedosclerosis, refers to the belief that Swedish taxation and welfare policies have resulted in slow economic growth in Sweden compared to other countries (Korpi 1996). 10 The Assar Lindbeck Commission, which reported in the spring of 1993, was set up by the centre-right coalition government "to provide expert advice on the future course of economic policy" (Clement and Mahon 1994: 8) and followed the positions of the and the Swedish Employers' Association in attacking labour rights and offering budget cuts as solutions to the economic crisis (Clement 1994). 11 analyze the background of the economic crisis of the 1990s and to make recommendations. The Commission concluded that Sweden's long-term problems were due to low efficiency in the private and public sector, and advanced a number of policy proposals that received extensive media coverage. After carefully analyzing the evidence,

Korpi concluded that the empirical data did not corroborate the Sclerosis diagnosis. In fact, Korpi posited that a more realistic hypothesis was that the decline in growth in

Sweden was due to a combination of the international recession and of national economic policies adopted in the late 1980s and early 1990s, some of which were inspired by the

Sclerosis thesis. Korpi (1996: 1741) concluded that the work of the Swedish economists advancing the Sclerosis diagnosis "thus shows serious symptoms of an objectivity sclerosis."11 There have been various responses to Korpi's article, from those who vehemently disagree with his analysis (Henrekson 1996) to those who support it

(Dowrick 1996, Bogardi, Knudsen and Shildt 2001).

Yet, there is no doubt that right-wing think tanks have been a source of influence regarding the evolution of social and economic policy. One such think tank, Timbro, has been promoting a classically liberal, free-market agenda in Sweden for over twenty-five years, advancing the idea that have "become passive, lazy and without initiative

11 The influence of economists on Swedish policy is not a new thing, however. Jukka Pekkarinen (1989) points to how influential the economists who were close to the labour movement, and who comprised the 'Stockholm school,' were in developing Keynesian economic ideas in the early 1930s. These ideas were crucial in the development of what became known as the 'Swedish model,' introduced by the Social Democrats and supported by the majority of Swedes in the postwar period. However, by the 1970s many Swedish economists had become critical of the model, something that has only been exacerbated by the increasing internationalization of economic theory and the spread of neoclassical economics in recent decades. 12 because of the welfare state" and that this can be reversed through cuts to the welfare state (Verdinelli-Peralta Interview 2005). It was with such ideas, that the Swedish

Employers' Association (Svenska Arbetsgivareforeningen or SAF), having changed its orientation and become "increasingly uncompromisingly hyper-liberal," launched a broad attack against labour in the 1970s (Ryner 2002: 144). As a result, the SAF broke from its traditional activities and "launched campaigns against public sector inefficiency and for the restoration of market forces and corporate profitability" (Pontusson 1987: 22). The attack on labour continued into the 1980s when the SAF began to decentralize the bargaining process, turning away from the solidaristic wages policy. The Swedish employer offensive exerted the power of capital over labour and re-negotiated the terms of their relationship.

By the turn of the century, the argument that the Swedish model was not dead was more strongly focused; the Swedish welfare state was reformed in the 1990s, not dismantled. One basis for this assertion was that the Swedish welfare state was still more social democratic than other welfare states were in 1980, prior to the threat of neoliberal globalization. So while Sweden was vulnerable to external pressures due to increasing internationalization, for Anders Lindbom (2001: 187-189) "ideology still seems to matter... In the end, economics is secondary to politics when it comes to deciding policy." Gregg Olsen (1999: 262) also argued: "Politics still matter, at least for the foreseeable future." Mahon (2000: 42, 27), too, put forward the argument "interests are

13 not narrowly dictated by material circumstances, they are politically constructed" and that the Swedish model remains important because it "continues to offer a viable alternative to neoliberalism."

One could see the continuing salience of social democracy's political values when in the 1990s the Moderate Party (Moderata samlingspartiet), ~ the largest and most powerful centre-right party, drew back from speaking in terms of a neoliberal alternative to the social democratic welfare state, and stressed only the need to change certain

aspects and priorities within it (Ackerby Interview 2005, Ferrarini Interview 2005, Palme

Interview 2005, Linder Interview 2005, Sainsbury Interview 2005). This is not to say that the centre-right parties have not been somewhat successful in introducing neoliberal ideas into Swedish discourse. For example, the notion of individual rights, and individualism more generally, appear to have permeated Swedish society today (Gustavsson Interview

2005). The centre-right coalition government from 1991 to 1994 has often been

associated with introducing neoliberal ideas into Sweden, as part of their political agenda

(Berge Interview 2005). However, it is also important to note that the centre-right parties did not necessarily get to wholly implement their agenda while in power. Even when right-wing politicians wanted to make cuts to the welfare state, "they didn't succeed

1 The Moderate Party has a long history in Sweden. It began in 1904 and has changed names several times throughout its history from the General Electoral League to the National Organization of the Right, to the Right Party and finally to the Moderate Party in 1969. The party's ideology represents a mix of liberalism (or libertarianism) and traditional conservatism. 14 because their own voting constituency supported the kind of institutions that existed in the welfare state" (Ferrarini Interview, 2005).

Thus, we must also consider the role of the SAP in implementing changes, or in keeping changes that were implemented by the centre-right parties.13 A growing divide developed between the blue-collar Swedish Trade Union Confederation

(Landsorganisationen i Sverige, or LO) and the SAP, with LO's influence in SAP policymaking diminishing considerably. LO and the SAP began to move in different directions during the 1970s,1 and this had major repercussions for labour's power in

13 The SAP ruled Sweden, uninterrupted, from 1932 to 1976, and was instrumental during this time in implementing the Swedish model. As Esping-Andersen (1999: 33) asserts, "the welfare state... began to unfold between the 1930s and 1960s in an effort to rewrite the social contract between government and the citizenry." There are various theories behind this dominance, including a fragmented opposition for most of this period (Clement 1994). PJ Anders Linder claims that the Social Democrats have been dominant because they are "skillful politicians" who have been able to listen to society's needs, make alliances with sub-groups in society, and stop anything of substance from occurring to the left of the party to threaten their dominance as the left party in Sweden (Linder Interview 2005). However, the SAP's dominance appears to be waning in recent years, with the vote in the last three national elections falling below 40 per cent, resulting in their lowest level of support since the 1920s in the 2006 election. 14 While LO took a generally positive or neutral stance towards the pension reform, the member unions of LO took different stances. For example, the Municipal Workers' Union came out in favour of the pension reform, while the Swedish Metalworkers' Union was very much against it. The Municipal Workers' Union is the largest LO affiliate, representing 570,000 members, 80 per cent of whom are women, and 50 per cent of whom are in the care sector. It saw the pension reform as benefiting their members. The Metalworkers' Union, representing 379,000 mostly male metal workers, had been instrumental in the creation of the original national supplementary pension system (ATP) and thus did not want to see it reformed. 15 Pontusson (1993: 556) argues that a major shift in public opinion about trade unions occurred during the 1970s to a belief that "unions had too much power," the outcome of which "set the stage for a subsequent rightward drift of Swedish politics." LO and the SAP were divided over the issue of wage earner funds, a plan for collective profit-sharing developed by Rudolf Meidner. The funds were part of a broader reform offensive launched by Swedish labour in the 1960s and 1970s that aimed for "greater public influence over corporate investment decisions and worker influence over workplace conditions" (Pontusson 1987: 7). The wage earner funds represented an attempt to democratize Swedish industrial policy on behalf of the working classes, but ended in failure. This marked the beginning of a division within the Swedish labour movement, between the SAP and LO. 15 Sweden since that time.1 When the SAP returned to power following the centre-right government of 1991-1994, LO felt betrayed as the party failed to keep many of its promises, such as restoring social insurance rates to their former levels. However, because of LO's official ties to the SAP, it was constrained in how it could respond to these issues (Mahon 1999b). These internal conflicts also hindered labour's ability to respond to the employer offensive launched by the SAF in the 1990s (Pontusson 1987).

In the end, though, LO and the SAP remain linked together as the two halves of the labour movement, although their relationship is more complicated today than in the

17 past.

The SAP won the 1994 election, ousting the centre-right coalition government, but preserving many of the cuts it had implemented in welfare benefits and services

(Swank 2001). Herbert Kitschelt (2001) argues that the SAP actually began these retrenchment measures prior to the centre-right coalition winning the 1991 election, and only intensified them after returning to power three years later. PJ Anders Linder, Chief

Political Editor at a major Swedish newspaper, argues that "the political language has changed... ideology has evaporated, and... things have become much more practical"

(Linder Interview 2005). The Social Democrats have made some very big changes in

Sweden, and "they have an ability to sort of do things without anyone really noticing, ' For a more detailed analysis of the origins and development of the strained relationship between LO and the SAP, see Andrew Martin's (1984) outline of the wave of wildcat strikes in Sweden in 1969-70 as well as LO's industrial democracy offensive during the 1970s. 17 For more on the development of the relationship between the Social Democratic Party and LO, see Martin (1979). 16 because they are very skilled at that" (Josefsson Interview 2005). As Karl Gustav (KG)

Scherman, Former Director-General of the Swedish National Social Insurance Board

(Forsakringskassari) argues, the Social Democrats have moved from "solidaristic

approaches to individual approaches" (Scherman Interview 2005). The Social Democrats

do not talk much about solidarity anymore; they are more concerned with things such as

economic efficiency (Ferrarini Interview 2005). "[T]he general trend [in politics] is

definitely towards the middle... The left-wing of the Moderates today and the right-wing

of the Social Democrats, they are very much alike" (Linder Interview 2005). Thus, the

party that helped create and develop the social democratic welfare state in Sweden is also

responsible for many of the recent changes in the opposite direction.

Many also point to more external factors, such as neoliberal globalization, which

can support domestic actors seeking to implement neoliberal ideas in their context.

Ingemar Lindberg (2005) argues that the main challenges to the Swedish model have been a global shift in power where capital can move freely, as well as a shift in the

hegemonic ideology in a neoliberal direction. As a result of globalization, Swedish

capital is now much less dependent upon Swedish labour. The managing director of a

large producer in the industrial gas market actually stated in the mid 1990s that "Sweden

needs Swedish companies but Swedish companies do not need Sweden" (Fulcher 1994:

212). As a result of this belief, the SAF took on a new agenda in the 1990s, one that

included the end of the Swedish model with an anti-public sector agenda (Olsen 1999,

17 Stephens 1996). The SAF was even referred to as the "party outside parliament" in the early to mid 1990s. The SAF sought to dismantle the instruments of the ALMPs, allowing unemployment to rise, which would decrease the power of the trade union movement in Sweden. On the path to this goal, the SAF unilaterally withdrew from state boards and agencies in 1991 in order to weaken the position of the unions in negotiations over labour market practices (Clement 1994), Thus, the SAF successfully used neoliberal globalization to further its own domestic agenda.

Yet as the economy picked up in the late 1990s some welfare state programs were made even more generous than prior to the crisis (Lindbom 2001). Indeed, the SAP's

1998 budget increased financing for various benefit programs and social services, as well as for education (Olsen 1999). The government's re-commitment to the public sector became clear in the so-called "Persson funds," which were special instruments introduced in 1997 to restore the cuts made to social services earlier in the decade (Mahon 2000). As a further example of this commitment, the SAP appointed a Health Care Commission in

1998 to improve the quality of health care for personnel as well as patients. The government has also invested more money into areas such as education and training to deal with Sweden's unemployment problem. Restoring service and personnel levels was positive for women in particular, who make up the majority of public sector workers and who rely heavily on a number of social services and programs, such as childcare and

18 parental leave. As Joakim Palme (2002) argued, by the beginning of the 21s century, the

Swedish model was in a process of recovery.

In their book, Nordic Welfare States in the European Context Mikko Kautto et al.

(2001) find that the Nordic welfare states may have a greater capacity to adjust than

others. This argument is based on the fact that over the past two decades, the Nordic

welfare states have overcome numerous challenges which were characterized as profound

and even insurmountable, such as globalization, eroding family structures, and a dramatic

economic crisis. Christoffer Green-Pedersen and Anders Lindbom (2005: 76) argue "the

fundamental characteristics" of the Swedish model have "survived." Yet, there remain

potential obstacles to recovery, such as the degree of power enjoyed by local levels of

government, some of which are governed by centre-right parties and have implemented

privatization as a means of dealing with increased service demand, as well as the

increasing use of long-term sick leave and the related increase in stressful work

environments (Mahon 2000, Palme 2002). Palme argued that if the government does not

respond to these new challenges, important social policy gains, such as those around

gender equality, could be lost. For Palme, it is how the state responds to these challenges

that will determine the character of the Swedish model in the future. For Marcus Carson

(2005: 192, 211), "It seems almost certainly premature to declare the Swedish model

dead"; however, the re-prioritization of efficiency over equality, two formerly

19 complementary goals, is cause for concern in terms of signaling a move towards the

"institutionalization of the market paradigm."

A combination of external and internal pressures had worked together to challenge the Swedish model during the 1990s. These factors ranged from external neoliberal pressures, including from the EU, to internal forces pushing for neoliberal change such as the SAF, the centre-right political parties, and the Assar Lindbeck

Commission. As a result of these challenges, the Swedish state engaged in a process of reregulation during the 1990s, which included adopting some neoliberal reforms, while at the same time maintaining the foundations of the social democratic welfare state. There has not been a death of the Swedish model, as John Stephens (1996), Olsen (1999),

Mahon (2000), Palme (2002), Paula Blomqvist (2004) and Marta Szebehely (2005) all have argued, but rather some significant modifications. One way of going beyond the death of a model debate is to focus more intensely on a single issue area, which I will do here by providing an assessment of gender and gender relations. With the significant exception of Mahon (2000), this has been largely lacking in that debate. We will see the

Swedish model very much alive in recent state-led changes in family policies, which have had limited but positive effects on women's employment and the gendered division of labour in the home. On the other hand, I also argue that the pension reform of the 1990s has had negative effects in terms of the universalism of the model, with many Swedes,

20 particularly part-time workers, the vast majority of whom are women, experiencing negative effects.

1.3 Reregulation and the Swedish Welfare State

The question of how to analyze, categorize or label recent changes in the Swedish welfare state remains the source of much academic debate. Many see the introduction of private elements into the welfare state as a sign of a diminished role for the state in the provision of services and programs. They also often see this as the state relinquishing its regulatory powers. However, this view does not take into account the state's role in introducing such private elements, and its continued regulatory role in ensuring standards are met or in providing financing. While arguing that the there has been a 'hollowing out' of the state, Bob Jessop (1996: 178) still acknowledges that "the state retains important functions" and that 'hollowing out' should not be confused with the 'withering away of the state.' Thus, the state remains an active participant even in the context of introducing private elements to the welfare state, through the process of reregulation. Thus, the

Swedish state has adapted its role to the new economic paradigm of neoliberalism, retaining its regulatory control even while allowing the introduction of some private elements into the welfare state.

In more general terms, Steven Vogel (1996: 3) has argued that whereas deregulation implies a "reduction or elimination of government regulations," what has occurred in fact is reregulation, where there has been a "reformulation of old rules and

21 the creation of new ones." The fundamental difference between de- and re-regulation lies in one's view of the power of the state and its regulatory role in the current era. For those who argued that globalization has resulted in a decrease in state power and sovereignty,

Vogel's (1996: 3) concept of reregulation challenged this belief, encompassing together

"freer markets and more rules" - a strengthening of both markets and states. Rather than becoming passive subjects through deregulation, state institutions are actually active agents that continue driving the reform process. Linda Weiss (2003: 4) similarly argued that states still had room to maneuver, even in the face of globalization, and that "[i]n general, one cannot deduce the impact of global markets... because these are mediated by domestic institutions." The particular ideas and institutions that make up a state determine the specificities of reregulation in a given context.

While Vogel's empirical work focuses on reregulation in telecommunications and financial services in the United Kingdom and Japan,18 parallels can be drawn between

Vogel's analysis of how the state regulates industry and how, in the Swedish case, the state regulates social services.19 In the face of neoliberalism from within and from

See also David Levi-Faur (2006) for his work on 'regulatory capitalism,' particularly reforms in governance of the telecommunications and electricity industries. 19 In terms of the ideas that make up a state, I am referring to the dominant political and economic ideologies of the time, both locally and globally, as well as those which have been dominant in the past, thus shaping those already existing institutions. There are a variety of such institutions which make up the state, as well as a variety of actors which shape the state, from individual welfare state programs, to the political parties, politicians, and government officials, as well as the electoral system, the bureaucracy, the unions, the employers, academics, economists, social movements, civil society groups, and so on. And while the SAP has ruled Sweden for sixty-five of the past seventy-seven years, the 'state' itself cannot be conceived of as solely social democratic, as other non-social democratic actors are involved in decision­ making as well. 22 without, and even through the processes of privatization and restructuring, the state has retained regulatory control over social services in order to ensure accepted standards and to work towards maintaining the underlying goals of full employment and equality, two pillars of the social democratic Swedish model. However, the state has done so while accepting certain neoliberal elements into the welfare state, such as an element of privatization in the new national pension system, and in the childcare system. A possible outcome of the reregulation of the pension system, for example, is that women will work more full-time hours and that Swedish workers, as a whole, will work for more years during their lifetime, thus reinforcing Sweden's dual-earner model. By expanding childcare, the state seeks to encourage women to have employment and children, both of which are important for the survival of the Swedish welfare state.

In recent changes to childcare, parental leave, and pensions, one can see a reinforcing of social democracy's political underpinnings, such as the cross-class alliances built through the struggles around the national supplementary pension system

(Allman Tillagspension, or ATP) in the 1950s. Class-political coalition structures refer to the different coalitions between classes, which led to the creation, and expansion of welfare states in different contexts (Esping-Andersen 1990). While the red-green alliance between social democrats and farmers was crucial to the early development of the social democratic welfare states, over time, the alliance between blue- and white-collar workers

20 See also Szebehely (2005), Pierson (2001), Hemerijck (2002), Korpi (2000), Lewis (1992), O'Connor, Orloff and Shaver (1999), and Olsen (2002). 23 became more important in the development of welfare state policies, and in creating a connection to, and defense of, the welfare state among the Swedish people. The cross- class coalition between blue- and white-collar workers was extended to include gender equality during the expansion of childcare and parental leave programs in the 1960s and

1970s.

Reregulation has been the Swedish response to the challenges faced by social democratic welfare states everywhere in recent years.21 In order to face these challenges while retaining its social democratic foundation, the Swedish state has incorporated certain neoliberal elements into its welfare state, with the goal of returning to a pre-1990 system of full employment, which is needed in order to support the social democratic welfare state, and its goal of equality. One could view reregulation as Sweden's response to the 'neoliberal dilemma,' identified by Greta Krippner (2007), drawing on Karl

Polanyi's work, who refers to policymakers' desire to escape responsibility for deteriorating economic conditions at the same time as markets also require regulation in order to function.

The social democratic welfare regime relies on the state to provide for people's social welfare needs. In this regime, the state absorbs risks, meaning that risks are both

'de-familialized,' or taken out of the family, and 'de-commodified,' or taken out of the market (Esping-Andersen 1999). However, in the current neoliberal context, this is no

21 For responses to the neoliberalization process, see Graefe (2006: 201-202), who discusses "the development of countervailing strategies that attempt to undo the neoliberalization process" which include "new attempts to democratize the state... [and] to re-regulate labour markets." 24 longer guaranteed, as can be seen through the introduction of more neoliberal forms of individualization, such as in the new pension system. While the individual is the basic unit of analysis within liberalism, and individualization underlies neoliberalism, it is important to note that individualization need not be neoliberal, as will be discussed below in terms of more equality-seeking types of individualization within the parental leave system. Neoliberal forms of individualization seek to individualize risk, and move away from the social democratic norm of collectivized risk. The end result is to make the individual responsible for his or her own economic well-being in retirement, meaning that the state bears less responsibility for guaranteeing standards of living or equality in old age. Individualization has been operationalized through the concept of 'choice,' which has been used in neoliberalism to emphasize self-reliance. Today there is choice in most aspects of the Swedish welfare state, from public versus private providers of childcare to choice in investment funds in the Premium Pension portion of the new pension system. While choice can also have positive implications, the way the concept has been used in neoliberalism implies that there is an important decision to make, and it is up to the individual to make the right decision for him or herself, thus reinforcing the transfer of risk from the state-level to the individual-level.

The Swedish model has traditionally not been about self-sufficiency or self- reliance, as is often the case in the North American context, but rather about equality achieved through women's economic independence and men's role in the domestic

25 sphere (Hobson 2004). This more radical and progressive form of individualization is what is being forwarded in proposals to individualize the parental leave benefits. By splitting parental leave equally between mothers and fathers, proponents seek to forward an equality-seeking form of individualization, as opposed to a more neoliberal form of individualization. By equally dividing parental leave, proponents hope to eliminate the discrimination faced by female workers when looking for employment or when seeking promotion. In addition, individualizing parental leave is also meant to encourage fathers to take a more active role in the child-rearing process, thus creating a more gender-equal distribution of paid and unpaid work within society. This type of proposal is key to understanding the role of the state in the Swedish context, particularly in the discussion of gender and the process of reregulation. As will be discussed below, in contrast to other

European welfare models, the Scandinavian model remains more state-based, meaning that the state is engaged in the organization and financing of social security and welfare

(Ervik and Kuhnle 1996).

As Vogel argues, reregulation looks different in different contexts, as it is dependent upon the actors that already exist in a particular national context.22 Different ideas and institutions have pressed states to respond to similar pressures in markedly different ways, as "preexisting ideas and institutions powerfully shape the basic direction of regulatory change" (Vogel 1996: 256). The historical legacies of liberal, conservative,

22 For a parallel discussion of regulation in the post-Fordist era, see Jessop (1996). 26 and socialist principles have become institutionalized and perpetuated in their respective welfare state regimes" over time, indicating the importance of past reforms to the institutionalization of class preferences and political behaviour (Esping-Andersen 1990).

This is directly related to the concepts of path dependency and policy feedback (Pierson

1994, 1996). Path dependency refers to the fact that once a nation begins down a certain path, for example Sweden following a social democratic welfare path, it becomes difficult to reverse or dismantle this path or to begin down a completely new path; choices made in the past affect, and even restrict, how choices are made in the future. In this context, Paul Pierson (1996) has developed the concept of 'policy feedback' to indicate that a nation's past policy choices and institutional forms will affect its future policy choices and institutional forms.

This helps us to move beyond the 'death of a model' debate. Wolfgang Streeck and Kathleen Thelen (2005: 8) argue that transformation can occur without disruption, and that even incremental or gradual change can lead to transformation; that "far- reaching change can be accomplished through the accumulation of small, often seemingly insignificant adjustments." This appears to be less the case with the introduction of private for-profit childcare than for the overhauling of the national pension system.

Private for-profit childcare providers have not made significant inroads into the Swedish

23 Esping-Andersen's (1990) comparative typology of welfare state regimes - liberal, conservative, and social democratic - serve as ideal-types around which advanced industrial nations cluster. The major differences between the three regimes is whether it is the market, the family or the state that is expected to provide for the majority of society's welfare needs. 27 public childcare system, which remains universal and accessible in terms of accessing a space and the fees charged to parents. Thus, the parallel private, for-profit system, appears to be superfluous to many. On the other hand, one could easily argue that the overhauling of the Swedish pension system is an example of path-shifting in the Swedish welfare state, where the transfer of risk from the state to individuals pointed more strongly to an adaptation to neoliberal tenets. Yet, important social democratic elements remain, such as the mandatory nature of the system, as well as the guaranteed pension portion of the system. There is also the state-run default fund within the private portion of the system. So, while the pension reform does not represent a complete break with

Sweden's social democratic past, it is the clearest example of path-shifting in the Swedish welfare state in the past two decades. This can be linked to Streeck and Thelen's concept of 'layering,' as the uncertainty of the new pension system has encouraged the growth of private savings in Sweden, which represents a parallel system to the mandatory public system.

Even acknowledging the changes that have occurred in the Swedish welfare state overall, it is clear that they have not been as extensive as in other nations, reflecting the strength of the path dependency thesis for the Swedish case. Social democratic values, including a valuing of social services and programs, particularly those that encourage the work/family balance, and thus lead to greater gender equality, are so entrenched in

In fact, this was an explicit goal of the Ministry of Finance in the early 1990s, as the national savings rate at the time was considered relatively low (Marier 2005). 28 Swedish culture, that it has proved very difficult to eradicate them. While the welfare state may no longer be expanding at the rate it once was, there is a real difference between remaining stable, or expanding, and contracting. As Stephens (1996: 57) argues,

"the politics of welfare state expansion are different from the politics of welfare state rollback." Most welfare state programs in Sweden have remained intact, and some, such as family policy (childcare, parental leave), continue to expand. Tommy Ferrarini,

Associate Professor in Sociology at the Swedish Institute for Social Research at

Stockholm University, agrees that the popular support that exists for welfare state institutions also provides "some kind of institutional path dependency... that will prevent very very rapid change" (Ferrarini Interview 2005). To really get at the effect of the change that has occurred, we therefore need to move beyond the 'death of a model' debate.

This is useful for the way reregulation of the Swedish welfare state will be explored in this dissertation in relation to childcare, parental leave, and pensions. The reregulation of the Swedish childcare system can be seen in the state retaining regulatory control over private for-profit, childcare. Even within the context of (somewhat limited) privatization, the state retains regulatory control, through a system of municipal subsidies, over elements such as the maximum parental fees charged to access the service, as well as the training requirements for childcare providers. Private, for-profit,

25 For a further discussion of the introduction of private competition within the Swedish welfare state, and the continued importance of state regulation within this system, see Stephens (1996). 29 childcare providers must follow the same rules as public providers in order to qualify for municipal subsidies. Thus, while allowing private for-profit providers into the childcare system is a step away from social democracy, the process can be viewed as reregulation in that neoliberal elements are introduced but the state retains regulatory control. In terms of parental leave, the state has been crucial in expanding the length of leave over the years, and in introducing fathers' months and proposing other ways to encourage mothers and fathers to share the leave more equally, as will be discussed further in Chapter 3.

In terms of the national pension system, the state retained regulatory control by refusing to completely privatize the system, as some on the right had pushed for. The entire pension reform in the 1990s was a top-down, state-driven process, which demonstrates the power of the state to make significant decisions about its social services.

The state adopted neoliberal policies by introducing market elements into a state-run, state-regulated national pension system. But, the state still provides a guaranteed pension to those with minimal earnings, and regulates the system of contributions to be collected by employers and employees. The state also provides a default option for the Premium

Pension, or private portion of the new pension system, which has been a more popular option than choosing one's own funds.

The relationship between gender and the reregulation of the Swedish welfare state is especially important to explore and understand in such cases. While in most countries, the process of privatization has meant that certain public responsibilities are now shifted

30 to the private sphere of the family and the home, thus re-ordering the gender order within welfare state restructuring (Fudge and Cossman 2002), this is not the case in Sweden."

The reregulation of the Swedish welfare state has not resulted in an increasing social burden for 'the family' (read: women), as in most other countries. The process of reregulation in Sweden is driven by the desire for the state to retain regulatory control even in the face of neoliberal policies, and the goal of full employment, ideally keeping both women and men in the labour market, full-time, throughout their adult lives remains central. Thus, have not been driven back into the home in an effort for the state to cut costs in, for example, the areas of health care or childcare. Unlike in many other contexts, the debate in Sweden is largely restricted to state provision versus market provision, with the state still retaining its role as regulator, decision-maker and financier even in situations where it is not the sole service-provider.

At the same time, the reregulation of the Swedish childcare, parental leave, and pension systems have had very particular consequences for both women and gender relations as a whole in Sweden. Although there is not yet the data to fully support this hypothesis, there is evidence to indicate that the reregulation process has affected

Sweden is often an outlier when it comes to theories of gender and the welfare state. For example, one of the most salient feminist critiques of Esping-Andersen's The Three Worlds of Welfare Capitalism (1990) was that his welfare regime typology was too focused on the de-commodifiction of labour. Feminists argued that Esping-Andersen failed to recognize that many women are first seeking to be commodified, in terms of their labour power to achieve economic independence in the market, as a crucial step in achieving gender equality and the breakdown of the public/private divide. However, this critique did not apply as neatly to Sweden, as women's labour has been commodified there since the 1970s, and the underlying concept of the family is very different, as it is not based on the traditional conception of a male breadwinner and a female housewife which is especially prevalent in the conservative or Christian Democratic welfare states, as well as the liberal welfare regimes. 31 women's equality, the domestic division of labour, as well as women's employment opportunities and patterns, particularly with changes to public sector employment, and the interviews support this as well. Ideally, the social democratic welfare state regime's strong commitment to full employment should allow both men and women to reconcile their family and work responsibilities (Lewis 1992). The changes to the Swedish welfare state, particularly in the areas of childcare, parental leave, and pensions, represent a concerted effort to encourage women and men to have both children and a career, as both are necessary to the functioning of a social democratic welfare state based on full employment and comprehensive social programs. And in the case of parental leave in particular, the emphasis is not solely on encouraging women to enter and remain in the labour force, as in many countries, but also on encouraging men to engage in child- rearing and domestic responsibilities in a more equal and fair manner. Thus, the reregulation of the Swedish welfare state is informed by the dominant view of gender equality in Sweden, which sees men and women as both workers and carers and, in turn, reinforces this gender order in the process.

This is very much connected to the social reproduction debates of the late 1960s and 1970s, where scholars such as Margaret Benston (1969) recognized equal access to jobs outside the home and the conversion of unpaid domestic work into work to be done in the public economy as prerequisites for women's liberation. During this same period,

Wally Seccombe (1974) argued that only when women have opportunities to work

32 outside of the home, and to be instrumentally involved in their community, does confrontation with their husbands around the domestic division of labour become progressive. This recognition that women's equality hinges not only on their labour market participation, but also on a reorganization of unpaid domestic work informs many of the debates in Sweden today, as there has been much success in getting women into paid work, but less success in convincing men and women to equally share unpaid domestic work.

1.4 Methodology and Chapter Outline

The central research question of the dissertation relates to the role of gender in the

'People's Home,' and how gender norms in Sweden have informed the process of reregulation and have, in turn, been affected by the reregulation process. In terms of methodology, the dissertation draws on a variety of approaches, including secondary research, primary research, and qualitative interviews. In terms of secondary research, I draw on a number of experts in the fields of welfare states, social democracy, regulation and reregulation, women's organizing, women's employment, gender relations, childcare, parental leave, and pensions. I do this through the inclusion of monographs, edited collections, journal articles, and newspaper articles. In terms of primary research, I rely on a variety of sources including government documents from several ministries in the

Swedish government, such as the Ministry of Education and Research, and the Ministry

7 The term the 'People's Home' was developed by the Social Democratic Party in the 1920s to conceptualize the ideals of the Swedish model: equality, full employment, and a generous and universal welfare state. The concept will be discussed in more detail in Chapter 2. 33 of Finance. Also included are documents, reports, and speeches from politicians, political parties and unions, as well as reports from various government-appointed committees and commissions, such as the Welfare Commission. I also draw on a number of reports from

Statistics Sweden (Statistiska centralbyran, or SCB), as well as other important domestic

organizations, such as the Swedish National Agency for Education (Skolverket), the

Swedish National Social Insurance Board, and the Premium Pension Authority

(Premiespensionsmyndigheten, or PPM). And, finally, a number of international reports

are included, from organizations such as the Organization for Economic Co-operation

and Development (OECD) and the World Economic Forum.

Significant primary research was obtained from qualitative interviews with forty- four people in Sweden. The majority of those interviewed were politicians and former politicians, particularly those involved with the pension reform of the 1990s, as well as

scholars and researchers in the fields of politics, welfare states, economics, childcare, parental leave, and pensions. I also interviewed a number of bureaucrats and former bureaucrats working at the Ministry of Finance, the Swedish National Social Insurance

Board and the Swedish National Agency for Education. A number of the bureaucrats and politicians interviewed had also taken part in government-appointed commissions on issues such as parental leave or pensions. In addition, I interviewed a number of researchers and economists at the Swedish Trade Union Confederation and its member

34 affiliates. And, finally, I interviewed two journalists, two privatization consultants, and

28 one activist.

My research methodology, in terms of the interviews, was both qualitative and feminist. It was qualitative in that the purpose of the interviews was to explore each interviewee's viewpoint of, or experience with, the Swedish welfare state. Hence, the interviews were often more of a discussion than a simple matter of posing questions and quantifying answers. In terms of feminist methodology, while it often focuses on the power relations between the researcher and those being interviewed (Wolf 1996), this was less of a concern in my research, as those I interviewed were generally well-educated people in positions of power and influence, such as politicians, bureaucrats, and scholars.

However, the focus of the questions being asked, and of the dissertation more broadly, All of the interviews took place between April and July 2005 in Stockholm and Uppsala, Sweden. All interviews were in-person, except for one that was conducted via email. In the years following the original interview, a few follow up questions were discussed via email with some of the interviewees as well. Most in-person interviews were video- or audio-taped and transcribed, while a few interviewees wished not to be taped, so only notes were taken for these interviews. None of those I interviewed asked to remain anonymous, and all signed an informed consent form. In terms of choosing those to be interviewed, I began with a list of people that I wished to interview due to their involvement in the Swedish welfare state or, more specifically, in childcare, parental leave, or pensions. As I began to contact people to set up interviews, they suggested other people to interview, and the list of potential interviewees began to grow. In addition, at the end of each interview, I asked for suggestions of others to contact, and thus the final list was composed using the snow-ball technique. In the end I contacted approximately ninety people to request an interview, and received favourable responses from forty-four. The others either did not respond, were out of the country during my time in Sweden, or did not wish to be interviewed due to time constraints or having changed jobs and/or moved outside of the Stockholm area. The majority of interviews lasted approximately one hour, and the questions posed during the interviews were open-ended, allowing much time for discussion and follow-up questions. I began with a list of general questions posed to each interviewee about the Swedish welfare state today and how it has changed in the last two decades, as well as issues around why Sweden has achieved such a measure of gender equality, and questions around women's employment. Then, depending on the person being interviewed, and their area of expertise, I asked more specific questions about social policy areas such as childcare, parental leave, or pensions, or about how their organization (union, political party, etc.) felt about a number of issues such as government intervention, privatization and globalization. 35 was explicitly feminist, which informed the interview process. One of the central aims of the dissertation is to demonstrate the gendered effects of processes that are often deemed gender-neutral, such as reregulation. Interviews were important in terms of exploring the relationship between women and the welfare state in Sweden, particularly in terms of the development of social policy.

The interviews are not intended to stand alone as evidence so much as to help confirm this dissertation's account and analysis of the process of reregulation which has taken place in Sweden in recent years. The interviews are thus used in the dissertation to sustain the understanding of welfare state reregulation offered here, especially insofar as they reveal a consensus of what has unfolded among people who hold differing opinions regarding this process in terms of their particular ideology and interests. The interviews also enhance the contribution of this study by bringing together in one place so many diverse voices involved in policy-making, and in researching and commenting on policy, in Sweden. Taken alongside the secondary and primary literature, they highlight the significance of the reregulation of childcare, parental leave, and pensions policies for women and for gender relations in Sweden that this dissertation addresses.

On the basis of this methodology, the dissertation will unfold as follows. Chapter

2, "Women in the 'People's Home': Women's Relationship to the Social Democratic

Welfare State," will deal with issues of gender. First, I will analyze how women, and gender relations, are tied to the Swedish welfare state, particularly through the Social

36 Democratic Party's conception of the 'People's Home.' This encompasses both women's reliance on welfare state programs in order to balance employment and family responsibilities, as well as women's employment in the public sector. Thus, there are important implications of changes to welfare state programs for Swedish women. Chapter

2 will analyze the Swedish women's movement throughout the twentieth century, as well as women's employment during this time. This analysis will trace the historic shift of

Swedish women from housewives to workers in the post-war period. It will also provide the foundations for Chapter 3, which focuses on childcare and parental leave - the basis of Sweden's family policy, which allows women and men to be able to balance both work and family life.

Chapter 3, "The Reregulation of Swedish Childcare and Parental Leave: Implications for Women's Equality," will explore the evolution of childcare and parental leave in the

Swedish context, including the goals of the programs, as well as the services provided.

There will also be an analysis of the changes to the childcare and parental leave programs since the 1990s, and the implications for women's economic independence and for gender roles and the domestic division of labour within Swedish society. Such changes include the introduction of private, for-profit childcare providers, a focus on increasing the universality and accessibility of the childcare system, through maximum parental fees and guaranteed access for those who are unemployed or on parental leave, and a shift to a more educational focus within the childcare system. In terms of parental leave, the recent

37 emphasis has been on increasing fathers' role in child-rearing through the introduction of

'daddy months' and other similar proposals.

Chapter 4, "The Swedish Pension System, 1959-1998: The Rise and Fall of the Jewel in the Crown of Social Democracy" explores the origins of the Swedish pension system from the 1950s, including the controversy surrounding the adoption of the pension system, the goals of the program, and its strengths and weaknesses. Attention will be paid to the various components of the system, as well as the rules for benefit calculation. The analysis will then shift to the reform process, which began in the 1980s and accelerated in the early 1990s with a parliamentary working group that came up with a plan to overhaul

Sweden's pension system.

Chapter 5, "The New Swedish Pension System: The Challenge to Social

Democracy," explores the new pension system from 1998, as a result of the 'pension reform.' There will be a discussion of the critiques of the pension reform, both in terms of process and content, as well as the implications of the new pension system for women's economic independence and equality in the labour market. Chapter 5 will also provide an analysis of the implications of the pension reform for social democracy more broadly.

Chapter 6, "The Swedish Welfare State of the Future: Social Democratic or

Neoliberal?", will offer some conclusions, both theoretical and practical. The future direction of the Swedish welfare state, of social democracy in Sweden, and of women's equality and gender relations in Sweden will be discussed in more detail. There will also

38 be some analysis of the resistance that has emerged to changes in the direction of the

Swedish model, including the emergence of the Feminist Initiative.

39 Chapter 2: Women in the 'People's Home': Women's Relationship to the Social Democratic Welfare State

2.1 Introduction

While social democracy is a much-analyzed area of political science, the relationship between women and the Swedish social democratic welfare state throughout the twentieth century until today has been less thoroughly analyzed. Since women's employment is a crucial aspect of gender equality, this chapter provides an analysis of how Swedish women moved from housewives to workers, and how the Swedish model shifted from a male-breadwinner society to a dual-earner society. Since Sweden is often viewed as the best example of a social democratic welfare state, as discussed in the previous chapter, and Sweden is also regularly named as the most gender equal country in the world, it is crucial to explore the relationship between the two. While it is clear that social democratic states such as Sweden have not achieved full gender equality, there remains something unique about social democracy that has led to many advancements in women's emancipation and in gender equality as a whole.

The central question this chapter addresses is the role of gender in the 'People's

Home' and the relationship between gender and the 'People's Home' in the process of reregulating the Swedish welfare state. In order to begin to answer this question, a more thorough analysis of gender and social democracy is required. Here I argue that there is indeed an important relationship between social democracy and the level of gender equality achieved in Sweden. Women and the state have become very much

40 interconnected in Sweden since the 1960s, through the women's movement's decision to pursue a strategy of state feminism, and through women's high levels of political representation. Women's relationship to the state is further entrenched through social democratic programs and services such as childcare and parental leave, which facilitate women's paid employment, and that offer an important source of employment to women.

Therefore, it is clear that any changes to the Swedish welfare state will have a direct impact on women and gender relations in Sweden.

It is thus crucial to understand how gender fits into, and is affected by, the process of reregulation currently taking place in Sweden. Gender has informed the reregulation process by placing women's employment and gender relations at the forefront of government policy in terms of childcare, parental leave, and pensions. The goal of full employment, particularly full-time employment for women, underlies the reregulation process. In addition, the goal of a more equitable distribution of child rearing and unpaid domestic responsibilities underlies family policy in the areas of childcare and parental leave. Thus, reregulation acts to reinforce the dual-earner model that already exists in

Sweden. The introduction of credits for the care of young children into the new pension system also indicates that childcare performed in the home is being legitimized as important work under the new pension system, even if it does not carry with it a wage.

With these factors underlying the process of reregulation, the result has been policies that

State feminism refers to feminist organizing through formal political channels, such as political parties and the bureaucracy, rather than through autonomous organizing. It can also denote the creation of state machinery to deal with gender equality concerns, such as a ministry or department of gender affairs. 41 encourage women to remain in the labour force full time after the birth of children, as well as policies that encourage fathers to take more responsibility in child-rearing and domestic duties. The relationship between gender and reregulation is, thus, multi­ directional, as gender influences the process of reregulation and vice versa.

Gender has increasingly become an important issue in the analysis of welfare states. As Mary Daly and Jane Lewis (2000) argue, gender has also been propelled to the forefront of welfare state policy. This is particularly true in Sweden, where the welfare state is often described as 'woman-friendly,' which is meant to convey women's strong representation in positions of political power, as well as their high levels of participation in education and the labour market (Kjeldstad 2001). This is due to a number of factors, including the welfare services available to women so that they may better balance work and family life. Of course, there is not one simple reason why Sweden in particular has achieved a greater measure of gender equality than other countries. It is a combination of many factors, from the Swedish model's interrelated goals of full employment and equality, to the dominance of the Social Democratic Party in Sweden since the 1930s, to the distinctive path of the Swedish women's movement since the 1960s, particularly its strategy of state feminism. It has been expressed in the state's encouragement of women's entry into the labour force in greater numbers to fill a labour shortage during the 1960s and 1970s, and the dominance of the dual-earner model in Sweden, made

42 possible as a result of the introduction of comprehensive childcare and parental leave programs.

The social democratic welfare state and the opportunities it has provided for women in Sweden "created the logic" for the introduction of childcare and parental leave after women began entering the labour force in greater numbers (Ferrarini Interview

2005). An inevitable consequence of the Swedish style welfare state is that it makes women "more independent of men" (Pettersson Interview 2005). "I think that rather early our welfare system is a system based on individuals not on families" (R. Andersson

Interview 2005). This focus on the individual rather than the family in taxation, labour market and welfare policies has provided the climate and the incentives for women to become more economically independent. Of course, women, including married women and women with young children, began entering the labour force prior to the 1970s.

Arnlaug Leira (1993: 57) argues, "it should be noted that in [Sweden] the behaviour of mothers began to change well ahead of any welfare state reforms facilitating their entry into the labour market." It was, then, these women who then fought for the extension of publicly subsidized childcare, as well as the introduction of parental leave. As they demonstrated, women could engage in paid labour without these programs, but it was more difficult, and many were forced to work part-time hours in order to balance work and family life. The introduction of these programs meant that more women could enter, and remain in, the labour market for the course of their adult lives.

43 The Swedish welfare state today reinforces a different norm for women than that of 'housewife' or 'mother' rather, both men and women are viewed as wage earners. In the late 1960s, there was increasing recognition by some in Sweden that to change women's position within society would require also changing men's position (Scott

1982). Starting in the 1960s societal expectations began to change about women's roles.

Increasingly, Swedish women were no longer expected to be housewives, and not workers, just as men were also expected to share in both paid and unpaid work. These expectations were shaped by a number of push and pull factors leading women into the labour market from the 1950s. In terms of pull factors, those most often cited are decreasing family size, frequently linked to women's greater control over their fertility, as well as women's increasing education levels (Baude 1979, Schmid 1984, Gustafsson and Jacobsson 1985, Jonsson 1992, Leira 2002). The most regularly cited push factors include the expansion of subsidized public childcare services,31 the introduction of separate taxation of couples' earnings in 197132 (Baude 1979, Gustafsson 1984,

Gustafsson 1992, Lewis and Astrom 1992), the prolonged labour shortage experienced by

Hilda Scott (1982) points out how in a 1968 statement to the United Nations on the status of women in Sweden, the Swedish government declared the importance of shifting from a male breadwinner to a dual- earner society made up of equal and independent individuals. Scott (1982: 43) also points to "The Right to be Human" exhibition that took place in Stockholm in 1975, as part of International Women's Year, where the message was "imprisonment in the masculine role is at least as great a problem to men as conformity to a feminine ideal is to women." 31 See Chapter 3 for a more detailed discussion of the expansion of childcare services and the links to women's employment. 32 In fact, writing in the 1970s, Annika Baude (1979: 171) argued "If I were to choose one reform which has perhaps done the most to promote equality between the sexes, I would point to the introduction of individual income taxation. This reform brought with it a new chance to measure directly the value of the gainful employment of married women." 44 Sweden in the post-war period, job growth in 'traditional' female occupations, such as in the public service sector (Adams and Winston 1980, Jonung 1984, Eklund 2004), as well as state-run labour market programs designed to assist women in the labour force (Qvist,

Acker and Lorwin 1984, Gustafsson 1984, Gelb 1989).

These ideas surrounding women's identity as workers emerged out of the 'sex- role debate' in Sweden in the 1960s. This debate harkened back to Alva Myrdal's more radical vision of women as workers from the 1930s and challenged the vision Myrdal and

Viola Klein had laid out in the 1950s of women as mothers and wage-earners only in sequence, not at the same time. Solveig Bergman (2004: 222) argues that within this debate "academics emphasized the socially constructed and thus changeable nature of sex roles," and advocated "a more equal division of labour between women and men... so that both sexes could have a professional as well as a family role." An important early entry in the sex-role debate was Eva Moberg's 1961 article "Women's Conditional

Liberation," which raised demands such as the reduced workday, which would later become important in the Swedish women's movement (Jenson and Mahon 1993).

Moberg argued "We ought to stop harping on the concept of 'women's two roles'... Both men and women have one principal role, that of being people" (quoted in Scott 1982: 5).

During this time the welfare state played an important role in shaping societal expectations regarding family and work.33 This can be seen through the expansion of

33 In Prue Chamberlayne's (1993) typology of four gender policy approaches, she identifies the Nordic countries as belonging to the 'social feminist gender recognition approach,' which focuses on the particular 45 childcare services from the late 1960s, as well as the introduction of parental leave in

1974.34 These components of the Swedish welfare state reinforce the norm that everyone in society should participate in paid labour, while recognizing the reality of parents with children and the need to take some time away from the labour force when children are young or sick. These are expectations placed on both women and men coming directly from the state, even if people do not recognize this. And this is what Elizabeth Wilson attempted to expose in her work on women and the welfare state - the ideology underlying the welfare state. As Wilson (1977: 12) argued, "social policy is an instrument whereby governments try to create a particular kind of society." In the Swedish case, this is an ideology that reinforces a dual-earner society, which encourages women and men to balance work and family life.

The adoption of the dual-earner model did not occur overnight and was not without debate. During the 1960s many of the centre-right parties and some elements within the Social Democratic Party supported strengthening the male-breadwinner model by introducing a care allowance to mothers. However, those who supported the dual- earner model, such as the Social Democratic women and youth, and others within the

Social Democratic and Liberal parties, as well as LO, were victorious in convincing the obstacles women face on the road to gender equality, and aims to achieve gender equality of outcome rather than of equal opportunities. Thus, the Nordic gender policy approach reinforces the dual-earner norm through positive discrimination measures, as well as programs such as public childcare and elder care to help women balance both work and family life. 34 The welfare state continues to play a crucial role in shaping societal expectations regarding family and work, as can be seen with the introduction of childcare credits within the new pension system - for further details, see Chapter 5. 46 Social Democrats and others that it was the best option (Bergqvist 2007, Bergqvist and

Findlay 1999). In Sweden the norm of the housewife, popular less than half a century ago, now no longer exists. It is rare to find a woman in Sweden who is not engaged in paid labour, be it part-time or full-time, for the better part of her adult life.

This not only demonstrates how quickly a new norm can be implemented, but also how quickly it can become entrenched as the dominant norm. Feminism, as advanced by the women's movement, has expressed itself in different ways in different contexts, and in Sweden, state feminism has been a popular form of feminist organizing, particularly since the mid 1970s. This involves feminists acting through state institutions such as political parties and the bureaucracy in order to advance their demands for gender equality. It is also related to the creation of new state institutions to further gender equality and women's interests (Kjeldstad 2001). In their book, Comparative State

Feminism, Dorothy McBride Stetson and Amy Mazur (1995: 1-2) look at how state feminism is conceptualized and operationalized differently in different settings, defining state feminism as "activities of government structures that are formally charged with furthering women's status and rights." It is important to address, however, as does Helga

Maria Hemes (1987: 11) that state feminism can also reflect an "interplay between agitation from below and integration from above."

47 Sweden's particular version of state feminism has meant the incorporation of women's concerns directly into the institutions and policies of the political system.

Since Swedish women fought for and won the right to vote early in the twentieth century, their concerns have generally been successfully incorporated into the state, reducing the amount of fighting from the outside and increasing the amount of cooperation between women and the state. Scholars such as Pippa Norris (1987) argue that societies with consensual rather than conflictual women's movements, such as Sweden, are more likely to have "low-profile" feminist movements, and are more willing to accept feminist demands. In the Swedish case, at least, women's concerns are addressed through legislation, creating a climate of cooperation and reducing resistance to the women's movement and its demands. Those Swedish women who are politically active have become so generally through membership in the women's sections of political parties

(or simply regular membership within political parties) or in unions, or through the

Swedish bureaucracy,37 and only rarely through independent grassroots feminist organizations, such as the Fredrika Bremer Association. Barbara Hobson and Marika

Lindholm (1997: 501) argue "Instead of mass movements demonstrating for feminist

This is not to say that Swedish women have not had to struggle to achieve their rights, as Joyce Gelb's inaccurate chapter title "Sweden: Feminism without Feminists?" (Feminism and Politics: A Comparative Perspective, 1989) might lead one to believe. Swedish feminists have had to fight for their rights like women everywhere, but they have done so largely through mainstream political channels. 36 The Social Democratic Women's Federation (SSKF), has been particularly influential in recruiting and organizing social democratic women. The SSKF is often referred to as S-Kvinnor (or S-Women) in more recent years. 7 For example, in the 1930s women became active on government-appointed committees and commissions examining women's issues. Hobson and Lindholm (1997) argue that these women were prototypes of what would later become known as "femocrats," or feminist bureaucrats. 48 goals as autonomous groups, Swedish feminist activism has tended to place itself within parliamentary bodies, institutional structures as well as government bureaucracies."

2.2 Swedish Women and the 'People's Home' in Historical Perspective

The concept of the 'People's Home' was developed by the Social Democratic

Party to encompass the ideals of equality, full employment, and a comprehensive welfare state. The term itself was coined in 1928 by party chairman (and future prime minister)

Per Albin Hansson in a memorable speech to parliament. The concept was meant to convey the feeling that all Swedes should feel as though they are members of a family, regardless of social or economic status. In his speech, Hansson stated "In the good home there is equality, consideration, cooperation and helpfulness" (quoted in Berman 1998:

157). The 'People's Home' was an effort to "rewrite the relationship between citizens and state, an affirmation that welfare and capitalism need not be incompatible" (Esping-

Andersen 1999: 34). Thus, the concept implied that socialist ideals could be achieved through the welfare state (Meidner 1993).

In the early years of its development, the 'People's Home' acted to reinforce the separation of men and women into different spheres of society, at least at various times of their lives. On the whole, though, the idea was to prove useful to the feminist movement, as it forged the concepts of 'community' and 'solidarity' and provided necessary discursive narratives for feminist equality demands from the 1930s onwards.38 During the

While the Great Depression negatively affected women's organizing in many Western countries, women were quite busy organizing in Sweden during the 1930s. This is, perhaps, due to a number of factors, from 49 1930s Swedish feminists began building cross-party alliances in order to represent a

"women's constituency," with influence on the policymaking process; and women did have a great deal of influence during this time, heading or taking part in a variety of commissions on women's issues. Women's growing influence, although mainly as mothers, was confirmed in a 1936 speech by Social Democratic Prime Minister Hansson where he stated "I suspect women will notice with great satisfaction the way in which women's issues have received attention. Essentially all our issues are your issues"40

(quoted in Hobson and Lindholm 1997: 499). This demonstrates how women's concerns were being heard, but the emphasis remained on their role as mothers, not workers.41

From the early years of the twentieth century, the Swedish women's movement began to take shape. Early struggles over legal, civic and political rights gave way to successes in the area of economic rights. As more women began entering the labour market, the women's movement placed pressure on the state to, first, remove barriers to women's employment and, second, to help women better balance work and family life.

Sweden not being as negatively affected by the Depression as other countries, to Sweden exiting the Depression earlier than other countries due to the government's policy of Keynesian deficit spending, as well as the election of the Social Democratic Party to office in 1932. By the mid 1930s Sweden had recovered from the Depression and women's organizing intensified. 39 For example, the 1935 Royal Committee on Population and the 1936-38 Commission on Married Women's Right to Work, chaired by two feminists, Kerstin Hesselgren and Alva Myrdal (Hobson and Lindholm 1997). 40 This, in many ways, reinforces his address nine years earlier to the women in the Social Democratic Party, where he stated "The task is to create in [the People's Home] comfort and cheer, to make it cozy and warm, bright, and gleaming, and free. There is probably no more enticing task for a woman" (Hirdman 2002). 41 For a lengthy discussion of how the state supported mothers, but not female workers during the 1940s and 1950s, see Jenson and Mahon (1993). 50 During this time women increased their presence in the labour movement as well, through unions and the Social Democratic Party. The formation of the women's league of the SAP in the early years of the twentieth century was a crucial moment for women's activism in Sweden, as the organization became an important catalyst for change. But it had important precursors, as in the last few decades of the nineteenth century social policy was already used as a means of "profound social reform and also... as an instrument aimed at reducing class conflict and preventing social unrest" (Leira 1993:

53). This was a crucial time for gender equality, as the traditional relationship between women and men was being contested through women's demands for the right to vote

(which was only achieved at the national level in 1919). This was accompanied by a new negotiation of the boundaries between public and private, between what was deemed the responsibility of the state versus that of the family or the individual. It was during this time that women's organizations began to emerge to fight for women's rights. In 1884, the Fredrika Bremer Association (Fredrika Bremer Forbundet, or FBF) was created with the aim of promoting "equal legal, civic, economic and political status for women"

(Elman 1996: 17). The organization is still in existence today and has been a very influential autonomous women's organization in Sweden for more than a century.

During the late nineteenth and early twentieth centuries, Swedish women began to exercise their voice and their desire to be included in the process of developing Sweden.

Women were divided in the early years of the twentieth century by class and political

51 ideology, but these divisions began to subside by the 1930s after decades of organizing together (Hobson and Lindholm 1997). Women's organizing in the early twentieth century included the creation of the women's league of the Social Democratic Party, known as the Social Democratic Women's Federation (Sveriges Socialdemokratiska

Kvinnoforbund, or SSKF), which held its first congress in February 1920, with representatives from 120 women's clubs from around Sweden (S-Kvinnor). Just eight years later, at the 1928 SAP congress, the SSKF announced "we women do not want to be invited into the People's Home only after it has been completed; we will be happier if we take part in laying the foundations" (quoted in Jenson and Mahon 1993: 82). By the

1930s, the SSKF had grown dramatically, to include more than 26,000 members (Hobson and Lindholm 1997).

During this time women organized around and won many rights, including the right to four weeks unpaid maternity leave (1901), the same right as men to civil service jobs (1925), the right to paid maternity insurance benefits (1931), the right to equal basic pensions with men (1935), as well as the right for employed women not to be dismissed on the basis of pregnancy, childbirth or marriage (1939) (Statistics Sweden 2006). Many of the gains of the 1930s were linked to women's employment, as approximately 33 per cent of Swedish women aged 15-65 were participating in the paid labour force during the

1930s, 1940s and early 1950s (Trost 1996). However, during this time, only a very small percentage of married women were participating in the labour force, from only, albeit

52 increasing, 8 per cent in 1930 and 9.3 per cent in 1940 to 14.1 per cent by 1950 (Amark

2006).

Yet, women's role in developing the People's Home was quite limited in the beginning. In the 1930s, the majority of Swedish women were still expected to focus on maintaining a 'good home' for their families (Jenson and Mahon 1993). Thus even though at the time approximately one-third of women were working in paid labour, largely in the service sector, as nurses and schoolteachers and as personal servants, for the majority of women there was still little room for any career role besides becoming a

'housewife' (Qvist, Acker and Lorwin 1984, Haavio-Mannila 1983).

This reflected the fact that during the first half of the twentieth century gender difference was celebrated, with women and men largely occupying separate spheres of society (Jenson and Mahon 1993). The public/private divide remained a reality for most women, as they were relegated to the private domestic sphere of the home and the family, while men located themselves in the public sphere of economics and politics. But those who were unhappy with the rigid definition of housewife for women, were increasingly encouraged to break through these confines, as revealed in Hobson and Lindholm's

(1997) discussion of how during this time women's organizing in Sweden was informed by a belief that women were a political constituency that deserved a political voice. The fruit of this could be seen in 1934 when the editor of the SSKP's monthly paper laid out a gendered conception of Keynesian demand management, arguing that "Housewives are

53 the workers' employers - they shape consumption and hence production" (quoted in

Jenson and Mahon 1993: 82). The discursive narrative of the 'People's Home,' based on equality and cooperation, clearly worked to the advantage of feminist activists demanding political influence at this time.

It was during the 1930s that the prominent Swedish feminist Alva Myrdal began writing about population policy. With her husband Gunnar Myrdal she published Crisis in the Population Question (1934), a groundbreaking book on how to encourage both childbirth and women's employment, stressing both the welfare of children and women's rights within the process of democratization. In this and subsequent work stretching over three decades, she argued that women's employment was often necessary in order to meet the needs of the family, particularly the costs of children (Myrdal 1968). For Myrdal, women not only worked in order to support their families, while at the same time reducing the size of their families, but many women were choosing work over family for the independence employment provided. As such, the economic and cultural dimensions of women's work had to be addressed in social policy. For Myrdal women were disadvantaged in comparison to men in their attempt to combine work and family and thus the response should be collectively organized publicly provided childcare. This was a step towards equalizing the costs of child-bearing, as well as improving the welfare of children. However, Myrdal's conception of equality was not limited to women being able

54 to better balance work and family, as she also argued for the greater participation of men in unpaid work and in child-rearing duties.4

For Myrdal, the social democratic welfare state was not inherently patriarchal and, in fact, was open to issues of women's rights, but a strong state was needed in order to realize these rights (Holmwood 2000). Despite Myrdal's early arguments in favour of women's employment, the Swedish welfare state was not immediately responsive. After married women were granted the legal right to work in the 1930s, the state did little to encourage their employment. In fact, married women "were largely denied support for their participation in the labour market" during the 1940s and 1950s, as the state preferred to focus on benefits to encourage women to have children, such as free maternity care and child allowances (Jenson and Mahon 1993: 83). The situation was one in which various feminists and feminist organizations came out in favour of women's employment as a step towards women's equality, but where the political parties and the labour unions remained resistant. During this time, the social democratic state saw

"maternity as women's most important social role" (Jenson and Mahon 1993: 84). Yet,

Qvist, Acker and Lorwin (1984: 263) are not incorrect to argue "Although in fact little was accomplished in the 1950s to improve wages and working conditions for women, the

42 For how Myrdal's social policy reforms fit well under the concept of the 'People's Home,' see Hobson and Lindholm (1997) and Tilton (1991). For Myrdal's place as a founder of welfare state theory, see Holmwood (2000). Myrdal's work also addressed the tension between employment and family for Swedish women. For example, in Women's Two Roles: Home and Work (1956) Myrdal and Klein argued that "marriage can no longer function as a career for women," again highlighting gender issues in work and in the family (quoted in Holmwood 2000: 41). In fact, Myrdal has been credited with bringing gender issues to the fore of the policy debate from the late 1930s and through the post-war era. She was also Chair of the government-appointed Working Group on Equality, which submitted its report, Towards Equality, in 1971. 55 basis for later measures was being laid, and more and more women were taking up paid work." This is supported by Bergqvist and Findlay's (1999: 120) claim that "... the interests of working women had to some extent been reflected in Sweden's welfare state policies since the 1930s." From the 1930s through the 1950s, the Swedish state still viewed women's most important role as wives and mothers, but at the same time its facilitation of the entry of an increasing number of women into the labour force laid the groundwork for future policies that would support women workers.

It was not until the 1960s that the women's movement achieved some success in getting the political parties and the labour unions to recognize women workers as important, and in need of social supports. During the 1960s the SSKF really began exercising its influence on the SAP and on Swedish social policy. In 1960 the SSKF persuaded the SAP to create a committee on women's issue with Tage Erlander, party leader and Prime Minister, as honourary chair and Inga Thorsson, SSKF President, as working chair; the committee published a report entitled "Women's Equality" in 1964

(Burness 1999). This led to an all-party report five years later, which stated that equality between men and women, was an "integral part of the parties' aspirations to achieve equality" (Sainsbury 1993: 280). These reports encouraged a broader acceptance of the goal of gender equality. As Mahon (1999a: 243) argues, "In the mid-sixties... the balance tipped in favour of the working mother."

56 While the committee on women's issues was not directly involved in the creation of new policy, it did much to help change the environment so that such policy could be created and accepted in the future. The SSKF was crucial in getting the SAP to adopt the sex-role debate into its equality program, so that the issue was not seen as simply a

'women's issue,' but an issue affecting everyone in society (Scott 1982). There were other activities that helped to change attitudes during the 1960s. For example, it was during this time that the FBF launched its 'Stop Helping Mother With the Housework' exhibit which encouraged family members to no longer see their task as 'helping mother' but as performing "a rightful share of the household duties" (Lovenduski 1986: 99).

It appears as though women's employment did stay relatively low from the 1930s to the early 1950s and rose only slightly throughout the rest of the 1950s.43 It was not until the early years of the 1960s that women's labour force participation spiked to 56 per cent in 1963, including 49.1 per cent of married women, and 37.9 per cent of women with children under seven, as compared with men's labour force participation which stood at

While most scholars agree that women's labour force participation hovered around the 33 per cent mark from the 1930s to the early 1950s, what occurred after this is somewhat less clear. Figures on the percentage of women in the labour force in 1960 vary considerably depending on which source one consults, ranging from 30 per cent (Lewis and Astrom 1992) to 33 per cent (Amark 2006) to almost 40 per cent (Trost 1996) to as high as 50.1 per cent (Schmid 1984). There is also a great disparity in the figures on the percentage of married women working at this time, ranging from 23.3 per cent to 41.1 per cent (Qvist, Acker and Lorwin 1984, Leira 1993, Amark 2006). Some of the variation may be explained in terms of different age categories, which vary from study to study, from 15 to 64 to 16 to 74, and from 20 to 50 to 20 to 59. However, the wild variations point to a problem (at least within the English-language literature) on Swedish women's employment in the 1950s and 1960s, not only in terms of statistics regarding the percentage of women in employment, but also in terms of which types of jobs were engaged in prior to the 1960s. This issue is beyond the purview of this dissertation, but is something that needs to be addressed in the future. 57 93.2 per cent at the time. The proportion of women in the labour force then continued to rise reaching 63 per cent in 1970, 72.6 per cent in 1975, and 81 per cent in 1980. During this time men's labour force participation decreased somewhat to around 90 per cent by the mid 1970s, where it remained fairly steady until the early 1990s At the same time, the proportion of married women and women with young children participating in the labour market also continued to increase. For example, in 1970 58.9 per cent of married women engaged in paid labour, a figure that rose to 69.6 per cent five years later, and to 80 per cent in 1980. In terms of women with children under age seven, 50 per cent were engaged in paid labour in 1970, 60.8 per cent in 1975, and 75.5 per cent in 1980 (Gustafsson and

Jacobsson 1985, Hoem 1995).

As the majority of Swedish women began to occupy a place in the People's Home not as housewives but as workers, the second-wave women's movement of the 1960s challenged the identities of 'woman' and 'worker' and opened a space to reconsider the two (Jenson and Mahon 1993). It was during this time that "women increasingly rejected" Myrdal and Klein's 'two-roles model,' opting instead "for both paid work and children" (Leira 1993: 64). When asked what it was about Sweden that has led it to achieve such a great measure of gender equality, Anna Hedborg, former LO Research

Director, SAP Member of Parliament and Director-General of the Swedish National

Social Insurance Board, simply answered: "Work, it's easy" (Hedborg Interview 2005).

58 Many see the dramatic increase of Swedish women into the labour market since the 1970s as part of a deliberate social democratic project to promote gender equality and women's economic independence in Sweden (Anderson and Meyer 2006, Leira 1993).

Ingemar Lindberg, member of the Family Policy Committee (Familjepolitiska

Kommitten) that created the Swedish parental leave system in 1974, argues "a positive attitude to - not just a neutral, but a positive attitude to - women taking up employment, was characteristic of Sweden, I think, earlier than any other countries" (Lindberg

Interview 2005). This, of course, was related to the strong emphasis on full employment found in Sweden. In fact, by the late 1960s, the Scandinavian countries were the first to abandon the assumed male-breadwinner model and adopt a dual-earner model (Esping-

Andersen 1999). As a result, Scandinavian women became far less dependent on their partners financially: there are far fewer married women in these countries without earnings; there are more couples that have similar earnings; and it is more common in these countries to find women earning more than their spouses. The Scandinavian social democratic welfare states "substantially increased the opportunity costs of being a housewife, and thereby... played an important role in the emergence of greater gender equality at home and at work" (S0rensen 2001: 114).

In the early 1960s LO and the Swedish Employers' Association negotiated an end to a separate women's wage classification (Statistics Sweden 2006) which, together with their policy of solidaristic wages bargaining, meant a successful reduction in the gender

59 wage gap in the years to follow. But LO, representing blue-collar workers, still remained rather focused on class as an all encompassing category of identity and rather dismissive of gender issues. Even well into the 1960s LO's demands remained largely focused on industrial policy and collective bargaining in gender-blind terms (Jenson and

Mahon 1993). However, it was during that decade that LO started to change and began to embrace the specific interests of working women as wage-earners. This was due to a number of factors. First, the growth of Swedish Confederation for Professional

Employees {Tjanstemannens Centralorganisation, or TCO, initially formed in 1944)4 put pressure on LO, as TCO was dominated by women employees and began talking about issues such as equal pay and equal employment opportunities quite early on (Scott

1982). As Jenson and Mahon (1993: 96) argue, wage-earner feminism began with white- collar women workers, and "[i]n the late 1970s, the TCO unions were prepared to negotiate a relatively proactive jamstalldhet contract while the LO continued to drag its

44 LO currently represents 1,831,000 members in fifteen affiliates, from the largest, Municipal Workers' Union with 570,000 members, to the smallest, Musician's Union with just 5,600 members (LO). 45 LO did form a Joint Female Labour Council with the Swedish Confederation for Professional Employees and the Swedish Employers Association in 1950 to investigate women's conditions at work (Scott 1982). This Council was replaced in 1972 by the Advisory Council on Equality between Men and Women, appointed by Prime Minister , and directly responsible to his office. 46 TCO currently represents 1.2 million white-collar workers in sixteen affiliates, half of whom work in the public sector and half of whom work in the private sector; professions represented include nurses, civil servants, and journalists (TCO). 7 Jamstalldhet "is the gendered, associative version of jamlikhet (class equality)" (Lindvert 2007: 242). There is much debate among feminists over the meaning and conceptual significance of the term jamstalldhet. Lindvert (2007: 242) argues that the concept "lacked sexual undertones," but also provided the opportunity for policy actors to imbue it with their specific meanings, thus becoming an important "conceptual mechanism for integrating gender equality policies" in Sweden. Shaver (1998) argues that the concept is ambiguous and can refer to equal status or sex/gender equality or equal opportunity. Jenson and Mahon (1993) provide a more thorough analysis of the relationship between jamstalldhet and jamlikhet, 60 heels." Second, LO began to see the benefits of women's labour force participation, versus increasing immigration, in a tight labour market situation. Third, over the years, women workers made up an increasing proportion of LO members, from 10 per cent in

1930 to 16 per cent in 1940, 19 per cent in 1950, 22 per cent in 1960, 29 per cent in 1970, and 40 per cent by 1980 (LO 2006). This reflects the growth in public sector service employment, with the Municipal Workers' Union (Kommunalarbetareforbundet, or

Kommunal), made up of primarily female workers, simultaneously growing in size and importance during this time. By 1970, 63 per cent of women aged 20-59 were engaged in paid labour, a percentage which increased throughout the decade, to over 70 per cent by

1975 and to almost 80 per cent by the end of the decade (Gustafsson and Jacobsson

1985).48

As a result of women's increasing employment and demands for equality in the

1950s and 1960s, the 1970s saw even more feminist challenges. Organizations such as

Group 8 (Grupp S)49 began the debate about unequal and gendered power relations, something which had been largely ignored in Swedish discourse until this point (Jenson and Mahon 1993). Following this, the SSKF also began a process of radicalization. For example, it promoted abortion on demand prior to the release of the government- and how the concept of jamstalldhet was used in the late 1970s to move women's concerns, or gender equality concerns, to a separate sphere from class equality concerns. 48 In fact, by 1975, 67 per cent of married women were engaged in paid labour in Sweden, with the corresponding number in the United States being only 45 per cent at the time (Scott 1982). 49 Group 8 was a feminist movement founded by eight women in Stockholm in 1968 in an attempt to emphasize a gender perspective on the left, particularly within the socialist movement; over time local groups were established across Sweden until the organization was later dissolved. 61 appointed commission's report on this issue - a bold step within the norms of Swedish party politics at the time. When members of the SSKF appeared at the 1975 SAP congress wearing t-shirts emblazoned with the words 'women's struggle' they were only reinforcing the important role they had been playing for years in drawing attention to the issue of unequal power relations.

The SSKF had published a key document entitled Families in the Future: A

Socialist Family Policy in 1972, which linked their demands for gender equality to LO's pursuit for industrial and economic democracy. This document outlined many significant feminist requests such as the six-hour workday, adequate public childcare, housing reform, and work for all. These interests were linked to the rising number of women in the labour market. In response, the government appointed the Commission for Gender

Equality between Men and Women in 1972 in order to implement gender equality policies (Bergqvist and Findlay 1999).50 As women began to form a critical mass within

LO they were able to work together with their sisters in the SSKF to exert pressure on the government to implement more 'women-friendly' policies, such as parental leave in 1974 and increased childcare availability throughout the 1970s and beyond. In 1976 the SSKF put forward a motion to parliament for compulsory paternity leave, contrary to the wishes of the SAP, and forced the SAP to deal with the issue in their family policy program later that year (lenson and Mahon 1993).

The Commission for Gender Equality "reflected Sweden's decision to integrate gender equality into the development of its social and labour-market policies," which would help transition Sweden fully from a male-breadwinner to a dual-earner society (Bergqvist and Findlay 1999: 128). 62 The pressure exerted by the SSKF during this time successfully affected policy, as well as opinions and attitudes. For example, by 1972 Social Democratic Prime Minister

Olof Palme gave a speech to the SSKF stating "In this society it is only natural for both parents to work. In this society it is self-evident that man and woman should take the same responsibility for the care of the home and the children" (quoted in Hirdman 2002:

6). This was the beginning of a recognition of the importance of men and women sharing in both paid and unpaid work - that this was an important step on the path to gender equality in Sweden.

2.3 Women's Employment and the Welfare State: Establishing the Pattern

Sweden's emphasis on solving its labour shortage problems51 in the 1960s and early 1970s by encouraging Swedish women to enter the labour market rather than increasing immigration created the conditions for women's increased employment. Most employment growth in Sweden from the 1960s to the 1990s was in the local public sector, and almost all of it involved women (Rosen 1996, Esping-Andersen 1990). From the 1980s more women began participating in the paid labour force in Sweden than in any other nation (Sundstrom and Stafford 1992). Full employment really was being achieved (Hemerijck 2002).

51 For a more detailed discussion of Sweden's post-war labour shortage, see Adams and Winston (1980) who discuss, for example, Sweden's low fertility rate as a contributing factor. In addition, Bjornberg and Dahlgreen (2003) discuss the changes to the organization of Swedish labour in the post-war period, with a move away from industrial manufacturing, where importing foreign labour was cost-effective, as education and language skills were not crucial. The rise of service sector occupations made Swedish women attractive potential employees over immigrants, both for the state and for the trade unions. 63 The Swedish welfare state developed policies that encouraged women to balance both family and paid employment. Already in the mid 1970s, Margaret Coulson, Branka

Magas and Hilary Wainwright (1975) argued that Sweden's high demand for women's labour resulted in the extension of the welfare state into areas traditionally reserved for domestic labour, which meant that services such as childcare were provided through the state. Maud Landby Eduards (1989) also emphasized the parental leave policies, the reduced working day, and the opportunities and choices available to both parents when it comes to balancing paid employment and family. More recently, Anne-Marie Daune-

Richard and Rianne Mahon (2001) cited the close link between childcare and employment policies in Sweden as an expression of the state's commitment to gender equality in the labour force. And G0sta Esping-Andersen (2002a, 2002c) warns that a current challenge to welfare state policy is the maintenance of the compatibility of parenthood with work, or a 'woman-friendly policy' and shows that the majority of

Swedish women take advantage of these woman-friendly policies and opt for both lifetime employment, with few or no interruptions, and motherhood.

Women's entry into the labour force has been facilitated by extensive public child care provision, parental leave programs, child allowances, job security legislation, and training programs (Olsen 2002). This indicates the range of services available to both women and men in balancing work and family life. The welfare state has also acted as an important source of employment for many women entering the labour force in Sweden.

64 Thus, the welfare state not only provides social services that allow both men and women to work, but it also creates a large labour market within which women may find employment. In the Scandinavian countries, the welfare state became the most important female labour market, providing women with good pay, job security and flexibility, including quality part-time jobs (Esping-Andersen 1990, 1999, 2002c). Work that is traditionally done in the home in other countries is done in the public sector in Sweden, which has become an employer for women. "And we've built a society that everybody is needed to work. And therefore we have built a society that also needs all the people inclusive of women" (Gustavsson Interview 2005).

The expansion of the welfare state and the dramatic increase in women's employment occurred simultaneously in Sweden in the 1960s and 1970s, where women were recruited to part-time service jobs, which partly accounts for the feminization of the labour force (Ryner 1999). "It was from the start clear that sustained full employment...

[and] the rise in women's employment, would have to rely on public service sector jobs"

(Esping-Andersen 1996: 11). The two were very much interconnected, as the majority of women needed public childcare, for example, in order to remain in the labour force, and the increase in public childcare offered an increasing number of jobs for women. "[OJn both the supply and demand side, the logic of the Swedish welfare state is such that it will produce a female-biased social-service explosion" (Esping-Andersen 1990: 223). In

65 general, the public sector is viewed as being much more 'woman-friendly,' allowing women to combine family and work (Ackerby Interview 2005).

Consequently, the Swedish labour force has remained highly segregated. Most women work in traditional female occupations, and many employed women work part- time. Due to the parallel expansion of the welfare state and women's entry into the labour force, what has occurred in Sweden is a feminization of the welfare state. For example, in the 1980s, the public sector accounted for 80 per cent of new jobs, with 75 per cent of these being female (Esping-Andersen 1990). The expansion of the welfare state was actually only possible through the recruitment of women to part-time employment, which led to this feminization of the waged labour force (Ryner 1999). It is clear that women with children who choose to work part-time do so in order to better balance working and family life (Drew 1992). Yet, part-time jobs in Sweden are not necessarily the same as part-time jobs in other parts of the industrialized world, as they are highly unionized, are accompanied by relatively high wages, and allow women flexibility in their work hours, with three-quarters of full-time being the norm. As Figure

2.1 demonstrates, the vast majority of women who work part-time, work what is called

"long part-time," or 20-34 hours per week, and only a small percentage work "short part- time," or 1-19 hours per week.

66 Figure 2.1: Women aged 20-64 by activity status and hours normally worked 1970

,., J.97Q.....1.9%...... ,.1 gao^iJjR^ . ijwn ,_139S pjina

*Source: Labour Force Surveys, SCB in Statistics Sweden 2004.

Ann-Zofie Duvander, a researcher at the Swedish National Social Insurance

Board, argues that there are three important elements in Sweden when it comes to

women's labour force participation: separate taxation, the expansion of childcare, and the

parental leave system (Duvander Interview 2005). A country's tax system is important in

that it can either penalize wives' employment or encourage it (Esping-Andersen 1999). In

Sweden, separate taxation, introduced in 1971, encourages women's labour market

participation after marriage by taxing individuals rather than couples or families. This

change in the tax policy transformed a tax subsidy into a tax penalty for single (male)

earners with a spouse (Hobson 2004). Many of the people I interviewed claimed that this

was one of the most important reasons behind women's increased labour force participation since the 1970s.

67 The development of childcare and parental leave "has, to some extent, to do with a quite unified women's movement... a big part of women's organizations... have fought for childcare and then the possibility to combine working and having [a] family"

(Bergqvist Interview 2005). There is a wide consensus that the Swedish women's movement of the 1970s really succeeded when it came to childcare and parental leave, which made it possible for women and men to work and to have a family and that this was a direct result of the women's organizations in Sweden working very hard over the years in order to further gender equality (M. Andersson Interview 2005, Hoffmann

Interview 2005, Gradin Interview 2005, Korpi Interview 2005). This combination of a strong women's movement, particularly within the political parties and the trade unions which held power, and a social democratic welfare state have been crucial to the design of welfare programs such as childcare and parental leave that have advanced the issue of gender equality (Berge Interview 2005).

The economic context played a significant role as well, particularly in the 1970s when Sweden experienced labour shortages. Policy decisions at the time turned out to be crucial for the advancement of gender equality. A number of feminist political economists see this as a turning point for women's equality (Bergqvist Interview 2005,

Wennemo Interview 2005). Prior to this the SAP had not placed a great deal of emphasis on issues of gender equality. However, the demands of the women's movement, including not only the SSKF but also women activists within LO affiliates and the

68 egalitarian ideals that already existed in welfare state institutions combined with the need

for female labour during this time to produce a change in orientation for the SAP

(Ferrarini Interview 2005). The political context and the strength of social democracy and the SAP have also played a crucial role in the promotion of gender equality. Due to the

fact that the SAP had worked towards class equality for a long time, it was relatively easy

to expand this to include gender equality (Korpi Interview 2005, Lindvert Interview

2005).

As Urban Lundberg, a researcher at the Institute for Future Studies, argues

"[F]rom the '60s and '70s... I think it's fair to say that the Social Democrats in Sweden

have been very important when it comes to questions of gender equality" (Lundberg

Interview 2005). Since the 1960s, the SAP has come to recognize the political importance

of working women, and began to court their support (Mahon 2000). During this time, the

SAP also began to implement policies that help both women and men to better balance

work and family life: "[IJnstead of social class they are now talking much more about

gender issues" (Lundberg Interview 2005). The SAP's interest in women as political

supporters has led to a situation where women have been very successful at getting their

demands met through the party, particularly since the party was in government for so

long. Given the dominance of the SAP and the inclusion of gender in its equality agenda

during the late twentieth century, even the more centrist and conservative parties have

also included gender equality issues in their platforms and in their official party

69 documents (Kjeldstad 2001). This has resulted in all seven of Sweden's major political parties claiming to be 'feminist' (Thoursie Interview 2005, Sainsbury Interview 2005,

Bergqvist Interview 2005, Lindblad Interview 2005).

2.4 Women and the Welfare State: Since the 1990s

Beginning in the 1990s Swedish women faced several challenges in terms of equality, but they also continued to achieve success even in the face of adversity. The early 1990s saw a renewal of the women's movement, as women felt their equality gains were being threatened, particularly in the area of governmental representation, but also by neoliberalism more broadly. Through women's organizing, the situation improved throughout the decade, and today women's representation is at its highest level nationally, even with a centre-right government in power. An additional challenge during the early 1990s was the economic crisis and subsequent increase in unemployment; but this, too, has largely been overcome in the years since the crisis, and women have made great advances both within the labour force and the labour movement. Nevertheless women also found major challenges in the areas of pay, job segregation, and part-time work.

In Sweden, like in other countries, women's political representation at all levels of government was low until the 1960s and 1970s, as can be seen in Table 2.1. However,

For example, it was the centre-right government which passed the 1980 Equal Opportunity Act against sexual discrimination, and which created the equal-opportunity ombudsman, supported by the Equal Opportunity Commission, to enforce the Act (Bergqvist and Findlay 1999). 70 Table 2.1: Women in the Swedish parliament (%), 1950-2006

Year Percentage of women 1950 10 1955 12 1960 13 1965 14 1970 15 1975 21 1980 26 1985 28 1990 38 1995 40 2000 43 2006f 47 *Sources: Bystydzienski 1995, Inter-Parliamentary Union 2008. f2006 is the most recent election year in Sweden. widespread beliefs in equality and justice did legitimize women's claims over the decades in Sweden, making it impossible to continue to ignore women's demands to share

CO political power with men. The open list proportional representation electoral system in Sweden is an important factor in facilitating women's entry into political life, as it is a system that also allows for preference voting at the local level. Preference voting allows voters to change the order in which candidates appear on party lists. Such techniques have been used to women's advantage through campaigns to get more women elected since the 1970s.

In fact, women were demanding greater political representation in Sweden as early as the 1930s. For example, in 1936 twenty-five women's organizations signed a public letter, "A Call to Swedish Women," asking women to join political parties and campaign for female politicians in order to increase women's political representation (Hobson and Lindholm 1997). 71 As a result, Sweden has seen a marked increase in women's political representation at the national level in the past forty years, as can be seen in Table 2.1.

And an increasing number of women were elected to public office at all levels of government during this period. Women also became party leaders and more women were successful in being chosen for cabinet positions. Women even broke the barrier of being assigned traditionally female cabinet portfolios such as health and education and were placed in charge of portfolios such as justice and foreign affairs. There are a number of contributing factors as to why Swedish women have achieved such electoral and policy success, and space prohibits a full discussion here, but they include women's organizing within the political system,54 the organization of the multiparty system, the electoral system, the welfare state, as well as labour policies.

To discuss just one of these factors in more detail, the connection between women's increased political representation in Sweden and their involvement in the nation's political parties is an important link. The number and strength of left leaning political parties in Sweden has contributed to women's increased political representation, in what has been termed the "contagion from the left." Left-wing parties have traditionally been the first to include women's concerns and adopt quotas to increase female membership, and in Sweden the SAP has been the most influential party in the

54 As a result of women's organizing for increased representation, the government appointed a Commission of Inquiry on Women's Representation in 1985; reports released by the Commission include Is the Future Society Also Going to Be Designed Solely by Men? and Every Other Seat for a Woman (Bergqvist and Findlay 1999). 72 last century. Chantal Maille and Lena Wangnerud (1999) argue that once the SAP adopted the goal of equality, women in all other political parties could use this as leverage in their claims for increased representation. And, it has been shown in numerous studies that left-wing and moderate political parties generally tend to have a larger percentage of female representatives than right-wing parties. This has led scholars such as Norris (1987) to credit the abundance and influence of left-wing parties in Sweden for the increase in women's political representation and the placement of women's interests on the public agenda. The SAP has made strides in regulating party lists to make them more gender balanced. The party passed six bills in 1993 that required all party lists used in elections to reserve every second seat for women, thus achieving an equal gender balance on party lists (Maille and Wangnerud 1999). An illustration of the legacy of the

SAP in this realm is that today within Sweden's centre-right coalition government there are 47.3 per cent women in parliament and 43 per cent of Prime Minister Fredrik

Reinfeldt's cabinet ministers are women.

While not all women's organizing in Sweden has occurred directly within the state, most does remain focused on the state as the location for change, as was witnessed in the 1990s. Diane Sainsbury, Professor Emerita in the Department of Political Science at Stockholm University, argues that while the women's movement is having a difficult time in many countries today, in Sweden it is going through a process of revitalization

(Sainsbury Interview 2005). There was a generational renewal in the 1990s, as more

73 young women got involved, mobilizing around the welfare state and around women's representation (Bergqvist 2007). The emergence of the Support Stockings, a network of feminist activists unhappy with the drop in women's representation in the 1991 national election, linked this decrease in women's representation to a concern with the overall direction of the welfare state in Sweden, thus making it more political than just a matter of numbers or percentages, as it was connected to the rise of neoliberalism in Sweden

(Burness 1999). As can be seen in Table 2.1, women's representation in the Swedish legislature, or , had been steadily increasing to the point where it had reached 38 per cent in 1988. When women's representation fell to 32 per cent in 1991 with the election of a centre-right government for only the third time since the 1930s, the Support

Stockings network was formed to ensure that women's representation increased again in the 1994 national election, and to ensure that the decrease in 1991 did not signal a trend.55

The Support Stockings' strategy to add to the already intense pressure that women within the political system were putting on their individual parties to increase the number of women on their party lists in the next election worked. The group was successful in making women's political representation an important issue in the 1994 national election

(Briskin 1999). This was a particularly difficult feat in a political atmosphere of economic crisis, dominated by discussions of unemployment and restructuring. The 1994 election saw the return of the Social Democrats to power, and the proportion of women in

55 The name of the group represented a tribute to past women's organizations, the Blue Stockings of the nineteenth century and the Red Stockings of the 1970s, and it also had a "down-to-earth, middle-aged, non- glamorous appeal" (Burness 1999: 16). 74 the Riksdag increased to 40.4 per cent, with equal numbers of men and women in the cabinet (Burness 1999). The Support Stockings achieved their goals and proved that, even in Sweden, a force from outside the institutional system is sometimes needed to change things within it. And like most independent women's organizing in Sweden, the

group disappeared after it had achieved its goal, leaving the women inside the parties to continue the struggle for gender equality in politics.

In addition to organizing politically in the 1990s, women also exerted pressure via the labour movement. The first conference of LO women took place in 1988,

demonstrating how far the confederation had come in terms of recognizing women not

only as workers but also recognizing that they have their own unique issues and demands

as workers (Jenson and Mahon 1993). That same year, Lillemor Arvidsson was elected as

the first woman leader of a LO union, Kommunal,56 and she became an outspoken critic

of the government's labour policies. At the same time, the increasing number of female

LO members had a great influence on the direction of LO policies and activities. For

example, in 1991 LO amended its statutes to include the goal of equal representation of

women in all union activities and on all union boards and committees. That same year LO

also sent a team of union women as its official contribution to the SAP election

Kommunal is the largest LO affiliate, representing 570,000 municipal and county council workers, 80 per cent of whom are women (LO). When it was established in 1910, Kommunal had only 593 members, all of whom were men. Over time, particularly in the post-war era, as more women began entering the labour market, they began to dominate many of the care sectors covered by Kommunal. Today the three largest groups of Kommunal employees are the female-dominated sectors of assistant nurses, care assistants, and child day-care attendants, which combined include 222,000 workers (Kommunal). 75 campaign, demanding women be given a higher profile in the campaign (Jenson and

Mahon 1993).

Women's gains in the labour movement in the 1990s were linked to women's employment at the time. By the early 1990s, women constituted 48 per cent of the

Swedish labour force (Olsen 2002), the highest percentage anywhere in the world. It is important to understand women's employment during this time in the context of the economic crisis of the 1990s. The 2002 report from the government-appointed Welfare

Commission concluded "the employment crisis did not lead to women leaving the labour market to become housewives" (Welfare Commission 2002: 37). After women's labour force participation peaked at 85.1 per cent in 1990 (Nyberg 2004), it dropped to 70 per cent through the decade, while men's rate fell from 83 to 75 per cent (Welfare

Commission 2002). These rates have since increased to 76.3 per cent for women and 80.9 per cent for men as of May 2007. At the same time, unemployment figures decreased to

3.7 per cent for women and 4.1 per cent for men in 2007 (Statistics Sweden 2007), demonstrating that since the crisis of the 1990s, women's unemployment rate has actually been lower than that of men (Statistics Sweden 2005). As Figure 2.2 illustrates, the majority of women who are not in the labour force are pursuing educational studies, are on long-term sickness benefits, live abroad, or are completing military service; only 2 per cent of women not in the labour force count housework as their main activity (Statistics

Sweden 2004), versus the European Union average of 26 per cent at the end of the 1990s

76 Figure 2.2: Population aged 20-64 in and not in the labour force, 2003 Proportion (%) of the population in different groups

Not in the labour force Women: 21% Men: 16%

Main activity Housework Studies Pension Other' W: 2% W: 5% W: 2% W: 12% M: 0% M: 5% M: 1% M: 10%

Cause of absence Owniliness Holiday Care of children Other W: 4% W: 7% W: 3% W: 2% M: 2% M: 6% M: 1% M: 2% 1 Includes long-lerm sick: admitted for medical care, living abroad less than 2 years and doing military service.

*Source: Labour Force Surveys, SCB in Statistics Sweden 2004.

(Hobson 2004). As such, it is obvious that even a severe economic crisis will not affect the norm that both women and men are expected to and expect to be engaged in the labour force in Sweden.

Yet, problems remain in terms of women's employment, particularly related to the types of work women are concentrated in. For example, women are still concentrated mainly in the public sector, with jobs in education, health care and social work employing

50 per cent of women, and only 14 per cent of men. And while employment in the

77 municipal sector has decreased since 1990, Figure 2.3 demonstrates that it still provides for a large proportion of women's employment, and the majority of women's permanent employment (Statistics Sweden 2004).

Figure 2.3: Employees aged 20-64 by sector and link to labour market, 1987-2003

Numbers in 1 000's Women 1 5001

1 200 Permanent employees in the public sector Permanent employees in the private sector 900

600

Temporary employees Temporary employees 300 H in the public sector in the private sector tn*r„;::;r:::»--r^ss"="°SSBaa! 1987 1989 1991 1993 1995 1997 1999 2001 2003

*Source: Labour Force Surveys, SCB in Statistics Sweden 2004.

The issue of raising the pay for female-dominated sectors has been on the political agenda for some time in Sweden. By the end of the 1990s, women in Sweden were earning an average of 82 per cent of men's wages (Ministry of Finance and Ministry of

Industry, Employment and Communications 2000), and women remained largely concentrated in a small number of public service sector jobs. The fact that over 90 per cent of childcare workers are women is often seen as an issue due to low pay. However,

Kommunal, the union representing childcare workers, has not made it part of its policy to change the gendered composition of the workers; instead, the union focuses on trying to raise the overall wages in the sector (R. Andersson Interview 2005). This is an ongoing battle, which will not be won in a single round of negotiations, but over time and through 78 changing attitudes and priorities. In the end, "gender equality in earnings has not been achieved, but... the earnings of Nordic women and men are considerably closer" than in many other countries (S0rensen 2001: 113).

As mentioned above, there is much talk of the gender segregation in the Swedish labour force. There is a trend toward desegregation in traditionally male-dominated occupations, which women are entering in higher numbers, "but men are not entering into female highly dominated occupations because they are usually very low waged" (Gonas

Interview 2005). Walter Korpi, Professor of Social Policy at the Swedish Institute for

Social Research at Stockholm University, agrees that the issue of men moving into traditionally female-dominated occupations has been more difficult (Korpi Interview

2005). The issue of job segregation is also a political one for many Swedish researchers and economists. They point out that while the Swedish labour market is viewed as very highly segregated by gender, Sweden also has the highest proportion of women in the labour force, thus it should not be compared to countries that do not have a high proportion of women in their labour force. Anna Thoursie, Senior Economist with LO, elaborates, "You could see segregation as being inside the labour market and outside... this is a matter of definition, how you define things" (Thoursie Interview 2005). Thoursie also adds that it is not surprising to see such a level of gender segregation in a context where women entered the labour market en masse: "you will see an increasing segregation within the labour market because so much work which has been done unpaid

79 before is now paid but it's performed by women" (Thoursie Interview 2005). In addition,

Korpi points out that the quality of jobs is not measured in labour indices, and that even though childcare might be female dominated, it is a rewarding job that involves close interaction with the young (Korpi Interview 2005).

Perhaps the biggest issue facing women in the Swedish labour market today is part-time versus full-time work. During the early to mid 1990s, part-time work for women declined, but by 1998, 43.5% of women still worked part-time, compared with only 9 per cent of men (Wadensjo 2006). As Figure 2.4 demonstrates, part-time employment is rare for men, with the overwhelming majority of employed men working full-time (Statistics

Sweden 2004). The Ministry of Finance and Ministry of Industry, Employment and

Communications (2000: 11) concluded "Men's and women's choice of occupation is affected to a high degree by the opportunities for combining work and family life, as well as work and leisure." As Stefan Carlen, Economist at the Swedish Commercial

Employees' Union (Handelstjanstemannaforbundet, or Handels) argues, "This is one of the head issues right now [in our union] is the problem of lower wages among women and also less working hours among women if you compare to men. And you can't explain it rationally, it's just because we still live in a society where women are forced to take more participating in homework with the child and so on" (Carlen Interview 2005). As a result, Handels is fighting for the individual right to full-time work so that no one who wants to work full-time hours can be forced to work part-time. This issue of having a

80 Figure 2.4: Men aged 20-64 by activity status and hours normally worked, 1970- 2003 Per cert Men 100T Not in — the labour force — Unemployed 80 H Short part-time, 1-19 hours 60 1 Long part-time, 20-34 hours

401 " Full-time, 35- hours 201 •HI

1970 1975 1980 1985 1990 1995 2000

*Source: Labour Force Surveys, SCB in Statistics Sweden, 2004

right to full-time work was actually on the political agenda in 2005, with a few ministers

interested in the proposal due to its relation to the issue of economic autonomy,

particularly for women (Montanari Interview 2005). The Swedish Federation of County

Councils and Municipalities (Sveriges Kommuner och Landsting) opposed putting this

into legislation, but Stefan Ackerby, Head of the Division for Economic Analysis at the

Federation, states that it is "an ambition to give all those who want to work full-time an

option to do so" (Ackerby Interview 2005). The issue is whether this should be mandated by legislation or left as optional for employers.

Over the years, however, the extent of part-time work for women has been

declining, as is illustrated in Table 2.2. Ackerby confirms that less county and municipal

workers work part-time now than in the past; however there remain many part-time

!1 Table 2.2: Women and men aged 16-64 with part-time work (%), 1990-2004

Year Women Men 1990 45.2 7.6 1991 45.4 7.6 1992 45.5 8.2 1993 46.3 9.0 1994 46.3 9.6 1995 45.9 9.2 1996 44.7 9.2 1997 44.3 9.2 1998 43.5 9.0 1999 35.9 9.3 2000 34.8 9.2 2001 34.1 9.4 2002 34.0 9.7 2003 33.9 10.2 2004 34.4 11.1 *Source: Wadensjo 2006. workers, some of whom are considered 'part-time unemployed' as they work part-time involuntarily and wish to work full-time; and the majority of part-time workers in this field are women, with few men working part-time hours (Ackerby Interview 2005). In

2001, the percentage of Swedish women working part-time hours was 34.1, which was a decline of 11.1 per cent since 1990 and a decline of 9.4 per cent just in the last three years

(Wadensjo 2006). It appears though that each generation of women entering the labour market works more full-time hours than the one before (Sundstrom Interview 2005).

However, there is a life cycle pattern that is detectable, where women work more full-time hours when they first enter the labour market and establish themselves, and then after they have children, they work more part-time hours for a number of years, and then 82 they work full-time again towards the end of their careers (Sundstrom Interview 2005).

This clearly illustrates that Swedish women largely use part-time work as a means to balance both work and family life. The issue of women's involuntary part-time work is mainly a problem in the care sector and its endemic flexible types of employment

(Duvander Interview 2005). In this context, the issue reverts to that of class. As Anita

Nyberg, Researcher at the Institute for Working Life, puts it: "Actually it's a question of class, it's women with low education, working in the public sector, very often they work part-time and many of them... would like to work more hours, but it's very difficult because the work is organized around part-time work" (Nyberg Interview 2005). White- collar and professional women have seen their average working time increase steadily over time, whereas blue-collar women have stalled since 1990. Irene Wennemo, Head of

Economic Policy at LO, agrees that it is blue-collar mothers who are still working part- time and who divide the work in the family in a more 'traditional' way (Wennemo

Interview 2005). After a century of struggle to get the issue of gender inequality not to be displaced by that of class inequality, it is nevertheless still clear that overcoming class inequality also matters if female equality is to be fully achieved.

Conclusions

The development of social democracy and gender equality have been interconnected in Sweden for a number of reasons. First, the two main goals of the

Swedish social democratic model have been full employment and equality, both very

83 much linked to women's economic independence. Second, beginning in the 1960s the

Swedish state needed women in the labour force and the majority of women needed the welfare state in order to facilitate their entry into the labour force. Thus, there was a mutually beneficial relationship between the two, where the state provided services and programs such as childcare and parental leave which facilitated women's entry into the labour force, and as a result women were able to fill the labour shortage in Sweden at the time and were able to become workers, paying taxes which support the welfare state. In

addition, the large public sector developed by the Swedish state in order to meet the needs of working women also provided a 'woman-friendly' sector in which women could work. Third, the strategy of state feminism also played a crucial role in this situation, as women were active within the political parties and unions, making their demands heard.

Women and the political parties, particularly the Social Democratic Party, worked together in the development of a 'woman-friendly' social democratic welfare state in

Sweden.

The results of this close relationship have been increased gender equality, including women's economic independence and to a lesser degree, a gradual change in gender roles in terms of unpaid labour. As will be shown in Chapter 3, there has been a shift in terms of the amount of fathers taking more parental leave over the years, yet this has been very slow. Women have advanced far more in terms of paid work than men have in terms of unpaid work, yet there remains room for improvement in both areas.

84 Issues such as involuntary part-time work for women and sex segregation in the labour

market persist, although the situation appears to be slowly improving over time. The

conditions necessary for women to enter and remain in the labour market are in place in

Sweden and they have had a tremendous impact in changing Swedish society from a

male-breadwinner to a dual-earner society.

However, it is apparent that these conditions alone are not sufficient for

substantive gender equality, and that more must be done, not only in the area of women's part-time low-paid work, but particularly in the area of men's part-time unpaid work.

"Harmonizing motherhood with employment will help establish the preconditions for, but

will not ensure, gender equality," as men must also embrace a more feminine life course

in order for there to be true gender equality (Esping-Andersen 2002c: 94-95). PJ Anders

Linder, Chief Political Editor at a daily Swedish newspaper, argues that there is not much

debate within Swedish society about being pro- or anti-gender equality, but the debate

surrounds how best to achieve gender equality: "through coercion or evolution" (Linder

Interview 2005). Women's economic independence appears to be a non-issue these days,

while the unequal division of labour within the home remains a source of tension. "[T]he

Swedish state really managed to get women out in the labour market... but they didn't

manage to get the men back into the household" (Lindvert Interview 2005). The situation

is hopeful in that the state is very influential when it comes to gender equality policies

and has used its influence in the past to move society further down the path of gender

85 equality, as we will see in the next chapter on family policy, which will engage directly with the central research question of this dissertation on how gender has informed, and is informed by, the process of reregulation currently taking place in Sweden.

86 Chapter 3: The Reregulation of Swedish Childcare and Parental Leave: Implications for Women's Equality

3.1 Introduction

Since the 1970s, Sweden has been in the lead in developing programs and services that help both women and men to balance family and paid employment. Family policy in Sweden has largely had a gender equality focus, particularly around women's labour force participation and men's role in childrearing. The childcare and parental insurance systems in particular seek to increase/maintain women's labour force participation while, at the same time, aiming for a more equal distribution of childrearing responsibilities between mothers and fathers. As such, these programs address issues of both employability and care. In the current climate of neoliberal globalization, Sweden offers an interesting case study, as it was the model of a social democratic welfare state in the postwar era; and while neoliberalism has come to influence certain aspects of the

Swedish welfare state, the area of family policy remains largely a haven of social democracy in the Swedish sense.

While the 1990s were, for the most part, a decade marked by contraction,

Sweden's childcare system actually expanded during this time, and is now more comprehensive than ever. In addition, while benefit levels were decreased somewhat in the 1990s, the length of leave within the parental insurance system was extended, and the system is the focus of current debate in Sweden where a government-appointed commission proposed further extension of leave and more individualization within the

87 system in its 2005 report. In the past two decades, the majority of the changes that have taken place in the areas of childcare and parental leave are related to the underlying themes of gender equality and full employment. And these changes demonstrate how the state has been involved in reregulating the welfare state, and that the state is at the forefront of the changes which are taking place. The Swedish state is still very much involved in its role as regulator, decision-maker, financier, and, to a somewhat lesser degree, as service-provider.

To put recent changes in family policy into perspective, childcare and parental leave are integral components of Sweden's full employment and gender equality strategies. These programs are also crucial to dealing with demographic changes in the

Swedish population. For example, as will be discussed in further detail below, the state responded to declining fertility rates in the 1970s and early 1980s by implementing a generous parental leave scheme in 1974, expanding childcare spaces throughout the

1970s and 1980s, and encouraging parents to space the birth of their children close together from the 1980s. As a result, the fertility rate in Sweden increased from just over 1.5 in the late 1970s and early 1980s, to 2.14 in 1990 (Hoem and Hoem 1996).

However, Sweden faced another decline in fertility rates during the 1990s, with the economic crisis, which brought with it increasing unemployment and decreasing benefit

57 This close spacing of children is often referred to as the "speed premium," which encourages parents to have a second child within 30 months of having their first child through benefit inducements. As Hoem and Hoem (1996: 11) argue "the rule has made many couples speed up their pace of childbearing appreciably once their first child has arrived." 88 levels. Today, Sweden's fertility rate stands at 1.91, lower than the necessary replacement

CO rate of 2, but higher than in many Western European countries (Statistics Sweden

2009b).

Figure 3.1: Swedish fertility rate, 1890-2003 The average number of children over the lifecycle Number of children per woman and man respectively

1 / 1-lH'tM yj rtX'irt

ISM- i-jvl- ~>?M •« \1

*Source: Population Statistics, SCB in Statistics Sweden 2004.

In addition to a decreasing fertility rate, Sweden is also facing an increasingly ageing population. For those born today, life expectancy at birth is 80.86 years (which is the tenth highest life expectancy in the world); 18.8 per cent of the population is now aged 65 and over, and the median age currently stands at 41.5 years (Central Intelligence

Agency 2009). This is a major problem for the welfare state, as there are a variety of public programs that cater to the elderly, such as health care, elder care and pensions, which must be paid for by those currently in the labour force. If the current labour force continues to shrink while the proportion of those over 65 continues to grow, the welfare state will not be able to sustain itself. Thus, the reregulation of Swedish family policy

For example, Sweden's current fertility rate is higher than that of the United Kingdom, the Netherlands, Belgium, Switzerland, Germany, Austria, Spain and Italy (Index Mundi). 89 involves an attempt to adapt to changing demographic pressures, as well as to work

towards the dual social democratic goals of full employment and gender equality.

During the 1970s, as women's labour force participation increased, fertility rates

continued to decline.5 As a result, policy-makers saw the link between the two and began

to grow concerned about population policy (Daune-Richard and Mahon 2001). In

addition, there was a growing demand by parents and female workers for the expansion

of public childcare facilities (Swedish Institute 2004a). Both fertility rates and women's

employment opportunities were clearly important factors in the development and

expansion of the public childcare system. These concerns were met with the development

of policies that encouraged women to be both mothers and workers, and such policies

remain crucial today. From the mid 1960s, the Swedish Trade Union Confederation

became the leading advocate for the expansion of public childcare (Daune-Richard and

Mahon 2001), as women workers continued to demand childcare services.

In the 1960s, political parties were divided on the issue of childcare, with the

centre-right advocating a home-care allowance and the Social Democrats advocating publicly provided childcare (Bergqvist, Kuusipalo and Styrkarsdottir 1999). Thanks to

LO's strong ties with the Social Democratic Party, childcare was given a high priority

and the number of publicly provided municipal childcare spaces increased rapidly from

As Figure 3.1 demonstrates, the number of children per woman fell from more than 4 in 1890 to 1.7 in 2003 (Statistics Sweden 2004). In the intervening period, the fertility rate remained higher than 3 during the 1910s and 1920s, but declined to 1.7 by 1935; after increasing again during the post-war period to more than 2, Sweden's fertility rate declined during the 1970s to less than 2 (Hoem and Hoem 1996). 90 the late 1960s onward (Curtin 1999), from under 12,000 in 1965 to over 136,000 by 1980

(Daune-Richard and Mahon 2001, Mahon 1999a). By 2002, there were nearly 730,000 childcare spaces (Swedish National Agency for Education 2003). This was partly the result of lobbying by key women in the trade-union and political spheres, as well as the state's own agenda to foster an environment where women could work outside of the home while still having children.60 The welfare state recognized access to reliable childcare as a basic requirement of a society in which the majority of both parents work outside of the home. The state was thus prepared to provide working mothers and fathers with the services and facilities needed to allow them both to work in the labour market.

In Sweden the municipalities have traditionally been responsible for providing the majority of public childcare, while the state, municipal taxes, and minimal parental fees finance the childcare system (Daniels 1992). This dates back to the 1930s and 1940s when public authorities began to assume greater responsibility for care. The previous system of private creches became daycare centres under the responsibility of the municipalities, along with the beginnings of leisure-time centres, which provide care for school-aged children before and after school (Swedish Institute 2004a). In 1963 only 3 per cent of all pre-school children were in public childcare, while over 35 per cent of all mothers of pre-school children were in the labour market (Nyberg 2004), which demonstrates the absolute need for expanded childcare at this time. Since the 1960s the

6 The state's agenda related both to the social democratic goals of full employment and equality, as well as to the continued labour shortage experienced by Sweden during this time, as discussed in the previous chapter. 91 state has exercised a great deal of national "control" in its quest for a national model of childcare with minimum standards (Alvestad and Pramling Samuelsson 1999). In 1966 state grants to full-time childcare centres doubled in order to encourage expansion and improve the quality of care; this also reflected a shift of support from stay at home mothers to working mothers who needed access to full-time childcare (Nyberg 2004). In

1968 the government appointed the National Commission on Childcare to draw up proposals for a childcare system to meet national needs (Swedish Institute 2004a). The work of the Commission laid the foundation for the pre-school model that exists today - daycare centres and playschools were combined into a pre-school system that would serve the interests of children while at the same time allowing parents to work.

The expansion of public childcare services in the 1970s and 1980s dramatically increased the responsibilities of the municipalities. This increase was, in part, a response to the 1975 National Pre-school Act adopted by parliament to address the problems of working mothers (Kelber 1994). Even as the Social Democrats promised a childcare spot for all children over eighteen months in 1985 (Mahon 1999a, Nyberg 2004), the municipalities could not keep up with demand and there were long queues for childcare throughout the 1970s and 1980s. 1 Public funds continued to be poured into the expansion of the childcare system throughout the 1980s (Daune-Richard and Mahon

2001), and in 1995, the Social Democratic government introduced the Act on Child Care

1 As Scott (1982) pointed out Sweden was among the laggards of Western Europe in providing childcare for preschool-aged children during this time. 92 under which municipalities became obliged to provide childcare without undue delay

(Bergqvist and Nyberg 2002, Swedish Institute 2004a). This new legislation, combined with an increasing fertility rate, led to a record number of new childcare openings, and the long queues of the 1970s and 1980s are now a thing of the past.

These childcare policies helped women to enter the paid labour force in greater numbers, thus decreasing their economic dependence on men. As Figure 3.1 demonstrates, in comparative perspective, Sweden has seen a relatively high fertility rate in the postwar era, with women giving birth to, on average, more than 2 children in the

1950s and 1960s, and 1.7 children as of 2003 (Statistics Sweden 2004). In fact, research in industrialized countries has shown that such high fertility rates are linked with high female employment such as in Sweden (Alfredsson 2005). This goes against previous thinking that women who did not participate in the paid labour force had more children; it appears as though today women have more children when they know they can balance being a mother with having paid employment. This is clearly linked to both the availability of childcare and the generosity of the parental leave system in Sweden.

Parental leave was introduced in Sweden in 1974, replacing maternity leave, which had focused solely on mothers (Daune-Richard and Mahon 2001). The new parental leave system was the culmination of the efforts of the government-appointed

93 Family Policy Committee, " which worked from 1965 to 1972 to ensure that women and men were treated equally in the various insurance schemes in Sweden (Lindberg

Interview 2005). Women's increasing level of employment, particularly married women and women with small children, was the impetus for the creation of the parental leave system. The Family Council, created within LO in the 1960s, was also instrumental in forming proposals around parental leave (Hirdman 2002). In 1969 LO's Family Council distributed a special Family Policy Program containing many of the first proposals for the parental leave system, a system based on the norm of the dual-earner family (Mahon

1999a). Thus, the trade union movement was crucial in advancing the dialogue on the issue of parental leave in the late 1960s.

At the time, there were differing opinions on how to best deal with the increasing proportion of women in employment, particularly married women and women with young children. There were calls for the creation of a care allowance, which would allow women to stay at home for long periods to take care of their children, and there were calls for the development of childcare and the improvement of working conditions (Lindberg

Interview 2005). The Social Democratic Party was somewhat divided on the issue, but the unions advocated the latter option. LO's work on this issue and its influence within the SAP led to the development of childcare and parental leave as the favoured option, in addition to the improvement of working conditions, (Lindberg Interview 2005). In the

62 The Family Policy Committee released its final report in 1972, in which it recommended transforming Sweden's maternity leave system into "a much longer and gender-neutral parental leave" (Ahlberg, Roman and Duncan 2008: 83). 94 end there has been a great deal of agreement among political parties around the necessity of parental leave, but there remain differences of opinion when it comes to the details.

When parental leave was introduced it consisted of 180 days (6 months) of leave per child, which parents could divide in any way, at a 90 per cent income replacement rate (Nyberg 2004). That this leave was now open to both mothers and fathers was at the time unique and very forward thinking (Wennemo Interview 2005, Ferrarini Interview

2005). The fact that the system was adopted with a great deal of consensus across party lines indicates the strength of the belief in the underlying objective to move Sweden from a male-breadwinner to a dual-earner society (Duvander Interview 2005, Bygren and

Duvander 2005). The parental leave system was viewed as a complement to the development and expansion of the childcare system, as both were aimed at helping mothers and fathers better balance work and family life (Cohen, Moss, Petrie and

Wallace 2004). And further amendments to the parental insurance system were made to accommodate this goal. For example, in 1978 parental leave was extended to 9 months, with the last three months paid at a flat rate; alternatively, the additional three months could be used to reduce the workday for one parent (Daune-Richard and Mahon 2001).

The main objectives behind the parental insurance system in Sweden are the well- being of the child, women's economic independence, and the involvement of fathers in family and home life (Drew 2005). The last two objectives are related directly to gender equality, with an emphasis on a dual-earner model and a more equal division of

95 household responsibilities, particularly around childrearing. For even in the late 1960s and early 1970s, the Family Policy Committee that proposed the parental leave system had discussed whether or not to add an additional month reserved solely for the father. In the end, the majority of the members of the committee voted against such an idea

(Lindberg Interview, 2005), but the discussion had begun. This posed a serious challenge, since in 1974 only 3 per cent of those who received parental leave were fathers, and fathers took less than 1 per cent of the total days available (Nyberg 2004). While this number has increased, it has not increased as quickly as the architects of the system had hoped (Lindberg Interview 2005). For example, by 1992, 48.3 per cent of fathers took an average of 63 days leave (Daune-Richard and Mahon 2001). While this was an improvement, further reforms were taken in the 1990s and 2000s in an attempt to encourage mothers and fathers to share parental leave more equally.

3.2 Changes to Childcare Since 1990

Beginning in the 1980s, the Swedish state had to deal with initiatives for private, for-profit childcare. The main challenge came from the Swedish Employers' Association and the Swedish Federation of Industries' proposal for a private day-care company,

Pysslingen (Daune-Richard and Mahon 2001). Pysslingen was an Electrolux subsidiary company created to open up childcare to the for-profit sector (Strandbrink and Pestoff

2006). This can largely be seen as an ideological rather than a commercial venture, as the initiative had nothing to do with the company's regular fields of business, and Electrolux

96 had close links to the above-mentioned employers groups. The challenge was launched by Sollentuna, a suburb of Stockholm, which attempted to contract out the provision of childcare to Pysslingen. The SAF worked with the centre-right government in Sollentuna to attempt to '"break the municipal monopoly' on the production of social services"

(Mahon 2005: 351). In response, the Social Democratic Party passed the Lex Pysslingen legislation in 1982, which banned all private for-profit day care, and regulated the growth of other non-public forms such as parental cooperatives (Daune-Richard and Mahon

2001).63 The SAP's concern regarding private for-profit childcare was that it would turn municipal institutions into ghettos for children of the low-paid or children with special needs, thus breaking with the universal principle of the Swedish welfare state. 4

However, when the SAP was defeated in the 1991 election, the ruling centre-right coalition abolished Lex Pysslingen, and the Social Democrats did not re-instate it when they returned to office in 1994, as their primary concern remained Sweden's economic crisis. Because several suburbs of Stockholm governed by centre-right parties continued to challenge the law, Pysslingen was ready to expand once it was legally able to do so in

1992 (Mahon 2005). Although private for-profit childcare centres are now allowed in

Sweden, they must follow the same rules as public centres in order to receive municipal subsidies (Daune-Richard and Mahon 2001). This is a clear instance of reregulation, not

63 Private, or non-public, forms of childcare in Sweden include parental cooperatives, unions, foundations, county councils, the , as well as for-profit companies (Statistics Sweden 2005). The fact that the majority of private for-profit childcare is located in the wealthy suburbs of Stockholm certainly seems to support this argument. Yet because private for-profit childcare has not increased much beyond these areas, the impact on the overall quality of public childcare is negligible. 97 deregulation. Thus, in this instance, reregulation has meant allowing the co-existence of both private and public service-providers but on terms set by the state in seeking a way to promote equal access, affordability and good quality. Childcare remains a service accessed on the basis of social citizenship.

Since the early 1990s, the popularity of private childcare has increased somewhat in Sweden. 5 In 1994 there were 27 Pysslingen childcare centres in and around

Stockholm (Strandbrink and Pestoff 2006), by 1999 there were 40 (Mahon 2005), and in

2009 there were 77 at the time of this writing (Pysslingen). Yet public provision has remained the norm in the rest of Sweden. While over 30 per cent of all children were in some form of private pre-school in in 2004, the percentage was as low as 4 per cent in other counties (Statistics Sweden 2005).66 In 1991 only 2.5 per cent of the total childcare workforce was employed in private childcare; by 1997, this percentage had risen to 9.2 (Daune-Richard and Mahon 2001). Local authorities must now provide grants to private childcare providers if they meet the standards set by the state (Swedish

Institute 2004a). The municipality retains the authority, however, to issue injunctions if

As mentioned earlier, 'private childcare' includes a variety of forms, not just for-profit centres. However, most data does not distinguish between the different types of private childcare, making it difficult to distinguish between children attending parental cooperatives and those attending for-profit childcare centres. However, we do know that in 2002, approximately 40 per cent of all private pre-schools were parental cooperatives (nearly 7 per cent of the total amount of pre-schools), while 30 per cent of all private pre-schools were for-profit centres (5 per cent of the total amount of pre-schools) (Swedish National Agency for Education 2003). 66 In 2004, 27,288 children attended some form of private pre-school centre, out of a total of 87,953 children attending pre-school in Stockholm County, or 31 per cent. However, in the entire country, there were only 60,938 children attending private pre-school, out of a total of 364,045 children in pre-school, or 16.7 per cent (Statistics Sweden 2005). Thus, the majority of private childcare is centered in Stockholm. the private childcare centre has unsatisfactory conditions, and to withdraw a permit if the standards are not met (Swedish National Agency for Education 2005a). The educational inspectorate of the Swedish National Agency for Education carries out visits to municipalities and pre-schools (including private pre-schools) on a regular basis in order to determine how well they are functioning in relation to the regulations set out in the

Education Act, school ordinances and the national curriculum (Swedish National Agency for Education 2005b).

The numbers continue to indicate that private, for-profit childcare has not really taken off in Sweden. There are many theories as to why, from citizens' existing satisfaction with the municipal childcare system to the fact that it is difficult to make a profit when following the state regulations in order to receive the same funding. There is also a suggestion that enough time has not passed to judge - that private, for-profit childcare may well continue to expand over time (Linder Interview 2005). Many of those

I interviewed believe that it is not easy to make a profit in the care sector, including childcare. Others believe that the way that childcare is organized, being close to where people live, and with a good public system already in place, private companies did not see it as profitable to set up centres all over the country (R. Andersson Interview 2005).

This type of childcare does not seem very popular within the Social Democratic Party, with then Prime Minister Goran Persson (2005) stating "market forces have no place in the educational system."

99 A potential consequence of the introduction of private, for-profit childcare, is segregation. However, many point out that this is not inherently a public versus private issue, but an already existing geographic segregation issue, where certain neighbourhoods and municipalities are wealthier than others. Because children are generally sent to the nearest childcare centre, the make-up of the neighbourhood or municipality makes a difference in terms of the make-up of the children attending each childcare centre, whether public or private. As some point out, it is often the most highly educated parents who choose to send their children to private pre-schools (Nordenstam Interview 2005,

Berge Interview 2005, Carlen Interview 2005, Bergqvist Interview 2005). This clearly goes against one of the original social democratic principles behind the introduction of childcare which was to have children of different backgrounds and classes mixing together, in order to create a more equal and just society, and to give all children the same opportunities. Yet, as PJ Anders Linder, Chief Political Editor at Svenska Dagbladet, states, "you never hear anybody mention that goal any longer" (Linder Interview 2005).

The goals of gender equality and educare seem deeply entrenched, yet the goal of children from different backgrounds attending pre-school together seems to have gotten lost over the decades. This reflects, in part, a shift in the relationship between women and the social democratic state, in terms of the priority given to the goal of gender equality over class equality, as discussed in Chapter 2.

67 The "educare concept" refers to the dual goals of Sweden's childcare system in terms of young children, which is to provide education and care. The term 'educare' illustrates the equal importance of both pedagogy and care in the childcare system. 100 Another example of the tensions between class equality and gender equality has been illustrated in recent attempts to introduce a care allowance in Sweden.68 The

Christian Democratic Party (Kristdemokraterna, or KD) was one of the four parties that formed the governing centre-right coalition in Sweden from 1991 to 1994. Although the party received only 7 per cent of the popular vote, it was an influential member of the governing coalition. One of the most important beliefs for the KD is that "The family is the most important social unit," and it promotes "concepts based on the Christian ethic"

(Christian Democratic Party). The party is in favour of more 'choice' for parents to decide how to raise their children, which is a principal argument in favour of care allowances (Bergqvist, Kuusipalo and Styrkarsdottir 1999). As a result, the KD was in support of a care allowance, which would make it possible for parents of young children to stay at home longer than the time allotted by the parental leave system, or to employ a nanny to take care of their child rather than to place their child in a childcare centre. The issue was a high priority for the party and even made its way into the election campaign in 1991 (Bergqvist 2007).

Once in power, the centre-right coalition was divided on the issue of a care allowance. Through several rounds of negotiations with its governing partners, particularly the Centre Party (Centerpartiet), which shared similar views on the issue, the

Christian Democrats were eventually successful in implementing a care allowance in July

When it emerged, the term 'care allowance' resembled the concept of a 'mother's wage,' as the purpose was to support caring work in the home (Bergqvist 2007). 101 1994 (Bergqvist, Kuusipalo and Styrkarsdottir 1999). However, when the Social

Democrats returned to power just a few months later they immediately abolished the allowance (Bergman 2004). The issues with such an allowance include encouraging women to stay at home to take care of their children, thus reinforcing stereotypical notions about gender and care, even though the allowance is framed in gender-neutral terms as though men and women will be equally enticed to take advantage of the leave.70

As well, the allowance allows parents to hire working class women to take care of their children as nannies, thus reinforcing gender stereotypes, and exacerbating class tensions among Swedish women.

The 1990s saw three things in Sweden that were new and unusual: a deep economic crisis, the dominance of neoliberalism in many economic circles, and the defeat of the Social Democratic Party at the national level for only the third time since 1932.

The centre-right coalition, which won the election in 1991, inherited an economic crisis while at the same time attempting to guide in a new era of neoliberalism in Sweden. As a result, in addition to the introduction of private, for-profit childcare, funding for childcare was cut during the early 1990s. Falling in line with global neoliberal trends, in 1993,

Moderate Prime Minister rolled national subsidies for childcare into a general

69 For example, the Liberal Party, which generally supported more marketization within the publicly- financed childcare system, only agreed to support the allowance if the other parties supported its idea for a 'daddy month' within the parental leave system (Bergqvist 2007). 70 Those in favour of the care allowance framed the debate as about "the parent who wants to stay at home" or "the freedom of choice for the parents" rather than acknowledging the gendered dimensions of the proposal (Bergqvist 2007: 254). 102 block grant to municipalities, while publicly stating his government's commitment to provide childcare spaces for all children of working parents (Daune-Richard and Mahon

2001). This change meant that municipalities were given greater freedom in how to organize social services, as they were now given a lump sum of money that was not assigned for any particular service. The official reasoning behind this change was that the old system of earmarked money for each social service was not "adaptable to local needs, nor did it allow for creative solutions in terms of municipal social service production" (Strandbrink and Pestoff 2006: 43).

When the Social Democrats returned to office in 1994 they did nothing to immediately improve this situation as their focus was on the economic crisis. However, once the economic situation improved, the SAP did increase the transfers to municipalities to restore childcare standards (Daune-Richard and Mahon 2001) through a program called the "Persson funds" (Mahon 2000). Yet, the SAP also continued funding childcare through block grants to municipalities, a system set up by the centre-right parties. Both the cuts to funding and the reversal of these cuts were state initiatives taken in an effort to further regulate the Swedish childcare system. In the early 1990s the centre-right coalition used spending cuts as an economic tool in the childcare system as a way to save money during an economic crisis. When the Social Democrats decided to try

103 to correct the damage that had been caused by these cuts, they, too, used spending as a

71 tool to reregulate the childcare system in an effort to specifically increase quality.

There have been concerns since the cuts in the 1990s over the quality of the childcare system. The concerns centre mainly on group size and the child-staff ratio.

From 1990 to 2003, the average pre-school group increased from 14 to 17 children, while staffing ratios worsened from 4.4 children per staff member in 1990 to 5.4 in 2003, which was mainly due to cuts in funding for staff and the parallel expansion of the childcare system. However, there have been attempts to correct this situation, as can be seen in the improved child-staff ratio from a high of 5.7 in 1998 to 5.2 in 2005 (Swedish National

Agency for Education 2006, Swedish Institute 2004a). There is evidence that this ratio is better in the public childcare sector than in the private, particularly in leisure-time centres, and particularly when it comes to workers with teaching qualifications (European

Foundation for the Improvement of Living and Working Conditions 2006). The government has instructed the Swedish National Agency for Education to develop quality indicators and advisory guidelines regarding quality in pre-school care; in addition, local authorities are to be given state grants earmarked for recruiting additional pre-school teachers and other staff, which total 1,000 million Swedish kronor (SEK) in 2005, and 71 In terms of quality improvements, the Swedish National Agency for Education (2007) states that the average staff density has improved marginally since the end of the 1990s, and that the variation in staff density between municipalities has also decreased during this time. In addition, the number of children per group in pre-school has decreased marginally since the early 2000s, but this remains a difficult thing to measure as some children, particularly of unemployed parents or parents on parental leave, often attend just for the morning, meaning that group sizes can vary throughout the day. Thus, even though in many cases pre-school has been expanded considerably since 2000, the average group sizes and staff density have not suffered as a consequence. 104 SEK 2,000 million in 2006 and 2007 (Swedish Institute 2004a). This is in addition to grants in 2003, which saw the hiring of the equivalent of 1,490 full-time staff (Ministry of Education, Research and Culture 2004). The goal is to reduce the size of pre-school groups to an average of 15 children with three full-time staff members (Swedish Institute

2004a). These are further examples of the state's role in reregulating the childcare system in order to improve quality and maintain national standards.

Among the chief concerns faced by childcare workers, are issues of persistent low pay, as well as the public/private division that now affects their workplaces. The Swedish

Municipal Workers' Union (Kommunal) represents all childcare workers as well as most other blue-collar municipal workers. Due to the introduction of private, for-profit childcare, childcare workers are no longer solely employed by the municipalities, and overall the union is in favour of having choices when it comes to employers. In fact, Rolf

Andersson, Head Researcher at Kommunal stated that "[Public versus private] is not a question discussed only as a principle high above the particularities of every sector... So we don't have one solution for [each service] at all; they should be fitted to what's needed" (R. Andersson Interview 2005). The number of private for-profit childcare centres varies considerably from one municipality to another (Statistics Sweden 2005), and is often tied to the party in power in a given municipality. Those municipalities that

105 have traditionally elected the centre-right parties tend to have more privately-run childcare centres than Social Democratic municipalities.

Wages are a key concern of childcare workers. One of the main issues around which Kommunal organizes relates to the fact that because women dominate the sector, the wages tend to be low (R. Andersson Interview 2005). This issue led to a five-week strike in the spring of 2003 (EPSU). Among Kommunal's key demands at the time were a

5.5 per cent pay increase for 2003 and a guaranteed minimum wage of SEK

14,000/month for all of its members (European Foundation for the Improvement of

Living and Working Conditions 2004). In the end, Kommunal agreed to a two-year deal with a 3.95 per cent pay increase in 2003 and 2.45 per cent the following year (EPSU). A larger percentage of this increase was allocated to the lowest paid groups in Kommunal, including childcare workers who were to receive a 5 per cent increase in 2004.

Kommunal's focus on wages is due largely to the fact that it has the lowest paid membership among all LO affiliates - in 2003 its workers earned an average of SEK

16,3000/month versus SEK 22,5000/month for building workers and SEK 19,1000/month for metalworkers (EPSU). The question of pay is an ongoing issue in the area of care work.

7~ For example, Taby, a wealthy suburb of Stockholm, whose current mayor is Filippa Reinfeldt, wife of Moderate Party Prime Minister , boasts on its website "Taby is a well-managed municipality. An increasing number of our municipal activities are being exposed to free-market competition. This improves quality of services and increases individual freedom of choice. Today, half of the day nurseries in the community are run by private firms, and so are more than half of the old age care service facilities in Taby" (Taby). 106 3.3 Changes to Childcare in the Past Decade

The 1990s saw a rethinking of the division of responsibility between the state and the local authorities. The 1992 Swedish Local Government Act regulates the division of responsibilities between the state and the municipalities (Government Offices of Sweden

2004). This Act was the realization of a trend that began in the mid 1980s that saw local authorities receiving greater responsibility and self-determination. Under this new division of responsibilities, the state sets out the goals and guidelines for the activities of the municipalities and sets the financial framework. The municipalities then decide how they will go about fulfilling these goals and allocating these funds. While direct local income taxes are the major source of revenue for municipalities, they also receive state grants, mostly in the form of block grants (Martin Korpi 2000). Hence, both the state and the municipality retain power in the regulation and provision of social services such as childcare. This form of offloading from the national to the municipal level is one way states around the world have dealt with current neoliberal pressures.

Until 2002 each municipality decided its own parental fees and how the fee system was to be constructed. During the 1970s and 1980s, the state and the municipalities both covered approximately 45 per cent of the fees, leaving the remaining

10 per cent to be covered by parental fees. But, during the 1990s, the fees became increasingly expensive - linked to family income and the number of hours a child attended the childcare centre. This is largely due to a change in the funding system owing

107 to a redefinition of the responsibilities of the state and the municipality. As a result, by

1998, 17 per cent of the costs of childcare were being covered by parental fees (Martin

Korpi 2000, Swedish Institute 2004a). A serious negative consequence of this increase in parental fees was that because the fees were linked to family income, they provided disincentives for parents to work more. One could view this as a form of means-testing, which is counter to social democratic universalism. Due to the negative consequences for low-paid workers in particular, LO became active in campaigning for a maximum childcare fee (Carlen Interview 2005, Wennemo Interview 2005).

In the 1998 election campaign, the Social Democrats placed the issue of childcare on the political agenda. In 2000 the government introduced a parliamentary bill on matters relating to pre-school. In November that year, the Riksdag adopted the bill, which would be implemented in three parts, including the introduction of a system of maximum childcare fees in January 2002.74 This system of maximum fees implemented by the state resulted in a ceiling being set for the amount of parental fees in the childcare system

(Swedish Institute 2004a). According to the Swedish National Agency for Education

(2003, 2007) this "regulation of childcare fees" immediately led to a decrease in parental fees from 18 per cent to 11 per cent of the gross costs of childcare in 2002, and fee ceilings have not caused deterioration in standards. The maximum fee meant that

73 During the 1998 election campaign, the SAP Minister of Finance, Bosse Ringholm, stated "This is a reform for social justice and security" (quoted in Arenander 2001). 74 The other parts were the introduction of pre-school for children of the unemployed and for children of parents on parental leave with another child in 2001-2002, and the introduction of a free pre-school for 4 to 5-year-olds on January 1, 2003. 108 municipalities could not charge more than 1 to 3 per cent of a family's income depending on the number of children; prior to the reform, some households paid almost SEK

6,000/monfh, and one year later no household was paying more than SEK 2,280/month

(Swedish National Agency for Education 2007). Thus, the results were immediate for parents in the amount of fees they paid for childcare.

Local authorities who introduced a fee ceiling received compensation from the state for loss of revenue, as well as grants specifically targeted for improvements in municipal childcare services (Swedish Institute 2004a). As a result, all of Sweden's 290 municipalities adopted the maximum fee system (Nyberg 2004). This is another example of state involvement in reregulating childcare, as it was the SAP that responded to this issue by introducing a system of maximum fees. The state then implemented the maximum fee system through grants to the municipalities to compensate for the loss of revenue. In this instance the SAP sought to decrease the proportion of parental fees used in the overall cost of the childcare system, and took the initiative to do so, as cost and accessibility are significant issues for a universal social democratic welfare state. Thus, the state further regulated the childcare system and its fee structure. The state has also become further involved in equalizing services across municipalities. Since 2005 the state has implemented a new system for the equalization of municipal finances aimed at allowing municipalities to deliver equal services to their residents, including in the area of childcare (Ministry of Education and Research 2008). This system means that those municipalities with high taxable income must pay a fee to the state and those with lower taxable income receive grants from the state, in order to equalize municipal finances. Of course, there are also specific targeted grants, such as those mentioned above.

The categories of children covered by Sweden's childcare system have also expanded dramatically in the last decade. In accordance with the 2000 bill on matters relating to pre-school, the government expanded childcare to include children of parents who are unemployed in July 2001, and to include children of parents who are on parental leave looking after a sibling in January 2002. In addition, in January 2003 all children aged 4-5 became entitled to 525 hours of free attendance in childcare per year. This expansion is in accordance with the Education Act, which states that municipalities must provide childcare for children aged one to twelve for parents to be able to work or study, or if the child is in need of this activity. These changes have contributed to the achievement of a more universal childcare system. In 2007 over 95 per cent of children aged 1-5 attended pre-school, while 74 per cent of children aged 6-9 attended leisure-time centres (Ministry of Education and Research 2009).75 As Figure 3.2 demonstrates, the percentage of children 1 to 9 years of age who are registered in pre-schools, leisure-time centres, and municipal day care has increased dramatically since the early 1970s. This illustrates how a public childcare system marked by low fees and a high level of

Of those children not attending pre-school, the vast majority are with parents who are on parental leave, as Christina Bergqvist and Anita Nyberg (2002: 302) assert, "The norm today is that children are in publicly financed child care except when parents are on parental leave." According to Nyberg (2004), only a small fraction of children are with a stay-at-home parent - approximately 2 per cent. 110 Figure 3.2: Children in municipal day care, 1972-2003 Number of children in 1000s in the population and proportion (%) in municipal day care Age 1972 1980 1990 2003 Number % Number % Number % Number % 1-6 689 12 604 36 641 57 558 83 7-9 360 6 338 22 289 50 317 74 10-12 316 1 332 3 294 7 373 10 *Source: Child care, 1972-90 SCB, 2003, National Agency for Education in Statistics Sweden 2004. legitimacy, quality and accessibility is now an integral feature of Sweden's welfare society (Swedish Institute 2004a). As Lennart Gustavsson, Left Party Member of

Parliament, stated, "For a rather short period, the Swedish childcare system... has become something that is very natural" (Gustavsson Interview 2005).

In addition, the childcare system took on an increasingly educational focus during the 1990s.76 In 1996 responsibility for childcare was moved from the Ministry of Health and Social Affairs to the Ministry of Education and Science (Swedish National Agency for Education 2004). In 1998, the Swedish National Agency for Education took over responsibility for the childcare system and at the same time the legislation was transferred from the Social Services Act to the Education Act. This new focus came with

77 a new curriculum and new regulations. This is part of Sweden's "educare concept,"

This move to a more educational focus was the culmination of a number of factors, from increased decentralization to the municipalities, an increased emphasis on pedagogy and 'lifelong learning,' to more economic and efficiency arguments, as well as decades of debate over whether or not childcare should be integrated into the school system (Cohen, Moss, Petrie and Wallace 2004). See Cohen, Moss, Petrie and Wallace (2004) for more information on these underlying factors, as well as the steps leading up to the transfer of authority to the Ministry of Education and Science. For more information, see Swedish National Agency for Education. "Curriculum for the pre-school Lpfo 98." Ill which unites pedagogy and care (Nordenstam Interview 2005), including consideration towards others, solidarity, gender equality and tolerance (Swedish Institute 2004a). Also, in 1998 a new school form was introduced, a pre-school class for 6-year-olds, which is technically voluntary but virtually all 6-year-olds who have not yet started compulsory school attend. This new focus on education has led the OECD (2001) to support the

Swedish pre-school system as a model for other countries. Clearly, the state's decision to reframe childcare from a social issue to an educational issue demonstrates yet another example of reregulation, as the state has not given up any power or decision-making authority, but has simply shifted it from one ministry to another.

Esping-Andersen (2002b) has written about family policy as a social investment, but his focus is rather more child-centred than equality-centred.79 Sweden's family policy, and particularly its childcare system, is a crucial component of the social democratic welfare state, allowing both women and men to combine paid work and family. This has become even more significant in recent years as there has been growing emphasis on Sweden's demographic problems, with an increasingly ageing population and the associated costs in health care, elder care, and pensions. The Swedish welfare

Ulla Nordenstam, Director of Education at the Swedish National Agency for Education, points out the risk of transferring pre-schools from the social sector to the education sector, as treating pre-schools like regular schools could lead to pre-school becoming compulsory, and it could threaten the care aspect of the educare concept (Nordenstam Interview 2005). However, so far the system appears to be working, with a continued emphasis on the role of play and the child's well-being, not solely on education (Martin Korpi 2000). 79 While Sweden is interested in the concept of 'lifelong learning' (Bergqvist and Nyberg 2002), there is also a strong gender equality component to programs such as childcare, as well as an attempt to deal with Sweden's current demographic issues. 112 state encourages its citizens to have children so that there will be enough workers in the future to pay the taxes needed to pay for such programs. At the same time the state needs to maximize the number of people currently in the labour force, and childcare is therefore an integral part of the strategy to encourage current and future labour force participation, as it allows current workers to have children while remaining in the labour force.

A recent interesting development in the area of childcare centers around the issue of gender equality within pre-schools. In 2003, the Swedish government appointed a

Delegation for Gender Equality in Pre-School which had four main goals: 1) to determine how to attract more men to work in the childcare sector, 2) to distribute grants to different projects with the aim of increasing gender equality in pre-schools, 3) to highlight and reward work in the field of gender equality in pre-schools, 4) to look at and learn from examples of gender equality work in pre-schools in other countries (Sjostrand Interview

2005). The Delegation began its work in December 2003 and concluded in the summer of

2006.

The Delegation's first goal - to attract more men to work in the childcare sector - was a daunting task. Many believe that if such work were better paid this would solve the problem. However, the Delegation did not have the mandate to recommend such costly solutions. It was thus forced to find more creative ways to attract men to the sector.

Indeed, the Delegation did not believe that wages were a crucial factor in explaining why there are so few men in the childcare sector. As Mattias Sjostrand, a member of the

113 Delegation from the Swedish National Agency for Education, pointed out, there are other low-paying sectors of the economy that are male-dominated, so it is not a matter of wages, but rather of the type of work and societal expectations about who should be doing this work (Sjostrand Interview 2005). The Delegation's final report recommended that Swedish Employment Services (Ldnsarbetsnamnderna) offer summer courses in childcare and pedagogy from the gender perspective of boys to attract more men into pre­ school positions, for a cost of SEK 3 million. The Delegation also recommended that

Swedish Employment Services be more gender aware in its job placements and study, as well as with career and study counseling, so that more men can be encouraged to enter the pre-school sector. This program is estimated to cost SEK 1 million and would also include short educational programs in gender equality for the pre-schools where these men would be placed (Delegation for Gender Equality in Pre-School 2006).

An interesting conclusion from the Delegation is that although when surveyed about how they treat children in their care, pre-school teachers believe they are employing a gender equality focus, when these same teachers are observed, they are indeed treating children differently based on gender. Thus, the Delegation began giving grants to teachers and pre-schools to videotape themselves and to reflect upon what they saw in terms of the interaction between teachers and children. This work was thus reflexive and aimed to change entrenched social behaviours and patterns. The aim was to influence children from an early age to treat each other equally and to have a gender

114 equality focus. This influences the very organization of the pre-school, down to the toys and games the children play with. The Delegation rewarded teachers and pre-schools who were successful in working within a gender equality framework (Sjostrand Interview

2005), and shared information among pre-schools so that others may learn from their example. Many of the recommendations in the Delegation's final report revolved around the training of gender pedagogues, both in terms of future teachers as well as training for existing teachers (Delegation for Gender Equality in Pre-School 2006).80

The final goal of the Delegation - to try to find examples of how other countries were dealing with the issue of gender equality in pre-schools - was a difficult one.

Because Sweden has been at the forefront of gender equality policy and of childcare development for a number of decades, there are few if any examples for it to follow.

Sjostrand indicated that the Delegation had looked for examples elsewhere in Europe but had been unsuccessful (Sjostrand Interview 2005). On the other hand, the work accomplished by the Delegation will surely act as an example to other countries looking into similar issues within their childcare systems.

Among its early recommendations, the Delegation recommended that teacher examination requirements should be changed to include a "clear reference to student teachers' knowledge about the gender order" (Edstrom 2005: 117). In addition, the

Delegation recommended that it be obligatory for the municipalities to allot at least 15

In fact, the Delegation sets as a goal that by the year 2012, at least one in every twenty-five employees in municipal pre-schools should be a gender pedagogue (Delegation for Gender Equality in Pre-School 2006). 115 per cent of their pre-school quality improvement state subsidies to gender equality measures. The Social Democratic government, at the time, responded by allocating money for gender training for at least one practitioner in every municipality. Other recommendations of interest in the final report include: 1) in-depth courses for existing pre-school directors regarding the meaning of gender equality as a target, 2) an information campaign to be carried out by the Swedish National Agency for School

Improvement (Myndigheten for skolutveckling) directed at pre-school staff as well as parents regarding gender equality as a target, 3) funds for regional development centres to offer permanent access to competence-development in gender and equality questions for pre-school directors and pedagogues, 4) and the importance of gender pedagogic research. In addition, the Delegation's report asserted that gender equality in pre-schools is a step towards changing traditional gender power structures, thus decreasing male violence (Delegation for Gender Equality in Pre-School 2006).

An interesting point regarding the Delegation's work is that it began from the reality of pre-schools today, looking at existing laws and conditions and how they are working and being implemented, rather than focusing on proposing new laws. In addition, the final report states that no proposals have been made that affect the balance of power between the municipalities and the state; however, it is contradictory in this area as it also states that its proposals serve to strengthen municipal autonomy by clarifying the specific responsibilities of the municipalities and the state. The report clarifies that the

116 municipalities are responsible for the organization and activity of pre-schools, while it is the state's responsibility to follow up on the quality of the pre-schools (Delegation for

Gender Equality in Pre-School 2006). The current centre-right government has responded positively to the Delegation's report, and is in the process of deciding which recommendations to incorporate into a new bill on pre-school (Sjostrand 2007). It also appears as though the recommendation to create a similar delegation for gender equality in the school system is underway, as the government has launched the Delegation for

Gender Equality in Schools (Ministry of Integration and Gender Equality 2009).

3.4 Changes to Parental Leave Since 1990

It is thus clear how the state is very much involved in the reregulation of the childcare system in Sweden. The same is true of the parental leave system, an integral part of family policy in Sweden. In 1995 the first 'fathers' month' was introduced, making thirty days of parental leave non-transferable (Nyberg 2004). In 2002 this reserved, or non-transferable, month was extended to two months per parent (Berg 2005).

These are clear examples of how the state has been involved in reregulating parental leave in order to ensure a more equal division of the leave. This is indeed a goal of the social democratic welfare state, and has been since the early 1970s, but it is not translating into much voluntary action by fathers. As a result, the state has felt it necessary to get involved on a number of occasions to try to change the behaviour of both mothers and fathers when it comes to the division of parental leave.

117 By 2003-2004 women were still using 83 per cent of parental leave, while men were using an all-time high of 17 per cent (Drew 2005). However, 43 per cent of those claiming some parental leave were fathers (Statistics Sweden 2004). As Figures 3.3 and

3.4 illustrate, while this is nowhere near equal, there has been movement in a positive direction since the introduction of both reserved months. Studies indicate that the higher the education level of the both the mother and father, the more parental leave the father will take. In addition, the level of income of the father affects how many days he will take, with higher income-earners taking a larger proportion of days (Nyberg 2004). While the reasons for this are not completely clear, this could perhaps be explained by increased job security with higher income, or by women in working class couples wishing to take the majority of the leave rather than return to physically demanding jobs in the public sector. Barbara Hobson (2004: 80) argues "One cannot ignore the earnings differential

Figure 3.3: Insured persons claiming parental allowance, 1985-2003 Numbers in 1000s and sex distribution (%) Year Allowance Temporary allowance Number Sex distri- Number Sex distri- bution bution W M W M 1985 357 77 23 620 60 40 1990 399 74 26 762 59 41 1995 472 72 28 705 61 39 1998 425 68 32 699 61 39 2000 442 62 38 655 60 40 2002 506 58 42 692 59 41 2003 535 57 43 693 59 41

*Source: Parental Insurance, National Social Insurance Board in Statistics Sweden 2004.

118 Figure 3.4: Days for which parental allowance paid, 1974-2003 Number of days in 1000s and proportion (%) drawn by women and men Year Allowance Temporary allowance Number Drawn Number Drawn of days by (%) of days by (%) W M W M 1974 19017 100 0 689 60 40 1980 27 020 95 5 3 042 63 37 1985 33 193 94 6 4 156 67 33 1990 48 292 93 7 5 731 66 34 1995 47026 90 10 4 890 68 32 1996 42 177 89 11 4 516 69 31 1998 36 327 90 10 4 468 68 32 2000 35 661 88 12 4 403 66 34 2002 38 128 84 16 4 776 64 36 2003 40 146 83 17 4 747 64 36

*Source: Parental Insurance, National Social Insurance Board in Statistics Sweden 2004. between men and women and the lower earnings potential of women in accounting for the imbalance in parental leave."

In 1995, at the same time as the first father's month was introduced,81 the SAP lowered the income replacement rate for parental leave from 90 to 80 per cent; the rate was further reduced to 75 per cent in 1996, and then raised back to 80 per cent in 1998

(Nyberg 2004), where it has remained since. This demonstrates the state's ability to intervene in parental leave, using it as an economic tool during times of economic crisis or periods of slow or negative growth. Currently the parental leave system includes 13 months leave at an 80 per cent replacement rate, with an additional 90 days that can be taken at a flat rate of SEK 60/day (Drew 2005). In addition, those parents who do not qualify for parental leave, as it is tied to employment, are entitled to 13 months at a flat

While certain groups within society had been calling for a 'father's month' since the 1970s, such as many women within the Social Democratic Party, it was Liberal Minister of Social Affairs and Gender Equality, Bengt Westerberg, who was the driving force behind the introduction of the first father's month, and the measure was adopted by parliament while the centre-right parties were in power in 1994 (Bergqvist 2008). 119 rate of SEK 180/day and an additional 90 days at SEK 60/day. The difference in benefits depending on one's employment status is a built-in feature of the system, which encourages both men and women to establish themselves in the labour market before having children (Sundstrom and Duvander 2002). This is a crucial part of most, if not all,

Swedish welfare policies - encouraging residents to attach themselves to the labour market from an early age and to remain in the labour market until retirement. This, of course, is tied to the fact that the Swedish social democratic welfare state is based upon a model of full employment and thus many of its programs provide incentives to work.

The total of 16 months currently available to parents has two months reserved for mothers and two months reserved for fathers, leaving twelve months to be divided as the parents wish (Swedish Institute 2004b). The parental leave system in Sweden is very flexible, allowing parents to use the leave until the child's eighth birthday in a variety of ways, from full-time leave to part-time work and part-time leave. Due to the generosity and flexibility of the parental leave system, it is very popular, with 97 per cent of parents using at least some of the income-related days, and 90 per cent using at least some of the flat-rate days; in addition, 60 per cent of families use their full entitlement, and most mothers use at least 6 months of leave (Nyberg 2004, Bygren and Duvander 2005).

This leads us to the current debate in Sweden over parental leave. In April 2004 the government appointed a commission to examine the parental leave and benefits systems, to determine whether the system works in the best way for children and

120 contributes to greater equality between women and men (Berg 2005). This commission was headed by Karl-Petter Thorwaldsson, a senior official at the Swedish Metalworkers'

Union (Svenska Metallarbetareforbundet, or Metall) and was made up of many experts in various fields from economics to psychiatry (Thoursie Interview 2005). On September

15, 2005 the commission presented its proposals which included a recommendation to increase paid parental leave to 15 months which would be divided into 5 obligatory months for the mother, 5 obligatory months for the father, and 5 months for the parents to split as they wished. This model is based upon a popular Icelandic model, which provides mothers and fathers each with 3 months leave plus an additional 3 months that they may share (Icelandic Ministry of Social Affairs 2000). In addition, the commission recommended that all mothers have the right to 30 days leave before giving birth, and that parents could take up to 30 days leave together after the birth (Berg 2005). These recommendations are very controversial, supported by some, but many argue that they lack support in the general population.

One of the major issues behind the current debate over parental leave is the fact that the parental leave system has actually had some unintended negative side effects for women's labour force participation. While parental leave has been successful in ensuring women's labour force attachment before and after having a child, there have been negative consequences as well. Because women take the majority of parental leave employers seeking to hire new employees or to promote employees see women as more

121 of a risk. Given the commitment to both gender equality and full employment, this poses an obvious challenge to the Swedish welfare state. Anna Thoursie, a Senior Economist at

LO and member of the Thorwaldsson Commission, fears that the commission's proposals do not go far enough as they do not aim at strengthening women's position in the labour market (Berg 2005). Thoursie suggests that if both mothers and fathers had a fixed number of months under the parental leave system, then employers would be forced to adjust their expectations (Thoursie Interview 2005, Berg 2005).

The OECD (2005a, 2005b) has also concluded that, due to the generosity of the

Swedish parental leave scheme, women's labour market prospects are being harmed - that the parental leave system is having detrimental longer-term career prospects for women. In addition, the Ministry of Finance in Sweden found that employers exclude women from occupations where absence is costly, resulting in a gender-segregated labour market (Nyberg 2004). Many of the trade unions and left-wing political organizations of youth and women believe that parental leave should be divided equally between the parents in order to remedy this situation (Berg 2005), as does the ombudsman for gender equality, Anne-Marie Bergstrom (The Local 2008).

LO, the Left Party (Vansterpartiet), the Green Party (Miljopartiet de Grona), as well as the Social Democratic Women's Federation and the Swedish Social Democratic

Youth League (Socialdemokraternas Ungdomsforbund, or SSU) were all in favour of the commission's proposals. The Social Democratic Party, on the whole, however, was more

122 reluctant as it feared the Swedish people were not behind such a reform (Berg 2005).

Previous studies indicate that the party is correct. A study by the Swedish National Social

Insurance Board indicated that most parents were satisfied with the present parental leave system ("Forced Fatherhood" 2004). The Confederation of Swedish Enterprise (Svenskt

Naringsliv), as well as the Moderate Party and the Liberal Party (Folkpartiet), all share the belief that parental leave should allow families to choose how they wish to share it

(Berg 2005). However, this has been an ongoing issue, with popular opinion constantly lagging behind more progressive politicians. Before the first father's month was introduced, surveys showed a majority were not in favour (Ferrarini Interview 2005).

Similar results were found before the second father's month was introduced, although a majority was now happy with the one month that had been introduced. Politicians have thus had to walk a fine line when it comes to how far to push their citizens in the direction of gender equality, although the citizens do tend to like such changes after they are introduced.

At the Social Democratic Party congress in late 2005, then Prime Minister

Persson made it clear that outright "individualization was not an option" (O'Mahony

2008), but the party stated that, "we are prepared to develop other proposals based on the parental insurance report in preparation so that a major part of the parental insurance will be tied to either parent. The aim is clear. We Social Democrats want equality in the claim for parental insurance" (Social Democratic Party 2005). While the Social Democrats did

123 not follow through with any action on this issue at the time, the issue has remained on its agenda, with the party (now in opposition) releasing a proposal in 2008 to increase individual quotas in the short-term, and to individualize the system in the longer-term

(Vinthagen Simpson 2008).

The issue also remains on the agenda for the centre-right parties. As part of its

2008 budget bill, the current centre-right government proposed an equality bonus for couples that share parental leave equally. This equality bonus is intended to "increase the prospects of a gender-equal use of parental insurance and of women returning to work during a child's first year of life" (Ministry of Finance 2007b). The equality bonus will take the form of a SEK 3,000/month tax reduction that is to be paid to the lower income- earner when he or she returns to work (The Local 2007). This new bonus entered into effect on July 1, 2008. The centre-right parties view a gender equality bonus as an acceptable alternative to individualization, as 'freedom of choice' informs their

CO ideologies.

This political will in the direction of change by both the left-wing parties and the centre-right parties is a clear example of reregulation, where the state is contemplating implementing a policy which may not be popular with many voters in order to further the goal of gender equality. And, as stated above, this is not the first time the state has done so. In fact, on the issue of parental leave, the state has often had to make unpopular 82 Current Minister for Gender Equality, , has stated that "Some say we should legislate, others say introduce quotas... but as a liberal I want parents to be free to choose how they want to share" (quoted in The Local 2008). 124 decisions in the name of gender equality, decisions that are a part of a larger project of reregulation. The state is not disappearing from family policy, but rather inserting itself directly into the center. If it were not for state-led initiatives, Sweden would have a very different parental leave policy than it has today. This is a clear illustration of social policy emanating from the state or, in other words, reregulation.

Conclusions

The examples of childcare and parental leave illustrate two important points in the

Swedish case. First, they are, for the most part, areas of the welfare state which have not been reduced or reformed in a negative way, and in fact have been expanded since the

1990s. Second, they are clear examples of reregulation. The Swedish state went through a very serious economic crisis at the beginning of the 1990s while simultaneously witnessing the global dominance of neoliberalism. However, it has retained its role as regulator, financier, decision-maker and, in most instances, as service provider. Even when these roles have been challenged, such as with the introduction of private, for-profit childcare in the 1990s, the state retained its regulatory role as it still financed private childcare and forced all childcare centres to follow the same state-set regulations in order to qualify for funding.

Another instance of reregulation was when the childcare system was further decentralized to the municipalities in the 1990s; the state still retained its regulatory role in imposing maximum fees, supplying targeted grants to improve the quality of the

125 childcare system, and in deciding who should have access to childcare and how long they should have to wait for a space. If anything the state became more involved in the regulation of childcare since the 1990s, and was indeed responsible for expanding the number of childcare spaces, and for changing the focus of childcare to include a very significant educational component. However, one area where the state has not lived up to its promises or responsibilities is in the area of pay for childcare workers. This is an ongoing struggle, marked by a strike in 2003, and the issue remains at the top of the agenda for Kommunal, the union representing childcare workers. This is, indeed, the main area in need of improvement in the childcare sector, which otherwise has set, and reached, some impressive goals regarding coverage over the past decade.

The state has also remained firmly involved in its role as regulator of the parental leave system. From expansions to the length of leave to the introduction of reserved, non­ transferable, months for each parent, the state has been pursuing a policy to encourage greater gender equality both in the workplace and in the home. After being a frontrunner in introducing parental leave legislation over thirty years ago, Sweden is still wrestling with the issue of how to get parents to share the leave more equally. By appointing a government commission and making public statements about the need to resolve this issue, it has become clear that this is not something that will simply fade away or fall to the bottom of the priority list. The fact that critics of the commission's proposals argue that the state is interfering too much in people's personal lives and decisions is another

126 clear indication of the state's project of reregulation. The state has not given up its power or stepped back to allow private interests to take over.

127 Chapter 4: The Swedish Pension System, 1959-1998: The Rise and Fall of the 'Jewel in the Crown' of the Social Democratic Party

4.1 Introduction

From 1959 until the 1990s Sweden had one of the most generous pension systems in the world. The pension system, based on a universal flat-rate entitlement (folkpension, or people's pension), as well as a national supplementary pension based on one's pre­ retirement income (ATP), provided most pensioners with between 60 and 75 per cent of their pre-retirement income. While the ATP system was very controversial in the planning stages, and very divisive among the political parties, once implemented it quickly became popular among blue- and white-collar workers. In fact, the ATP system became known as the 'jewel in the crown' of the Swedish Social Democratic Party. It was a symbol of a hard-fought political and ideological battle, and the unity it created among blue- and white-collar workers. Among the labour movement in Sweden it is, in part, responsible for the high levels of support for the entire Swedish welfare state, not just the pension system, in the post-war era. The ATP system achieved income security for all Swedish workers and, as such, was important both materially and symbolically.

However, during the 1980s and 1990s politicians, bureaucrats and economists in

Sweden began to paint the ATP system as unsustainable in the future and in need of reform. This chapter will analyze the development of the ATP system in the post-war

See Urban Lundberg's 2003 PhD dissertation, entitled, Jewel in the crown: Swedish social democracy and the politics of pension reform. period, the reasons for the pension reform in the 1990s, as well as the reform process itself. Chapter 5 will provide an analysis of the new pension system and what it means for pensioners in Sweden, particularly women. In the end, I argue that the pension reform has negative consequences for social democracy in Sweden, in that the new pension system is more individualized, with far more uncertain outcomes, as well as providing an expanded role for the market, challenging the social democratic principles of de-commodification, solidarity, and universal entitlements. I also argue that the pension reform has negative consequences for certain groups of women workers in Sweden, as those who do not work a typical male career pattern, such as part-time workers, the majority of whom are women, will be punished within the new system. The data to confirm this hypothesis is not yet available as these gendered effects can only be measured in the long-term, however there is evidence from primary and secondary research that support this hypothesis, as will be laid out below.

The changes that have taken place demonstrate a reregulation of the pension system, but in a more negative sense than the reregulation of family policy. Within this process of reregulation, there has been both an increase and a decrease in state responsibility. The state is still involved in its roles as regulator, decision-maker, financier and service-provider, but often in new and very different ways. Within the new pension system there is also an expanded role for the market and for private pension options. While the implications of the new pension system are still somewhat open to

129 debate, the traditional male career pattern is clearly taken as the standard, and those who do not fit into this pattern will be losers in the new system. This could prove to be a challenge to gender equality in Sweden, particularly amongst pensioners.

It is important to note the global context in which the Swedish pension reform occurred. Since the early 1990s, pension reform has been an important issue for many advanced industrialized countries. Goran Therborn (2003: 133) argues that "Second only to war, pensions have become the most divisive - and, perhaps, the most decisive - issue of contemporary politics." The issues of financial sustainability coupled with growing demographic pressures inspired this most recent wave of pension reforms, which include increases in retirement age, changes in the calculation of benefits (OECD 2007), as well as an overhaul of some pension systems. While the scope and extent of the reforms varies, the result has been a reduced pension promise in sixteen OECD countries.84

Consequently, workers today have to shoulder more of the responsibility when it comes to preparing for their retirement.

At the same time, these reforms reinforce the link between pensions and global capitalism. Unlike childcare and parental leave, which are domestically oriented, pensions and pension funds have become important to the global economy (Therborn

2003). Given the massive funds involved, privatizing pensions has been on the agenda of

84 A pension promise refers to the cost of a country's pension system based on the promised pension payment to each individual upon retirement from all components of the system. The pension promise was cut by an average of 22 per cent overall, and 25 per cent for women in particular, in these sixteen OECD countries which undertook pension reforms (OECD 2007). 130 international institutions such as the World Bank (1994) for some time. In Sweden, the public pension funds (AP funds), built up as part of the ATP pension system adopted in

1959, accounted for 35 per cent of the total supply of credit in the country at their peak in the 1970s (Pontusson 1992). In the late 1960s, the housing sector was the dominant borrower of pension-fund capital, but by the early 1970s business replaced housing as the dominant borrower. In the beginning there were three separate AP funds, one to invest excess ATP contributions of public employers, one to invest the contributions of larger private employers, and one to invest the contributions of the self-employed and smaller private employers. And while the creation of three funds, instead of one, was to allay business fears, the three funds came to function as a single unit, with one executive director and a single administrative staff. A Fourth AP Fund was established in 1973 to allow ATP savings to be invested in the stock market, and by 1989 this fund alone held 3 per cent of the corporate shares registered on the stock exchange.85 The privatization of a portion of the Swedish pension system in the late 1990s is evidence of the private sector's desire to gain access to these savings directly.

Another 3 per cent was held by the five wage-earner funds established in 1983, modeled on the AP funds, particularly the Fourth AP Fund. Wage-earner funds were an idea put forward by Rudolf Meidner and LO in 1976 as part of a larger reform initiative launched by the Swedish labour movement from 1968- 76, seeking industrial democracy. Wage-earner funds were based on the idea of collective shareownership through collective profit-sharing and were a way for workers to have a say in corporate investment and in public policy-making. Meidner's plan would have seen a gradual transfer of ownership from private individuals and institutions to the collective wage-earner funds, which would have increased labour's control over capital. Due to massive opposition from the centre-right parties and from organized business in Sweden, the wage-earner funds were not introduced until 1983, and even then they had been watered down substantially from Meidner's original plan, and were dismantled in 1992. For more details on Meidner's original plan and the proposal implemented by the Social Democratic government in 1983, see Pontusson (1992). 131 Robin Blackburn (2005) connects the commodification of pensions in several

European nations to the deregulation of the global financial services industry and to increasingly laissez-faire legislation at the level of the European Union. Blackburn also reveals the system of 'grey capitalism' that exists where pension fund managers prioritize the interests of corporate boards over pension policyholders, which has led to the erosion of pension fund assets both in the Anglo-American countries and in Europe. However, it appears as though the Anglo-American model of commercial welfare lends itself to this type of situation, whereas the European model has traditionally had more social protections and better-designed corporate schemes. But Blackburn (2005: 96) is concerned about the erosion of these protections, in light of the increasing privatization of pension schemes as well as the ageing European population, and argues that "Many - the majority - will suffer a drastic drop in living standards unless something is done."

This is where the link between childcare, parental leave and pensions emerges, as

Blackburn points out that Europe's ageing population is not only linked to increased life expectancy, but also to low fertility, which can be countered with good quality, accessible, and affordable childcare as well as generous parental leave schemes.

Childcare, parental leave and pensions are linked in terms of employment, particularly women's employment, and parents' ability to balance work and family life. The more people that are in the labour force, the easier it is to meet pension commitments to retirees; in addition, if working women are able to better balance work and family life,

132 they are apt to have more children, countering the current trend of Europe's increasingly ageing population, which, again, ensures that there are enough workers to finance pension commitments to retirees.

Thus, Sweden was not the only country facing pressures for pension reform but, unexpectedly for many, it went the furthest in overhauling its pension system in the

1990s.86 The World Bank and the European Commission have held up the new pension system as a model for other countries, with Poland and Latvia following in its footsteps.

As we shall see in the next chapter, the Swedish pension reform included a private component and the introduction of great uncertainty into the system as pension benefits are now linked to economic growth. And while there may have been a need for some changes to the old pension system in Sweden in the wake of demographic trends the pension reform is fraught with problems, both in terms of the content of the new pension system as well as the process by which the system was reformed.

4.2 Development of the ATP Pension System

In the first half of the 20th century, Sweden had a very ad hoc pension system.

Before the introduction of the basic flat-rate folkpension in 1913, blue-collar workers often lived out their later years in poverty; or they were reliant on community-based charities for food and money (Hoffmann Interview 2005). The folkpension was a truly universal system, which provided the same benefits to all pensioners, and abolished

For a more detailed discussion of Sweden's systemic reform versus the parametric changes undertaken by most OECD countries, see Settergren (2003). 133 means-testing (Palme 2003). Gustav Moller, Minister of Social Affairs under Prime

Minister Per Albin Hansson, designed the new folkpension system in 1946 (Magnusson

2000). In addition to the folkpension, occupational pension schemes for certain sectors of the labour market began to emerge. However, at the beginning of the post-war period there was still no universal earnings-related pension system in Sweden. As Joakim Palme, pension expert, argues:

What Richard Titmus labeled the two nations of welfare started to emerge in Sweden... we had some groups on the labour market which had earnings-related pensions on top of the universal, public, statutory flat-rate benefit [such as] public state employees, some municipality employees, and some private salaried employees, but not blue-collar [workers] (Palme Interview 2005).

Blue-collar workers soon began to demand the same kind of pensions that white-collar workers were receiving (Hoffmann Interview 2005).

The Social Democratic Party and LO worked together to remedy this situation by coming up with a system that would give all pensioners an adequate amount of money during retirement.87 The most important goal was to make a comprehensive public pension system that encompassed all citizens in Sweden. The importance of this type of system was that it included white-collar workers as well as blue-collar workers, strengthening support for the system and for the SAP (Therborn 2003). As a result, a national supplementary pension, or ATP, was developed which was determined by one's

87 This is an example of power resources theory, where the Swedish labour movement, particularly the blue-collar LO, had access to power resources through its relationship with the governing Social Democrats and was thus involved in the formation of a national, universal pension system in Sweden. For a more detailed discussion of power resources theory, see Korpi (1983). 134 pre-retirement income (Olsen 1999), and which was a universal, state-administered system that provided income security for all Swedish residents. Blue-collar workers began receiving an earnings-related pension from 1960, when the ATP legislation of

oo

1959 went into effect. The target level for the ATP was set at 65 per cent of past earnings up to a ceiling, which was more generous than the OECD average of 57 per cent

(Sunden 2006). The ATP system was a defined-benefit (DB),89 pay-as-you-go (PAYG)90 system, which was the quickest way of paying out pensions, and did not require a long transition period (Pontusson 1992). Defined-benefit systems are such that future benefits are defined in advance, even if some parts of the benefit formula depend on factors that cannot be determined in advance (Immergut and Anderson 2007). In addition, the ATP system was linked to the development of prices which meant that the level of pension benefits was not directly linked to the country's economic development, and offered citizens some level of de-commodification in old age.

From this point, all Swedish citizens received the folkpension, and those who had participated in the labour force also received supplementary ATP benefits. Those with low pensions also had access to a variety of pension supplements (Johannisson 2000). A defined-benefit pension system is the type of system where future benefits (upon retirement) are defined from the outset, typically as a percentage of previous earned-income. This type of system provides a more certain outcome, and since benefits are typically paid as an annuity, there is little risk for the pensioner upon retirement. This is in contrast to a defined-contribution (DC) pension system, which provides an individual account for each contributor, where benefits accrue based on a set contribution amount. In a DC system, risk is individualized, and outcomes are less certain as they depend on investment returns and the age at which one retires. 90 A pay-as-you-go pension system refers to the funding status of the system. Under a PAYG arrangement, the system is unfunded and benefits paid to current pensioners come directly from the contributions and taxes of current workers. This type of system requires a large pool of workers to finance the benefits of current pensioners. 135 Figure 4.1: Pension System, 1959-1998

Components: • Folkpension: universal, flat-rate pension • ATP: national supplementary earnings- related pension o Mandatory, Defined benefit, Pay-as- you-go • Provision for disability & family pensions Regulation: • Parliamentary decision was needed to alter the system due to economic or demographic factors Pension Calculation: • Based on best 15 years of earnings within 30 years of covered earnings Pension Outcomes: • Total between 65-75% of past earnings, up to a maximum ceiling The 1959 pension reform was "a way of introducing earnings-related pension for blue-collar workers in both the private and public sector, the kinds of benefits that could only be achieved by higher income earners, unless there was public intervention" (Palme

Interview 2005). However, it was not achieved easily. The ATP system was very controversial in the 1940s and 1950s and it took a long time for it to become legislation.

The issue of pension reform was debated over a number of elections, as well through a referendum. There were also three commissions of inquiry, which reported in 1950, 1955, and 1957.91 The third commission failed to resolve these issues but did provide the SAP

91 The major split that emerged during the second commission was between the Social Democrats, who favoured an obligatory PAYG pension system, and the Liberal and Conservative (later re-named the 136 with an opportunity to broaden the appeal of its ATP proposal by adopting the 15/30 years rule. The Agrarian Party (later re-named the Centre Party), which was in a coalition government with the SAP at the time, disagreed with both the SAP and Liberal-

Conservative proposals and provided its own proposal, advocating an increased flat-rate pension and a voluntary, state-subsidized individual retirement insurance system

(Pontusson 1993).

The three alternatives were put forward to the people in a referendum in the fall of

1957, but because there were three alternatives, the referendum did not provide a clear solution; the ATP proposal did receive the highest percentage of votes, at 45.8 per cent, but the two voluntary solutions received more votes in total. Following the referendum, the SAP decided to put the ATP proposal to a parliamentary vote, causing the Agrarian

Party to leave the government coalition, leading to an election in June 1958 where the proponents and opponents of the ATP proposal each won identical representation in parliament. It was only when a Liberal Member of Parliament broke away from his own party, and abstained from the vote, that the ATP system was finally adopted. The Liberal

Party endorsed the reform after-the-fact, which secured its implementation within such a hostile environment (Pontusson 1993, Anderson and Immergut 2007).

Moderate Party) parties who, along with representatives from employers, favoured a voluntary premium- reserve pension system (Pontusson 1993). The Liberal-Conservative proposal received 35.3 per cent of the vote, while the Agrarian proposal received 15 percent of the vote (Pontusson 1993). 137 The introduction of the ATP system was "an attempt to bridge the interests between white-collar workers and blue-collar [workers], to provide benefits of the same kind for both these groups" (Palme Interview 2005). The system could thus be seen as a success as it provided income security not only for very low-income earners, but also for white-collar workers, thus uniting the Swedish labour movement (Pontusson 1993), and women, who make up a significant proportion of both low-income earners and white- collar workers. But in order to gain the support of the white-collar workers, the system was based on the 15/30 years rule, which led to some unusual redistributions. The 15/30 years rule meant that in order to qualify for full pension benefits, you must have worked at least thirty years, and your pension was based on the best fifteen years' income. If you worked less than thirty years, there was a penalty applied to your pension for each year you missed. Within such a system, you could work part-time for a number of years, and as long as you had fifteen years of higher earnings you could receive a full pension based solely on those years. The system did not penalize those who worked part-time for a portion of their careers, as years of part-time work were equal to years of full-time work when it came to calculating the thirty years needed in the end. While some believe that this was good for women (Hoffmann Interview 2005, M. Andersson Interview 2005,

Anderson and Meyer 2006), others believe that this only helped to cement existing gender differences with regard to paid and unpaid work (Palme Interview 2005,

Sundstrom Interview 2005).

138 In terms of redistribution within the ATP system, some argue that the system benefited white-collar workers over blue-collar workers. This is because blue-collar workers, who generally have long careers with flat earnings profiles, were paying into the system for a very long time, but the benefits were based just on a relatively short period of time in the system (Sunden Interview 2005). This type of system benefited those who went to school for a long time, entered the labour market later, and then had steep earnings profiles during their career (Palme 2003, Stahlberg 1995a, Anderson 2005). So in a sense, blue-collar workers were subsidizing the pensions of white-collar workers.

Those who really gained within this system were academic women who studied for a long period of time and worked part-time for a number of years - these women "really paid nothing for their pensions in the old system compared to everybody else, which wasn't quite so fair" (Hedborg Interview 2005). Low-income female workers in the municipalities paid a lot for their pensions as they worked for a long time with a low income all of their lives. Some claim that the SAP sold out the working class in order to get the support of white-collar workers, and this is how the system ended up designed in such a way (Konberg Interview 2005, Gennser Interview 2005, Pettersson Interview

2005). However, the majority of people, particularly the working class, were happy with the ATP system and the benefits it provided, as was demonstrated in their often staunch opposition to the pension reform of the 1990s.

139 Thus, from 1959 until the 1990s, Sweden had a very generous, comprehensive pension system. The combination of the folkpension, the ATP, and a national supplementary occupational pension system provided, in total, approximately 75 per cent of one's gross pre-retirement income (Olsen 1999, Stahlberg 1995a). This system also minimized poverty of the aged in Sweden (Esping-Andersen 2002a), which was part of the overall goal of eradicating poverty in the country. The high and predictable replacement rate allowed pensioners to live comfortably and gave all Swedes a sense of confidence in their future. For over two decades trust in the system remained high, as did the overall popularity of the system.

4.3 Background to the Pension Reform

However, besides the unfair redistributions mentioned above, there were other problems that developed within the ATP system. One such problem was that the link between contributions and benefits diminished over the years due to several different changes within the system (Konberg Interview 2005). Also, there were no incentives within the ATP system to work for more than thirty years (Stahlberg, Kruse and Sunden

2005). Palme argues that an important critique of the ATP system "was on incentive structure... that it eroded incentives for working, and by having this lifetime income formula it was a way of responding to the critique of having a good incentive structure"

(Palme Interview 2005). Thus, in the new pension system, the incentives are for people to work more (Wennemo Interview 2005), in order to get higher pensions when they retire. The ATP system was fine during the 1960s and 1970s when there was full employment in Sweden, but once unemployment began to rise during the late 1980s and early 1990s, this created a real problem for the Swedish welfare state, as the success of the system is based on a model of full employment. The 15/30 years rule allowed people to enter the labour market at a late stage and to leave the labour market before age 65 (Lundberg

Interview 2005). In addition, the fact that over time more people were earning income above the pension earnings ceiling, meant that the system's goal of income security was being eroded, as the ceiling remained relatively low in Sweden (Stahlberg 1995a,

Anderson 2005, Palmer 2000).

The pension system was very much regulated by the state. In order to lower benefits in the system, due to an economic downturn or demographic burdens, a decision from parliament was needed (Lundberg Interview 2005). "A government run defined- benefit system can be designed to assume uninsurable risks by altering the contribution rate or by adjusting the value of pensions or by a combined adjustment of contribution rate and pension level" (Settergren 2001b: 4). Annika Sunden (2006), Senior Economist at the Swedish National Social Insurance Board, argues that the option of increasing contribution rates was needed to maintain the financial stability of the Swedish system; by the mid 1980s it was projected that contributions would have to be raised from approximately 18 per cent to 24 per cent by 2015 and to 30 per cent by 2025 in order for the pension system to remain financially sustainable. The necessity of state involvement in order to maintain the system would prove to be a deciding factor in the perception of the system as unsustainable, and the eventual reform of the pension system. It was also the reason behind the introduction of the Automatic Balancing Mechanism (ABM) in the new pension system, which was conceptualized as a way to reduce state interference, as politicians would no longer have to make decisions regarding benefits, as these decisions would occur automatically when necessary (Anderson 2005).

As many of the people I interviewed pointed out, a widespread belief in the financial unsustainability of the system began to emerge in the 1980s. This was due to a number of factors including decreased economic growth, reductions in retirement age, as well as increased use of sickness benefits to exit the labour market early, and, finally, demographic patterns. In terms of economic growth, wage growth of 1 per cent per year or less would have required steady increases in contribution rates to avoid financial disaster (Palmer 2000, Stahlberg 1995a). And while talk of a pension reform had already begun in the 1980s, the economic crisis of the early 1990s only reinforced the perceived financial unsustainability of the system given weak economic growth during this period, which witnessed not only an economic crisis, but a crisis in the banking sector,94 and the introduction of mass unemployment in Sweden for the first time in the post-war period.

This was aggravated by cuts in the public sector which put more pressure on those who

93 The ABM is discussed in greater detail in Chapter 5. 94 For a more detailed discussion of the Swedish banking crisis of the early 1990s see Larsen and Giles (2009) or Backstrom (1997). remained with jobs. Employees in the public sector, the majority of whom are women, are, overall, a third more likely than those in the private sector to be absent from work due to illness (Rae 2005).95 This is related to the cuts in the public sector during the

1990s and the subsequent harsher working conditions. For example, the percentage of women working in stressful work conditions at the beginning of the 1990s was 64, and grew to 73 per cent by the end of the decade; while the same numbers for men were 62 per cent at the beginning of the 1990s, and 68 per cent at the end of the decade (Welfare

Commission 2002).96

And, finally, in terms of demographic patterns, Sweden is facing the same demographic pressures as most West European countries in the form of an ageing population and low fertility rates. For the pension system in particular, this is of grave concern as the proportion of retirees increases and the proportion of those still active on the labour market decreases, thus reducing the number of people paying into the pension system. An increasing percentage of Sweden's population is aged 65 and over, and due to innovations in medicine and health care, Swedes are living longer than ever before. As a result, pensions are to be paid to retirees for longer periods, thus costing the system more, at a time when the proportion of those who are active on the labour market is decreasing, which makes it more difficult to afford a generous pension system.

For a further breakdown of the number of sick days taken per employee (by gender) in each sector of the Swedish economy, see Statistics Sweden (2009a). Stressful work and the psychosocial work environment relates to the "substantial rise in the numbers of jobs with high physical demands and a low degree of autonomy, i.e. negative stress," which is associated with worker illness and the quality of welfare services offered (Welfare Commission 2002: 39-40). 143 Due to all of these factors, the Swedish parliament was forced to make changes to the indexation of the pension benefits on a number of occasions during the 1980s and

1990s to ensure the viability of the pension system (Settergren Interview 2005). As mentioned earlier, these interventions in the pension system only helped to feed the perception that the system was unsustainable. This was a major factor behind the perceived need for a pension reform. These political interventions also helped to justify the reregulation of the pension system, which is an attempt to adapt to changing demographic and economic pressures, as well as to accommodate global capital and neoliberalism to a certain degree.

This perceived financial unsustainability of the pension system also led to new trends in savings in Sweden. Following the adoption of the ATP system there was a decrease in private individual insurance in Sweden, as there was a decline in the perceived need for additional insurance at this time (Palme 2003). However, the percentage of people taking up private individual insurance began to increase again in the

1980s. Some argue that the feeling that the pension system was unsustainable led many to lose trust in it (Palmer 2000), which could help to explain the increase in people taking up private individual insurance during the 1980s. For example, Sunden argues that

"people had lost trust in the pension system and they thought that there wouldn't be any pension for them when they retired" (Sunden Interview 2005). Anna Hedborg, member of

7 In 1980 approximately 5 per cent of the working age population had private individual insurance; but by 1989, the corresponding figure was 15 per cent (Palme 2003). 144 the Parliamentary Working Group on Pensions, agrees, arguing that young people in

no particular began to lose trust in the system (Hedborg Interview 2005).

There were many events that occurred in the 1980s and 1990s that led to and shaped the direction of the pension reform. For example, like in many countries, by the early 1990s the pension system had become the largest single welfare state program in

Sweden in terms of spending (Anderson 2005), due to its generosity and the increasing number of pensioners. In addition, PJ Anders Linder, Chief Political Editor at a daily

Swedish newspaper, argues: The late '80s, early '90s was... an interesting phase of modern Swedish political history, because many things that had been impossible suddenly became possible. There was a tax reform, there was a pension reform, and there was the Swedish application for membership to the European Union... And the whole... currency framework was abolished, and we got free capital markets... (Linder Interview 2005).

This quote points to the relationship between the pension system and capital formation historically in Sweden where the AP Funds were drawn on for capital investment, giving the state power over where investment would occur and limiting the role of financial capital in capital markets. The introduction of privatization into the pension system is a move in the opposite direction, giving financial capital more freedom, as discussed above.

Anders Lindbom, Associate Professor in the Department of Government at Uppsala University, disagrees. He argues that people, particularly young people, had not lost trust in the ATP pension system because pensions are not something that people think about in advance (Lindbom Interview 2005). 4.4 The Pension Reform

Discussions about the reform" of the pension system did not begin until the early

1980s. It was at this point that economists began talking about how the pension system was unsustainable (Sonnegard Interview 2005). The Swedish National Social Insurance

Board,1 too, began to "ring the alarm bell that the [ATP] system needed to be reformed" in its 1987 actuarial report101 (Marier 2005: 529), which presented the ATP system as unsustainable even in the face of any potential economic growth (Marier 2008). Others also began to criticize the ATP system and to call for reform. The Swedish Employers'

Association, in particular, argued that the ATP system "adversely affected national savings, contributed excessively to non-wage labour costs, and reduced work incentives"

(Anderson and Meyer 2003: 42). In fact, in 1991 Bo Carlsson, an economist with the

SAF, published an article entitled "Time to retire the whole ATP system" which suggested replacing the ATP system with private savings and a minimum pension financed by taxes, using the money accumulated in the AP Funds to finance the transition

When the discussion first began, a reform of the current ATP pension system seemed to be the goal. However, over time, and particularly once the Parliamentary Working Group on Pensions began its work, the term 'reform' became less accurate for the process which was taking place. As Marier (2008: 107) argues, "An entirely new pension system and philosophy were instituted." Therefore, the use of the word 'reform' itself is somewhat problematic, as Settergren (2003: 370) argues that the result of the 'reform' is "an entirely new system," thus to call it a reform "is somewhat misleading." However, within the media and within scholarly literature on the process, the word 'reform' was maintained, and thus I also use it here, even though it is not an entirely exact descriptor of the process. 100 While the Swedish National Social Insurance Board was a key actor "in generating a broad political consensus that a reform of the ATP system was necessary" (Marier 2005: 530), it failed to mobilize political support for its more modest proposals to modify, but retain the core principles of the ATP system. Instead, an overhauling of the pension system occurred. 101 For a more detailed discussion of this report, see Marier (2008). 146 to this new system (Marier 2002). The SAF was also in favour of a stronger link between contributions and benefits within a reformed pension system; in many respects, the SAF and the Moderate Party had similar views on the pension reform, including wanting to eliminate contributions above the ceiling that were not counted towards pension benefits, which they viewed as an unfair tax on employers.

After the SAP returned to power in the early 1980s, the party appointed an

Official Commission of Inquiry, which began its work in 1984, to look into what changes needed to be made in the pension system. The Commission, chaired by Sture Korpi,

State Secretary for the Ministry of Social Affairs, was composed of representatives from all of the parties in parliament, as well as government agencies such as the Swedish

National Social Insurance Board, the three major trade union confederations, seniors' organizations and employers' organizations (Wadensjo 2005). In investigating the pension system from November 1984 until the final report was released in 1990, the

Commission's purpose was "to examine the pension system's internal liabilities, its consequences for the economy as a whole, and to give advice on how future benefits could be financed in a responsible and sustainable way" (Lundberg 2005: 10). The mandate for the Commission, however, clearly indicated that the core elements of the

ATP system should be retained (Marier 2008).

In the end the Commission of Inquiry was internally divided and did not come to agreement on any substantial proposals for how to change the pension system (Lundberg 2005). The final report did point to several problems, such as decreasing public confidence in the system due to the weak link between contributions and benefits, and the increasing expenditure required to finance it (Anderson 2005). The report also put forward some proposals for potential avenues of reform, such as strengthening the link between contributions and benefits, raising the 'best' years used in the calculation of benefits from 15 to 20, raising the minimum number of qualifying years to more than 30, decreasing the level of benefits, and linking the index to economic growth rather than to inflation.

When the report was circulated for comments from various organizations and authorities, as is the practice in Sweden, there were many critical reactions. As a result, the government decided not to move forward with any of its specific proposals, but, instead, to appoint a new working group composed of members of parliament to work on a solution (Wadensjo 2005). With the economic crisis of the early 1990s came increased unemployment and the double burden of shrinking tax revenues and increasing pension expenditures due to the growing number of pensioners (Anderson 2005). The economic crisis coupled with having a centre-right government from 1991-1994, allowed the process of the pension reform to take off (Lindberg Interview 2005). But these factors were not the impetus for the reform, as the process had already begun with the first

Commission of Inquiry in the 1980s. The economic crisis and increasing unemployment were also partly to blame for the lack of public debate about the pension reform. Some argue that people were too concerned with keeping their jobs and with the state of the economy to pay the necessary attention to the pension reform.

When the centre-right government came to power in 1991, it inherited a dire economic situation, and it made the pension reform one of the central pieces of its restructuring work (Sunden Interview 2005). The new government introduced the idea of a far-reaching pension reform in its first declaration in 1991, announcing its aim to reach broad political agreement on the reform (Lundberg 2005). The reason behind seeking consensus on the pension reform was so that the system would not be changed again in the near future, as a pension system is something which must be stable and remain in place so that people can trust in the system and know rather early in life what the system entails (Konberg Interview 2005, M. Andersson Interview 2005). Ulla Hoffmann, Left

Party Member of Parliament and member of the Parliamentary Working Group on

Pensions, who was eventually shut out of the process due to her opposition to the reform, believes the centre-right coalition took advantage of the opportunity they had to reform the pension system, which they had never supported and had vowed to get rid of in the

1960s when it was first implemented (Hoffmann Interview 2005). Stefan Carlen,

Economist with the Swedish Commercial Employees' Union, agrees, arguing that the coalition wanted "to make the system more like an ordinary insurance system, not as the old system [which] was more [of a] social insurance system" (Carlen Interview 2005).

149 The market ideology underlying the new pension system is the same logic as in a private pension scheme in many aspects (Settergren Interview 2005, Lundberg Interview

2005). Ole Settergren (2003: 374), Pensions Expert at the Swedish National Social

Insurance Board, argues that the new pension system is "a cross between private and public pension principles... combining the best features of both." The centre-right parties wanted to shift the pension system ideologically towards a system where you are secured a minimum level of support and no more (Sonnegard Interview 2005), something that

Hoffmann argues is a "gigantic shift of ideology" (Hoffmann Interview 2005). KG

Scherman (2004), pension critic, argues that it is a "paradigmatic shift," a total shift in basic values within the pension system. While they were forced to compromise on many points, the centre-right parties certainly won much in the negotiations that led to the pension reform, including the above-mentioned shift in ideology. These were not new ideas for the centre-right parties, but this was the first time they had the opportunity to put them into practice, and with the support of the Social Democrats, which many found surprising.

4.5 Constructing the New Pension System

Sweden is often looked to as having a model welfare state. Many of its social programs have been discussed and emulated around the world. One could even say that

Sweden is an innovative nation in terms of implementing systems that do not exist anywhere else, and the new pension system is no exception to this rule. Bo Konberg, one

150 of the architects of the new pension system, claims that the Notional Defined

Contribution (NDC) system was thought to be impossible, "so the real invention then in

1994... was to invent a system that could be un-funded and defined-contribution, with direct links between fees and benefits..." (Konberg Interview 2005).102 The content of the new pension system, including the NDC, will be discussed in more detail in the next chapter.

However, one may wonder was this the only possible outcome of the pension reform? While most agree that once the Parliamentary Working Group on Pensions

(Pensionsarbetsgruppen, or PWGP) agreed to a number of core principles, their options became somewhat limited, there remained other alternatives to choose from. During the

1980s, a number of proposals or ideas about the pension system emerged. One example is when the Swedish National Social Insurance Board brokered an agreement between employers and unions to raise the pension contributions during a period of years by 0.3 per cent every year, but this was never implemented by the government because of the economic situation at the time (Lindberg Interview 2005). While most people recognized the need to make changes within the pension system, many wanted smaller changes, such as changing the 15/30 years rule to a 20/40 years rule or raising the contribution rates

(Carlen Interview 2005).

1 The reason this system was thought to be impossible is because typically DC pensions schemes are funded schemes. However, by creating a notional DC scheme, the Swedish pension system was able to shift from DB to DC while remaining an unfunded PAYG system, with the exception of the fully funded Premium Pension portion of the new pension system. 151 Perhaps the most prominent of the pension alternatives was the one designed in

1991 by KG Scherman, then Director-General of the Swedish National Social Insurance

Board. Scherman released a report entitled "The New Pension: A Reform with Big

Problems" that outlined changes needed in the pension system, but changes that remained within the framework of the existing ATP system (Hagberg 2006).104 As Dan Josefsson, journalist, documentary film-maker and pension critic, argues:

When KG Scherman came up with his report, when he said that this is the way we could reform the ATP system, then that was very confusing because that's when everyone thought... well isn't that what [the PWGP] are doing, but he knew... they are not doing that, they are just throwing it all away and coming up with a complete[ly] new system... that is founded on different principles (Josefsson Interview 2005).

Many rank-and-file SAP members had read Scherman's report and were more in favour of this type of reform, one that remained within the ATP framework and did not create an entirely new framework. This separation between what the members of the SAP wanted and what the leadership wanted would prove to be a difficult obstacle to the pension reform, as discussed further below.

There was a small window of opportunity following the centre-right coalition's rise to power in 1991, where the Liberal Party could appoint a working group to respond

As Marier (2005: 530) notes, Scherman was linked to the Centre Party and was nominated to the position of Director-General of the Swedish National Social Insurance Board by the centre-right government in the early 1980s. However, he did not agree with the Centre Party's views regarding the pension reform and, instead, sought to "protect and restore the pension system." 104 These changes would have included "a gradual lengthening of the earnings period, a successive increase in the standard retirement age and, most important of all, co-ordinated changes to other social insurance systems such as those providing for sick pay" (Hagberg 2006: 5). 152 to the pension Commission's final report (Palme Interview 2005). After meeting with the other parties, Prime Minister Carl Bildt formed the PWGP, which ultimately designed the pension reform and the new Swedish pension system, thus making it a state-led reform.

Bo Konberg, the Liberal Party representative, led the pension reform, writing the directives in November 1991, which acted as a starting point for the group's work in

December that same year (Konberg Interview 2005). In addition to writing the PWGP's directives, Konberg was also appointed as chair of the Working Group (Anderson 2005).

The working group was made up of representatives from the four centre-right coalition parties, from the opposition Social Democratic Party and Left Party, as well as from New Democracy (Ny Demokrati), a small right-wing party represented in parliament only in the early 1990s. These representatives were: Bo Konberg (Liberal

o

Party), Margit Gennser (Moderate Party), Ake Pettersson (Centre Party), Pontus Wiklund

(Christian Democratic Party), Anna Hedborg and Ingela Thalen (SAP), Ulla Hoffmann

(Left Party), and Leif Bergdahl (New Democracy).105 In the beginning each party wanted something different - the Moderate Party wanted a smaller pension system with lower ceilings; the Centre Party wanted a system of basic pensions instead of an earnings- related system; the Liberal Party wanted to eliminate collecting employers' fees on

105 Konberg, who was Minister of Social Affairs from 1991-94, chaired the PWGP, and he and Wiklund had been members of the previous pension committee in the 1980s; Hedborg had been involved with pension committees in the early 1980s during her time at LO, and she was Under Secretary of State in the SAP government from 1988-91; Gennser had written an article on widows' pensions and a subsequent document for the taxpayers' association on reforming the pension system; Thalen and Pettersson had little experience with pensions, but much experience in politics; Hoffmann also had little experience with pensions, but took an intensive two week course on the topic prior to joining the group (Marier 2006). 153 income above the ceiling, while the SAP wanted to retain this system (Konberg Interview

2005).

Clearly the different political parties involved in the pension reform each had their own agendas. However, they were committed to a process of consensus, which meant that there was to be compromise throughout the process. The parties did agree on a number of core principles from the beginning, but there was a lot of compromise surrounding the details and implementation of these principles. Hedborg described the relationship amongst PWGP members as a "gentlemen's agreement," where it was understood that if one person were to drop out or disagree, that person would have ruined the pension reform (Lundberg 2005). A purely social democratic reform as such would have had no Premium Pension component, no employees' contributions, and potentially a greater degree of economic redistribution, but due to the principles of the PWGP, compromise was necessary on all sides.

Because the first Commission of Inquiry investigating the pension system could not reach an agreement about how to change the system, the PWGP decided it would reach a decision through consensus and compromise, thus "de-politicizing the pension question" (Lundberg 2005: 19). This focus on consensus led to the overhauling of the pension system, and the close-knit and, in many ways, closed group became opposed to any alternatives to their vision. However, major disagreements did emerge over two issues - the introduction of the Premium Pension and whether contributions should be

154 paid on incomes above the earnings ceiling (Anderson 2005). Such issues demonstrated the remaining ideological divide between the centre-right parties and the Social

Democrats.

The PWGP published an 89-page document outlining the main principles of the pension reform in September 1992. These principles included changing the pension system from a defined-benefit system to a defined-contribution system, an idea Margit

Gennser claims responsibility for (Gennser Interview 2005). This shift would necessitate the adoption of the lifetime earnings principle. The document also "proposed the creation of a funded component" to the pension system (Marier 2008: 124). However, due to the economic context within which Sweden found itself, there was little public debate over these principles (Konberg Interview 2005). As many of the people I interviewed were quick to point out, while the PWGP sent out their proposals to different organizations for comments in 1994, pensioners' groups, pension experts, and the unions were all excluded from having a direct say in the design of the system. This is very unusual in Sweden where the social partners are generally included in commissions and committees; and they were included in the previous Commission of Inquiry in the 1980s (Wadensjo 2005), but were excluded from the PWGP. And even those organizations which were consulted in 1994 had only six weeks to respond to a reform of the entire pension system instead of the usual six months granted for consultation (Marier 2006, Hagberg and Wohlner 2002).

The reason for this shortened consultation period was a desire to have the agreement

155 passed by Parliament before the end of the summer session and, thus, before the fall general elections (Marier 2008).

Thus, criticism began to build that the process was "quiet" (Ehnsson Interview

2005). This is related to the fact that the PWGP had a self-imposed rule of coming to an agreement within the group before consulting with one's party leadership, which effectively kept the content of the negotiations from entering the public sphere during the process (Lundberg 2005). While opponents of the pension reform argue that the reform came from above and lacked legitimacy (Lundberg Interview 2005), even proponents of the reform admit that "it's very true that [the reform] was very much a top down process"

(Settergren Interview 2005), something that fit well with the underlying neoliberal ideology of the reform. The social partners were no longer involved in the process of reform, and even consultations were at a minimum during the process.

Anna Hedborg, one of the architects of the pension reform, claims that there were many consultations, but that it was difficult to mobilize interest in the pension question.

The consultations that were held tended to be small due to a lack of interest. In the end,

Hedborg admits that the "the process wasn't quite good... It's the thing you could say about the reform which... I am not really proud of..." (Hedborg Interview 2005). This top down process without much public consultation and debate is an illustration of the reregulation process that was taking place. It was the state, or its representatives, which dictated the content and the process of the pension reform. The fact that the PWGP was

156 made up of only state actors and was initiated by the state, not in response to grassroots mobilizing, reinforces the argument that this was a reregulation of the pension system.106

In addition, the lack of public consultation and input meant that it was the state alone that controlled and determined the direction of the reform.

The PWGP brought its proposed guidelines and principles for a reformed pension system to parliament in 1994, where they were accepted (Johannisson 2000), which was

i r\-j the most important decision taken regarding the pension reform (Palme 2003). Not only was the proposal accepted, it was supported by 85 per cent of the Members of

Parliament (Settergren Interview 2005), a fact which proponents of the system point to as an indication of the democratic nature of the reform.108 However, many scholars have highlighted the fact that the guidelines were adopted in June 1994, prior to the beginning of the 1994 election campaign, as an indicator that the parties represented in the PWGP did not want to make the pension reform an election issue (Anderson 2005, Lundberg

2005, Marier 2008). Many view the fact that the new pension system was formulated

The Swedish pension reform can be viewed as a top down process in that it was not a response to grassroots mobilizing by citizens but, rather, was initiated by politicians in response to pressure from economists and employers' organizations, as well as perceived demographic and financial pressures. This is in contrast to, for example, the implementation and extension of the childcare system from the 1960s and 1970s, which was in response to demands from working women, women's organizations and the trade unions. 107 However, Scherman (2003: 310) argues that the content of the pension reform was quite different from the principles presented in 1994, and that the "paradigm shift" was able to occur because of this. 108 In fact Konberg (2004: 17) responded to Scherman's criticism that the new pension system was undemocratic by stating "to describe what a large majority in Parliament has agreed upon as 'undemocratic' is of course extreme." 157 between two general elections as an indication of its undemocratic nature,109 as the citizens were never consulted and the core issues were never publicly debated.

In 1998 parliament passed the bill making the new pension system law, and thus began the implementation process (Palme 2003). The new pension system did not come into effect until 2000, and is set to be phased in over a number of years due to the transition period for those born before 1954. "[T]he selling of [the pension] reform was very coordinated and shrewd" because the political group behind it was "super tight together... [and] loyal towards the process" (Settergren Interview 2005). It is difficult to characterize the reform, as no one involved in the process framed the new system in ideological terms or made it into a politically significant historical event (Lundberg

2005). There was little fanfare around the pension reform as there was in the 1950s when the ATP system was the outcome of years of political struggle. Instead, the reform quietly became law while few took notice, capping a very quiet, closed and top-down process of reform.

The pension reform did divide many organizations and people in terms of their support (or lack of support) for the new system. Kommunal, the biggest trade union and the one with the highest proportion of female membership, was in favour of the pension

For a more detailed discussion of the undemocratic process by which the pension reform occurred, see Hagberg and Wohlner (2002). 158 reform (Konberg Interview 2005).'' LO, as a whole, was divided on the pension reform because some of its affiliates were in favour of the reform, such as Kommunal, while others were not. The Swedish Metalworkers' Union, in particular, was very critical of the pension reform (Lundberg Interview 2005, Hoffmann Interview 2005, Hedborg Interview

2005, Palme Interview 2005), as the average Metall worker tends to retire early, an action which is punished under the new pension system (Marier 2008).111 In the end, LO supported the pension reform without a broad popular discussion (Lindberg Interview

2005). This response was puzzling to some, since the ATP system implemented in the

1950s was more or less a LO-driven reform. One could have expected that LO would have fiercely defended the ATP system when talk about pension reform began, but this was not the case. Perhaps LO's reaction can be explained in the context of the economic crisis and rising unemployment; it wanted to get the economy going again (Lundberg

Interview 2005). It can also be explained in the international context of changing employment patterns, with the declining influence of metal workers and the increasing number and weight of public sector workers. However, this type of reaction was not the only option available to LO, and thus represents a clear choice on the confederation's part

"° Kommunal, Handels, and the Hotel and Restaurant Workers' Union, three female-dominated LO unions, all came out in favour of the pension reform. They supported Anna Hedborg, a former LO Research Director, who argued that the ATP system was not beneficial to women, and that women could gain in the new pension system (Marier 2007). Metall claimed that nearly half of its workers are forced to retire at 60 because of the physically demanding labour they are involved in (Marier 2008). 159 to adopt, or at least passively support, a neoliberal approach during the economic crisis of the 1990s.

The exclusion of organizations and experts from the PWGP was unusual, but seemed to occur without much protest. While LO was excluded from negotiations and consultations, it largely accepted this exclusion. There seemed to be a division between the leadership and the members of LO, just as in the case of the SAP leadership and the

SAP members (Lundberg Interview 2005), discussed in more detail below. While LO affiliates were divided on the pension reform, LO's official position was that it supported the reform but with three areas of concern: 1) the pension level was too low and should be higher; 2) the financing of the pension system should be made through employers' contributions only; 3) pre-retirement should stay a part of the pension system and not become part of sickness insurance (Wennemo Interview 2005). These concerns were not incorporated into the design of the pension reform, yet LO remained supportive of the reform throughout the process.

In terms of other unions, TCO, as a whole, was extremely critical of the pension reform. From the beginning, TCO criticized the process whereby the PWGP excluded the unions. In a piece printed in 1993 in Dagens Nyheter, a daily Swedish newspaper, TCO president claimed "The doors of the Working Group... are almost always closed to the labour-market partners. Therefore, we do not know exactly what is going to be proposed"

(quoted in Marier 2008: 134). In addition to being critical of the process, TCO was

160 obviously critical of the content of the reform, as the 15/30 years rule in the ATP system directly benefited its members. In fact, the 15/30 years rule was created to secure the support of TCO members in the 1950s. While the Swedish Confederation of Professional

Associations (Sveriges Akademikers Centralorganisation, or SACO) was generally supportive of the foundation of the pension reform, it joined TCO in criticizing early proposals that did not compensate individuals for periods spent in education or training, and was successful in convincing the PWGP to include pension credits for education in the final pension proposal (Marier 2008).

The Left Party was the only party within the PWGP that did not support the pension reform. Konberg, a Liberal, argues that it is suiprising that the Left Party seems to be the party most in favour of the 15/30 years rule which redistributes money from working class people to white-collar workers (Konberg Interview 2005). However,

Hoffmann, the Left Party representative on the PWGP, remains adamantly opposed to the reform, claiming it is less flexible than the ATP system in terms of allowing for part-time work, time spent in education to better oneself, and immigrants who come to Sweden later in life (Hoffmann Interview 2005). All of these cases will result in reduced pensions within the new pension system. Hoffmann is also critical of the Premium Pension portion of the new system, as well as the transfer of risk from the state to the individual, and the increased uncertainty within the new system. Indeed, the Left Party was eventually shut

112 SACO currently represents twenty-four independent associations with approximately 556,000 members, all of whom are academics or graduate professionals with a university or college degree, such as occupational therapists, architects and graduate engineers (SACO). 161 out of the process because Hoffmann refused to adhere to the principle of consensus within the working group.

The centre-right parties generally had no problems gaining the support of their members for the pension reform as their members favoured it (Lindbom Interview 2005).

Gennser did face some resistance by other elites within the Moderate Party, such as Lars

Tobisson, who had advocated a fully funded system or a larger funded component

(Marier 2008). In the end, Gennser was successful in convincing her party of the advantages of the pension reform. However, when it came to the Social Democratic

Party, gaining support from its members was very difficult.

4.6 The Pension Reform and the SAP

As mentioned earlier, the ATP system was the jewel in the crown for the SAP. It was something the party worked hard to win and it was very proud of this achievement.

In fact, the ATP system was viewed as the thing that made the Social Democrats social democrats. The SAP had won numerous elections since the implementation of the ATP system on the promise that the pension system would survive, unchanged, forever. The

ATP system helped to establish the SAP as the "natural party of government" in Sweden because the party had managed to garner support from both the working- and the middle- classes (Lundberg Interview 2005, Scherman Interview 2005). As mentioned earlier, the

ATP system had a great symbolic value in Swedish society and in Swedish politics. In fact, prior to losing the election in 1991, Ingvar Carlsson, Chairman of the SAP, once again reinforced the SAP's position to defend the income security principle within the pension system (Palme Interview 2005).

If the Social Democrats had been in power in the early 1990s, one may wonder whether there would have been a pension reform at all, or if so, if it would have been any different. Some speculate that it was easier for a non-Social Democratic government to undertake the pension reform (Konberg Interview 2005, Josefsson Interview 2005). Many agree, arguing that the pension reform would have looked quite different if the SAP had been in power throughout the process (Settergren Interview 2005, M. Andersson

Interview 2005, Pettersson Interview 2005, Lindberg Interview 2005). Urban Lundberg

(2005: 27), Researcher at the Institute for Future Studies in Stockholm, argues that "it was easier for the [SAP] leadership to settle for a compromise with non-socialist parties in the working group on a solution to the pension systems' financial problems than to convince its own membership that the ATP system had outlived its usefulness."

Thus, the political situation that Sweden found itself in during the early 1990s was conducive to a successful overhaul of the pension system on all sides. In fact, some argue that if the SAP had not returned to power in 1994, the pension reform would have looked quite different as well, as the party leadership would not have been able to maneuver support for the reform among the party's members had it not been in power (Hedborg

Interview 2005). At the time, returning to power after an absence, the SAP leadership used this situation to its advantage, explaining to their members that if the party were to

163 pull out of the pension reform now there would have to be another election, and the

11-5 centre-right parties could return to power. Thus, the changes in government during the

1990s were significant for the end result of the pension reform (Settergren Interview

2005).

Another element that shaped the reaction to the reform was the way in which it was discussed publicly during the process. For example, the SAP asked the other members of the PWGP to never talk about taking away the ATP system and replacing it with something else, but to always frame it as a 'reform' of the ATP system (Josefsson

Interview 2005, Hoffmann Interview 2005). Because of this, many believe that the SAP leadership cheated the membership into accepting the pension reform (Scherman

Interview 2005). Many people were unaware of the extent to which the pension system was being overhauled until it was too late, due to the manner in which the reform was framed in public debate.

Throughout the process the SAP leadership went along with and supported the pension reform, while their members did not. The dilemma was how to explain to its members the need for a pension reform that was a departure from the party's traditional approach (Lundberg 2005). The SAP congresses in 1993, 1994, and 1996 provided an opportunity for party consultation on the pension reform question. At these congresses, the party leadership was criticized for the closed nature of the pension reform process 113 However, this seems rather unlikely as the Social Democrats received 45.3 per cent of the vote in the 1994 election. Together the Social Democrats, Left Party and Green Party received 56.5 per cent of the vote, compared to a total of 41.4 per cent for the four centre-right parties. 164 (Anderson 2005). Members also expressed their dissatisfaction with the content of the pension reform. At the 1997 SAP congress, numerous motions were put forward to strike down the pension reform. However, the leadership was successful in convincing the membership to endorse the reform by making promises it could not keep,114 as each of the other four parties involved would also have to agree (Marier 2008).

In terms of consultation, the SAP leadership also sent materials to all the party's local organizations around the country for discussion and comments (M. Andersson

Interview 2005). Josefsson argued that this material had very little to do with the end result of the pension reform, as it indicated the SAP's support for the importance of being able to predict one's pension upon retirement, something which does not exist in the new pension system. Members spent months studying this material and sending in their responses, responses that were never read or considered. As a result, Josefsson claims this as "a devastating defeat for the official party line, completely devastating" - with the end result being that many members left the SAP over this issue (Josefsson Interview 2005).

The Party had 152,000 members as of 2003 (Social Democratic Party 2003), which is a drop from over a million members at its peak in the 1970s and 1980s (Lundberg

Interview 2005, Sainsbury 1983, Esping-Andersen 1978, Heclo and Madsen 1987).

Members of the SAP were very reluctant to support the pension reform. In poll after poll, at least 80 per cent of members who responded had extremely negative views

114 These promises included things such as "low-income earners would be compensated if contributions were raised" (Marier 2008: 129). 165 about the reform (Lundberg Interview 2005, Carlen Interview 2005, Josefsson Interview

2005). In 1994, two-thirds of all responses in an internal comment process within the

SAP advised that the reform should be postponed until after the September election

(Anderson 2005). The membership could not understand the reasons behind rushing into the reform, and wanted to have enough time to familiarize themselves with the reform proposal before making a decision (Lundberg 2005). The Social Democratic youth and women's organizations in particular attempted to pressure the leadership to postpone any decisions regarding the pension reform. However, the party leadership did not listen. In

January 1996 motions from members began to arrive at party headquarters, 320 in all, demanding that the pension reform be shelved and the previous system be re-introduced.

LO congresses during this time were also flooded with motions critical of the reform process (Anderson 2005). As Hoffmann argues, the"[pension reform process had] consensus between the parties but not between parties and the people" (Hoffmann

Interview 2005).

In the end, the power distribution between party leadership and party members resulted in the party backing the pension reform, but it was not "a genuine expression of the whole party's 'will'" (Lundberg 2003). The SAP leadership managed to resist the pressure from below and force party members to back the reform, while at the same time distancing itself from the membership (Anderson 2005, Josefsson Interview 2005,

Scherman Interview 2005, Lundberg 2005). Party leaders were able to coerce those most

166 critical of the reform by arguing that if they were to pull support for the pension reform there would be a government crisis and the party would have to leave office after having just returned (Josefsson Interview 2005, Lundberg Interview 2005). The SAP leadership

"twisted arms in behind closed doors and in corridors, rather than convincing the party that this was a better system from an ideological point of view. It was brute force behind that work to get the party support for the reform, rather than intellectual and ideological argumentation" (Sonnegard Interview 2005). As mentioned above, it also framed what was taking place as a 'reform,' rather than the introduction of an entirely new system, which may have played a role in the leadership's ability to convince the membership to relent in their opposition.

There was considerable discontent over the process by which the pension reform came about. "[T]here is a general acknowledgement of the... democratic deficit in the way the pension reform was actually implemented" (Palme Interview 2005). Josefsson

(2005) argues that the pension reform was characterized by "a lack of democracy, a lack of transparency, and... a lack of common sense." In the end, the pension reform reflected a process of restructuring - where the basis or underlying principles of the system were changed (Lundberg Interview 2005).

Many were surprised by the extent of the changes brought about by the reform

(Palme Interview 2005). Anderson (2005: 94-110) calls the pension reform "far reaching," "a radical overhaul of the existing system," and "a major departure from existing pension policy." The processes by which the ATP system and the new pension system were developed and adopted could not be more different. Leading up the 1994 election the reform was a closed process, this compared to the enormous political struggle and political debate that preceded the adoption of the ATP system in the 1950s (Lundberg

Interview 2005). "If you were someone who questioned the pension reform [in the 1990s] you were viewed as someone who did not want a sustainable pension system" (Berge

Interview 2005). Settergren (2003: 393), a defender of the pension reform, acknowledges that the biggest threat to the new pension system is "the still rather tacit unpopularity of the new scheme with the public"; he argues that, in order to survive, the pension system's supporters "must become more numerous than the handful of politicians and experts that designed the new scheme, a small number of approving editorialists and a few economists." In the end, Scherman (2004) argues that the new pension system is

"profoundly undemocratic, and, for this reason, if no other, it will ultimately fail."

Conclusions

While having analyzed the reasons behind the pension reform and the reform process itself, particularly the work of the Parliamentary Working Group on Pensions, it is clear that the issue of 'financial sustainability' dominated the process rather than issues of fairness, redistribution and solidarity. The end result was the death of the ATP system and the creation of an entirely new pension system based primarily on a market logic and the concept of individualism, particularly when it comes to risk. The top-down process of

168 overhauling the Swedish pension system represents an instance of reregulation where the state, in response to pressure from economists, employers' organizations, bureaucrats, and global financial capital, pursued a pension reform in private with very limited public consultation or public debate. The fact that the decisions taken by parliament regarding the pension reform in 1994 and 1998 occurred prior to national elections only supports this argument. In addition, the fact that what was occurring in private, behind the closed doors of the PWGP, was continually referred to by those involved as a 'reform' was misleading to the public, who believed that the ATP system was being modified, rather than a new system being created. These issues will be analyzed further in the following chapter, which discusses the content of the new pension system as well as its outcomes.

169 Chapter 5: The New Swedish Pension System: The Challenge to Social Democracy

5.1 Introduction

The pension reform that took place in Sweden during the 1990s was significant for its signaling a real shift in ideology in a critical area of social insurance. The architects of the pension reform sought, among other things, to increase overall labour force participation in Sweden. The incentives within the new pension system are to work full-time hours for a longer period of one's life. While family policy, discussed in

Chapter 3, remains a haven of social democracy in Sweden, the new pension system can be seen as an experiment in institutionalizing neoliberal behaviours, particularly the new

Premium Pension portion of the system, which will be discussed in detail below. The new pension system contains a more direct link between contributions and benefits in order to make the system more financially sustainable in the long-term. It is also an attempt to get back to the goal of full employment, which is necessary if the Swedish model is to function. Yet, the new system will likely have the effect of increasing private pension savings in Sweden, which will challenge the universality of the public system. This could have enormous consequences for social democracy in Sweden.

The new pension system consists of an income pension system, or inkomstpension, as well as an advance-funded portion with privately managed individual accounts (the Premium Pension, or PP), and a Guaranteed Pension at age 65 for those with low lifetime earnings (Palmer 2000). The new pension system, like the old, is

170 mandatory for the over four million people in the Swedish workforce (Engstrom and

Westerberg 2003). The new system contains a minimum retirement age of 61, but no maximum, encouraging people to work for as long as they can. Some believe the minimum retirement age in Sweden was set too low since people currently live to, on average, 80 years of age.115 In addition, the new system allows people to retreat from the labour force gradually, combining work and retirement for a number of years before fully retiring (Palmer 2000). Within the PP system, one can choose 25, 50, 75 or 100 per cent of a full benefit after age 61; this allows people to both work and benefit, while still contributing to the system (Settergren 2001a, Anderson 2005). The new system will be phased in over a number of years, to accommodate those stuck in between the old and the new system.

Although the Swedish pension reform is innovative in many ways, the legacy of the 20th century pension system is a strong one. One must consider the importance of how national welfare states were organized to begin with, when considering how to organize the welfare state in the future (Palme 2003). The historical legacy of regime institutionalization is an important factor, as it indicates the importance of past reforms to

115 McGillivray (2005: 222) argues that the option to retire whenever one chooses after age 61 in the new pension system "is somewhat disingenuous since no matter how much one might wish to retire, the choice obviously depends on whether the retirement pension at the chosen time will be adequate." 11 Because there were so many workers already in the system, contributing to a pension system that was dramatically reformed, there will be a gradual transition into the new system for those born between 1938 and 1953; those born before 1938 will remain entirely in the old ATP system, and those born in 1954 or later will be covered entirely within the new pension system (Johannisson 2000). For people born in 1938, they will have 20 per cent of their pension calculated according to the new rules, and the proportions change successively with increments of 5 per cent per year up to those born in 1953 (Palmer 2000). 171 Figure 5.1: Pension System, 1998-present

Components: • Guaranteed Pension: for those with low lifetime earnings • Income Pension o Mandatory, Notional Defined Contribution, Pay-as-you-go • Premium Pension: private funded individual accounts Regulation: • Automatic Balancing Mechanism Pension Calculation: • Based on lifetime earnings Pension Outcomes: • Income Pension: uncertain - linked to economic growth, life expectancy, and age at retirement • Premium Pension: uncertain - linked to funds chosen, economic factors, life expectancy, and age at retirement (no guarantee on rate of return) the institutionalization of class preferences and political behaviour (Esping-Andersen

1990). The historical legacies of socialist principles have become institutionalized and perpetuated in the Swedish social democratic welfare state regime over time. This ties in to Paul Pierson's (1996) argument around policy legacies, or policy feedback, as discussed in Chapter 1, which indicates that a nation's past policy choices and institutional forms will affect its future policy choices and institutional forms.

In terms of the pension reform, the existing institutions had an impact in that they

"reshaped the interests and expectations of the population, thus limiting the degree of freedom of movement for the politicians" (Palme 2003: 165). Path dependency in the 172 case of the Swedish pension reform can be seen in the new system being based on a

PAYG system that remains under public control (Harrysson and O'Brien 2004). At the same time, there is a break with the path, in the introduction of the Premium Pension portion of the new system. Path dependence worked in the SAP's favour to some degree, as past obligations to honour entitlements to pensions prevented even more radical proposals from coming to the fore (Lundberg 2005).

In the end, "the Swedish pension reform, like all pension reforms, represents both continuity and change" (Palme 2003: 166). There is continuity in that the system still has the social policy goals of basic security, income security and redistribution, although by

117 different means. In addition, the reform includes increased government spending, at least in the short- and medium-term, and perhaps even in the long-term (Palme 2002).

"Given that governments make pension promises decades in advance, the notion of a

'path' is inherent, even overwhelming, in pension development..." (Anderson and Meyer

2006: 20). However, there is change in the form of a private portion of the system and the transfer of risk onto the individual; thus, the Swedish case demonstrates that some path departure is possible (Palme 2002, Anderson and Meyer 2006). Palme (2005: 51) frames the issue as follows, "it is difficult, but - as the Swedish pension reform shows - not impossible to change existing institutions."

117 However, horizontal redistribution has been minimized in the new pension system, mainly due to the shift from a defined benefit to a defined contribution scheme, and also from the introduction of elements such as the lifetime contributions principle and the Premium Pension (Harrysson and O'Brien 2004). 173 The new system is adjustable to the economic development (growth or lack thereof) in society and to demographic changes, and is based on lifetime earnings, from the age of 16 until retirement (Johannisson 2000). It also includes things other than actual earnings, such as pension-based income, or pension credits, for taking care of one's young child, aged four and under, as well as for military service, periods spent in education, and periods spent receiving benefits from unemployment, sickness, work injury and disability insurances (Palmer 2000, Stahlberg 1995a). The total contribution rate is 18.5 per cent of earnings, which is divided into two parts: 16 per cent goes to the income pension component of the system which finances today's retirees; and 2.5 per cent goes to the funded PP component (Johannisson 2000). In the new system, employers pay 11.55 per cent of the 18.5 per cent contribution rate, while employees pay the remaining 6.95 per cent (Marier 2008), whereas in the ATP system employers paid the full contribution. However, for those with earnings over the ceiling, the employee will no longer be forced to pay contributions on the amount over the ceiling, while employers will still pay their share, but as a tax that will go directly to the state treasury.119 The new pension system is autonomous from the state budget, except for the Guaranteed Pension

The original intention was that the 18.5 contribution rate would be paid half by employers and half by employees, but a plan for how to achieve this was never realized (Palmer 2000, Marier 2008). The pension ceiling in Sweden is rather low, at roughly 50 per cent above the average wage, which Palmer (2001: 6) argues is due to "the fact that most Swedes also belong to a quasi-mandatory scheme that supplements the public schemes." From 2002 the pension ceiling has been indexed to average wage growth (Palmer 2000). 174 and the state financed contributions for pension credits (Palmer 2000, Engstrom and

Westerberg 2003).

The criticism that was directed at the political system for its numerous interventions in the old pension system helped to shape the design of the new one. The new pension system was designed so that reductions in payments would occur automatically through the Automatic Balancing Mechanism, rather than requiring a change in the rules to get the same effect (Settergren Interview 2005). "If and when liabilities should exceed assets, the basis for indexation is automatically switched to an approximation of the system's internal rate of return, thus automatically adjusting pension levels as well" (Settergren 2001a: 6). This balance mechanism secures the financial stability of the new pension system. Michael Cichon (2005) argues that a balancing mechanism is a necessary aspect of a NDC scheme, as it is required to maintain financial equilibrium in the case of shrinking workforces due to decreased fertility.

Otherwise, the system would not necessarily achieve balance on its own.

As Sunden argues "the goal [of the pension reform] was really to design a system that would be financially sustainable, that would be fair, that would give incentives for work and that would give a good pension benefit" (Sunden Interview 2005). The issue of fairness applies to the fact that for each krona paid in to the system, you receive a benefit, and everyone gets the same benefit from each krona paid. Two major underlying themes in the new pension system are incentives to work longer and to save more privately

175 (Johannisson 2000). An attempt to make the pension system more employment-oriented is linked to the fact that the system needs as many people as possible employed at any given time (Lindberg Interview 2005). The incentives to work are also closely linked with rising life expectancy. As life expectancy increases, people will have to work longer in order to receive the same level of pensions (Palmer 2000, Settergren 2001a, 2006,

Wennemo Interview 2005, Scherman 2004, Swedish National Social Insurance Board

2004). Or, as Bo Konberg (2003: 118), member of the Parliamentary Working Group on

Pensions, puts it, pensions will decrease as life expectancy increases, "all other things being equal." Thus, KG Scherman (2003: 306), pension critic, notes that "a basic implication of the new system is that people will have to work longer or save more - considerably longer and more than many realize - or to accept a lower annual pension."

As we shall see, the income pension and the PP portions of the new pension system provide for a great deal of uncertainty in old age. But there is one area of the new system that provides for more assurance. The Guaranteed Pension (GP) is just that, a guaranteed pension available to those with low lifetime earnings. A full GP can be claimed at age 65, with 40 years of residence in Sweden (Palmer 2000).120 Those receiving the GP are also entitled to means-tested social assistance programs, such as untaxed housing allowances. Edward Palmer (2001: 13) argues that, taken together, the

GP and the housing allowance should "be sufficient to meet the subsistence norm

120 For those who have lived in Sweden for less than 40 years, the benefit will be reduced by 1/40 for each year less than 40 years the pensioner has lived in Sweden. established by the National Welfare Board." The GP is financed by general tax revenue, unlike in the old system where the basic pension was mainly financed by payroll taxes paid by employers (Settergren 2001a, Anderson and Meyer 2006). So far, the GP in the reformed system costs more than the folkpension cost in the old pension system (Palmer

2000). However, as older pensioners with relatively poor ATP pensions die and are replaced by younger pensioners, the need for the GP will decrease (Scherman 2004), thus costing less in the long-term. If earnings increase at a faster rate than inflation, the GP will become less and less important as it is indexed to inflation, and will gradually be phased out over time, as fewer pensioners will meet the criteria of having such low lifetime earnings.121

The income-based Notional Defined Contribution pay-as-you-go pension system emulates the principles of a market-based defined-contribution scheme, but without the advance funding and with a rate of return based on economic performance rather than the financial market. The new pension system contains a direct link between contributions and benefits. The 'notional' part of NDC comes from the fact that contributions are not physically deposited into individual accounts, but rather recorded into individual accounts while being used for financing current pensions (Palmer 2000, Engstrom and

Westerberg 2003, Lequiller 2004). Since current contributions are being used to finance current pensions, no real interest is earned on these contributions, so NDC schemes have

121 This is a design feature of the new pension system that Scherman (2004) argues lacks fairness and political credibility. to determine an adequate fictitious rate of return for contributions. The NDC system has been "heralded as a new tool to financially stabilize national PAYG pension schemes"

(Cichon 1999: 89). The PAYG aspect refers to the fact that the system does not require that the pension liability be backed by a certain amount of funded assets (Swedish

National Social Insurance Board 2004).

Under the new pension system, the size of one's income pension is determined by four factors - 1) the amount of contributions paid into the system, 2) the return earned on one's contributions, 3) the current average life expectancy, and 4) one's age at the time of retirement. When a pension is paid out from the income pension it is adjusted to economic growth and to the life expectancy of the individual. The connection to economic growth is measured in terms of indexation by average wage growth.

Adjustment to economic growth will result in lower pensions if growth is less than inflation. This means that if economic growth is good, pension levels will increase, but if economic growth is slow, as it is today, then pension levels will decrease. Adjustment to demographic changes is achieved by dividing the pension to be paid out by the life expectancy for each pensioner by age cohort (Swedish National Social Insurance Board

2004, Engstrom and Westerberg 2003, Johannisson 2000, Wennemo Interview 2005).

Hence, if life expectancy increases, pensions will decrease.

It is important to note, however, that pension are not adjusted for changes in life expectancy once you have retired and begin receiving your pension (Palmer 2000). 178 5.2 The Premium Pension: The Administration of 'Choice'

The Premium Pension is based on funded individual accounts, and represents a move towards privatization within the Swedish public pension system. As Konberg

(2003: 118) argues, "The premium pension component means great freedom of choice for the individual," emphasizing both 'choice' and the 'individual,' two important concepts in neoliberalism. The PP entered into effect in the autumn of 2000, when individuals could choose for the first time how to invest their money. The PP system is self-directed and those involved can invest in a number of domestic and international funds (Sunden

2004). There are three factors which determine the size of one's PP: 1) the amount of money paid into your PP account, 2) value fluctuations and withdrawal fees for the funds you chose to invest your money in, and 3) your age at retirement (Premium Pension

Authority). There are no guarantees within the PP system when it comes to the rate of return. Thus, there is a great deal of uncertainty within this system. Even so, the major occupational-based group pension schemes have begun to convert into advance-funded defined-contribution schemes like the PP in order to fit with the new pension system

(Palmer 2000, Sunden 2004).123

Fund management is an important question within the PP system. The number of investment opportunities in the Swedish system is significantly larger than in most DC systems. In 2000, when the PP system began, there were 460 funds to choose from to

123 As Palme (2005: 49) argues, "It is difficult, or at least potentially very expensive, to run defined benefit plans on top of public defined contribution plans," which has led to pressure for occupational pension plans to adopt the same scheme as the national pension system. 179 invest one's money and in 2004 there were more than 650 funds (Engstrom and

Westerberg 2003, Sunden 2004). Today there are 770 funds to choose from, a number the

Nordic Region Pensions and Investment News (2009) calls "staggering." People may choose between one and five funds at any given time, and may switch funds whenever they want for no additional cost. Investing in funds means that you are buying units in a securities portfolio; this portfolio may consist of shares, interest-bearing securities or both

(Premium Pension Authority). All funds licensed to operate as investment funds in

Sweden are allowed to participate in the PP system, including those owned by foreign interests. This has led to the integration of international fund managers on the Swedish market, which has provided them with an inroad into the Swedish savings market (Palmer

2000, Palme 2003).

There was pressure from the European Union to open up the PP system to all kinds of fund managers, including international fund managers (Palme 2003). This is related to the discussion in Chapter 4 about capital formation in Sweden and how the new pension system offers global financial capital more freedom in the Swedish capital markets. This is a good example of external pressure placed upon the state in terms of the pension system. However, the political parties behind the pension reform had a choice whether or not to acquiesce, and did so knowing the consequences. This is not surprising of the more right-leaning parties such as the Moderate Party, but it is somewhat surprising for the Social Democratic Party. While the SAP was opposed to the PP portion

180 of the new pension reform from the beginning, its commitment to the Parliamentary

Working Group on Pensions and to reaching an agreement by consensus eventually led to this 'compromise.'124

Within.the PP system, there are different types of funds to choose from, in terms of risk level as well as fund type. The Premium Pension Authority (PPM) organizes its funds into four categories - interest funds, mixed funds, generation funds and share funds

(Premium Pension Authority). In terms of risk, the PPM rates fund risk as 0-7 (low risk),

8-17 (average risk), 18-24 (high risk), 25+ (very high risk) (Sunden 2004). This allows investors to choose the type of fund they wish to invest in. If investors are still unsure, they may access a tool on the PPM website which will give them proposals for a portfolio comprised of fund categories after they have answered some questions about risk, age and income (Premium Pension Authority). Or they may simply choose not to make an active decision, and their money will go into the publicly managed default fund, which will be discussed in more detail below.

Contributions are paid into an individual account once per year. The capital that accumulates in the individual accounts within the PP system cannot be withdrawn until

The PP is based on a conservative ideology - an attempt to avoid government intervention, and allow the free market to rule (Settergren Interview 2005). The centre-right parties wanted the PP to be a substantial portion of the new pension system, and while compromises were made, they succeeded in introducing a market logic to the new pension system (Sunden 2004, Berge Interview 2005). Josefsson argues that Liberal MP, and PWGP member, Bo Konberg loved the PP because he wanted to make everyone a stock owner - "he thinks it would be nice if the Swedish people sit around at the breakfast table discussing their stocks" (Josefsson Interview 2005). The proponents of the PP expected people to become very interested in investing their money and it was a great disappointment when most people simply refused to make a decision or did not care after the initial round of investing in 2000 (Lundberg Interview 2005). 181 one retires, at the age of 61 at the earliest. The annuity is calculated by dividing the individual account value by life expectancy for each pensioner by age cohort on the day you retire. Pensioners have a choice between a fixed or flexible annuity rate (Engstrom and Westerberg 2003). Pensioners must also choose whether to retain their balance in fund insurance or to switch to a conventional insurance option (Swedish National Social

Insurance Board 2004).

The PP system is based upon a clearing house model, and as such, "the Premium

Pension Authority... conducts the actual trading of the funds, aggregating all individual trades per day to one gross transaction vis-a-vis the fund" (Engstrom and Westerberg

2003: 229). The benefit of such a system is that it costs less for the pension savers compared with direct investment in the market, as it gives the PPM the ability to negotiate the size of management fees. This is an attempt to deal with initial concerns of how to set up the system so as to minimize administrative costs (Palmer 2000). However, according to Thomas Franzen, ex-President of the Swedish National Debt Office, and

Chairman of the PPM, those entering the labour market today could lose more than one- fifth of their PP deposits in management fees over the course of their working lives. This money taken from pensioners would be going to fund companies and banks (Josefsson

2005, Hagberg and Wohlner 2002, Cichon 2005), which may be viewed as a new form of

'unfair redistribution' within the new pension system.

182 The PPM is governed by a Board of Directors and a Director-General appointed by the Swedish government (Premium Pension Authority). The PPM works with other national organizations, such as the Swedish National Social Insurance Board, to produce and distribute annual account statements and to provide client services (Palmer 2000). At the beginning of the Premium Pension system, the PPM held an information campaign encouraging people to make an active investment decision; however, the PPM's strategy seems to have changed over time and it has taken a more passive role, simply providing information about fund risks and fees (Sunden 2004). This could certainly be tied to the surge in popularity for the publicly managed default fund.

The default fund (Premiesparfonden) exists for those who do not wish to make an active investment decision. However, once you have made an active investment decision, you may not later switch to the default fund (Premium Pension Authority). The default fund is an important design feature of the PP. The target for this fund is that it must be associated with lower risk than the average fund in the system. Perhaps because of this, or perhaps because the fee for this fund is lower than other mixed funds within the system

(Engstrom and Westerberg 2003), the default fund has become very popular. The fee for the default fund is 0.16 per cent, while the average fund fee for those choosing where to invest their money is 0.55 per cent (Sunden 2004). In addition, the default fund performed better than the average portfolio when the system first began; from the autumn of 2000, when the stock markets dropped, to the autumn of 2003, the return of the default

183 fund was -29.9 per cent while the return on the average portfolio chosen by an investor was -39.6 per cent (Cronqvist and Thaler 2004). Those who made active investment decisions and lost money due to the drop in the stock market began to question the need to make an active decision when the default fund outperformed the average portfolio.126

Interest in the Premium Pension and in investing in funds appears to have waned since the initial introduction of the system. While 66 per cent of those eligible made active investment decisions in the first round of investing in 2000, only 18 per cent of new pension-savers did so in 2001, 14 per cent in 2002, and less than 10 per cent in 2003,

2004 and 2005 (Settergren 2003, Sunden 2004, Weaver 2005). In the past two years, active investment decisions by new pension-savers have decreased to an all-time low, from 7.4 per cent in 2007 to just 1.6 per cent in 2008 (Liinanki 2009). As such, "interest in the Premium Pension has declined dramatically since the plan's inception" (Sunden

2004: 7). There are several possible explanations for this decline. One is that there has been a drop in the market, which makes it less interesting to invest (Ehnsson Interview

Even Konberg (2003: 117), a staunch supporter of the new pension system and the Premium Pension, admits that "Developments on the stock exchange since the spring of 2000 have of course led many to doubt that share investment in the premium pension scheme and by the buffer funds will strengthen the pension system" and that the timing "now appears extremely unfortunate." 126 However, the default fund has actually returned slightly lower yields in the past two years. In 2007, the default fund returned 4.5 per cent, while the average portfolio returned 5.9 per cent (Liinanki 2009). And in 2008, during the current financial crisis, the return of the default fund was -36.2 per cent, while the return of the average portfolio was -34.5 per cent (Nordic Region Pensions and Investment News 2009). 127 During the first year of investing, there were expensive state advertising campaigns that emphasized the need to choose the right fund in order to achieve wealth in old age (Scherman Interview 2005). There was also a great deal of media attention around the issue and many fund companies actively marketed their mutual funds at the time (Engstrom and Westerberg 2003). This was not the case for subsequent rounds of investing and, as a result, people would have had to take it upon themselves to learn about the system. 2005). From 2000 until at least mid 2002 the pension funds suffered from poor returns on the international stock markets, and the same has occurred during the past year with the financial crisis. A lot of money has disappeared during this time, and it has become clear that profits from the PP can not be counted on (Palme 2003, Josefsson 2005). Also, some believe that young workers just entering the system are not as interested in making active

1 78 investment decisions. In addition, the amount one has to invest is small so some do not see the urgency in making an active investment decision right away, and perhaps put it off for a number of years.

Perhaps the simplest explanation is that choosing from so many funds is just too difficult. Annika Sunden (2004), Senior Economist at the Swedish National Social

Insurance Board, argues that the first four years of the PP system clearly indicates that the number of options is overwhelming, and that changes are needed. In June 2009 a parliamentary pension group was reconvened to discuss the PPM's proposal to drastically cut the number of funds available to pension savers from nearly 800 to between 150 and

300.129 While no decisions have yet been made, Liinanki (2009) argues "After years of avoiding the topic, Swedish politicians have finally started discussing whether 800 funds Indeed, according to a study conducted by Engstrom and Westerberg (2003), those with financial wealth are more likely to make an active investment decision, as are those who had prior pension savings, those with more education, those working in the financial sector or the local government sector, those in middle- age, those born in Sweden, those who are married, and those who are women. 129 Other proposals for change have also been made over the past five years. Sunden (2004) argued that a simplified approach was needed where tiers of options would be provided, one for those who wish not to make an active investment decision, another for those who want to choose but do not wish to become investment experts, and a third for those who are interested in selecting their own portfolio from the full menu of funds. Scherman (2004) has proposed making changes within the PP system so that a minimum guaranteed yield on investment be introduced. 185 might be causing confusion in the public arena." The current attempt to simplify the PP may also come in reaction to a 2008 comment from Mike O'Brien, the UK minister for pension reform, when he branded the Swedish pension system a failure "because of its lack of simplicity." Mats Oberg, manager of the default fund, recently stated "Freedom of choice is good but only to a certain extent. We have too many funds. You have to be a professional not to feel uncomfortable" (quoted in Nordic Region Pensions and

Investment News 2009). Oberg's statement demonstrates the contradictions inherent in neoliberal capitalism. While 'freedom of choice' is an underlying principle, that choice can always be taken away, demonstrating that 'choice' is often used in terms of political rhetoric. As mentioned above, in the case of the PP, the designers of the system anticipated making Sweden into a nation of capitalists, something they had failed to do in the 1950s (Sonnegard Interview 2005). However, it has become abundantly clear that they have also failed to do so in the 2000s, despite their best efforts. As a result, there is recognition that perhaps the system offers pension-savers 'too much choice.'

Some argue that it is actually a rational choice not to make an active investment decision, as there is nothing to indicate that one will make a better choice than the default option (Scherman Interview 2005). The increase in those choosing the default option has led to a general perception of the failure of the Premium Pension system (Settergren

Interview 2005). Josefsson points to the fact that two major critics of the Premium

Pension were brought into the PPM as an admission from the PPM that the system is not

186 working (Josefsson Interview 2005). One could also point to the current debate over reducing the number of funds in the system as further proof that the system is failing.

Those critical of the new pension system, particularly of the Premium Pension portion, use words such as "idiotic" (Josefsson Interview 2005), "silly" (M. Andersson Interview

2005, Hoffmann Interview 2005), and "ridiculous" (Scherman Interview 2005, Carlen

Interview 2005) to describe the system. Josefsson contends that he interviewed two investment professionals, one in the US and one in Sweden, who both indicated that there was no way to make a good choice within the PP system and the over seven hundred funds people may choose from (Josefsson Interview 2005). The fact that investment professionals do not believe in the system is another indication of the failure of the PP portion of the new pension system.

5.3 Outcomes of the New Pension System

In 2005 then Social Democratic Prime Minister Goran Persson made a surprising comment while on an overseas trip. Up until this point in time, no high-ranking representative from any of the five political parties that supported the pension reform had said anything negative about the reform in public. But on February 18, 2005, while in

Australia, Persson stated "The new pension system will not be popular when Swedes have realized the effects" (quoted in Ridderstolpe 2005). This comment caused a media frenzy in Sweden, where it was picked up by the Swedish News Agency {Tidningarnas

Telegrambyra). Many of the people I interviewed in 2005 made reference to this

187 comment, as it surprised many, particularly those who supported the pension reform.

Persson's comment indicated that those who had made the pension reform were aware of the effects it would have, while the Swedish public was not. Thus, a certain level of deception and deliberate misinformation can be attached to the PWGP and the five parties involved, and this is becoming clearer as the years wear on.

The new pension system eliminates much of the equality and universality of the previous system. The system is still universal in that it is mandatory, and thus includes all workers, but the increase in private savings due to the uncertain outcomes of the new system is a challenge to universality. Also, the fact that two retirees with similar work histories could receive very different pensions, depending on their age at retirement, or the economic situation of the time, or the funds they chose in the PP system, challenges the equality principle. However, as discussed below, the maturity of the system, like the whole welfare state, has made wholesale privatization virtually impossible (Anderson

2001). Esping-Andersen (2002a) argues that an adequate retirement guarantee must be a part of any social model, and this appears to be faltering in Sweden. Scherman (2004) argues that the concept of solidarity, an underlying principle of the Swedish model, has been abandoned in the new pension system. While it is unclear that this is currently the case, there is definitely an argument to be made that this is the direction in which the new pension system is heading.

188 There is much debate and disagreement over the outcomes of the pension reform

for people's pensions. One point of contention is the replacement rate. While many argue

that if earnings per capita grow by over 2 per cent per year, the new system will generally provide the same or better benefits as the ATP system (Palmer 2000); of course,

problems arise when this does not occur. Some argue that for most people in Sweden,

the replacement rate in the new system will be lower compared to the ATP system, at

about 45-55 per cent, or 50-60 percent of one's pre-retirement income (Johannisson 2000,

Letzner and Tippelmann 2004, Swedish National Social Insurance Board 2004). Some

believe that the replacement rate will be as low as around 40 per cent for those who

cannot work until age 67 or 70 (Scherman Interview 2005, Carlen Interview 2005).

Proponents of the system such as Ann-Charlotte Stahlberg, Agneta Kruse and Annika

Sunden (2005) acknowledge that, depending on economic growth, the new system might

result in lower benefits than the ATP system, but they emphasize the fact that the old

system was unsustainable. Others argue that the change from a defined-benefit system to

a defined-contribution system will result in better replacement rates, particularly for low-

income workers (Settergren Interview 2005). In the end, though, the basic issue is the

uncertainty within the new system, with no one really knowing what the replacement rate

130 A 1993 Government bill stated that "The public pension system shall give a pension at approximately the same replacement rate [as the ATP system] for a person who works to a normal extent, provided 2% real growth in the national economy and under certain other conditions"; of course, "the concept of 'a normal extent' was not defined" (Scherman 2006: 101-102), nor were the 'certain other conditions' elaborated. As such, the issue of the replacement rate in the new pension system has been somewhat unclear from the very beginning. 189 1-5 1 is, or will be, as it depends on too many changing variables. Jan Hagberg and Ellis

Wohlner (2002: 234) argue that the new pension system "promotes social injustice by yielding varying retirement incomes for individuals in similar circumstances," and it is this that may be the biggest challenge to solidarity in the Swedish welfare state.

The Swedish National Social Insurance Board (2004) argued that because of favourable economic development in the late 1990s and 2000s, pensioners benefited from a pension increase of 2.5 per cent greater than if there had not been a pension reform.

When interviewed in 2005, Konberg also pointed to the fact that the new pension system had so far given higher pensions than the old ATP system because of wage growth during the early 2000s (Konberg Interview 2005). These higher pensions are the result of two important factors, however, which will not always be the case: those currently retiring are a part of the 'transition' and have a portion of their pensions covered under the old ATP system, and economic growth in Sweden was favourable during the first few years of the

2000s. When people retire without these two conditions, the results will be very different, as demonstrated above.

Konberg freely admits that those who start work later in life or who take more time out of the labour market will get less in the new pension system than in the old ATP system (Konberg Interview 2005). Cichon (1999) agrees, arguing that for those who enter the labour force later, withdraw for long periods, or leave early, the pension amount is

131 In fact, Settergren (2006: 230), a proponent of the new pension system, admits, "the projected pension level is heavily dependent on the method of calculation used." 190 automatically reduced. It is important to note that the majority of those who start working later in life and who take more time out during their careers are women, thus they will be affected by the new pension rules more negatively than men. In fact, recent studies have shown that women's pensions are worth between 80 to 90 per cent of men's, on average.

"The main reasons for the gaping inequality is that women often have lower salaries than men... [and] many more women than men work part-time" (Rodas 2008). Patrik Marier

(2007) argues that by focusing the debate on the benefits of the new system versus the old

ATP system, the fact that women will receive a lower pension than men due to their lower wages and occupational segregation was not emphasized. Sigrid Leitner (2001) argues that pension schemes based on long calculation periods, such as lifetime contributions, privilege men as a group over women. Marier also points to such criticisms of the life income principle, as this type of system reduces women's pensions on average, as women tend to have more career interruptions and work more part-time hours than men. Thus, it is clear that, as a group, women are disadvantaged within the new pension system.

The new pension system indicates a shift from a society taking care of people to individuals taking care of themselves, and it does so by transferring risk from the state to the individual (Settergren Interview 2005, Hoffmann Interview 2005, Sunden Interview

1 Leitner and Marier are not the only ones critical of the life income principle for women. The Social Democratic Women's Federation was also critical of the life income principle, which resulted in over thirty female SAP Members of Parliament writing an open letter to party leader, Ingvar Carlsson, in the early 1990s (Marier 2007). 191 2005, Anderson 2005, Lundberg 2005).I33 By guaranteeing a fixed contribution rate and having an ABM, the result will be that pensions will be reduced as much as necessary in order to restore financial equilibrium in times of economic downturn (Scherman

Interview 2005, Lundberg Interview 2005, Scherman 2004). This shift in ideology also implies a shift from a focus on distributive justice to a focus on procedural justice, where the outcome no longer matters, but rather the way that you earn your pension is the focus

(Lundberg 2003, 2005). The question remains - will this shift of risk onto the individual, particularly within the PP system, contribute to the erosion of the solidarity that typically underpins social democratic welfare states (Palme 2003)?

While it may be necessary for people to work longer within the current context, it is necessary to have a debate about this issue and to have a discussion about where people are expected to find jobs which will let them stay until age 70. The PWGP managed to avoid such debates by instituting automatic mechanisms to deal with the issue instead of frankly discussing with the population that changes in working behaviour are needed

(Scherman Interview 2005, Cichon, 1999).134 Scherman (2004: 8) argues that "[a] standard retirement age, successively increased in line with increases in life expectancy, as well as a corresponding increase in the minimum age when an early retirement can be drawn is necessary in order better to reflect the real needs of society." Konberg recognizes the fact that because people must now work longer, there must be a system in

133 As Palme (2005: 46) argues the new pension system "introduces individual risk taking within social insurance, where programs are usually designed for collective risk sharing." 134 Such as retiring at 66 or 67 and reducing the amount of people retiring early. 192 place where people may not do the same tasks in their job for the last few years in order to accommodate this need to work until 67 or 70 (Konberg Interview 2005).

Others agree, but due to the way the Swedish labour market is currently organized, it is unrealistic to expect that everyone can work until 67 or 70 (M. Andersson

Interview 2005, Gonas Interview 2005, Montanari Interview 2005, Lundberg Interview

2005, Duvander Interview 2005, Scherman 2004). In a piece written for the European

Foundation for the Improvement of Living and Working Conditions, Jenny Lundberg

(2007) argues that there are two principal factors which influence people's capacity and inclination to work long - "motivation and work environment conditions," which include manageable stress levels, organizational changes, and reduced working hours; she argues

"fewer working hours can motivate people to work longer." However, these conditions do not necessarily exist for many workers. As such, the National Institute for Working

Life (Arbetslivsinstitutef) and the Swedish Work Environment Authority

(Arbetsmiljoverket) both argue that "Working conditions need to be adapted to encourage older people to remain in the workforce" (Stenlund 2004). The awareness that something needs to be done appears to be there, however this has resulted in very little action to date.

The question of fairness is terribly important in the new pension system (Hedborg

Interview 2005). The NDC PAYG system abolishes the redistributions between different income groups that occurred in the old pension system (Cichon 1999). This is due to the

193 fact that there is now a closer, more direct link between contributions and benefits. The new pension system saw a shift from a defined-benefit formula to a defined-contribution formula (Palme Interview 2005). This shift represents a change in direction for the entire welfare state, where your contribution to the system will be important for determining your benefits from the system (Sonnegard Interview 2005). However, as mentioned earlier, there is also concern that money is being redistributed from workers to banks and fund companies in the new PP system. So the question of unfair redistribution has not been solved with the pension reform.

The Swedish National Social Insurance Board provides updates on everyone's future pension income in an orange envelope sent out once a year. These orange envelopes are part of an ongoing information and education campaign about the new pension system. Some argue that because of these orange envelopes people know more about the pension system now than they did in the old system (Ehnsson Interview 2005,

Gennser Interview 2005). Konberg argues that these orange envelopes are useful in that they allow people to know the different pension they will receive if they retire at different ages (Konberg Interview 2005). However, there are others who believe these statements are difficult to decipher and that despite the orange envelopes most people do not know how much pension they will receive (Linder Interview 2005). In fact, despite now receiving information about one's future pension income yearly, there is more uncertainty

1 5 For a more in-depth analysis of the orange envelopes and citizens' reactions to them, see Nyqvist (2008). 194 about what this income will be (Settergren Interview 2005). "This uncertainty might encourage people to save privately to a greater extent than before" (Johannisson 2000:

54).

Of course people's views on whether private pension savings are a good thing or a bad thing differ as well. Margit Gennser, one of the architects of the new pension system, believes that "if we are getting more wealthy, people have the possibility to make their own [private] savings and then you have [the public system] as a basic system" (Gennser

Interview 2005). Konberg argues that in such a system workers must save or insure themselves if they would like to have "a good proportion of the income they had the last fifteen or twenty years before they retire" (Konberg Interview 2005). Yet, the amounts that people are saving privately are not enough to make up for the low public pension people will receive if they keep the same working patterns (Scherman Interview 2005).

Some argue that because pension benefits will decrease over time, there will be a rise in private pension alternatives within Swedish society, something which was rare in Sweden in the post-war era until recently (Korpi Interview 2005, Montanari Interview 2005,

Verdinelli-Peralta Interview 2005, Nyberg Interview 2005, Scherman 2004). Palme

(2003: 161) argues that the "relative importance of private solutions has been on the increase for over two decades." In addition, the potential for long-term savings is increased with the financial stability of the system. Of course this indicates the very real

195 possibility of eroding the public pension system and its core principle of income security, and the very real possibility of increased inequality among Sweden's retirees.

A major goal of the pension reform was to depoliticize the pension question - to create a completely autonomous self-regulating system that would not need any sort of political intervention under any circumstances (Lundberg Interview 2005, Anderson

2005). Those behind the design of the pension reform were happy that the new pension system would run automatically without any interference from politicians and parliament

(Gennser Interview 2005). An attempt to "deliberately and severely [limit] the policy space for policy-makers" is a built-in element of the ABM within a NDC pension scheme

(Cichon 2005: 178). The ABM, or 'braking' mechanism as it is often referred to, was designed to ensure that the state would not take on any risk within the pension system

(Lequiller 2004). Lindbom has termed this "automatic politics," and argued that this would lead to major conflicts in the future (Lindbom Interview 2005).

Lindbom was correct, and the problems arrived sooner than most expected. The

ABM was designed to be an example of automatic politics in practice, where decisions by politicians are no longer required and the system can function on its own, whether during times of poor economic growth or high economic growth. However, this is not an accurate picture of how recent events have unfolded.13 As Scherman (2009b) argues "the

Pension agreement was based on beliefs about the coming years that have already proved

136 In fact, Hagberg and Wohlner (2002: 338) argue "the fact is that all financial systems require adjustments over time. The goal of automatic long-term stability is exceedingly elusive..." 196 to be totally wrong." Calculations were made in the spring of 2009, based on the situation as of December 31st, 2008, which indicate that liabilities currently exceed assets, and thus the ABM must be activated, which will affect pension payments beginning in 2010

(Scherman 2009c). As the balance ratio has been close to 1 from 2002 through 2007,137

Scherman argues that the only reason the ABM has not already been activated is due to the high growth in the stock market during those years. Thus, he argues that the current activation of the ABM is less about the financial crisis, and more about the design of the system (Scherman 2009a, 2009b), as this is an inevitable consequence of relying on the stock market for people's pensions.

Instead of allowing the ABM to be activated and to 'automatically' deal with the imbalance, as was the intention behind the design of the new pension system, politicians have, once again, inserted themselves into the process. As Scherman (2009a) argues, the five political parties behind the pension reform "have agreed to revise the calculations that determine how the 'braking' mechanism functions." The parties came up with a proposal that would lower the effects of the ABM in 2010, an election year, and redistribute them over the next five years (Sunden 2009a). The parties submitted their proposal to the Swedish National Social Insurance Board for analysis, and the Board rejected it on the basis that it would have more serious long-term effects; yet, the parties have decided to go forward with the proposal, after Parliament gets to vote on it later this

137 According to Sunden (2009a) the balance ratio was 1.0105 in 2002, 1.0097 in 2003, 1.0014 in 2004, 1.0044 in 2005, 1.0149 in 2006, 1.0026 in 2007, and the ratio finally dipped below 1 to 0.9672 in 2008, thus activating the ABM. 197 fall (Scherman 2009a).138 Table 5.1 illustrates the results of activating the ABM for the average pensioner, both under the current rules as well as under the government's proposal. Either way, in this five year period, the average pensioner is set to lose nearly

40 per cent of a year's pension, according to calculations by Scherman.

Table 5.1: Effects of activating the ABM on the average pensioner!, under the current rules versus under the government proposal, 2009 Year Current rules Government proposal 2010 -3.3% -1.8% 2011 -8.4% -7.2% 2012 -10.1% -9.8% 2013 -8.8% -9.9% 2014 -7.9% -9.2% 2010-2014 Total -38.5% -37.8% *Source: Scherman 2009b |The 'average' pensioner has a yearly pension of SEK 144,000

When conducting interviews in Sweden in 2005, the uncertainty within the new pension system was something that most people acknowledged. Because the system is so closely linked with economic growth, it is impossible to predict exactly how much pension you will receive when you retire (Konberg Interview 2005, Wennemo Interview

2005). At the time, Settergren, a pensions expert, acknowledged that there would come a time when the indexation of the benefits would be low due to slow economic growth, and he was curious to see what would happen then (Settergren Interview 2005). While most people recognized this as an abstract possibility, few thought about what would happen when this actually occurred, which is the current context in which Sweden finds itself.

The proposal is expected to pass without problem in the Swedish Parliament, as it has the backing of the five largest parties represented in parliament. 198 The question remains, will the Swedish people sit by quietly during economic downturns and simply accept lower pensions? Or will they call for changes to the pension system once they see concretely how they are losing in the new system?

5.4 Gendered Effects of the New Pension System

Members of the PWGP claim that they were always conscious of how the pension reform would affect women. Anna Hedborg, PWGP member, argues that the formulation in the new system was done in a way that the part of the benefits going to women in the new system should be the same as in the old system (Hedborg Interview 2005). Konberg claims that the principle of gender fairness was one of the most important questions discussed by the PWGP (Konberg Interview 2005). In addition, because women live longer than men, and the calculation of life expectancy in the pension system is unisex, some argue that women will benefit in all income levels because of this redistribution

(Gennser Interview 2005, Palmer 2000, Stahlberg, Kruse and Sunden 2005).

The PWGP had stated in the principal bill in 1994 that those who stay at home with young children, mainly women, must be compensated in the pension system in recognition of this pattern in Swedish society (Sonnegard Interview 2005). This led to the introduction of pension credits for the care of children four years old and under.139

Without this, the new pension system would have been viewed as discriminatory towards

13 However, the pension credits do not recognize unpaid care work for older children or for other relatives, such as elderly parents or those with illnesses or disabilities. As such, women who take on this type of unpaid care work to the detriment of full-time hours in the paid labour force will be disadvantaged within the new pension system. 199 women, as it is based upon lifetime contributions and would penalize women who take

time off to spend with their children when they are young (Stahlberg, Kruse and Sunden

2005). Thus, the introduction of pension credits for childcare came from a place of justice

and gender equality (Sonnegard Interview 2005, R. Andersson Interview 2005,

Montanari Interview 2005). Gennser claims that the pension credits for childcare make

up for any benefits women had in the old ATP system from the 15/30 years rule, making

it a fair exchange (Gennser Interview 2005).

Konberg argues that if you take the new pension system as a whole, including the

pension rights for childcare, women will have no lower percentage of men's pension than

they had in the old ATP system (Konberg Interview 2005). Yet, Karen Anderson and

Traute Meyer (2006) argue that the pension credits for childcare probably do not

compensate for the generous protection built into the old system via the 15/30 years rule,

and Marier (2007) agrees that this was a controversial aspect of the pension reform, as

women were viewed by many as a key group that benefited from the old ATP system's

15/30 years rule. Leitner (2001: 107) also argued that these pension credits maintain

"gender discrimination though to a lesser degree" than if they did not exist. Thus, while

women may not be directly disadvantaged within the new pension system for taking time

off to care for young children, they are disadvantaged indirectly in that time out of the

labour market often means fewer promotions, lower wages, and difficulties in changing jobs, all of which affect one's pension (Sunden Interview 2005).

200 A combination of the pension system, the parental leave system, and the ceiling on childcare fees all contribute to women working more hours now than ever before

(Sundstrom Interview 2005). As discussed in Chapter 2, approximately one-third of all female workers now work part-time, as compared to nearly 50 per cent twenty years ago.

Over the years women had improved their relative position within the pension system due to their increasing number of qualifying years (Stahlberg 1995b), and their increasing propensity towards full-time employment throughout their working lives. The differences between men and women's pensions will diminish when older women retire, since younger generations of women participate in the labour market more than older generations. Marianne Sundstrom, Associate Professor of Economics at Stockholm

University, argues "that the new pension system gives great incentives for women to work more" (Sundstrom Interview 2005).

But will this be the outcome or will women's pensions simply suffer? Anita

Nyberg, researcher at the National Institute for Working Life, argues that this possibly could be good for gender equality in the future (Nyberg Interview 2005), but it is still undecided. Women who work part-time will now have to think about what they will lose by working part-time (Sundstrom Interview 2005, Stahlberg 1995a). Some argue that "a pension system with positive work incentives leads to higher female labour force participation, higher pensions for women" (Stahlberg, Kruse and Sunden 2005: 2). Others argue that "you have to really have bend the numbers... to make this [new pension

201 system] look like a good deal for women" (Josefsson Interview 2005), as those working part-time will be punished within the new system, as they will have contributed less to the pension system over the years than if they had worked full-time. The result could be that women will have little to live on when they retire (Gonas Interview 2005, Duvander

Interview 2005).

Urban Lundberg, a pensions expert, argues that if there are a lot of differences on the labour market, in terms of female participation and compensation, then there will be differences in outcomes in the pension system as well (Lundberg Interview 2005). Jenny

Lindblad, researcher and gender expert at LO, agrees, stating that the problem within all social security systems is that they are based on income and women earn less than men and work less hours than men (Lindblad Interview 2005). Stahlberg (1995b) agrees, arguing that it is women's lower wages and shorter working lives that result in lower pensions for women. It is clear that men and women face different life course risks due to their sex and their relations to one another (Myles 2002). This, of course, means that women are disproportionately affected by reforms that reduce or reorganize public sector benefits, since they typically have lower lifetime earnings. For all these reasons, some sort of consideration of men and women's different positions on the labour market should have been incorporated into the design of the new pension system, but it was not. As a result, women's pension will continue to be lower than men's.

202 Ulla Hoffmann, PWGP member, argues that the result of the new pension system will be that "most women are going to be depending on the guaranteed pension that we have at the bottom" (Hoffmann Interview 2005). Over the years, women have consistently had higher GPs than men, due to the fact that women on average have lower income pensions than men. On average, women's pensions have been 35 per cent lower, largely due to differences in income during their working years (Swedish National Social

Insurance Board 2004, Anderson and Meyer 2006). Konberg (2009) admits that due to the current financial crisis, "[f]or those - mainly women - who only have a guarantee pension, this will probably mean a lowering of the nominal pension [by] 70 SEK a month," or as Hoffmann (2009) argues, as much as 100 SEK a month. Again, this will have a greater impact on women than men, as it is women, as a group, who rely more heavily on the GP.

The fact that certain groups of women will lose in the new pension system is confirmed in studies conducted by the Swedish National Social Insurance Board, which demonstrate that "about two thirds of the studied population will lose in the new system, mainly lower level salaried employees and women working part-time and less than 40 years" and that overall "[a]bout 80% of the population will lose 7-8% in pension value"

(Harrysson and O'Brien 2004: 70). Marier (2005) also argues that those expecting to lose in the new system are those with interrupted careers, blue-collar workers prone to early retirement, and white-collar workers who benefited from the previous 15/30 years rule or,

203 in other words, women and blue-collar workers who retire early. Within LO, support for the new pension system is backed by the argument that the new pension system is better for female members who often have a low income and flat earnings profile (Wennemo

Interview 2005).140 Members of Kommunal, the vast majority of whom are women, work approximately 80 per cent of full-time, and this amount has been steadily increasing over time (R. Andersson Interview 2005).141 However, the fact that many Kommunal members do not work full-time hours will still result in lower pensions in the new system.

Feminists are dramatically divided in their evaluation of the new pension system.

While Konberg argues that there has been very little criticism of the pension reform from a gender perspective, Palme argues that the reform has been heavily criticized from feminist sides (Konberg Interview 2005, Palme Interview 2005). However, three prominent Swedish feminist pension scholars, Stahlberg, Kruse, and Sunden (2005), concluded that the design of the new Swedish pension system is favourable to women due to design elements such as direct links between contributions and benefits, the GP, a unisex calculation of life expectancy, pension credits for childcare, and the income ceiling. They pointed out as well that the system's public and mandatory nature also makes it beneficial to women, who have particular pension concerns as their behaviour on the labour market as a group is different from that of men. A public and mandatory

1 Marier (2005: 527) supports this argument when he states that those who are expecting to gain in the new pension system are "those with steady career and low-wage progression." 141 There was a brief interruption in this pattern in the early 1990s during the economic crisis, where the percentage of full-time hours that Kommunal members worked dropped from approximately 80 per cent to approximately 76 per cent, but has since increased to 80 per cent again (R. Andersson Interview 2005). 204 pension system is advantageous to women, as it makes use of unisex life tables in the calculation of benefits, and since women have a higher life expectancy, the result will be higher annual benefits for women than in a voluntary system where men would likely choose private alternatives over paying more into the public system (Stahlberg, Kruse and Sunden 2005).

5.5 Sweden's Pension Reform: A New Model?

The new Swedish pension system, while designed in Sweden, was actually not implemented in Sweden first. The Swedish International Development Cooperation

Agency spent SEK 48 million to introduce the Swedish pension system in Latvia first as a test run (Hoffmann Interview 2005). The Latvian and Polish cases are illustrations of how the Swedish pension reform has influenced pension reforms in other nations, and continues to do so today, as Norway's new pension system, influenced by the Swedish reform, is ready to take effect in 2010 (Palme 2003, Lequiller 2004, Scherman 2004,

Andresen 2006). As mentioned in Chapter 4, the World Bank, the European Commission and numerous finance ministries all heralded the new Swedish pension system as a possible way of dealing with the pension crisis facing many countries today (Letzner and

Tippelmann 2004). The authors of a World Bank study on pension reform stated that the Swedish pension reform "is a most promising new approach to pension reform at a time when virtually every country in the world is looking at the viability of their pensions

142 Robert Holzmann and Edward Palmer (eds.), Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes. The World Bank Group, 2006. 205 systems, and wondering how to relieve their demographic and economic pressures, while avoiding creating additional burdens for future workers" (quoted in The Local 2006).

Konberg was quite busy after the Swedish pension reform of the 1990s, giving speeches, both inside and outside of Sweden, on the topic. He gave dozens of speeches to visiting groups from other parts of Western Europe about the pension system, how it was set up and how it was implemented so easily (Linder Interview 2005). When representatives came from other countries they realized that Swedish politicians were successful in avoiding the debate about where people will find employment until they are

67 or 70, something that they too have been struggling with (Scherman Interview 2005).

Konberg has also traveled around the world talking about the Swedish pension reform to the World Bank, and elsewhere (Hoffmann Interview 2005).

It would have been much more difficult for Konberg and others to advocate introducing this type of pension system in other countries if it were not for Sweden's international reputation around issues of social security (Hoffmann Interview 2005).

Indeed, the fact that the new Swedish pension system was being touted as a model for other countries even led some Swedes to believe that the pension reform must have been good for this reason alone (Scherman 2004). However, the "radical and innovative" nature of the pension reform has roused not only interest, but also "surprise, and confusion among the international community of pension scholars and policy-makers"

(Palme 2003: 144). Not everyone has shared the belief the Swedish pension reform is a

206 model to be emulated. Many found it difficult to believe that such a reform was undertaken in social democratic Sweden.

The pension reform was not only held up as a model for other countries, but also as a model for future social reforms in Sweden. In 2005 then Prime Minister Goran

Persson announced that he was appointing an investigation into the social security system in Sweden, and that the pension reform would be the model (Hoffmann Interview 2005,

Lundberg Interview 2005). There are parallel trends in developments in other sectors of the Swedish welfare state - the importance of private provision and choice are increasing.

There are two potential outcomes of these developments: 1) by providing for more individual choice, the legitimacy of the system could increase; or 2) by providing for more choice, support for the public universal system will erode and social divisions will be reinforced (Palme, 2003).

Linder argues "[The new pension system is] still very much a public system, everything is run by the government, but there is a certain part of it that allows for choice" (Linder Interview 2005). Because the government does not want people to receive very low pensions, there are a number of supplements and other types of support available to those with low pensions. For example, there is a housing supplement for pensioners, maintenance support for the elderly with low pensions, and a special pension supplement for those who took time off work to care for a sick or disabled child (Swedish

207 National Social Insurance Board 2006).143 This demonstrates the state's continued involvement in the lives of retirees and in guaranteeing the social security of its residents.

"[T]he design of the pension reform has the potential to foster interplay between public and private pension provisions, which is mutually reinforcing rather than mutually exclusive" (Palme 2003: 162). For example, within the new pension system there is interdependence between the state budget and the pension system that exists independently of the autonomous NDC PAYG pension system (Scherman 2004), thus demonstrating the state's continued role as financier within the guaranteed pension portion of the new system. The new pension system also still has the old social policy goal of providing a basic safety net for pensioners, through the GP, and income security for those who are active on the labour market (Palme Interview 2005). The new pension system reaffirms boundaries between public and private since "[e]ven if there are elements of privatization, the reform does not represent a clear-cut retrenchment of public commitments..." (Palme 2003: 144).

However, the Premium Pension is the clearest example of changing the boundaries between public and private, as it is a private insurance system within a public pension system. This system combines private funds with a popular publicly managed default fund. The introduction of the PP, therefore, does not represent an entire

143 Konberg (2009) argues that the problems that have arisen due to the current financial crisis will probably not result in changes in the pension system, but may bring about changes to housing supplements and tax rules for retired people, to acknowledge the fact that they are receiving lower-than-expected pensions. 208 privatization of the pension system. This is clearly illustrated in the fact that the system is mandatory, not voluntary, the payments from the PP are public in the sense that the PPM pays the annuities to the contributors, and there is a publicly managed default fund

(Palme 2003). However, as of 2007, the Statistical Office of the European Communities has reclassified the PP as part of a private insurance scheme (Eurostat 2004), as the government does not 'control' the PP system since, by design, the system is funded and benefits are determined by assets and returns on assets (Lequiller 2004).

Conclusions

The pension reform did not appear to be a major issue in Sweden until the recent financial crisis. As a result of the anticipated activation of the ABM, Sunden (2009b) states, "[t]here has been a lot of discussion on the pension system and in particular the expected decrease in pension benefits next year." Yet, while there is some public discussion around the pension system today, any resistance from the Swedish people would have to be significant in order to topple a system supported by a five-party consensus, and this does not appear to be on the horizon, at least not yet.

This consensus is a reminder of the process by which the pension reform came about. This process of reregulation saw the state choose which direction to follow, with few constraints; only financial concerns and the choice to make a decision by consensus constrained the process by which the pension system was reformed. There was no public input into the process, and little or no consultation with pension experts, pensioners' organizations or trade unions. In the end, it was the state that decided it was time for a pension reform, and the state that dictated the direction of this reform. As such, the state retained its role as decision-maker and regulator throughout the reform process, but voluntarily relinquished some power within the new pension system. For example, the state's role as regulator of the pension system was to be severely curbed by instruments such as the Automatic Balance Mechanism, which were built into the new system. The new pension system was designed in such a way so that politicians would no longer have to interfere with the system to adapt to changing economic realities, as it would all be done automatically within the system. This decision to remove political interference from the system was a voluntary one, and one the centre-right parties favoured for ideological reasons. However, it is also a decision that these same parties are now going back on, as they are involving themselves in current decisions about the activation of the ABM in the wake of the current financial crisis.

While the Swedish pension system has been overhauled in the past decade and a half, there still remain elements of the new system that reinforce the social democratic nature of the Swedish welfare state, and there are also elements which pose challenges to social democracy in Sweden. The social democratic goal of universality is reinforced in the continued mandatory nature of the system, the Guaranteed Pension available to those with little or no income pension, as well as the state's continued involvement in the pension system through financing pension credits for certain forms of non-paid work or absences from the labour market, and through the publicly managed default fund within the Premium Pension portion of the system. These aspects of the current pension system echo Palme's earlier comment that even given the introduction of some elements of privatization, the pension reform represents both continuity and change.

But, at the same time, social democracy has been challenged through the introduction of private elements into the public pension system, such as the PP, which carries with it an underlying market logic. In addition, the uncertainty introduced in the new pension system, by linking benefits to economic growth and life expectancy, also poses a challenge to social democratic values of equality and universality. A fundamental problem in the new pension system is its reliance on the market to provide for people's social security in retirement. To place the market in control of such a crucial aspect of people's social security demonstrates the inroads that neoliberalism has made in the

Swedish pension system. The new pension system is fraught with problems, from a design standpoint, from an ideological standpoint, and from an outcome standpoint.

However, the fact that the PPM is looking to alter the choice of funds in the Premium

Pension, and that politicians have gotten involved in the activation of the Automatic

Balance Mechanism, demonstrates that there is some recognition, even amongst those who designed the system, that the new system is not working as planned. As the cracks in the system grow larger, Palme (2005: 51) argues "Omission to correct mistakes and

211 mismanagement, or to adapt systems to changing needs and demands, will make the programs undesirable and unsustainable."

An interesting aspect of the new pension system relates to the incentives to work and the question of whether they will affect people's work behaviour in the future.

Because women who work part-time will be disadvantaged within the new pension system, will we see more and more women working full-time hours for their entire working career? Will we see more people working until age 67 or 70 in order to secure a better pension for themselves, or will people still retire by age 65 and simply have less money to live on in retirement? Will we thus see a rise in pensioner poverty, something that has largely been eradicated in Sweden in the post-war period? These are questions that will only be answered with time, but the new pension system does open up some interesting possibilities in Sweden. The continued success of the country's social democratic welfare state depends upon full employment, and it will be interesting to see if the pension system will be successful in encouraging this. Stahlberg (1995b: 21) argues that "the rules for how pensions are determined are not neutral from a distributional point of view. Some pension rules favour a particular pattern of labour market behaviour." This is illustrated within the new Swedish pension system, where the underlying goals of full employment and financial sustainability are clearly outlined. Thus, the system favours a more typically male pattern of labour market behaviour and will have negative consequences for those who do not adhere to this pattern.

212 While the results of the new system are still unfolding, it is clear that there will be losers within the new system, particularly female and male blue-collar workers in physically or psychologically demanding jobs who retire early, as well as women who work part-time, even if just for a few years while their children are young. It is also clear that inequality between pensioners will certainly increase over time due to differential outcomes from the PP system, as well as the increased trend towards private savings among the population. Those who can afford to, will save enough privately to supplement their public pension, while those who cannot afford to do so, will simply have less money during retirement. This will pose a serious challenge to social democracy in Sweden in the future, as the goal of equality, achieved through a certain level of redistribution, has been neglected in the new pension system.

213 Chapter 6: The Swedish Welfare State of the Future: Social Democratic or Neoliberal?

6.1 Introduction

For many the current period in Sweden represents a time of uncertainty, of potential change. Some believe the Swedish welfare state has already changed direction, or altered course, but for most the social democratic path remains intact. The debate over the extent of changes to the Swedish welfare state, and particularly the extent of neoliberal elements within the social democratic welfare state, remains important.

Throughout this dissertation I have argued that the reregulation of the childcare and parental leave sectors has generally been very positive for women's employment and gender equality in Sweden, whereas the reregulation of the pension system has generally been negative for most Swedes, and particularly women, about one-third of whom work part-time. As such, the reregulation of the pension system could undermine gender equality and social democracy in Sweden in the future, as the gendered effects become clear with time. However, all three cases clearly illustrate a process of reregulation, whereby the state remains in control, even when introducing private elements into the welfare state.

I argue that today the social democratic welfare state remains largely intact, but the introduction of some neoliberal elements, such as privatization, since the 1990s is cause for concern and does pose a threat to social democracy in Sweden. Andrew Martin

(1975) once posed the important question "Is Democratic Control of Capitalist 214 Economies Possible?" - using Sweden's labour movement-supported political party, the

SAP, as the test case. In the end he concluded that the scope for national economic policy has been reduced as the strength of global capitalist forces increased. While there is some validity to this argument, the differential ways in which countries have dealt with neoliberal pressures since the 1970s and 1980s indicates that this is not entirely accurate.

The predominant social forces in Sweden - the Social Democratic Party, the strong trade union confederations, the institutions which form the social democratic welfare state - have shaped how Sweden has responded to neoliberal pressures.

The reasons why the social democratic welfare state has survived are many, including the historical legacy of the social democratic regime in Sweden, the continued strength of the state, the institutionalization of class coalitions, as well as the popularity of the welfare state amongst Swedes.144 The future Swedish welfare state will likely remain social democratic, but only if the state and the citizens remain committed to the principles of social democracy. One such principle is that of equality, and gender equality in particular, which remains a high priority for the state and citizens, as demonstrated in

Chapters 2 and 3. The fact that family policy remains an area of expansion within the

Swedish welfare state illustrates the importance of the goal of gender equality within

Swedish society, while also illustrating the process of reregulation which has taken place in Sweden, where the state has retained its role as regulator, decision-maker, financier,

144 Stefan Svallfors and Jonas Edlund (2002) have conducted studies that indicate that many Swedes would even be willing to pay more taxes to support the universal elements of the welfare state, such as health care, education, and childcare. 215 and service-provider, and has been able to implement its own agenda even in the face of external and internal neoliberal pressures.

Social democracy in Sweden dates back more than a century, and helped to shape the path of the social democratic welfare state since the 1930s. In the post-war period, the twin pillars of full employment and equality underscored the development of the Swedish welfare state. However, these principles evolved over time, with full employment growing to include both women and men in the 1970s. In addition, the narrow concept of class equality expanded to include, and even focus on, gender during this same period.

Today it would be impossible to speak of employment or equality policies in Sweden without engaging in a discussion about women and gender relations. This connection between gender equality and social democracy in Sweden remains strong, even if always evolving. There were certainly key decisions or points in time which have led Sweden to have achieved such a high degree of gender equality, but it is difficult to pinpoint one particular reason. The decision in the 1960s and 1970s to encourage Swedish women into the labour market due to a labour shortage can be viewed as a turning point, but simply having more women in the labour market does not necessarily lead to a high level of gender equality, as evidenced by many countries, such as the United States or Canada.

The events that followed women's entry into the labour market - the expansion of childcare and parental leave, the expansion of the concept of full employment to include women, and the expansion of the public sector, laid the basis for women being provided

216 with secure, well-paying jobs. Together these factors led to a shift in society from a male- breadwinner model to a dual-earner model, where women are not viewed as a reserve army of labour, but as workers alongside their male counterparts. This shift in ideology and in policy is what created the conditions for women to be expected to, and expect to, work in the labour force during the whole of their adult lives. The idea of working until one gets married and has children and then stopping to become a full-time housewife and mother is no longer a popular one in Sweden. Both women and men are expected to participate in the labour market throughout their adult lives, and more and more, both women and men are expected to participate in the unpaid domestic duties that go along with having a family. Consequently, some argue that Sweden is not only a dual-earner society, but also a dual-carer society. And while this may not yet be completely true, it is certainly the direction being pursued in Swedish society today.

Family policy in Sweden today is not only directed towards women as workers and mothers, but also towards men as workers and fathers. The initial development of the childcare program in Sweden allowed women to enter and remain in the labour market after having children, while also offering Swedish children a valuable socialization and educational experience. Over time, the development of the complementary parental leave program has shifted focus from simply allowing women to be both workers and mothers, to encouraging men to be not only workers, but also active fathers. Thus, the program has as much to do with gender equality as it does with full employment.

217 The whole of Swedish family policy encourages both women and men to balance family and work life, so that they may have careers and children. In due course, the concept of gender equality was expanded from just women engaging in paid labour to a more equitable sharing of unpaid labour between women and men, a concept advanced four decades ago by feminists such as Benston (1969). And while this goal is taking longer to achieve, the fact that it is a societal goal and that there have been important steps taken in this direction is significant, as it indicates a desire to achieve substantive gender equality. And the fact that the state is so involved in moving society in this direction is but another example of the current process of reregulation in Sweden, where the state takes its role seriously in setting goals and implementing policy to achieve these goals.

6.2 The Effects of the Introduction of 'Choice'

The introduction of private service providers in Swedish childcare was accompanied by a certain discourse with distinct class connotations. In the beginning, arguments in favour of private providers emphasized efficiency and saving taxpayers money. However, over time, the debate has come to focus more on the concept of

'choice,' and people's ability to choose for themselves which provider they wish (Linder

Interview 2005). The concept of 'choice' has, relatively quietly and quickly, come into widespread use in Sweden in terms of welfare service delivery. Christina Bergqvist

(2007) refers to Paula Blomqvist and Bo Rothstein's (2000) concept of a "revolution of choice," implemented by the centre-right government in the early 1990s, to describe how the concept became dominant in such a short time period. Choice has come to be an

important underlying concept of neoliberalism and privatization, used to justify the

introduction of private providers on the basis of "consumer choice" (Blomqvist 2004).

Jan-Erik Lane (1994: 192) argues that in the early 1990s the dominant political policy

orientation in Sweden highlighted "private choice and competition in supply," in an

attempt to increase private provision within welfare services. Today there is 'choice' in

almost every aspect of the Swedish welfare state (Palme Interview 2005).

However, the idea of 'choice' is relative. Gustavsson, Member of Parliament for

the Left Party in Sweden, argues that it would be interesting to see who really has the

ability to make choices, and asserts that it is unlikely to be the working class (Gustavsson

Interview 2005). For some, "a bit more choice" means "a bit more segregation" (Ferrarini

Interview 2005). Also, it is important to remember that in smaller communities in

Sweden there is no choice at all, because there is only one school or one hospital in the

area (Korpi Interview 2005). Thus the choice debate is confined mainly to major urban

centers such as Stockholm or Goteborg. In this context, choice has been framed in such a

way that many people feel they have an influence on the services provided, and thus do

not mind paying higher taxes for them (Palme Interview 2005).

The idea of choice is also very much linked to individualism, another concept

adopted by neoliberalism to emphasize the centrality of the individual, which is a threat

219 to the social democratic welfare state and to social solidarity (Gustavsson Interview

2005). Notions of self-reliance and of responsibility over one's own destiny, which are derived from market theory, lay beneath the concept of choice (Holmes 2006). Scherman, a critic of the recent pension reform, agrees, arguing that what the choice discourse has done is shift the responsibility for results to the individual, instead of the state ensuring that all choices are good choices, or reflect the same standards (Scherman Interview

2005). Prior to the 1980s and 1990s, the dominant belief in Swedish politics was that

"welfare services should be allocated equally to all citizens by one supplier" (Lane 1994:

192).

Within the concept of choice there is embedded the idea that certain 'choices' are better than others and, as such, there will be winners and losers. This is in stark contrast to a publicly run social service system where everyone is treated equally and receives the same education, the same level of care, and the same pension benefits. In this context one does not have to fear making the 'wrong choice,' as everyone is treated equally. In the current context of 'choice,' however, there is a fear that you may choose the wrong pre­ school for your child, which could set them back academically for their entire lives, or that you may choose the wrong funds to invest your pension money, which could result in a very different life post-retirement than your colleague or neighbour. Scherman argues

"we should concentrate more on standards that should be met by all institutions" than on choice (Scherman Interview 2005). In addition, the way the 'choice' debate has been

220 framed also makes it difficult to reverse. If a political party were to try to stop the introduction or maintenance of private producers in certain sectors, the party would be accused of taking away people's right to choose; as such, 'choice' is a very strong symbol

(Ferrarini Interview 2005) and has been an effective strategy in maintaining middle-class support for the welfare state in recent decades. It does not take the state out of the equation but its regulation is cast within new terms.

6.3 Future of the Swedish Social Democratic Welfare State

The future of the Swedish welfare state is a crucial question for welfare state theorists. As the pre-eminent example of a social democratic welfare state, there is much interest in the future direction of the Swedish welfare state. This is a question I asked those I interviewed in Sweden, and which elicited a rich variety of responses, as did questions on a variety of topics, whose answers appear throughout the dissertation. While most agreed that the Swedish welfare state remains, and is likely to remain, social democratic, although with some changes, there were some who felt that Sweden was at a crossroads in 2005 and that the election in 2006 would be an important determining factor in the future direction of the Swedish welfare state.

The 2006 Swedish national election saw the formation of a centre-right coalition government, which was largely the result of the Moderate Party's recent move towards the centre as well as the growing unpopularity of Social Democratic leader Goran

Persson. The centre-right government proposed a tax credit on purchases of household

221 services, such as domestic work or childcare, a departure from the social democratic view that such services should be provided by the public sector.145 The tax deduction, introduced in July 2007, allows individuals to recoup up to half of the cost of domestic sendees (Brunk 2008). The increasing private and individualized direction threatens the social democratic nature of the Swedish welfare state, as well as the terms of gender equality across classes.146 In terms of family policy, the government announced plans to introduce a childcare voucher system, with the aim of increasing "freedom of choice for families with children," and a voluntary municipal child-raising allowance,147 which will

"give parents the opportunity to spend more time with their children" (Ministry of

Finance 2007a: 45-46).

In addition, in the months following the coalition's election, the government announced several proposals to tighten eligibility and benefits within unemployment and

Of course this could be related to the tax scandal that hit the new centre-right government within a month of its election in 2006. Within a two day period, two government members, Maria Borelius and Cecilia Stego Child, were forced to resign after it came to light that each had employed nannies and paid them cash to avoid paying employer's taxes. Each woman also admitted to other forms of tax fraud, such as employing black market cleaners, not paying television license fees, and avoiding paying property tax on a summer house by registering it to a corporation (Watt 2006, O'Mahony 2006). 146 For example, LO Chair Wanja Lundby-Wedin stated that the "tax deduction on domestic services would not increase gender equality," instead she argued for parents to be able to reduce working time (Brunk 2008). Attempts to encourage women's labour force participation by offering tax incentives to hire domestic work has obvious class implications, as it is generally women from a lower class who take on this domestic work, which allows middle- and upper-class women to enter the labour market without having to work a 'double shift' - one in the paid public sphere and one in the unpaid private sphere. And when linked to the new terms of pension qualifications, this has serious implications for the entire life-cycle of those involved. 1 7 The allowance is voluntary in that each municipality can choose whether or not to introduce it. For those municipalities that do introduce the allowance, families may access an allowance that can be used to substitute the income of a parent who chooses to stay at home, or to employ a nanny (Westlund 2007). 222 14R sickness insurance programs. Such proposals were designed to make it "more worthwhile to work" - the mantra of the new government (Ministry of Finance 2007a:

24). The government's aim is to deal with the growing incidence of people accessing sickness benefits in Sweden in recent years. As David Rae (2005) argues, the increase in people on sickness benefits after age 60 appears to have more to do with people's attitudes than ill health. The connection between sickness benefits and 'early retirement' is undeniable: when there is a decrease in one there is generally a corresponding increase in the other (Berg 2003). Today, there are many more women accessing sickness benefits, particularly long-term sickness benefits (Rae 2005).' This is a particular problem within the health care sector, where women often have to contend with heavy lifting and harsh hours (Sunden Interview 2005). The government's response has been to reduce the generosity of benefits and to increase the eligibility requirements to try to force those on sickness benefits back to work.150

Such proposals include removing the possibility of extending the unemployment insurance compensation period, and allowing an employer to demand a doctor's certificate from the very first day of sickness in a sick pay period. In addition, the Ministry of Finance's (2007a) emphasis on and concern with "overutilization" and "benefit offences" when discussing it's strategy for reducing sickness absence is striking. There is even an entire section later in the Budget Statement on "Vigorous measures against benefit offences and overuse" with proposals such as creating a new act on benefit offences and appointing an inquiry to draw up proposals for a special supervisory body for social insurance administration. 149 While in most countries no more than 10 per cent of all sickness absences are more than 6 months, in Sweden this type of absence accounts for more than 50 per cent of all sickness absences (OECD 2009). In 2002, women constituted 65 per cent of those on long-term sickness benefits (Berg 2003). 150 Until recently the Swedish sickness insurance system provided 80 per cent of one's earnings and could be granted for an unlimited time (Rae 2005). Recent government measures place new limits on the length of benefits, with the norm now being around one year (Loven 2009). 223 Even prior to the election of the current centre-right government, some believed that Sweden had already taken some important steps in a neoliberal direction, such as increased privatization within the social services and a renewed emphasis on full employment as crucial to the continued success of the social democratic welfare state.

For example, Scherman felt there had already been a move from social democratic ideas about solidarity to an emphasis on increased individualization (Scherman Interview

2005). Joakim Sonnegard, Pensions Expert at the Ministry of Finance, argued that

Sweden had moved towards a system where your contribution will play a more important role in determining your outcome, in a broader context than just the pension system

(Sonnegard Interview 2005). Gudrun Ehnsson, Pensions Expert at the Swedish National

Social Insurance Board, argued that there had been a move towards more owner responsibility within the Swedish welfare state at large (Ehnsson Interview 2005). Her colleague, Ole Settergren, had the most radical view, arguing that in the future in Sweden

"there will be a development more towards the sort of Anglo-Saxon situation" with less people relying on welfare state benefit schemes (Settergren Interview 2005).

These pensions experts had more pessimistic views about the future of the

Swedish welfare state than most, perhaps due to their experience with the pension reform and the new pension system in Sweden. The pension reform does represent the most critical and extensive change in a neoliberal direction in the Swedish welfare state in the

151 This emphasis was highlighted in a 2007 statement by the current centre-right Prime Minister Reinfeldt, where he referred to "the goal of full employment," "the fight for full employment," "the work-first principle," and "encouraging both women and men to work" (Prime Minister's Office 2007). 224 past two decades. The pension reform is especially significant because it affects everyone, and because it represents more of an overhaul than a simple reform. As mentioned in Chapter 4, the fact that it was framed as a 'reform' led the Swedish people to believe that the existing system was to undergo some changes, when what really happened was an abolition of the old system and the creation of a new one based on very different principles.

The new pension system is the most neoliberal element of the Swedish welfare state as it combines a private, market-driven element, the Premium Pension, as well as introducing the uncertainty that goes along with individualizing risk. If the economy is going well, pensioners will receive a good pension, but if economic growth is slow, then pensioners will receive a lesser pension, which is the situation in Sweden today. Thus, the state no longer carries the risk, the pensioners do. The new pension system is built upon the principle of full employment - not only full employment as we have seen it in

Sweden in the past, but taking it further so that workers are encouraged to work full-time during the whole of their careers, and extending their working lives until 67 or 70. One will receive a better pension the longer one works, thus encouraging people to put off retiring until as late as possible. It is, therefore, not difficult to see why experts in the pensions system in Sweden may be more pessimistic about the future of the Swedish welfare state than others. Their experience with the pension system indicates a shift in a more neoliberal direction. In contrast, many of those I interviewed who are not pensions experts, saw the current era as one of stability, with the Swedish welfare state having survived the crisis of the 1990s relatively intact (Municio-Larsson Interview 2005, Wennemo Interview 2005,

Korpi Interview 2005, Ferrarini Interview 2005, Lindberg Interview 2005, Josefsson

Interview 2005). Many were impressed with how the welfare state not only survived the crisis, but how the state was able to actually reverse some of the changes made during the crisis, such as reductions in replacement rates and cuts to various programs. Many others believed that while there was continuity in the current period, there was also change, depending on which sectors one analyzed (Ohrlander Interview 2005, Bergqvist

Interview 2005, R. Andersson Interview 2005, Berge Interview 2005, Lundberg

Interview 2005, Gonas Interview 2005, Sainsbury Interview 2005). Many saw Swedish family policy in a favourable light, while pointing to the pension reform as a move in a different direction. There was no consensus over the future direction of the Swedish welfare state amongst those I interviewed: there was more optimism among those focusing on family policy or the welfare state more generally, and more pessimism among those whose area is pensions.

However, the prevailing view was one of hope that Sweden would, and could, remain on a social democratic path, having to make some changes depending on the economic context. By looking at the changes that have taken place through the lens of reregulation, it is not difficult to see why this optimism exists. If the changes that have

226 taken place have been authored by politicians through the process of reregulation, it is possible that politicians could also reverse them, although certain changes would be more difficult to reverse than others. The fact that politicians have already reversed reductions in replacement rates and funding cuts in the late 1990s and 2000s makes it is easier to understand this sense of optimism. However, the current centre-right government has dampened this sense of optimism as it continues along a similar path as it did in the early

1990s. Thus, social democracy is still being challenged, by initiatives such as the tax credit on purchases of household services introduced in 2007. However, overall, the welfare state does appear to be fairly resilient in the face of such challenges.

The fear is that if enough individual changes take place in social policy, one day the welfare state might no longer be social democratic due to the sum of these changes.

This idea of 'path-shifting' is something explored by Streeck and Thelen (2005: 4), who argue that gradual changes can lead to transformation, and that "the current transformation of modern capitalism... unfolds by and large incrementally, without dramatic disruptions like wars and revolutions," and the result is a more market-driven and market-accommodating form of capitalism. Thus, policy-makers and citizens must be aware of, and guard against, such gradual changes, as they could lead to a transformation of the social democratic foundations of the Swedish welfare state.

227 6.4 The Future of Swedish Gender Equality

The future of gender equality in Sweden remains hopeful. While there are difficulties, the relationship between women and the People's Home in Sweden remains a good one. The proportion of Swedish women in the labour market is very high, and more women than ever are working full-time, rather than part-time, hours. In addition, all women now have access to childcare to facilitate their entry and continuation in the labour market. Nevertheless, there remain problem areas such as involuntary part-time work and low wages in female-dominated sectors, for example the care sector, which have yet to be dealt with in a substantive manner. In addition, women's representation on internal union decision-making bodies remains lower than that of men (Bergqvist 2004).

But women's relationship to the welfare state, both as clients of services and as public sector workers, is crucial for understanding the relationship between social democracy and gender equality, both in the past and in the future. It is also crucial for understanding the role of gender in the process of reregulation.

The future of gender relations and gender equality in Sweden remains a high priority for politicians and citizens alike. An example of this primacy comes in a recent statement by Prime Minister Fredrik Reinfeldt, who declared that "It goes without saying that women and men must have the same opportunities in life... to choose between different jobs... to earn a living and build a career... to feel secure in their everyday lives" (Prime Minister's Office 2007). However, there remains debate about the best

228 route to achieve gender equality. Reinfeldt's centre-right coalition government has emphasized, among other things, tax deductions for low and middle income earners, more resources for women to start their own businesses, and lower taxes in the service sector. Nor has it moved to implement the recommendations of the Thorwaldsson

Commission on parental leave, which many see as a crucial step towards greater gender equality in terms of women's employment opportunities as well as men's parenting opportunities. Instead, in 2007 the government announced a gender equality bonus, which

"will increase the prospects of a gender-equal use of parental insurance and of women returning to work during a child's first year of life" (Ministry of Finance 2007b). Thus, the goal of gender equality remains, but the route by which to achieve it is contested. This is but one of the reasons for the emergence of the Feminist Initiative (Feministiskt initiativ, or Fi), a political party which would like to see Sweden move more quickly towards the elusive goal of substantive gender equality.

It is clear that there must be a reorganization of social reproduction if we are ever to achieve gender equality. Many have argued that an initial step requires publicly provided childcare, education, health, maternity and parental leave programs. This initial step has been taken by the Swedish state, but it has proven insufficient alone for the achievement of substantive gender equality. As Leira (1993: 56) argues, "Contrary to popular belief, social reproduction has not been completely socialized in ."

Leira also argues that unless the division of labour by gender, which ascribes the greater

229 part of time-consuming unpaid care to women is challenged, gender inequality will remain in the Swedish welfare state. Julia O'Connor, Ann Shola Orloff and Sheila Shaver

(1999: 107) agree, arguing that equality can only be achieved through "a more equal sharing of paid work and caring between men and women." Thus, the continued move towards a reorganization of unpaid domestic and caring work is necessary in Sweden in order to move closer to gender equality.

6.5 Resistance and Political Mobilization

An important research question in this project is what type of political mobilization has there been in Sweden around the changes that have taken place in the areas of childcare and parental leave, and pensions? As mentioned in Chapter 1, this is a difficult question to answer as political mobilization in Sweden takes many forms. In terms of childcare, most citizens are happy with this program in recent years, as it is now more comprehensive and generous than ever. However, there has been some concern from Kommunal, the union representing childcare workers, about the low pay and working hours available to such workers. As a result of these issues, Kommunal launched a strike by municipal and city council workers in April 2003, as discussed in more detail in Chapter 3. Among the demands on Kommunal's agenda are pay, both higher relative salaries as well as equalizing income between women and men; a good working environment; skills development, in terms of education and continued training; and

230 working hours - their motto being "full-time should be a right, part-time a possibility"

(Kommunal).

The issue of parental leave has been a hotly contested one in recent years in

Sweden, but there has not been a lot of citizen activism around this issue. The proposed changes to the parental leave system have come from the state and from a government- appointed commission, which launched an investigation in the spring of 2004 and delivered its report in the fall of 2005. As mentioned above, the report's recommendations have not yet been implemented. One might argue that this is due to the election of a centre-right government in 2006, but even prior to this election the Social

Democrats had the report for a year and chose not to act upon it because it lacked popular support, particularly among the SAP's own voters (Mahon 2008). This appears to be a pattern with parental leave, where the state implements policies that are not very popular among the population in order to advance the goal of gender equality. These proposals are supported by small segments of the population, such as the Social Democratic

Women's Federation, but not by the population at large. This is how the first and second father's months were introduced, which are examples of reregulation, where changes were made, but they came from the state, supported by a small number of politically active groups, such as women's organizations or union groups. By implementing the father's months and looking into the individualization of the parental leave system, the state is attempting to change the behaviour of both mothers and fathers when it comes to

231 sharing parenting responsibilities, as changes to this behaviour are not occurring quickly enough on their own.

In terms of resistance to the pension reform, there was no major public debate or outcry, but there have been some individuals and groups who have been critical of the pension reform. For example, many Social Democratic Party members were very critical during the reform process but, for the most part, the party leadership silenced their voices. In addition, some unions, such as the Swedish Metalworkers' Union, were very much opposed to the pension reform, but their criticisms were somewhat dampened by

LO's general support of the reform. It appears, though, that a lot of this opposition or criticism from party and union members has all but disappeared since the reform was adopted by parliament in 1998. The lone voices of opposition today remain individual politicians, academics and journalists.

I interviewed four such people: Ulla Hoffmann, Left Party member of the

Parliamentary Working Group on Pensions, Urban Lundberg, a researcher at the Institute for Future Studies in Stockholm, KG Scherman and Dan Josefsson, both pension critics.

As discussed in Chapter 5, each of these people is critical of both the content of the pension reform, as well as the process by which the system itself was reformed. They are critical of how opposition was dealt with during the reform, and of the shift in direction the pension reform represents in the Swedish welfare state. I also share these criticisms and argue that the failure of the Premium Pension portion of the new pension system represents a form of citizen resistance to the introduction of a private element into the pension system, as the majority of Swedes simply choose the default option, administered by the state. As such, the belief held by the designers of the new pension system that

Swedes would welcome and embrace the opportunity to invest their money and to become engaged in the stock market, has proven to be incorrect.

After more than a decade, Scherman and Hoffmann remain actively committed to changing the new pension system. Scherman has been giving presentations on the problems within the new pension system since it was implemented and continues to do so today. Hoffmann, a member of the Left Party, is working with a group that is trying to convince the SAP to join the Left and Green parties in wanting to change the pension system. She argues that in the face of today's financial crisis "it is very easy to say: I told you so, but that will not help anyone," so instead she is working with others to try to form a strong partnership among the three opposition parties so that they may contest the general elections in 2010 as a strong coalition (Hoffmann 2009). And resistance to the pension reform may begin to grow in the public as well, given the reduced pensions on the horizon.

What type of political mobilization has there been in Sweden around the changes that have taken place in the areas of childcare, parental leave, and pensions in recent years? The answer to this question is complicated, in that political mobilization in

Sweden largely occurs within the recognized channels of the bureaucracy and of party

233 politics, which includes the trade unions to a certain extent. As Ursula Berge, an editor and activist at Agora, a left-wing think tank in Stockholm, put it: "But Swedish people, we are not really the protesting kind of people. We are participating in the democratic system in other ways" (Berge Interview 2005). As mentioned above, with respect to pensions, a few academics, journalists and politicians have been very outspoken about their criticism of the new pension system and the process by which it was overhauled. In terms of childcare, the expansion and development of the system was largely due to the activism of many women and men, in the unions, in the women's movement, and more generally, who experienced the difficulty of balancing work and family life. Due to the continued expansion of the system, there has been little protest in recent years, although there has been some debate and activism within Kommunal about the salary of childcare workers being too low.

In terms of resistance or criticism toward the direction of the Swedish model, one of the most talked-about responses was the creation of a new feminist political party, the

Feminist Initiative, which was a reaction to neoliberalism and the fear that the gains made by the women's movement in Sweden over the last forty years could be in danger.152 The

Feminist Initiate fits within the broad framework of state , where

' Another feminist organization was launched around the same time in Sweden, but received much less media attention. The organization, called Feministas, was launched by Marita Ulvskog, Social Democratic Party secretary and Margareta Winberg, former EU Minister and Social Democrat. Feministas was never intended to be a political party, but rather a feminist network fighting for women's rights and equality (The Local 2005f). In fact, some argue that the launch of the Feministas was a response to the anticipated launch of the Feminist Initiative as a potential political party (Bolin 2007). 234 women's organizing has largely taken place within recognized political channels, such as the party system. At the time of its launch, it was an organization, not a political party, and did not have a leader, although many viewed former Left Party leader Gudrun

Schyman, as the de facto leader,153 and the Fi as her organization. The organization of the

Fi was a topic of much debate in the beginning, as Sofia Karlsson, Fi member, stated

"Maybe we won't have [a leader]. We want to build an antipatriarchal organization"; as

Schyman put it "women who have been working for different organizations on questions which affect women's lives... [have] joined forces" (quoted in Butterworth 2005). This was a different type of organization, one that did not follow the norms of political organizing in Sweden. It also included a number of different movements and, as founding member Tiina Rosenberg described it, "this is the modern way of dealing with feminist politics. It is about gender, but it's also about sexuality, it's about ethnicity, it's about class, it's... bringing all of these perspectives into feminist politics" (Rosenberg

Interview 2005).

In terms of the timing of the launch of the Fi, it was very much linked to the timing of the emergence of the Support Stockings fourteen years before. Both are, in many ways, a feminist response to a perceived neoliberal threat. While the Support

Stockings were focused more on the singular issue of women's representation in the

153 In fact, Henrik Brors, writer for daily newspaper, Dagens Nyheter, argued that the reason why no leader was named was because Gudrun Schyman's credibility remains low with voters who remember her troubles with tax fraud, which led to her stepping down as Left Party leader in January 2004, and the fact that "little changed for women when she was leader of the Left Party" (quoted in Butterworth 2005). 235 Swedish parliament, they saw the losses which occurred in the 1991 election as part of a broader neoliberal agenda that could see the rolling back of women's gains during the post-war era. The Feminist Initiative also saw the current neoliberal climate as a threat to women's gains, and were not only fighting rollbacks, but were also pushing for further movement in the direction of gender equality instead of maintaining the status quo. For

Rosenberg, the Fi was, in part, a reaction to "a very gender conservative, a very family conservative, kind of political climate that is ahead of us, and it is a result of the neoliberal politics, so we just have to say no to that." Rosenberg also recognized the continuity between the Support Stockings and the Fi, in that it is feminism that emerges in relation to neoliberalism, "it's the women's voices that were raised against neoliberal politics" (Rosenberg Interview 2005).

Following its launch, the Fi highlighted five issues it would work on, from changing the rape laws to eradicating discrimination in the health sector, addressing the wage discrepancy between male- and female-dominated professions to reducing inequalities in parental leave, sick leave and other job market issues, and ensuring that women can seek asylum in Sweden for persecution due to their sex. Members of the

Social Democrats, the Left Party and the Green Party were all receptive to more people working on women's issues, but some expressed concern about the Fi becoming a political party and taking votes away from their parties (Butterworth 2005). However, where the Fi was located on the political spectrum remained a source of much debate, as the party refused to position itself on the left or the right, instead taking a different approach to politics, as Schyman argued "that of feminine ideology" (quoted in

Mongalvy 2006). Schyman and the Fi made it clear that they did not believe Sweden deserved its reputation as a "bastion of gender equality" and, as a result, one of the Fi's first plans upon entering parliament would be the creation of a Minister for Gender

Equality.

However, after becoming a political party in the fall of 2005, and as the

September 2006 national election neared, the Fi began to lose momentum. Just a few weeks after its launch, it was revealed that one of those working for the party, Susanne

Linde, was receiving sickness benefits for being "burnt-out" (The Local 2005a). Linde then quit the organization following its September 2005 conference amid a conflict with

Rosenberg regarding their differing political views. Prior to Linde's departure, another member, Ebba Witt Brattstrom154 had quit, also due a conflict with Rosenberg (The Local

2005b). Following Linde's departure, another founding member, Helena Brandt, left the

Fi over the direction the organization was taking. Rosenberg, Associate Professor of

Gender Studies at Stockholm University, was accused of plagiarism by a colleague in

October 2006 (The Local 2005c), an accusation proven to be without merit, and a week later she stepped down from the Fi board due to the media scrutiny (The Local 2005d).

All of these internal problems within the Fi led to declining support for the party. Indeed,

154 Witt Brattstrom was also a member of the feminist group, 'the Support Stockings,' active between the 1991 and 1994 national elections, as discussed in Chapter 2. 237 prior to the election Maud Eduards, Professor of Political Science at Stockholm

University, argued "It's the party itself which is perceived to be the problem, not the issues it raises" (quoted in Mongalvy 2006).

In terms of issues, the Fi continued to bring awareness to feminist matters in its statements to the media, as well as through its 2006 election platform. Other issues which the Fi discussed in the lead-up to its becoming a political party included replacing marriage with a cohabitation law which ignores gender and allows for more than two people to be included, the introduction of a six hour workday,155 completely individualized parental leave benefits, and the introduction of gender quotas on company boards (The Local 2005e). Fi's 2006 election manifesto declared that:

Women need to get more power and men have to take a step back... Women's salaries have to be raised!... Men's violence has to cease!... Parental allowance has to be individualized!... A world free from discrimination must be the foundation!... Civil-, urban and domestic planning should lean on and be extracted out of women's needs and conditions! (Feminist Initiative 2006).

In the end, the Feminist Initiative managed to get less than 1 per cent of the vote in the

September 2006 national election, and thus is not currently represented in the Swedish parliament (which requires parties to obtain 4 per cent in order to be seated). While the party remains active, and the potential remains for influencing gender politics in Sweden, it appears to be unlikely at this point.

The issue of a six hour workday has been a demand of various feminist organizations in Sweden since the 1970s, but has never been realized. 238 Conclusions

Throughout the dissertation I have argued that what has occurred in Sweden during the past two decades is a process of reregulation, not deregulation, when it comes to the social policies associated with the welfare state. This process of reregulation demonstrates the state's continuing power over, and influence on, social policy, and generally reflects Sweden's social democratic path. Owing to the social democratic foundations of the Swedish welfare state, neoliberalism was not simply embraced with open arms during the 1990s, as it has been in certain other states. While neoliberal pressures do exist, both externally and internally, the Swedish state has been able to pursue the same social democratic, state-driven, path in terms of childcare and parental leave. It did, however, embrace neoliberal tenets to a greater degree when it came to the pension reform of the 1990s. While the Social Democratic Party has been able to resist many domestic pressures for change, it weakened its stance in the face of pressure from the European Union and the Swedish centre-right parties to open up its pension system to global capital and global fund managers, in addition to individualizing risk.

It is also important to note that this process of reregulation is not complete, as it is an ongoing project. During the current financial crisis it will be interesting to see which path the centre-right government chooses to pursue. Throughout the post-war period, each time there has been a centre-right government in Sweden, it has been accompanied by difficult economic times, and the outcome has never been a paradigm shift in terms of the overall welfare state. Thus, there is historical evidence to suggest that the outcome of the current centre-right government and the concurrent financial crisis will not be a dramatic shift in priorities, or a rejection of the foundations of the well-entrenched social democratic welfare state. It is also likely that the Social Democrats could return to power in 2010, however even if this occurs, it must be noted that the SAP has played a part in implementing or allowing certain neoliberal reforms in Sweden, such as the pension reform. The national election in 2010 will help to determine whether the Social

Democratic Party will be reinvigorated by its time in opposition and its change in leadership,15 or whether it will continue to drift from its social democratic and labour movement roots, as it has in recent years.

156 Mona Sahlin replaced Goran Persson as the leader of the Social Democratic Party following the party's loss in the 2006 general elections. Sahlin is the first female leader of the party and could become the first female if the party is successful in the 2010 elections. 240 References

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