Sweden’s National Reform Programme 2017 Europe 2020 – the EU’s strategy for smart, sustainable and inclusive growth Sweden’s National Reform Programme 2017 Europe 2020 – the EU’s strategy for smart, sustainable and inclusive growth Contents 1. Introduction ........................................................................................................................... 2 2. Macroeconomic situation and scenario ............................................................................... 6 3. Initiatives and measures in response to main economic challenges .................................. 8 3.1 Private debt ................................................................................................................................ 9 3.2 The housing market .................................................................................................................. 12 4. Progress towards the targets of the Europe 2020 strategy ............................................... 17 4.1 Employment target .................................................................................................................. 17 4.2 Education target ....................................................................................................................... 21 4.3 Target for increased social inclusion ........................................................................................ 25 4.4 Research and development target ........................................................................................... 28 4.5 Climate and energy targets ...................................................................................................... 31 5. European structural and investment funds 2014-2020 ..................................................... 36 6. Institutional issues and participation of relevant parties .................................................. 40 6.1 Institutional issues .................................................................................................................... 40 6.2 Consultations with the social partners ..................................................................................... 40 6.3 Local and regional support ....................................................................................................... 41 6.4 Consultation with interest organisations and civil society organisations ................................ 41 Appendix with external contributions to Sweden's national reform programme 2017... 43 1 1. Introduction The Europe 2020 Strategy is the EU common strategy for growth and jobs that has been in place since June 2010. The aim of the strategy is to improve the conditions for full employment and inclusive sustainable growth up to 2020. The strategy is based on three priorities that are mutually reinforcing: − Smart growth: developing an economy based on knowledge and innovation, − Sustainable growth: promote a more resource-efficient, greener and more competitive economy, and − Inclusive growth: stimulating an economy with high employment and social and territorial cohesion. In April each year, Member States submit a national reform programme to the Commission, which reports on implementation of the Europe 2020 strategy in national policies, undertakings implemented and progress achieved over the past year, as well as a description of planned measures. The Europe 2020 strategy is based on the integrated economic and employment policy guidelines.1 The reporting shall also reflect the overarching priorities for the European Semester, which is the framework for economic policy coordination in the EU. Sweden’s national reform programme for 2017 is mainly based on the initiatives and reform ambitions proposed by the Government in the Budget Bill for 2017 and the Spring Fiscal Policy Bill for 2017. It also reflects the policy priorities in the Commission’s Annual Growth Survey, in accordance with the conclusions of the President of the European Council of 9 March 2017: − boosting investment; − pursuing structural reforms; − and ensuring responsible fiscal policies. An appendix to this year's programme also presents contributions received from social partners, regional and local actors and organisations in civil society. The Government has not taken a position on these contributions. Reform policy The Government’s objective is to achieve equality, development and cohesion throughout the country. Sweden shall remain a pioneering country that takes international responsibility for the climate, gender equality and democracy. Sweden is presently in a favourable position to grasp the opportunities presented by globalisation, the knowledge- based economy and technical progress. The Government’s ambition for building society is universal participation as we build the future. Education, a job, a home, preschools where children are happy and develop, experiencing the beauty of nature with the right of public access and public services including good and accessible healthcare, police services 1 Council recommendation (EU) 2015/1184 of 14 July 2015 on broad guidelines for the economic policies of the Member States and of the European Union. Council Decision (EU) 2016/1838 of 13 October 2016 on guidelines for the employment policies of the Member States for 2016. 2 and long-term care. This shall not remain a dream; it shall be the reality for everyone in the entire country. For Sweden shall be a country of work and cohesion, of equality and of sustainable development. On the foundation of the Swedish Model and using the toolbox of modernisation, we are building a sustainable society where no one is left behind – and no one is held back. Presented below are the areas that affect the Europe 2020 strategy and are included in the Spring Fiscal Policy Bill of 18 April as regards the focus of economic policy in coming years. The strength of public finances must be maintained Economic development in Sweden has been among the most outstanding in Europe in recent years. Responsible fiscal policy and favourable growth in employment turned the former government’s deficit – the largest since the economic crisis in the 1990s – into surpluses in both 2015 and 2016. On the heels of somewhat subdued economic development elsewhere in the world, outlooks are beginning to brighten in several areas. Sustained favourable growth is expected in Sweden in 2017 and the public finances are strong. The Government’s economic policy is based on the fiscal policy framework. Sound public finances secure the investment climate, jobs and welfare. Unemployment must fall Economic policy is governed by the Government’s objective of having the lowest unemployment in the EU by 2020. The Swedish labour market is continuing to show strong growth. Unemployment has fallen by about 1 percentage point since 2014 and 150 000 more people are in work. The decline in youth unemployment has been especially strong. Sweden’s employment rate is the highest ever measured in the EU. Unemployment is expected to decrease in 2017 and subsequent years due to strong demand and the reforms that have been implemented to get more people in work. Nevertheless, the Government takes the view that unemployment is far too high and will continuously present further reforms to help more people into work and to lower unemployment. The central government will continue to support job growth with a carefully considered fiscal policy. The Government’s job agenda comprises investments in improving skills and an active labour market policy, investments in housing and infrastructure and an active business policy. As well, additional staff are needed in the welfare sector. The redirection of policy from unfunded tax cuts to investments and stronger welfare has made it possible for thousands of people to secure employment in vital social functions. The transition to a fossil-fuel free country is also leading to more jobs through, for example, investments in railways and trains, expansion of green city districts and public transport and rising exports of Swedish environmental technology. Strengthening schools, healthcare and the police is not only good policy for knowledge, health and security. It is also a policy that creates more jobs. Consequent upon the reception of a large number of people seeking asylum, particularly in 2015, many newly arrived migrants will be received by the municipalities in 2017 and future years, and will enter and become established in the labour market. Arranging effective reception and planning for services including schools, housing and healthcare presents challenges to municipalities and county councils. The Government has implemented several measures during the current term in office to improve and hasten the 3 establishment of newly arrived migrants, but further action is needed to address the challenges and benefit from the opportunities inherent in the many people of working age who migrate to Sweden and are able to contribute to welfare. Not least importantly, employment must increase among foreign-born women, particularly women with short education. Knowledge-based education in equal schools The schools are critical to social cohesion in Sweden. It is in the schools that the foundations are laid for building society, as well as individual development. Pupils are given the resources they need to meet life and work head on, thus assuring future skills supply and Sweden’s position as a competitive country of knowledge. Academic performance in Swedish schools has weakened over a long