RGE Monitor's Econmonitor blog has an interesting post about the vaunted Swedish "welfare" economy:
So how does Sweden manage to have such remarkably low unemployment? Long term sick leave is paid for by the government at a generous percentage of the original wage, and thus large groups are not counted as unemployed, because they are still officially employed, though not actually working.But no worries, cooler heads are prevailing:
In other cases, many of the unemployed are placed in labor market projects, which also depresses open unemployment figures. In other words, real unemployment is not 4.6%, as the official statistics state, but as high as 12% or 15%.
But now the new right-of-center (by European standards) government has shifted focus: the number of positions for labor market projects is being cut back, and the ones remaining will focus on getting the short-term unemployed back to work. The result: Open unemployment is climbing in the latest statistics, not because Sweden's economy is doing worse, but because the numbers are beginning to reflect reality.And more of the same good sense seems to be on the way. Maybe we won't hear so much "we should all imitate the Swedes" cheer-leading from the EU bureaucrats in the future... On the other hand reality rarely does get in the way of their ideas.