2017 OECD ECONOMIC SURVEY OF SWEDEN Growing more

2017 OECD ECONOMIC SURVEY OF SWEDEN Growing more equal Stockholm, 8 February 2017 http: //www. oecd. org/eco/surveys/economic-survey-sweden. htm @OECDeconomy @OECD

The economy is growing strongly Real GDP 2005 Q 1=100 130 Sweden Germany Denmark United States 120 110 100 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: For Denmark, Germany and Sweden, OECD projections for 2016 Q 4 Source: OECD Economic Outlook database 2

Unemployment is trending down Unemployment rate % of labour force 16 Sweden 14 Germany Denmark United States 12 10 8 6 4 2 2005 2007 2009 2011 2013 2015 2017 Source: OECD Economic Outlook database 3

Swedes enjoy a high quality of life 1. Each well-being dimension is measured by indicators from the OECD Better Life Indicator set. Indicators are normalised to range between 0 (worst) and 10 (best). Source: OECD Better Life Index database 4

Real housing prices continue to rise 2000=100 300 Spain 250 Canada Sweden Denmark 200 150 100 50 0 2002 2004 2006 2008 2010 2012 2014 2016 Note: Prices are adjusted by the private consumption deflator Source: OECD Analytical Housing Prices Database 5

Gross household debt is high ITA USA ESP FRA GBR NLD DEU 0 FIN 0 Government SWE 20 DNK 20 NLD 40 NOR 40 GBR 60 SWE 60 USA 80 ESP 80 FIN 100 FRA 100 ITA 120 DEU 120 DNK Gross debt % of GDP 140 Households NOR Gross debt % of GDP 140 Note: 2015 or latest Source: OECD Economic Outlook database 6

Inequality is fairly low, but has risen rapidly since the 1990 s Gini coefficient post taxes and transfers (2013 or latest) Source: OECD Income Distribution and Poverty database 7

Women’s employment rate is almost as high as men’s Source: OECD Labour Force Statistics 8

Key recommendations – Macroeconomic policies Ø Gradually withdraw monetary stimulus as inflation rises towards the 2% target. Ø Continue to pursue prudent fiscal policy, while accommodating temporary immigration-related spending to facilitate integration. 9

Key recommendations – Housing and household debt Ø Introduce a cap on household debt-to-income ratios. Ø Reform the recurrent property tax to better align tax charges with property values. Phase out the deductibility of mortgage interest rate payments. Ø Enhance co-operation between central and local government in land-use planning and increase incentives for municipalities to facilitate the timely release of development land. Simplify land-use planning procedures, balancing economic, environmental and social considerations. Ø Ease rental regulations to incentivise rental housing supply, mobility and better utilisation of the housing stock, while maintaining tenant protection against abuse. 10

INCOME, WEALTH AND EQUAL OPPORTUNITIES 11

The wealthy have prospered Median disposable income within each group 1991=100 180 160 Top 5% Bottom 5% 140 120 100 80 60 1991 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Statistics Sweden Ø Record wealth data for analytical purposes. 12

Benefits have been lagging behind Disposable income within each group 1991=100 180 Workers 160 Unemployed and sick 140 120 100 80 60 1991 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Statistics Sweden Ø Review annually the distributional consequences of raising social benefits, taking equity, fiscal costs and work incentives into consideration. 13

Low skills reduce employment and wages Wages and employment by literacy skill level (2012) 1. PPP adjusted USD Source: OECD Survey of Adult Skills (2012) Ø Consolidate wage subsidy schemes for the most vulnerable workers and ease the related administrative burden to increase take-up. 14

Disadvantaged immigrants need special targeting Share of graduates Literacy - upper secondary graduates 0. 014 0. 012 0. 010 PIAAC 0. 008 level 1 and below 0. 006 0. 004 0. 002 0. 000 50 90 130 170 210 250 290 330 370 410 PIAAC score points Natives Migrants from low-income countries Migrants from high-income countries 1. The PIAAC literacy test was taken in Swedish for all groups Source: OECD Survey of Adult Skills Ø Build on successful experiences at the local level to enhance the efficiency of integration. 15

High immigration poses challenges to integration Gross migrant inflows 1 1. Excluding free movement immigrants from EEA countries Source: Swedish Migration Agency Ø Continue to simplify the procedures to help migrants get residence and work permits. 16

Rental regulations hinder mobility Waiting list for rental housing in Stockholm Persons 600 000 500 000 400 000 300 000 200 000 100 0 200020022004200620082010 2012 2014 Source: Stockholm Housing Agency. Ø Ease rental regulations to incentivise rental housing supply, mobility and better utilisation of the housing stock, while maintaining tenant protection against abuse. Ø Consider some prioritisation of low-income households to municipal housing with allocation rules designed to limit spatial segregation. 17

Key recommendations – Income inequality and equal opportunities Ø Review annually the distributional consequences of uprating social benefits, taking equity, fiscal costs and work incentives into consideration. Ø Continue to simplify the procedures to help migrants get residence and work permits. Ø Rationalise by merging and harmonising various wage subsidy schemes to better target the most vulnerable workers, ease the related administrative burden and increase take-up. 18

FIGHTING GENDER INEQUALITY 19

The gender wage gap is significant 2014 or latest year available Source: OECD Employment Database 20

Gender segregation across occupations is substantial Share of women by main activities Human health and social work activities Education Public administration and defence, Compulsory social security Arts, entertainment and recreation Accommodation and food service activities Financial and insurance activities Administrative and support service activities Wholesale and retail trade, repair of motor vehicles and motorcycles Professional, scientific and technical activities Real estate activities Information and communication Sweden Agriculture, hunting and forestry Other Nordics Transportation and storage Industry 0 10 20 30 40 50 60 70 80 % 90 Source: OECD Labour Force Statistics Ø Continue to develop methods to fight stereotypes in education. Address gender-specific weaknesses in education, whether faced by girls or boys. 21

Only a third of business sole-proprietors are women Latest year available Source: OECD Entrepreneurship database Ø Further promote female entrepreneurship through business promotion programmes creating a level playing field irrespective of gender, age or ethnic background. Develop data and analytical tools to evaluate these programmes. 22

Parental leave is fairly generous % of national average earnings Paid parental and home care leave to mothers Source: OECD Family Database Months Ø Encourage parents to split parental leave more equally by continuing to increase the share reserved for each parent. 23

Employment of foreign-born women is low compared to natives % 90 Native born Foreign born % 90 80 70 70 60 60 50 50 40 40 30 30 20 20 ISL ISR CHE NZL EST PRT CAN NOR LUX GBR AUS HUN SWE DEU CZE AUT USA DNK OECD IRL NLD FIN SVK SVN ESP POL ITA FRA BEL GRC MEX TUR 80 Source: OECD Migration Statistics Ø Enhance active labour market policy foreign-born women when the Introduction programme ends, to prevent them from drifting away from the labour market. 24

Key recommendations – Gender equality Ø Encourage parents to split parental leave more equally by continuing to increase the share reserved for each parent. Ø Enhance active labour market policy foreign-born women when the Introduction programme ends, to prevent them from drifting away from the labour market. 25

For more information Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. http: //www. oecd. org/eco/surveys/economic-survey-sweden. htm OECD Economics OECD 26