Report: Every Self-Supporting Swede Supports Another Person

A new report from the Confederation of Swedish Enterprise (Svenskt Näringsliv) shows that the economic support burden in Sweden is significantly higher than traditional measures suggest. According to the report, each self-supporting person on average supports themselves and an additional 1.24 people.

The calculation is based on the so-called income-based dependency ratio, where people are considered self-supporting if they have an annual income equivalent to at least three income base amounts. For 2024, that corresponds to about SEK 19,000 per month before tax.

Sven-Olov Daunfeldt, chief economist at Svenskt Näringsliv, describes the trend as troubling and argues that Sweden is facing significant challenges as ever fewer people must support ever more. He describes the level as high and says this represents a significant burden of support.

According to the report, the problem is not just unemployment. Many people also work too few hours to reach the threshold for self-support. Therefore, the report authors argue that the focus should be both on getting more people into work and on increasing the number of hours worked.

The differences between the country’s municipalities are also considerable. In municipalities like Solna, Sundbyberg, and Kiruna, the support burden is relatively low, whereas Högsby, Perstorp, and Hällefors are at the opposite end of the spectrum. According to the report, the strength of the local labor market is the main explanation for these variations.

To reduce the support burden, Svenskt Näringsliv advocates for reforms to increase employment and strengthen labor supply. Among the proposals are better matching between jobseekers and employers, educational initiatives, entry-level jobs, and increased geographic mobility in the labor market.

More Hours Worked

The report also criticizes proposals for shorter working hours. According to Svenskt Näringsliv, Sweden actually needs more hours worked to meet future challenges stemming from an aging population and increased demands on financing the welfare sector.

The income-based dependency ratio has been developed as a complement to the traditional demographic dependency ratio, which measures the relationship between people of working age and those who are younger or older. According to the report authors, the new measure gives a more accurate picture of how many people actually support themselves through their own work.

Green Party Criticism Dismissed

The debate over shorter working hours has intensified. Recently, the Green Party’s spokesperson Daniel Helldén criticized a report from Svenskt Näringsliv warning of major socio-economic costs if the legally mandated workweek is shortened from 40 to 35 hours.

However, the criticism is rejected by Svenskt Näringsliv’s labor market economist Petter Danielsson, who says the organization’s calculations are based on research and established economic methods. According to him, the analysis has also considered the possibility that productivity could increase when people work fewer hours.

– We have based our conclusions on evidence and research, says Danielsson to TN.

Svenskt Näringsliv has analyzed two scenarios. In one, no productivity increase is assumed, while in the other, it is assumed that 30 percent of lost working hours are compensated by higher productivity. According to Danielsson, the costs to society are significant in both cases.

He refers to previous research reviews and notes that results on the productivity effects of shorter working hours are mixed. Some studies show positive effects, while others do not. According to Danielsson, the most robust studies rather support the view that the effects are small or non-existent when working time is already at today’s levels.

– If we work less, we get less done. That is the most reasonable starting point.

Warning of Lower Tax Revenues

According to Svenskt Näringsliv, a general reduction in working hours would mean fewer hours worked in both the private and public sectors, which in turn could affect everything from industrial production to schools and healthcare. The organization also warns of lower tax revenues, increased recruitment difficulties, and greater skill shortages.

Danielsson also points out that Sweden faces major challenges with an aging population, defense expenditure, and significant investments in industry and energy transition.