This is what's happening in Sweden — fact

By Clemens Bomsdorf

In a speech the other day, US president Donald Trump claimed things are going very badly in Sweden when it comes to refugees and serious crime.

He referred to a Fox News (owned by Rupert Murdoch's listed 21st Century Fox) clip about a film titled “Stockholm Syndrome” and its director Ami Horowitz.

Two policemen interviewed in the film have accused Horowitz of having spliced in different questions to the ones they were asked (you can read their response in the Swedish daily newspaper Dagens Nyheter). One only has to look into Swedish crime and migration statistics to see Horowitz has taken poetic licence with the facts used in his film. 

Since there has been so much discussion of Sweden lately, we want to add some more facts to the debate and take a look at how the country’s economy is doing – including how migrants are faring.

Luckily, major institutions, namely the IMF and the OECD, have published reports on Sweden in the last couple of months. Put briefly, both find the largest Nordic economy to be: “resilient and growing strongly” (OECD February 8, 2017) and experiencing “Great Economic Performance” (IMF November 17 2016).

 

However, the two would not be carrying out their remit if they did not have some caveats as well. “Mind the debt,” is the IMF’s advice; while the OECD a bit more vaguely says Sweden “must address rising challenges.” 

Those were the taglines of the reports, now for the substance.

Digging deeper, one sees that the two bodies share the same core concerns. Both mention the recent rapid rise in house prices and the large, growing body of private debt stemming from it.

 

Labour market issues and integration of migrants are also seen as key challenges by both the IMF and OECD.

“Sweden’s robust growth is reducing unemployment and raising resource utilization,” reads the IMF report. Regarding asylum seekers, it finds “[m]igration inflows have subsided after last year’s historic surge, but there are significant hurdles to integrating the large stock of asylum seekers.”

Indeed, while the IMF (due to its publication date) only took into account data for the first half of 2016, we now know that the downward trend continued in the six months after as well. In the entire year of 2016, only 29,000 people applied for asylum in Sweden; not 160,000 as claimed by Fox News (that was the 2015 figure).

 

Perhaps more relevant is the OECD's fresher economic survey of Sweden.

“Employment has increased more rapidly than in most OECD countries over recent years. The unemployment rate has receded and is now around 7%," it states.

However, there are certain groups of people that have a harder time finding a job than others: “Indeed, despite strong output growth, unemployment is increasing among some vulnerable groups, in particular immigrants and the low-skilled.”

In particular, the number of non-European born migrants finding themselves unemployed is on the rise. Generally, immigrants’ employment levels increases in line with their level of education and length of stay.

“The large share of refugees among immigrants has historically resulted in extremely low employment rates even though the employment rate of refugees is somewhat higher than the EU average,” says the OECD

 

The OECD finds that “integrating a large inflow of immigrants is a great challenge for education, skills, labour market and social policies.” It adds: “However, migration also gives a welcome boost to the demographic structure of Sweden’s population. Without migration, the population size would have stagnated at its 1969 level of 8 million, instead of increasing to 10 million currently."

"Migration has also contributed to a younger population directly, as many migrants are in the age-group 20-35, and indirectly through childbirth. Without migration, older people would represent a much greater share of the population and the youth a much smaller share.”

 

Hence, though integrating migrants is a challenge, their arrival in Sweden also comes with positive effects for the country’s economy.

“Immigrants will make a substantial contribution to future output growth, provided efficient integration allows them to develop their skills and find matching jobs,” says the OECD.

Generally, risks for the Swedish economy “are mainly related to global economic developments.”

Interestingly, while Sweden is known for valuing gender and equality in general highly, the OECD sees developments in both lagging behind so much that it makes them one of the three main points in the report's executive summary. That might come as a surprise for many!

 

Later it warns, “[k]eeping income inequality low is increasingly challenging.”

 

When it comes to equality of the sexes, it might shock some of you that Sweden has a gender wage gap not that far from the OECD average, the same goes for women in senior management – only their employment rate is well above the average rate for OECD members.

The number of foreign-born women working is very low, highlighting the need for a more active labour market policy targeted at them “to prevent them from drifting away from the labour market.”

Swedish women also account for 75% of all parental leave, which affects their career prospects, according to OECD. It recommends "[encouraging] parents to split parental leave more equally by continuing to increase the share reserved for each parent “

To finish on a positive note – Sweden’s de facto and foreseen macroeconomic indicators.