Enhance migrant integration. Humanitarian and family reunion immigrants to Sweden, notably women, are on average less educated than natives, and face language and cultural barriers.
Actions taken: Limited, but coherent, policies have been put in place to build migrants’ skills and facilitate their employment. Notable examples include the earlier provision of Swedish classes (2017), mandatory settlement in municipalities (mid-2016), fast-track recognition of foreign qualifications in high-demand occupations (strengthened in 2017 and 2018) and the streamlining of wage subsidies (2018).
Recommendations: Adapt language training, education, subsidised work and recognition of foreign competencies to individual needs, and coordinate them between municipalities and the Public Employment Service. Address strict employment protection and continue to streamline wage subsidy schemes. Increase the involvement of the social partners and civil society.
Reduce housing market distortions. Overly rigid planning and rental regulations impede labour mobility, reduce competition in construction and increase the risk of financial and macroeconomic imbalances.
Actions taken: The Financial Supervisory Authority has introduced further macro-prudential measures in 2017 and 2018 to contain financial risks. The government is gradually implementing a 22-point plan to support construction, including simplifications in planning and construction regulations.
Recommendations: Ease rental regulations and phase out mortgage interest deductibility to help contain the rise in household debt, improve financial and macroeconomic stability and access to housing.
Improve the efficiency of the tax structure. High marginal taxes on above-average income reduce incentives to work longer and weaken productivity growth.
Actions taken: No action taken
Recommendations: Cut marginal tax rates on above-average earnings by shifting part of the tax burden towards recurrent taxes on immovable property and inheritance tax, and by removing VAT exemptions.
Increase the efficiency of the education system. School results, as measured by PISA and other international tests, have fallen rapidly over the past decade, even though some improvement is visible in the most recent surveys. Children’s performance is increasingly determined by whom their parents are and where in the country they live.
Actions taken: Starting 2018, school providers (usually municipalities) will be obliged to designate a person responsible for schools, which should improve accountability. Legislation was also passed in 2018 to address problems of long or repeated absences among students. Targeted grants have been awarded to municipalities to raise the salaries of high-performing teachers and support schools with a less favourable mix of students.
Recommendations: Strengthen the institutional set-up of the school system, better target funding to pupils’ needs and expand regional governance structure. Take the socio-economic mix of pupils into account in entry and investment decisions, coordinate the entry and expansion of private schools and assign pupils to over-subscribed private schools by lottery or quotas to counter school segregation. Improve teacher education, strengthen continuous learning and instigate more cooperation, feedback and support between colleagues to raise teacher quality and the status of the profession.
Reform job protection for permanent contracts. Relatively stringent job protection for permanent contracts raises concerns about labour reallocation, productivity growth and exclusion of vulnerable groups such as migrants.
Actions taken: No action taken.
Recommendations: Reduce stringency in areas that unduly hinder productivity enhancements, such as the “first in, last out” rule, obligations related to internal reassignment and the priority for dismissed workers to be re-hired following justified individual or collective dismissal. Engage with social partners to reform employment regulations in the industries in which they are tightened by collective agreements.
