Sweden’s economy performed remarkably well during and after the COVID-19 pandemic but has been slowing down as a result of high inflation, as noted by the 2023 OECD Economic Survey of Sweden. Currently low, unemployment is set to rise and real wages are expected to fall. In navigating these challenges, Sweden can rely on a robust welfare state supported by a high citizen satisfaction with public services. Moreover, Sweden ranks among the top OECD member countries for low income inequality, both before taxes (with a GINI coefficient of 0.36) and post taxes and transfers (0.27), and out-performs the majority of OECD countries in social mobility. Well-being is also high in virtually all categories of the OECD Better Life Index.

Sweden has one of the most decentralised and largest governments in the OECD, both in terms of government employment (29% of total employment) and expenditures (53% of GDP in 2021). Sweden has developed a unique consensus-based model for its public sector, with small ministries grouped under Government Offices alongside a large number of agencies. This model allows the government to plan, co-ordinate and implement policies and strategies in an agile manner. Government work with agencies is based on ordinances to ensure continuity and strategic direction. Procedures and co-ordination mechanisms between a line ministry and its agencies, such as assignments, enable the government to respond to urgent needs or new priorities. Government size and expenditure have been relatively stable over the previous decade, but Sweden has carried out expansive fiscal policies using its pre-crisis fiscal space to weather the effects of the COVID-19 crisis, while the public deficit and debt remain modest. Fiscal policy is expected to be slightly expansionary in 2023 but will need to tighten to bring inflation under control.

Sweden’s public governance system has helped support progress in a number of national and international commitments, including on climate change, integrity, inclusiveness, and gender equality - all areas in which Sweden has been a frontrunner. Sweden has reduced greenhouse gas emissions by 40% relative to 1990 levels and has launched several programmes to green the economy. It is a global leader in most indicators pertaining to CO2 emissions, exposure to air pollution or renewable energy: for instance, CO2 emissions decreased significantly in recent decades, to one-third of the OECD average per capita.

Despite these positive trends, confidence in the national government is slightly below the OECD average, according to Main Findings from the 2021 OECD Survey on Drivers of Trust in Public Institutions. Fewer than four out of ten Swedes trust their national government, compared to more than four out of ten in OECD member countries. Reversing this trend could be challenging in the current context, which may exacerbate regional and sectoral disparities in access to, quality of and digitalisation of public services. Sweden also encounters challenges in governing cross-cutting issues, particularly the digitalisation of the public administration, public sector integrity and climate change. Sweden is internationally recognised for having lower levels of public sector corruption and in the OECD Trust Survey Sweden scores highest among OECD countries in people’s perceptions of public integrity. Nonetheless, the Survey also finds that 29% of Swedes believe that a public employee would accept a bribe.

Enhancing the effectiveness of the public administration can also improve the responsiveness, quality and cost efficiency of public services, and help the country embrace the green and digital transitions, ultimately reinforcing trust in public institutions. Improving the use of performance management tools would allow Sweden to more closely monitor and enhance its public sector effectiveness and achieve public administration objectives and reforms. Reinforcing the co-ordination and steering of horizontal priorities could increase the government’s capacity to respond to current multi-faceted priorities. Accelerating the digitalisation of public services and taking a coherent approach to digital government across the public administration remain important challenges in Sweden. Sweden could also take a more holistic approach to public sector integrity, especially at the local levels, and the revision of its national anticorruption plan is a welcome step to achieve this objective.