Will Job Fears Pull Down Sweden's Center-Right Coalition?

With Swedish voters worried about jobs, Fredrik Reinfeldt's center-right coalition has a slight lead over the left in the upcoming elections. But can they hold on?

Sweden’s Parliamentary elections on September 19 mark an interesting crossroads. The current center-right coalition government led by Fredrik Reinfeldt was long discounted, but recent opinion polls show the Alliance leading just slightly ahead of the red-green opposition.

The Alliance includes four parties: the Moderate Party, the Center Party, the Liberal People’s Party and the Christian Democrats. The red-green opposition consists of the Social Democratic Party, the Left Party and the Green Party.

However, the race is head-to-head and there is evidence that one new party may play a key role in Parliament—the anti-immigrant party Sweden Democrats. Several polls have placed the Sweden Democrats over the four-percent vote threshold required for seats in the Riksdag.

Victory by the red-green coalition would return the Social Democrats to power, this time led by former deputy prime minister Mona Sahlin. The Social Democrats have dominated Swedish politics for years. Since 1932, the party has only sat in opposition during three periods: Thorbjörn Fälldin’s and Ola Ullsten’s administrations in 1976-1982, Carl Bildt’s administration in 1991-1994 and Fredrik Reinfeldt’s administration in 2006-2010.

Each time the center-right alliance has been up for re-election, it has been during economic crisis—a situation that holds true this time as well. But now Fredrik Reinfeldt’s administration seems to have managed the crisis well, and Sweden is better positioned than many other countries on the international field. Voters show significantly more confidence in Minister for Finance Anders Borg than the Social Democratic Party’s candidate for the post, Thomas Östros.

Criticism from the red-green coalition focuses on increased gaps between rich and poor and the need for other steps to curb unemployment. Today, Sweden’s unemployment rate hovers just over eight percent, which is slightly under the EU average but higher than countries such as Denmark, Germany and the Netherlands.

When polled, Swedish voters ranked unemployment as the most important election issue.  The Alliance wants to continue on its existing path and expand its in-work tax credit program, which provides a tax reduction for all employed people.

The red-green coalition is focusing instead on more active labor market policies. New jobs would be created by spending more public funds on health care, education and welfare. Investments in high-speed trains and energy-efficient rental housing would prepare society for a transition toward the green.  Reforms would be financed by various sources, including increased income tax for high-income earners and a re-introduction of wealth tax.

Compared with other countries, Sweden has a high rate of unemployment among its youth. To make it easier for young people to find jobs, the red-green coalition is recommending that private employers who hire a young unemployed person would be exempt from employer contribution taxes.  But at the same time, it would also remove today’s 50-percent reduction on employer contribution tax for people under the age of 26. The Alliance wants to keep the reduced contribution tax for young people, while making it simpler for youth to enter trainee positions.

An issue being debated is the tax deduction for household services introduced by the Reinfeldt administration. The tax deduction has reduced consumer prices for household cleaning services and resulted in an increase in new businesses in the field. The red-green coalition would eliminate the tax deduction on the grounds that it mainly benefits the rich.

Another hot issue in the election campaign is nuclear power. The Alliance has pushed through a resolution that makes it possible to replace existing nuclear reactors with modern ones.  This is a major step in particular for the Center Party, which led the nuclear-resistance movement in the 1970s.  The red-green coalition wants to tear up the Alliance’s resolution to promote nuclear energy and reinstate the ban on new nuclear power.

On the international front, the red-green coalition has promised to reopen the Swedish General Consulate in New York. They also want to withdraw Swedish troops from Afghanistan, a process that is slated to begin in 2011 and be completed by 2013.

Swedish general elections tend to be neck-and-neck.  Recently the wind has blown toward the Alliance Coalition, but things can turn around quickly.

If the Sweden Democrats hold the balance of power, the situation in the Parliament becomes complicated.  It would result in intense pressure to create a coalition across party blocs, breaking one of the alliances already formed.

Regardless of the election outcome, the result will make history in some respect:

• If the Alliance wins, it will be the first time since the dawn of Swedish democracy that a non-Socialist government has managed to finish a full-term and also be re-elected.
• According to recent opinion polls, it may be the first election since 1914 in which the Social Democratic Party is not the largest party in the Riksdag.  According to an August 31, 2010 United Minds poll, the Moderate Party holds 29.3 percent and the Social Democrats 27.3 percent of votes.
• If the red-green bloc wins, Sweden will have elected its first female prime minister.
• Also, if the red-green coalition wins, it will also be the first time that the Left Party (formerly the Communist Party) will be part of the government.
• Most indications suggest that the Green Party will become Sweden’s third largest party, passing other parties such as the Liberal People’s Party and the Center Party.
• If the Sweden Democrats receive four percent of the votes, Sweden will have a right-extremist party in Parliament for the first time. New Democracy, which sat in Parliament between 1991–1994, was a right-wing populist party, but nowhere near the same level as the Sweden Democrats.
• If the Sweden Democrats succeed, Sweden will most likely have eight parties in Parliament –more than ever before. The Danish Folketinget currently has nine political parties. Denmark is commonly held up in Sweden as an example of a country with too many parties in Parliament.