LO President on the budget bill

A policy that turns a blind eye to the economic situation
- In spite of the fact that Sweden is entering into a recession with unemployment increasing considerably, the Government’s employment policy today is identical to the policy of three years ago. The cornerstone is the in-work tax credit. A Government praising itself for pursuing a rational economic policy ought to know that recessions and booms require different kinds of political measures.

These are the comments of Wanja Lundby-Wedin on the Government’s budget bill.

- The substantial improvement of the labour market during 2006 and 2007 was due to the favourable economic situation, not to the Government’s employment policy. When there now is a recession, the Government falls short of a policy to counteract a rise in unemployment. The demand of the Swedish economy must be triggered by measures with immediate effect. In such circumstances, further in-work tax credits and reduced employers’ fees are not the right medicine. Now there is a need for investments in labour market training and stimulation of the household spending by way of increased child allowances and study grants.

In the present situation, the households should venture to consume, but the very fact that half a million persons have relinquished the unemployment insurance, at the same time as the levels of remuneration have been lowered, does not contribute to keeping the wheels spinning.

- The amendments of the unemployment insurance proposed by the Government are far from sufficient to persuade those who have relinquished the insurance to rejoin it. Today, only 25 per cent of the employees can cover 80 per cent of their salaries by way of the unemployment insurance. The proposed minor reduction of the unemployment insurance fee will probably not benefit everybody. The Government should ponder over abolishing the fee to the unemployment insurance and, instead, increase the levels of remuneration as well as the ceiling of the insurance.