Swedes fear aid system is overtaxed: Generous benefits are burdened by an aging population and sick-leave abuses.
STOCKHOLM, Sweden - In the happy chaos of their two-bedroom apartment in central Stockholm, Mika and Carolina Laine interrupt each other in their enthusiasm to describe the cozy embrace of the Swedish welfare state.Be still my heart!
As 4-year-old Georg plays Robin Hood and 2-year-old Annie learns to skip, the Laines talk about everything from generous paid leave for new parents to free tuition and generous stipends for university students.Funny how that works.
"Even if we pay a lot in taxes, we get a lot," said Mika, 34, a middle-school teacher.
But like many Swedes who fret about the world's highest tax burden, worrisome demographic trends, and a puzzling explosion in sick leave, the Laines wonder how long it can last.You mean I have to buy a beer to get a free lunch?
"I want the system to work and keep the standards we have today," said Carolina, 33. "But I'm afraid it's impossible."
But before we get to that part, how about some more bennies?
Income taxes top out at a marginal rate of 55 percent, compared with 38.6 percent in the United States, and high rates apply at much lower incomes. If retail prices seem high, that's partly because a walloping 25 percent value-added tax is built in.Oops, here are the bennies:
In fact, 51 percent of Sweden's gross domestic product is consumed by taxes, the highest rate among the 30 developed countries tracked by the Organization for Economic Cooperation and Development. At 29 percent and falling, the United States vies with Japan, South Korea and Ireland for the developed world's lowest tax burden.
The Laines offer a typical case. After each of the children's births, the couple split more than a year of state-paid parental leave. Now they collect monthly payments to help support each child.What a great con - the government takes huge whopping hunks of their income but they're happy because they get "benefits". Muggers ought to try it - "Give me your wallet, but I'll give you 20 bucks." The only problem is when there is no "20 bucks".
When the children need a vaccination or run a fever, their medical care is free. Their subsidized day-care center, a 10-minute walk away, has four trained adults for 17 children.
Such benefits hugely ease the strains of parenthood, they say. Carolina said a Swedish friend recently married an American and moved to Minnesota. "But they plan to move here when they have children," she said.
True, Mika pays 30 percent of his $40,000 teaching salary in income tax. But that money might be said to recycle to his wife, a full-time student of clinical psychology at Stockholm University. Not only does she pay no tuition, but the government also pays her a stipend to cover living expenses.
"I do have to pay for my books," Carolina said.
Another young Swedish mother, asked about views of the Swedish welfare state, surveyed her social circle.
"I spoke to a few of my friends and said, 'Come up with something about the system that's bad,' " said Esther Goldman, 24, mother of a 10-month-old son. She got few complaints: "Everybody said we get so much, it's kind of cheeky to complain."
The fact that even the well-to-do receive tangible benefits from the system has preserved its broad popularity, said Agneta Karlsson, deputy secretary of the ruling Social Democratic Party, which has held power for most of the last seven decades.
"The Swedish idea is everybody pays and everybody gets something," said Karlsson, 41. "If only the poor receive something, the poor will be stigmatized, and the rich will say, 'Why should we pay?' "
More than 800,000 people - about a fifth of the workforce - are either on sick leave or early retirement for medical reasons, a rate far higher than in other European countries, according to government figures.Not that there was much incentive in the first place. Hmm, maybe I can become an honorary Swede?
Fabian Wallen, an economist with the Confederation of Swedish Enterprise, faults what he considers to be lax rules for determining who is ill.
"In Sweden you can be on sick leave basically forever," Wallen, 29, said. "You don't really have incentives to go back to work."
And there's more good news:
Similarly, in a sign of anxiety about the future, the Laines recently began paying about $30 a month into a private retirement account. They worry that state pensions might not survive the graying of the population, which will place a huge burden on a shrinking working-age population.Lotsa luck.
If sick leave is the short-term threat to the system, demographics pose a long-term danger. While the growing number of retirees poses problems for the United States, Sweden's generous benefits make the age shift potentially more catastrophic.
Wallen says the looming demographic challenge makes it essential that Sweden find ways to enlarge the economic pie that is being so equitably distributed.
"The basis for any society besides having a just legal system and all that is to have some kind of wealth creation," Wallen said.