Sweden’s hidden jobless

Jan Edling, a little-known labour-union economist from the big LO blue-collar union, is suddenly in the policy spotlight with his assertion that Sweden's real jobless rate is closer to 20 per cent than the official 5.5 per cent rate.

He suspects that the government is putting people into benefit categories that other countries would simply put into the unemployment column:

Beyond the official rate, an additional 4.4 per cent of the working-age population are parked in the government's elaborate array of job-creation and training programmes, according to a study by Skandinaviska Enskilda Banken AB with data from Statistics Sweden.

But Edling calculates that another 10 per cent of working-age people can be identified as unemployed, using correlations between unemployment, long-term sickness and early retirement among Sweden's municipalities and regions.

This makes the actual unemployment rate closer to 20 per cent of the work force, he says.

Instead of urging the overhaul of the labour market and welfare and tax regime, Edling says his aim was to show that regions investing heavily in infrastructure, research and education for job mobility did better than regions that didn't. Typically, he explains, the latter had more hidden unemployment.

"The public debate is about statistics, but they are only a symptom of something that is wrong in this country," says Edling. "What we see are people at Electrolux who lose their jobs and don't know anything else than how to make vacuum cleaners. Chances are they will soon be in early retirement."

Source: Terence Roth, Sweden's Hidden Jobless: Labour Economist Asserts Unemployment Near 20%, Wall Street Journal, June 1, 2005.

For text (subscription required): http://online.wsj.com/article/0,,SB111714741454244517,00.html

For more on International: Unemployment and Labour Market: http://www.ncpa.org/iss/int/

FMF Policy Bulletin/ 07 June 2005