Speech at Hankuk University of Foreign Studies Seoul, Republic of Korea
October 29, 2013
It is an honor to be here.
The Republic of Korea is a very warm and welcoming country,
and it is a great privilege to learn more about your culture and your current development.
I would like to thank the University for inviting me and a special thanks to the Department of Scandinavian Languages. I will stick to English for now, but feel free to ask me questions in Swedish afterwards if you want to try your language skills.
I am in Seoul to study your education, business and innovation systems. These are key elements of development where Sweden and the Republic of Korea can learn from each other.
The theme for my lecture today is the Swedish welfare system, which connects to all those elements. The Swedish welfare system is fundamental to our development and growth, and it is our national pride.
The creation and the constant development and reform of the modern welfare state is one of my party’s, the Swedish Social Democratic Party, main projects. That is why I was delighted when I was asked to talk to you about this subject.
I will try to give you a view of both the ideas behind the Swedish welfare state, and its challenges for the future.
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There is one main reason for having a welfare state.
It is not just equality, even though history has shown that it creates equality.
It is not just growth, even though history has shown that it creates growth.
It is freedom. The answer is freedom.
We believe that, since we are all created equal, we must have equal opportunity to live our lives the way we choose, without regard for gender, social background, or health. That is the reason for having a welfare state.
Some say that sharing responsibility for each other’s welfare creates a too collective mindset, and destroys individualism. That is wrong. Studies have shown that Sweden is one of the most free, equal and individualistic countries in the world.
And I am convinced that is not despite of, but because of, the welfare state.
General welfare strengthens you as an individual, and makes you independent and free to live your life as you choose.
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All societies must find a way to finance education, health care and all other social services. It is commonly said that there are three ways of organizing the welfare.
One is the market-oriented model, used in the United States, where everyone pays their own costs, sometimes through individual insurance.
Another is the conservative model, predominant in catholic continental EU- countries, where social services to a large extent are connected to the family instead of the individual.
And then there is the general welfare model, most clearly represented by Sweden and the other Nordic countries; Norway, Denmark, Finland and Iceland.
I will focus on the Nordic model, and I would like to describe three fundamental aspects:
First: Free, equal and general access to education, healthcare and care for the elderly, with an emphasis on the individual’s right to these things.
Second: General social security, when you become a parent, become unemployed, sick or old.
And third: The urgent need for full employment, which lays the foundation for a sustainable welfare state also in the future.
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So let me begin with free, equal, and general access to education, healthcare and care for the elderly.
The reason we so strongly believe in a general welfare model is that we feel that certain social services should be regarded as social rights. They should be delivered not by capacity to pay, but according to need. They should not only be available for some, but for all. These are indeed principles and truths we hold to be self-evident.
We believe that education should be free, because it gives everyone knowledge he ros he or she needs at the labour market, a chance to understand yourself and your society – and ultimately a chance to succeed in life.
This begins already with heavily subsidized universal public childcare.
87 percent of all Swedish children attend publicly financed childcare. Among four to five-year-olds, the figure is 95 percent.
Then follows nine years of compulsory education from the age of seven, and three years of upper secondary education which prepares students for a job or university. All these levels of public education, including universities, are free.
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This also means that we are fighting hidden fees, such as extra costs for school trips, educational material or school lunches.
Those kinds of costs could create a division between students with rich parents and students with poorer parents, and they should therefore not be allowed.
Studies at university are also supported through grants and government student loans, which cover the basic cost of living during the study periods.
The same idea of general access for all applies to the healthcare sector. Meeting medical doctors and undergoing examinations or surgery cost only a small fee. Medicine is heavily subsidized, and you only pay up to a certain threshold, after which the costs are covered by the government. This is also crucial for our elderly citizens. Even though care of the elderly is also heavily subsidized, the costs for growing old could still rise to unacceptable levels if it weren’t for limits on the cost of medicine.
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The general idea behind all of this is, as I pointed out earlier, that we believe that things like education and health are social rights. They should be kept outside our free market system. But that doesn’t mean that they should not be carried out on a financially sound basis, quite the opposite.
Paying for education and healthcare through taxes instead of fees keeps down the cost of administration and also prevents overspending in the health sector. The skyrocketing costs which occurs when bureaucrats need to find out who has paid for what in healthcare, as can be seen in the US, are greatly reduced in our system.
We just need to make sure that everyone pays their taxes. General welfare is often more efficient than private solutions. And that leads us on to point number two: social security.
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Our social insurance system is based on the loss-of-income-principle.
We all pay into the same pool; so that you are able to maintain a respectable economic standard if you lose your job, become ill, suffer a work-related injury, or retire.
It is a simple idea. No parent should have to come home and tell their family that they have to leave their apartment or sell their house because they have lost their job or got cancer.
The same principle applies to everyone – no matter if you are a blue collar worker, a white collar worker, academic or a CEO. This principle is sometimes under attack by Sweden’s conservative parties, but it has strong support among the people.
I think this strong support stems from the fact that people can see how it leads to greater equality, greater cohesion in society, and that everyone knows that they themselves may some day become unemployed or sick. And everyone will inevitably get old.
But there is also an understanding that general welfare also creates a more effective economy. It is a pretty simple logic, if you look at what happens if the social security isn’t there. If you are afraid that unemployment will lead to poverty and exclusion, you will be more reluctant to accept new technology or new ways of working that might make you redundant in the workplace.
You will fight efficiency instead of promoting it. Or let’s say that you will suffer financially just because you get sick. That won’t help you get better or get back to work, but rather the opposite.
You will have to try to find new ways to put food on your table, instead of focusing on your rehabilitation. And losing your income if you become a parent will only make you regard parenthood as a cost, an economic challenge. You will hesitate to become parents, and it will lead to fewer children being born who later can take care of the old, by paying taxes or in other ways .
That this line of thinking is correct can easily be shown by looking at the fertility rates in Europe. Countries with weak welfare systems have among the lowest fertility rates. For example Hungary, Romania and Poland have a fertility rate of 1.2 to 1.3, just about the same level as Republic of Korea.
On the other hand Sweden, through investments in child care, parental leave, gender equality, and extra child allowances has reached a fertility rate of 1.9 – one of the highest in Europe.
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This is why the construction of a welfare state should not primarily be regarded as spending, but as an investment. What you put in comes back. And that leads me to my third point: The relation between full employment and the welfare state.
It is not a secret that the running of a modern welfare state needs a relatively high level of taxation. But the amount of tax that the government can collect is of course to a large extent dependent on how much people earn all together. So the key to maintaining a welfare state is not high taxation, but high employment. The important principle of a work ethic, that everyone needs to contribute and do their part, is very important. It is the foundation for a well-functioning welfare state.
An old Swedish motto is “Do your duty – demand your right”, and that captures the essence of it.
Full employment builds the welfare state. And the beauty of the story is that: a welfare state in turn helps to create full employment. It is a two-way steet. I have already told you how social security increases productivity in the labor market, as people can accept efficiency instead of working against it.
They can also focus on rehabilitation to allow them to go back to work when they get sick. But that’s not all.
The Nordic welfare model also increases equality between the sexes. More women can participate on the labour market, and society can benefit from both men’s and women’s skills and ideas.
Our investments in daycare for children, and elderly care for old parents, have created a situation where fewer people are forced to stay at home to take care of them. Sweden has now one of the world’s highest levels of employment rates among women. 72 percent of all women between 16 and 64 are employed in Sweden.
Free healthcare means that fewer people hesitate to go to the doctor, and they can get well sooner and return to their job. Investment in education for all also means that more people are able to study, and re-educate themselves later in life.
Which proves Sweden’s position in the global knowledge economy. Therefore, the welfare state is a great engine to achieve full employment But it is not a guarantee.
And that brings me to the future challenges for the Swedish welfare state. The expectations on the welfare state are constantly rising. The higher living standards are, the greater the demand on health care, social services and education.
It is always possible to make public sector services more effective. But it’s not like the manufacturing industry. Welfare services mean people helping people.
Even though modern technology can help some, there is always a need for a personal connection and a human touch.
And even though we have a high fertility rate, the population is growing older since people live longer. The life expectancy for a girl born in Sweden today is 84 years. It is true progress that we have succeeded in organizing our society so that we are stronger and can live longer.
But this also increases the cost of health care and care for the elderly, while a smaller percentage of the population is working. Unfortunately, Sweden has strayed from the path of full employment for many years. 400 000 people are unemployed, a significant number in a population of 9 million. That is why I believe that the only way to support and strengthen the welfare state is to commence the tough way back to full employment.
That is why I have put up as a goal that Sweden should have the lowest unemployment rate in the European Union by 2020, as a first step. This will be one of my most important pledges in next year’s Swedish parliamentary elections.
And that is why I am here in the Republic of Korea right now, studying your education system, your business sector and innovation policies. This goal will demand an active policy for full employment. Sweden needs to stimulate growth, invest in research, innovation and industrial cooperation in order to create greater demand on the labour market. We will invest in the education system and strengthen Sweden’s schools to make it possible to meet the increasing demand from business and the public sector for a well educated work force.
And we will focus on sustainability:
- Sustainability in the workplace, by improving the working environment in both public and private sectors – so that people can stay healthy and can work until they want to retire.
- Sustainability in the production of welfare, by strengthening the rules for providers of welfare, so that people always can benefit from high quality services.
- And of course ecological sustainability. Growth can only be sustainable if it accepts our planetary boundaries.
And the production of green and energy efficient technology creates jobs. But most important of all: neither jobs nor welfare can exist in a damaged environment.
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Let me conclude by saying this: Sweden is facing challenges. Yes. But our welfare state is not part of the problem, it is part of the solution.
This simple idea of social rights, of solidarity and of cooperation, has made us into a world leader in terms of growth, living standards, competitiveness, and equality.
Where social rights increase – equality, sustainability and wealth will follow.
That is why the construction of welfare states is the construction of a more prosperous and fair world.