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Monday, June 19, 2006

The Divine Social Model

From RedState.com:

Sweden's unemployment rate is 15 per cent, three times the figure being used by the government, according to new research from McKinsey Global Institute, the think tank.

The consultancy's calculations indicate unemployment is set to rise further, with between 100,000 and 200,000 jobs outsourced to cheaper countries over the next 10 years if no corrective action is taken.

The numbers cast a pall over Sweden's international reputation as a thriving welfare state with low unemployment and will help focus attention on jobs ahead of September's national elections.

McKinsey reached its conclusions by including those who want to work and those who could do so, meaning people on government programmes as well as those on prolonged sick leave.

In its first assessment of the country's economy since 1995, it said: "Sweden's economy has reached a critical juncture. If nothing is done, the problems will become much more serious."

It praised Sweden for achieving average GDP growth of 2.7 per cent a year since 1995, which it attibuted to deregulation and improvements in private sector productivity.

But it said the country could not rely on future improvements in private-sector productivity, as the catch-up effect that had driven these developments would decline over time.

The ageing population would put the public sector under "intolerable pressure" unless productivity improved, it added.

"If nothing else changes, the resulting increase in welfare costs would become too large to finance through the current tax system in only 10 to 20 years," McKinsey said.


Some comments that were posted at RedState:

2.7 % GDP growth is lousy. If they consider that an improvement, things must've been miserable -Steven

On the plus side - when the last factory closes, they'll hit their Kyoto targets! -Neil Stevens

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