The Thinning Swedish Welfare State

The system is under strain from demographic changes and the refugee crisis

- Amanda Billner, Rafela Lindeberg, And niklas Magnusson

When the maternity ward at a local hospital in the Solleftea district of northern Sweden was shuttered early last year, expectant parents had no option but to brave a more than 100-kilometer (60-mile) drive to the nearest alternative. That’s why local midwives began teaching couples a new skill: how to deliver a baby in a car.

A birthing course in response to leaner times would have been unusual even in a cash-strapped country. But Sweden is in the midst of its longest economic expansion in at least four decades, and the nation’s state coffers are brimming. The government, which has posted budget surpluses every year since it came to power, projects a surplus of 0.7 percent of gross domestic product this year and 0.9 percent next year.

“We have money,” says Hanna Hedvall, who worked as a midwife in Solleftea’s maternity ward for six and a half years. “We may not be able to have specialist care across the country, but here we are talking about rather simple things.”

Sweden, with a high birthrate and an aging population, has one of the biggest tax burdens in the world, and the marginal tax rate can reach 60 percent. The taxes are used to fund a system of cradle-to-grave benefits that are among the most generous in Europe. Citizens are entitled to heavily subsidized health care, free education, including university, and more than a year of paid parental leave—plus a pension when they retire. But in recent years, a need for increased welfare spending has coincided with a large influx of refugees. Sweden has absorbed more than 600,000 immigrants over the past five years, many from war-ravaged countries such as Afghanistan and Syria. That’s a huge number for a country of 10 million people.