Income inequality in Sweden

Sweden enjoys a very low income inequality and a high standard of living, unemployment as of 2014 is estimated to be 7.9% (2014 est.) by the CIA World Fact Book,^[1] which is relatively low compared to other EU countries, and the Nordic Model employed by Sweden has often been considered a success story in Europe in relation to other failing European economies. This model includes many unemployment benefits for the poor, and a generous welfare state,^[2] while being a very transparent and corruption free country.^[3] The Income inequality in Sweden ranks very low in the Gini coefficient, being 24.9 as of 2013^[4] which is one of the lowest in the world, and ranking similarly to the other Nordic Countries; although inequality has been recently on the rise.^[5]

Inflation is currently in a historical low,^[6] and Swedes pay very high taxes, being 52.1% of GDP (2014 est.) and enjoy a very generous universal welfare state. Sweden highest earning househould have a remarkably lower share of income capital when compared to other countries; with the highest 10% having 22.2% of income or consumption by percentage share ^[7](compared to the USA, in which the highest 10% percent have 30%,^[8] and Germany, have 24% ^[9]), and very low poverty rates. In 2010, a study by InequalityWatch in 2010 shows that considering the thresholds at 50% of national median income of EU countries, Sweden rate of poverty is 7%, significantly lower than in other countries such as Spain(around 15%), or the UK(9.8 %).^[10]

Workers and growing Inequality

In 2005, Sweden's labor force was estimated at 4.49 million persons. As of 2003, the services sector accounted for 75.1% of the workforce, with 22.6% engaged in industry, 2.1% in agriculture, and the remainder in undefined occupations. About 80% of Swedish wage earners are members of trade unions, and within certain industrial branches the percentage is even higher. The trade union movement is based on voluntary membership, and there is neither a closed shop nor a union shop. Although workers have the right to strike, employers also have the right to use the lockout.^[11] The Labour workforce is mixed, and productivity has slightly weakened in recent months, but GDP per hour worked in Sweden remains very high.^[12]

In the last decades, there has been a growing supply and amount of low-skilled workers in the labor force competing for fewer and fewer occupations with lower educational and experience requirements. These types of jobs can include certain occupations in industry, and a number of occupations in services, administration and sales such as child care workers, kitchen and restaurant assistants, shop assistants,and cleaners. Many of these jobs are characterized by high staff turnover, which can be good for those who want to gain a foothold in the Swedish labor.^[13]

Many Immigrants to Sweden come to work in low-skilled labor, and high-skilled labor is more difficult to be found in immigrants due to a lack of good quality in higher education of these immigrants. According to a news report by thelocal.se, a 2008 change to Sweden's labour migration laws have designed to make it easier for companies to recruit non-Europeans to hard-to-fill high-skilled jobs, but has instead been used primarily to bring low-skilled workers to Sweden. "Only one third of the 60,000 jobs filled since the law came into effect have actually landed in the hands of the much-needed specialists." ^[14] Suggesting non-EU workers may have a tougher time finding high-skilled jobs.

Albeit inequality between the low-skilled and high-skilled workers is increasing, low-skilled workers are generally very well paid, inequality remains low and the lowers classes and the higher classes alike enjoy a very generous welfare state. Income taxes and cash benefits traditionally play an important role in redistributing income in Sweden, reducing inequality among the working-age population by about 28% (the OECD average is 25%). This redistributive effect however weakened overtime as it used to range between 35% and 40% prior to the mid-2000s.^[15]

Sweden still belongs to the group of the most equal OECD countries, despite a rapid surge of income inequality since the early 1990s. The growth in inequality between 1985 and the early 2010s was the largest among all OECD countries, increasing by one third. In 2012, the average income of the top 10% of income earners was 6.3 times higher than that of the bottom 10%. This is up from a ratio of around 5.75 to 1 in the 2007 and a ratio of around 4 to 1 during much of the 1990s.^[16]

Inequality has been rising subtly in recent years. A 2010 inequality watch study has reported : There is a new feature of inequality: it is increasing in the most egalitarian of rich countries, the Nordic countries of Europe. In Sweden the Gini coefficient increased from 0.21 to 0.26 in 25 years; the ratio of disposable incomes between the richest and poorest declines increased from 4.1 to 5.8." ^[17] In the same study, it has been reported that the gap of the percentage of population living in relative poverty between those of immigrant and foreign background and those of native origin to be 11%. When considering only those coming from non-EU countries, it increases to 14.6%.

Immigration and Poverty

Sweden has a relatively high population of immigrant born and native population born to foreign born parents. As of 2011, Statistics Sweden reported that around 19.6% or 1.858.000 inhabitants of Sweden had foreign background, defined as born abroad or born in Sweden by two parents born abroad. Although Sweden does not officially record ethnic backgrounds, the national migrants' are recorded. The largest immigrant populations as of 2014 are Finland, Iraq and Poland (see Immigration to Sweden).

Immigrants are overrepresented in Sweden's crime statistics. In a study by the Swedish National Council for Crime Prevention in 1997–2001, 25% of the almost 1,520,000 offences were found to be committed by people born abroad and almost 20% were committed by Swedish born people of foreign background. In the study, immigrants were found to be four times more likely to be investigated for lethal violence and robbery than ethnic Swedes (see Crime in Sweden).

According to a study by Torun Österberg and Björn Gustafsson in 2014, when comparing the poverty rate between the immigrant population (in particular those of Turkey and Muslim countries) and the native population, it has been found that the most recent poverty rates among children with a Turkish background are three times higher than among native children.It has been a recent trend, that recent labour markets require higher education which many immigrants lack, resulting in increasing poverty and unemployment.^[18]

It is known that these ethnic groups have some form of trouble in integrating into the native community, resulting in increasing marginalization. Another possible group of explanations for the weak labor market situation among many immigrants is the difficulties of finding a job even if the person is qualified. According to the same study, it has been reported that : "Results from a number of recent field-experiments convincingly shows that many Swedish employers do not invite job-applicants who are according to documents as qualified as natives but have attributes signaling a Muslim or another non-western foreign background."

In this study, it has been reported that the Adjusted percentage difference to children with Swedish born parents in the second generation ^[19] in 2008-2010 in Iraq descendants to be 37%, while those from Greece and Hungary to be 23% .There has been a rapidly increased gap in income between the second generation of people with a background in Muslim countries and in other countries and native Swedes. This first took place from first half of the 1980s to the second half of the 1990s when the economy experienced negative economic growth and decreased employment. (see, Economy of Sweden; Crisis of the 1990s) and continues to this day.

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