To enable higher growth through productivity gains and increased job creation, Sweden should focus on three priorities:
- Remaining barriers to competition and productivity throughout the private sector should be removed.
- Productivity in the public sector must improve rapidly through increased competition and improved measurability. Demographic trends and the tendency for labor costs in the public sector to rise to keep pace with the private sector labor cost mean that Sweden will soon struggle to finance its current level of welfare services.
- The rate of job creation must increase, especially in services industries, which represent a growing proportion of employment in developed economies and already employ 40 percent of Sweden’s workforce.
Success in these three areas would significantly improve Sweden’s economic performance. Policy makers, companies and labor unions all need to contribute to making the necessary changes.