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Sweden – Grappling with Economic Upheaval

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Sweden

Grappling with Economic Upheaval

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In the 1990s, the people of Sweden were admired for winning the battle against global financial downturn. Today they are again confronting a wave of recessions—this time greater in scope and magnitude.

Recent financial data shows that Sweden’s gross domestic product contracted by 0.1 percent in both the second and third quarters of 2008, placing the country in a state of recession.

“What we’re seeing now is a strong negative trend in the Swedish economy which will have major consequences for the labour market,” Swedbank economist Cecilia Hermansson told the Tidningarnas Telegrambyra news agency.

Bankruptcies in Sweden grew by 12 percent in 2008 to a total of 5,500. The country’s credit check company, UC, fears the worst is to come. It estimates that 9,000 companies are in dire financial straits.

“‘In total, UC predicts that company bankruptcies will increase by a full 25 percent in 2009, which would take us above the 2004 level of 6,900 bankruptcies,’ said UC’s marketing manager Roland Sigbladh.”

“‘There will be a large scale shake-out as well as probable domino effect when sub-contractors in the manufacturing industry are hit by major problems’” (The Local).

Even Sweden’s billionaires have not been spared by the present global financial crisis and stock market crash. A business magazine showed that the number of Swedish billionaires was reduced by close to 30 percent in the past year. Their losses have reached as much as 200 billion kronor ($24.7 billion USD)—about 20 percent of their combined wealth.

The economic slump resulted in hundreds of companies having to lay off a large number of workers. By the end of 2008, a total of 199,359 lost their jobs, an increase of 25,338 compared to the previous year. Alfa Laval, a Swedish engineering firm, has said it will cut 1,000 jobs worldwide due to dwindling demand for its services (BBC).

People

Sweden has one of the world’s longest life expectancies (80.74 years) and lowest birth rates (10.15 births per 1,000 people). The nation’s extensive childcare system guarantees a place for all children ages two through six in a public daycare facility. From ages 7 to 16, children participate in compulsory education. After completing ninth grade, 90 percent attend upper secondary school for either academic or technical education.

Free sex education in all four levels, from grade school to college, is part of the school curriculum.

Sweden is one of the richest countries in the world. Both the nation and Stockholm, its capital, are considered the greenest and most livable places on Earth (The Telegraph).

The Swedes live in an egalitarian society, which emphasizes the need to provide for its citizens. Its income and wealth are more equally distributed than other nations, primarily because of a large public sector allotment and a high tax burden.

In 2005, Swedish tax-financed consumption, or government subsidies for services such as education and childcare, was about $100.46 billion USD. This figure constituted 28 percent of Sweden’s Gross Domestic Product (GDP), the total value of all goods and services produced by the nation that year. Capital spending in Sweden was $10.72 billion USD, three percent of the nation’s GDP. Another $78.94 billion of Sweden’s GDP was redistributed to the public sector through transfer payments, such as unemployment benefits, sick pay and pensions.

To finance its social welfare programs, Swedes pay a tax burden equal to 51 percent of their GDP—the highest in the world.

A Permissive Society

In a 1992 article, The New York Times published the following: “From the 1950’s through the early 1970’s, Sweden was synonymous with the idea of an unfettered and open sexuality, a permissive, even promiscuous society at the cutting edge of the sexual revolution.”

“In part, the image of Sweden as a bastion of free love and sexual abandon endures as a memory of the 1960’s, a period of open sexual experimentation that was a precursor to the sexual revolution in the United States in the late 60’s and early 70’s. ‘It was a time of radical politics, a time when people believed quite wholly in the idea of personal freedom,’” said Katarina Lindahl, executive director of the Swedish Association for Sex Education.

According to the National Marriage Project of Rutgers, more than 90 percent of Swedish couples live together before marriage, and 55 percent of all babies are born out of wedlock.

Travel blog writer Terri Mapes (Scandinavian Travel) wrote that many Swedes like to swim or sunbathe in the nude. Nudism is prevalent.

History

The Swedish people descend from ancient Middle Eastern tribes that were captured by the Assyrians in 721-718 B.C. Their captors carried them to the Caucasus region (now modern Iran). Ultimately, the Assyrians migrated to northwestern Europe, along with their captives, who settled in northern Europe.

During the Viking Age, the Swedes were feared even by their former masters, known today as the Germanic peoples. The Vikings subdued nations across the European continent and pillaged villages as far as the Mediterranean, Black and Caspian seas.

In 1397, Queen Margaret of Denmark united all the Scandinavian countries (Denmark, Sweden, Finland and Norway) under one ruler. Named the Kalmar Union, it lasted up to the 16th century. King Gustav Vasa fought for an independent Sweden, and succeeded in driving the Danes from their stronghold in Stockholm. He then founded the Swedish state, joining the Protestant Reformation and making Lutheranism the state religion.

In the 17th century, Sweden, with just over one million people, was catapulted to great power by the leadership of the fearless, master military tactician Gustavus Adolphus. He made Sweden the dominant power for the next 100 years. The warrior king was credited as the founder of the Swedish Empire, in addition to breaking the religious dominance of the Catholic Church in Europe.

The 17-year-old king, in 1611, led his armies to a series of impressive victories. Then he joined in the Thirty Years’ War (1618–48)—one of the most destructive wars in Europe, which started between the Protestants and the Catholics in the Holy Roman Empire. His reign became widely known when he penetrated Germany in his war campaign in June of 1630, and began turning the tide against imperial Rome.

However, he died in the battle of Lutzen in 1632, which prolonged the war for many years.

By 1658, Sweden ruled several Danish provinces, as well as what is now Finland, Ingermanland (in which St. Petersburg is located), Estonia, Latvia, important coastal towns, and other areas of northern Germany.

The Dominions of Sweden extended as far as North America, including part of the present-day state of Delaware, which was ruled by a governor general who was appointed as permanent representative by the Swedish monarch.

But the territory was lost to Dutch Governor General Peter Stuyvesant.

During the Great Northern War, which started in 1700, Russia, Saxony-Poland-Lithuania, Denmark and Norway joined forces and attacked the Swedish Empire for supremacy of the Baltic Sea. Although the young Swedish King Karl XII (also known as Charles XII) won stunning victories in the early years of the war, he failed to achieve total victory and was killed in battle in 1718.

The war ended in 1721, with Sweden defeated. In 1809, Sweden was forced to cede Finland to Russia for losing during the Napoleonic Wars. The following year, the Riksdag (Parliament) elected Karl Johan, French Marshall Bernadotte and the Swedish king’s adopted heir, as crown prince. The present Crown King Carl XVI Gustaf is his descendant.

The Swedes ended their last war in 1814.

At the time of the Industrial Revolution, Sweden’s agriculturally based society failed to provide economic well-being to its growing population. As a result, about a million Swedes immigrated to the United States between 1850 and 1890. There was a common saying in Sweden around 1930: “Every Swede has a cousin in America” (The Local).

At one time or another, the Swedish realm once ruled Danish, Norwegian, Finnish, Estonian, Latvian, German, Polish, Prussian, Russian and other Baltic nationalities from the 12th to the 20th century.

Since Sweden remained neutral during World War I and II, the country was able to operate its vital industries. The economic success derived from the worldwide demand for Swedish products laid the groundwork for modern Sweden’s social welfare system.

EU Involvement

Sweden became a member of the European Union (EU) in 1995. In September 2003, the nation held a referendum on entering the European Monetary Union; 56 percent voted against it. All parliamentary parties pledged to respect the outcome of the referendum. No new referendum is planned.

In the last half of 2009, Sweden will take her role as rotating president of the EU.


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