An open letter to Göran Persson from the Left Party

Submitted by Anon on 22 August, 2006 - 8:55

This is the translated text of the open letter to the Minister of State Göran Persson which was published in Swedish on the Left Party’s website at:

In the Social Democrat election manifesto that you, together with the party secretary, will soon present we expect a number of promises on urgent welfare reforms. It is also to be expected that you will call attention to the fact that unemployment is still the most important election issue.

The question is then if you are prepared also to carry out a concrete policy for full employment. At the latest SAP party congress you decided that “full employment is the Social Democrats most overriding goal”. This can hardly be translated as anything other than that increased employment must have preference over low inflation when the Riksbank (National Bank) set interest rates. Recently the Riksbank has, for example, argued for increasing interest rates with reference to “ an altogether stronger employment market with increasing employment, altogether lower unemployment and an increased labour shortage”. It was in other words necessary, in the Riksbanks view, to actively prevent improved employment. This is clearly not a plausible arrangement and you have yourself made it clear that you are have not been satisfied with a number of the Riksbanks interest rate increases. You are not alone on this. For example the Konjunkturinstitut (Institute of economic affairs) stated that the latest interest rate increase “quite simply prevents any improvement of the labour market”.

When the government earlier this year was questioned about the SAP party conference decision you answered that you were not prepared to place employment on a level footing with low inflation. But let us hope that you only wanted to wait until the election before you declare that you will return to the successful employment policy that was carried out in the beginning of the 1990’s. Do this and you will have, of course, mine and the Left Partys full support and we can then present a real alternative the right wing alliances policies of reduced unemployment benefit, large tax cuts and increased insecurity for employees.

But interest rate policy alone is not enough to achieve a strong increase in employment. Full employment as an overriding goal requires also a duty to create many new jobs in the public sector to compensate for the big cuts of recent years. Our proposal of 200,000 jobs is a step on the way to restore that which was destroyed. And we know that the need is great as we get nearly daily reports about it.

But does it cost too much? The alternative question is obvious. Today unemployment costs an enormous sum, both as benefit payments and in the form of the social costs that are created by marginalisation, alienation and poverty. Furthermore society loses enormously due to people who should be contributing to the common production of goods and services not having the opportunity to do that. And the private companies have, despite an economic boom and record profits, shown that they are not capable of taking a long term responsibility for investment and employment. That this is the state of things is not, I believe, consciously denied by the Social Democrats.

Sweden is today a much richer country than in 1990 when we could finance 1.6 million public employees. Even with our proposal of 200,000 new jobs it would still require another 50,000 jobs to reach 1990 levels of public sector employment. The very favourable economic prognosis for the next mandate period shows also that it is possible to finance an improved welfare state.

If we assume that these 200,000 new jobs in the public sector will become a net contribution then it implies a budget expense of hardly 17 billion kronor (around £1.3 billion). Although this sum will probably be somewhat higher as not only the unemployed will take these new jobs. At the same time several billion will go to education and other investments that are required for these new jobs. But these expenses are investments that quickly generate income. Those today that are unemployed and get work will contribute more in tax, which gives a re-injection of funds to the public sector. Furthermore the outpaid wages will in the main part be used towards increased consumption, which gives increased VAT revenue. Public investment is also a strong motor for the private sector and demand for their products and services increases.

The energy and the environment changeover gives us big possibilities for many new future jobs. Based on the industries own figures, we estimate that the energy changeover can give at least 170,000 new jobs by 2020.

Both myself and the Left Party truly hope that your election manifesto announces a policy for full employment and a real investment in jobs in the public sector.

Best wishes,

Lars Ohly

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