Swedish Welfare: Some Find It More Rewarding Not to Work

An article by Nima Sanandaji, the president of the Swedish think tank Captus

In many European nations taxes, government regulation and public programs have expanded rapidly during the past 50 years. Many people today are dependent on government jobs and handouts whilst others are paying into the system year after year. The political discussion in Western European nations has focused on the short term interest of various interest groups. It might be useful to break the status quo of the political debate and ask ourselves what social model makes sense for Europe.

Sweden is often used as an example of the modern European welfare state and might thus serve as a model for policies in Western Europe. Since the political landscape radicalized in the 60s an important change has occurred in the country. The high taxes and the generous welfare programs have led to a situation where the number of people of working age who are living off public welfare has risen from around 10 to over 20 percent. Reduced incentives to work and labour market regulations have also affected the situation for immigrants. Immigrants have gone from being a group who had a larger labour market participation and higher incomes from working compared with native Swedes to becoming a group that to a large degree lives off taxpayers’ money.

What are we trying to achieve through welfare programs and income redistribution?

A report from the National Institute of Economic Research, a Swedish governmental organization, shows that the incentives to go from handouts to work are relatively small for Swedish workers. The report, published in December 2006, looks at a typical Swedish worker whose employer pays 300,000 Swedish Kronen in employer’s tax and salary (corresponding to some 32,000 Euros). Under the past Socialdemocratic government this person would only gain 12 percent of the 300,000 by working rather than living off unemployment insurance. The reforms implemented by the recently elected center-right government would increase this figure, but only to 14 percent.

If the salary of this worker including employer’s tax is said to be around 14 Euros an hour and he or she worked a typical 8 hour work day, the reward for going to work would be less than 16 Euros per day. But there are also costs associated with working. Going out to lunch rather than staying at home to eat might cost an extra 4 Euros per day. Travel to work might bring on an additional expense of 5 Euros. The reward to the individual for a hard days’ labour would thus shrink to only some 7 Euros for each day spent working. If the alternative to work is a black market job, there would be a considerable loss in going from unemployment to employment.

A recent survey in Sweden showed that a majority of company owners have experienced that people come to job interviews for employment that they are clearly not interested in. The motivation for turning up to these interviews is rather to convince the government that they are actively seeking employment. This is the result of a system that barely rewards the individuals who work.

The European welfare states are based on the idea that individuals only make use of welfare programs when they absolutely need to and that the strong work ethic prevents people from taking advantage of the system. But people slowly adapt to the system and the work ethic declines in view of the low rewards for hard work. We must ask ourselves if this situation is what Sweden’s welfare programs were constructed for. Is it reasonable that welfare systems originally designed to help the very poorest now encompass a large fraction of the national economy? Is it fair that hard work is punished whereas dependence is rewarded? There is a need for a moral and principled discussion of the social system that exists in Sweden and that is mirrored in most European nations.

In Reply to MarcFrans

Marcfrans: "Individuals are not becoming "atomized"..."


The atomization I am referring to is purely cultural. The social movements originating in the 1960s are in part responsible for the prevalence of extreme individualism in contemporary Western societies, in particular the United States, Canada and the United Kingdom (I am excluding Australia and New Zealand for lack of in-depth knowledge regarding their social trends). Because institutions of human socialization (e.g. marriage, friendship, work, politics, the family) have come under severe criticism in academic and popular discourse because of their often arbitrary and subjective nature as well as their capacity to harm one's self-development, individuals are tending to enter into associations with other individuals not for the sake of the association or its members but purely for self-interest. Furthermore, if one's interests are being compromised or being perceived to be compromised by association, one is encouraged to leave. Because people are increasingly unwilling to compromise or to invest their time and energy into socialization, atomization is occurring, with resulting loneliness, high divorce rates, low birth rates and overall malaise. This observation is not intended to lend support to forced socialization like arranged marriages or conscription, it is merely to note that if individuals no longer view themselves also as members of cross-cutting communities (e.g. families, nations, civilizations, etc.) they will increasingly resist supporting those communities' structures. Every institution operates on an unwritten or rational code, irrespective of its legal framework, and the welfare state is no different. If the state is nothing more than a service provider, than it must compete with private alternatives thus eventually reducing its function to that of a night-watchman.


MarcFrans: "...and no one is "at the mercy of the global economy" in western welfare states..."


People perceive that they are, and perception is reality.


MarcFrans: "On the contrary, the trend has been in the other direction towards 'corporatism' and excessively strong special-interest-groups who gain 'insider' status."


An unfortunate but undeniable fact of organization.


MarcFrans: "The real problem is internal, i.e. a cultural one of changing values, as you outlined in your first paragraph."


True. However, individuals and communities contest their own values with those of others, with which exists a degree of dichotomy e.g. would the concept of race exist if the world consisted of Europe?


MarcFrans: "It is a matter of how to reform European welfare states in such a way as to restore values of "hard work" and "honesty", and re-link the safety net to 'community'.  That requires a  genuine 'community', not a collection of special-interest-groups and grievance-promoters."


Agreed! I support government intervention in the national economy for the purposes of regulation and for ensuring its optimal performance. Rather than basing this support on ideological foundations, I also support the greatest degree of economic liberalization possible simply because it is often in the best interests of all economies to liberalize and therefore in the interests of all national communities. However, if either liberalization or intervention is being carried out to serve special interests, ideological committments or foreign designs I am not supportive of either. The issue here is not one of taxation or finances, it is about restructuring. What is needed ultimately is centre-left fiscal policy with right-wing values.


@ Kapitein Andre


Your first paragraph is very perceptive and well written.  I support your call for "social democracy" and your warning against "change in values".  

Your second paragraph is more questionable, and a bit demagogic.   Individuals are not becoming "atomized" and no one is "at the mercy of the global economy" in western welfare states.  On the contrary, the trend has been in the other direction towards 'corporatism' and excessively strong special-interest-groups who gain 'insider' status.  

It is a 'diversion' to look for external scapegoats, like the indeterminate "global economy", or the Americans, or the muslims, etc...  The real problem is internal, i.e. a cultural one of changing values, as you outlined in your first paragraph.  It is a matter of how to reform European welfare states in such a way as to restore values of "hard work" and "honesty", and re-link the safety net to 'community'.  That requires a  genuine 'community', not a collection of special-interest-groups and grievance-promoters. 

The primary aim

of welfare is to buy votes to enlarge the government. The drive in people to be self-sufficient is being systematically extinguished by government policy that dictates the state as mother and father. As the state has taken on the role of robber of working people who feel the yoke of oppression, the people wonder why work so hard. They know they have no hope of getting ahead. The government has set the barriers so high to working people that the drive becomes limited.

The analogy of the flea circus is quite applicable here. If you set a piece of glass on top of a container and allow the fleas to jump as high as they can, they hit the glass. After awhile they will only jump as high as the glass and you can remove the glass and know they will not leave, because they cannot.

The state doles out money to the people most likely to become addicted to the infusion of cash. This encompasses the elderly, unwed mothers and “disabled” people. This assures the government of a positive voter base by which to continue to rob people of the fruits of their labors.

As the governments become more burdensome you will see a net loss of productive people and an increase of “freeloaders”. As the “freeloaders” increase crime will increase and entitlements will increase to solve the problem. The government is then infected with a cancer that cannot be cured except through a radical reformation. The people will demand the reforms long before the government will even recognize there is a problem.

The revolution has already started.

In Response

Although the structure of European welfare states, particularly Sweden's, may encourage free-ridership from Swedes and foreigners, the problem is in the final analysis cultural. Welfare states initially provided a social safety net for those who through little or no fault of their own were among the least well-off. Their underlying ethos was that this social safety net was the means through which the national community could take care of its own and an emphasis on hard work, honesty and savings did not contradict this motive. However, Western European states are systematically obliterating their national communities through policies of multiculturalism, open immigration and political correctness. Not only are members of formerly homogenous nations increasingly atomized, but they are perceptive of the free-ridership amongst immigrants and their descendants who have little or no affinity to these nations that created the benefits they enjoy. Thus, without a sense of community, the welfare state will be destroyed as each individual, save for a few naiive idealists, takes what he or she can. Furthermore, instead of fostering an overall culture of self-reliance, Western European elites have fostered a culture of entitlement. However, this change in values is not limited to either the realm of politics or to Western Europe as children across the West are being raised into this culture and mature with dashed expectations. Irrespective of non-Westerners taking advantage of Western socio-economic institutions, as well as the obvious necessity for structural modifications, the declining viability of the welfare state correlates with a shift in values and in identity.


Unfortunately, many elites in Western Europe are attempting to succeed where the Soviets failed, namely in the deconstruction of identities with the aim of a completely egalitarian society. Far from supporting social democracy, these aforementioned policies will only lead to its abolishment as individuals become atomized; moreover, once isolated and at the mercy of the global economy, these disaffected Europeans will be easy prey for those distasteful ideologies that provide some sense of community and of security.

Nobody is surprised

It's a basic law of economics - subsidize something and your get more of it.

And so you get more slackers. And turn honest people into chumps.

It's entirely predictable.