Swedes say social costs hurt trade

Date: 14/03/02

By Peter Chapman

SWEDISH business is warning that the EU could preside over a Stockholm-style decline if it allows social affairs issues to remove business-friendly policies from the Lisbon agenda.

The country's business federation says EU leaders must deliver promises to roll back the welfare state, reform unfunded state pension systems and boost labour mobility for Europe to become the world's most competitive economy by 2010.

But they fear the opposite will be true and that the EU is bowing to French government calls to push social affairs up the agenda.

This would risk the spread of social policies that saw Sweden drop from eighth richest country in the world in 1980 to 17th in 2000 - dragged down by crippling taxes needed to pay for a lavish welfare system.

Jan Herin, director of international affairs at the Confederation of Swedish Enterprise, said: 'Business has now become the underdog in 'social Europe'.

'In Sweden we created a welfare hammock - and leaned back on it for 20 years. Things have only now started to pick up.'

A report by the Swedish group showed the continent is already way off the pace on new business creation, functioning of labour markets, labour taxes, venture capital markets and business red tape.

Herin said that a policy shift to social issues will see the US leave the EU trailing even further in its wake come 2010.

Dangers include possible new policies increasing costs to employers of taking-on agency workers and rules forcing companies to offer child care provision to workers.

Swedish business is warning that the EU could preside over a Stockholm-style decline if it allows social affairs issues to remove business-friendly policies from the Lisbon agenda.