2019 OECD ECONOMIC SURVEY OF SWEDEN - - PowerPoint PPT Presentation

2019 OECD ECONOMIC SURVEY OF SWEDEN

@OECD @OECDeconomy

http://www.oecd.org/eco/surveys/economic-survey-sweden.htm

Key messages

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• Policies should remain responsive to macroeconomic developments
• Addressing structural weaknesses in housing and business

regulations could enhance productivity and well-being

• Reinforcing the school system and maintaining high workforce skills

is essential for growth, competitiveness and social cohesion

Output growth is robust

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Real GDP growth

Source: OECD Economic Outlook database.

• 8
• 6
• 4
• 2

2 4 6 8

• 8
• 6
• 4
• 2

2 4 6 8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Y-o-y % change Y-o-y % change Germany Euro area Sweden United States

Unemployment has declined

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Source: OECD Economic Outlook database.

2 4 6 8 10 12 14 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % of labour force ITA DEU FRA SWE Euro area OECD

Unemployment rate

The employment rate is among the highest in the OECD

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Source: OECD Labour force statistics database.

10 20 30 40 50 60 70 80 90 TUR GRC ITA MEX CHL ESP BEL FRA KOR LUX POL SVK OECD IRL ISR HUN PRT USA SVN G7 FIN LVA AUT AUS CAN GBR EST CZE NOR DNK DEU NZL JPN NLD SWE CHE ISL % of population aged 15-64

The economy is operating close to full capacity

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• 1. Percentage of potential output.
• 2. Deviation from 2005-2018 average in units of standard deviation.

Source: OECD Economic Outlook database, NIER and Riksbank.

• 7.5
• 6.0
• 4.5
• 3.0
• 1.5

0.0 1.5 3.0 4.5 6.0 7.5 70 72 74 76 78 80 82 84 86 88 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % % Capacity utilisation in manufacturing industry Output gap (rhs)¹ Resource utilisation (rhs)²

Labour productivity has been growing faster than in most other countries

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Note: Productivity is measured as GDP per hour worked. Source: OECD, National Accounts, Productivity and Economic Outlook databases.

100 105 110 115 120 125 130 135 140 145 150 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 1995=100 EU28 JPN USA G7 SWE 100 105 110 115 120 125 130 135 140 145 150 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 1995=100 DEU DNK FIN NLD SWE

Global uncertainties shroud the outlook

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• Global slowdown
• Trade tensions
• Brexit
• Financial market volatility

Monetary policy remains very expansionary

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Source: OECD Economic Outlook database and Riksbank. Policy rates Inflation

Government surpluses largely reflect the strength of the economy

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• 1. % of potential GDP.

Source: OECD Economic Outlook database.

• 2
• 1

1 2 3 4

• 2
• 1

1 2 3 4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 % of GDP % of GDP Underlying government net lending¹ Government net lending

Recommendations on macroeconomic policies

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• Continue to raise interest rates gradually, taking inflation and output

developments into account.

• Continue to run budget surpluses while the economy remains solid.
• In the case of a downturn, use the space provided by the fiscal framework.

How’s life in Sweden?

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Note: This chart shows Sweden’s relative strengths and weaknesses in well-being when compared with other OECD countries. For both positive and negative indicators (such as homicides, marked with an “*”), longer bars always indicate better outcomes (i.e. higher well-being), whereas shorter bars always indicate worse outcomes (i.e. lower well-being). Source: OECD (2017), OECD Better Life Index, www.oecdbetterlifeindex.org.

Perceived corruption is low

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Note: The Corruption Perceptions Index uses a scale of zero (highly corrupt) to 100 (very clean). Source: Transparency International.

10 20 30 40 50 60 70 80 90 100 10 20 30 40 50 60 70 80 90 100 DNK NZL FIN SWE CHE NOR NLD CAN LUX DEU GBR AUS AUT ISL BEL EST IRL JPN FRA USA CHL PRT ISR POL SVN CZE LVA ESP KOR ITA SVK HUN GRC TUR MEX

Corruption Perceptions Index, 2018

Income inequality remains low

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Source: OECD Income Distribution Database (IDD). Ratio of ninth to first disposable income decile, 2016 or latest

1 2 3 4 5 Other Nordics Sweden OECD

Sweden scores well on environmental indicators

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• 1. Production-based.

Source: OECD Green Growth Indicators database.

CO2 intensity1

0.0 0.1 0.2 0.3 0.4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sweden OECD kg/USD, 2010

Environment-related taxes, % of GDP

0% 1% 2% 3% Sweden OECD (median) Energy, 2014 Motor vehicles, 2014 Other, 2014 Total, 2000

Recommendations on environmental and green finance policies

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• Raise taxes on industrial energy use.
• Strengthen and further harmonise climate-related disclosure

requirements, especially for financial intermediaries, including banks.

The housing market has cooled, but prices remain high and structural issues remain

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Source: OECD Economic Outlook database.

50 100 150 200 250 300 350 400 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 1995=100 Canada Norway Euro area New Zealand Sweden OECD

Recommendations on housing policy

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• Reform the recurrent property tax.
• Phase out the deductibility of mortgage interest rate payments.
• Ease rental regulations.
• Simplify land-use planning procedures, balancing economic,

environmental and social considerations.

• Enhance co-operation between central and local government in land-

use planning and increase incentives for municipalities to facilitate the timely release of development land.

Construction costs are high

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Reading note: Sweden’s construction price level is more than 60% above the OECD average compared to less than 40% for the consumer price level. Source: Eurostat.

EU BEL CZE DNK DEU EST IRL GRC ESP FRA ITA LVA LTU LUX HUN NLD AUT POL PRT SVN SVK FIN SWE GBR ISL NOR CHE TUR 20 40 60 80 100 120 140 160 180 200 20 40 60 80 100 120 140 160 180 200 Construction price EU28=100 Consumption price EU28=100

Product market regulations are lean, but further streamlining could raise productivity

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Source: Preliminary OECD 2018 PMR database (as of 20-02-2019).

1 2 3 4 Overall PMR indicator Public ownership Involvement in business operations Simplification and evaluation of regulations

• Admin. burden on

start-ups Barriers in service & network sectors Barriers to trade and investment Sweden OECD average Average of 5 best performing countries Average of 5 worst performing countries

Recommendation on business regulations and competition policies

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• Continue to use digital tools to improve services, simplify procedures

and shorten licences and permits processing times.

Labour market mismatch is increasing

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Note: An outward (inward) shift of the Beveridge curve over time implies a decrease (increase) in the efficiency of labour market matching. Source: OECD Registered Unemployed and Job Vacancies dataset and Annual Labour Market Statistics, and Statistics Sweden.

Many jobs are at least partially at risk of automation

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Note: Jobs are at high risk of automation if the likelihood of their job being automated is at least 70%. Jobs at risk of significant change are those with the likelihood of their job being automated estimated at between 50 and 70%. Source: Nedelkoska and Quintini (2018).

10 20 30 40 50 60 70 10 20 30 40 50 60 70 NOR NZL FIN SWE USA GBR DNK NLD CAN BEL IRL EST KOR ISR OECD AUT CZE FRA POL ITA ESP SVN CHL DEU JPN GRC TUR LTU SVK % % Risk of significant change (50-70%) High risk of automation (>70%)

The low-skilled receive less training than others

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Note: Low-skilled adults are defined as people scoring at or below a PIAAC literacy score of 225 points. Source: OECD calculations based on the Survey of Adult skills (PIAAC).

10 20 30 40 50 60 70 TUR GRC ITA POL SVK FRA JPN ESP SVN KOR ISR BEL CHL AUT OECD EST CZE IRL DEU CAN GBR USA SWE NLD FIN NOR NZL DNK All adults Low-skilled adults

Nearly one adult in five lacks some foundation skills

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Source: Musset, P. (2015), “Building Skills for All: A Review of Finland”, OECD Skills Studies.

0% 5% 10% 15% 20% 25% 30% 35% 40% Italy Spain France United States Ireland Poland Northern Ireland England Canada Germany OECD Australia Korea Denmark Austria Estonia Sweden Flanders (Belgium) Czech Republic Norway Slovak Republic Netherlands Finland Japan Both low numeracy and literacy Low numeracy but literacy above level 2 Low literacy but numeracy above level 2

Recommendation on labour market and adult skills policy

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• Develop adult education, in cooperation with the social partners,

including for people in unconventional forms of work.

Quality and equity in Sweden’s schools

School results may have bottomed out, but there is room for improvement

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Sweden’s test results in international skills surveys for children of school age

Note: PIRLS denotes the national average results of fourth-graders in the Progress in International Reading Literacy Study. TIMSS denotes the national average results of eight-graders in the Trends in International Mathematics and Science Study. PISA denotes the national average results of 15-year-olds in the OECD Programme for International Student Assessment. Source: OECD (2016[4]), Mullis et al. (2017[19]; 2016[20]), and Martin et al. (2016[21]).

450 470 490 510 530 550 570 590 450 470 490 510 530 550 570 590 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Score points in PISA, TIMSS and PIRLS Score points in PISA, TIMSS and PIRLS PIRLS (reading) PISA (reading) TIMSS (mathematics) PISA (mathematics) TIMSS (Science) PISA (science)

The school system reinforces societal trends towards segregation

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Between-school grade variation controlling for socio-economic background

Note: Grades are grade point averages of 9th grade pupils. Between-school variation is the share of total grade points variation explained by between-school average grade points variation. Source: Skolverket (2018[6]).

1990s reforms probably contributed to falling results

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Difference to PIAAC average by 10-year age cohort

Note: This figure shows that skills in the Swedish population compared to the PIAAC average peaked with the cohorts ending compulsory school (approximately at the age of 15) before the 1990s school reforms. Source: OECD Survey of Adult Skills (2012).

• Strengthening reading, mathematics and science.
• More detailed rules/curriculum, national tests and tougher inspections.

– Makes sense, but increases the administrative burden and may stifle innovation and teacher autonomy at the local level.

• Grants to benefit pupils from weak socio-economic backgrounds and to

raise teacher attractiveness. – Central level involvement warranted, but fragmented system.

• The School commission offers a more holistic approach.

Steps have been taken to rectify the situation, but policies could have been more coherent

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• Re-instate instruments for (soft) central level coordination.
• Use choice and competition as a force for improvement, while mitigating

segregation and other negative side-effects.

• Make teaching a high-status occupation by raising teacher training

quality, peer support, and accountability. Recommendations are mostly in line with those of the School commission.

Recommendations focussing on three areas of reform

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Targeting of resources to socio-economic needs is insufficient in many municipalities

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Note: Negative values indicate higher shortages in schools with low socio-economic status. As reported by school principals. Source: OECD, PISA 2015 Database, Tables II.6.2 and II.6.15.

Shortage of educational staff – difference between advantaged and disadvantaged schools

• Municipalities vary greatly in size, capabilities

and political priorities.

• An active approach to school leadership,

teaching and accountability can improve results.

• Example: Essunga municipality.

Continuous improvements to teaching and school

• rganisation is not the norm in all municipalities

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Potential gains from competition and private provision are not realised in Sweden – on average

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Note: Standard deviations change in math scores for a standard deviation change in the exogenous variable. Source: Table 4 in André, Pareliussen and Hwang, forthcoming.

Change in mathematics test score associated with a one standard deviation change in the independent variables

School choice contributes to school segregation

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Note: The figure shows schools sorted into deciles according to their socio-economic mix of pupils. Schools are not weighted by size. Source: Author’s calculations based on André, Pareliussen and Hwang (2019[10]).

Private schools attract pupils with favourable backgrounds

Teaching is not seen as a high-status occupation

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Source: OECD, TALIS 2013 Database, Tables 7.2 and 7.2 web.

Percentage of teachers who agree that the teaching profession is valued in society

Teacher appraisals, mentoring and peer-to-peer learning are patchy

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Share of lower secondary education teachers who report receiving feedback in their current school

Note: Feedback is defined broadly as any communication of the results of a review of an individual’s work, often with the purpose of noting good performance or identifying areas for development. The feedback may be provided formally or informally. Source: OECD, TALIS 2013 Database, Table 5.4.

Recommendations on education policy

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A stronger institutional set-up

• Introduce a non-binding minimum norm of school financing,

integrated with the national income equalisation system, to better target funding towards disadvantaged groups.

• Develop a regional arm of the central government school

governance structure tasked with systematic quality improvement, inducing local cooperation, continuous teacher training and inspections.

Recommendations on education policy (cont.)

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Steer competition and choice to deliver in line with the public good

• Remove sources of bias in national test grading to create an
• bjective benchmark for school performance, and use it to

remove differences in grading leniency.

• Weigh high and low grades symmetrically and suppress the

requirement to pass in certain subjects to enter upper secondary education.

• Take the socio-economic mix into account when investing in

new schools and in school entry.

Recommendations on education policy (cont.)

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Teacher quality and standing

• Strengthen teacher education with more instruction time, teacher

practice and research.

• Improve continuous learning and development through a

regional school governance structure, systematic peer learning and continued mutually beneficial cooperation with universities.

FOR MORE INFORMATION

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http://www.oecd.org/eco/surveys/economic-survey-sweden.htm

OECD OECD Economics

Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

André, C., J. Pareliussen and H. Hwang (2019), What drives the performance of Swedish lower secondary schools?, OECD Economics Department Working Papers, forthcoming.