Welfare and the unemployment crisis: Sweden in the 1990s

In the 1990s Sweden went through a deep economic recession accompanied by a massive increase in unemployment and a rapidly growing budget deficit. The crisis had large repercussions for the welfare of many citizens and it generated cutbacks in virtually all social policy programmes. This halted a welfare-state expansion that had been going on for decades. It also caused great concern about the state of welfare of the nation. In 1999 the Swedish Government appointed a 'Welfare Commission', a team of academic researchers who were assigned the task of drawing up a balance sheet for the development of welfare in the 1990s. The Commission delivered its final report in October 2001. This article is a condensed account of one of the more central issues for the Commission; namely, how the unemployment crisis affected already socially and economically vulnerable groups. Looking at the development over the entire decade, three groups stand out as particularly disadvantaged in terms of individual welfare resources: young adults, immigrants and single mothers. The downturn for these groups was especially accentuated in terms of employment and income. Young people and immigrants trying to get into the labour market during the crisis years faced the problems of newcomers to the systems of social protection. The poor economic development for single mothers could essentially be attributed to the shortage of work in general and of full-time work in particular that followed from the unemployment crisis. As a consequence, the importance of selective benefits increased and the relative size of all public transfers – despite rationing measures – stayed fairly unchanged. The results highlight the great influence of macroeconomic conditions and policy making for the welfare of vulnerable groups in society.