STOCKHOLM (Reuters) – Sweden has powered through the COVID-19 crisis with an economy set to regain its pre-pandemic size by late-2021, but a surge in unemployment among its foreign-born citizens risks exacerbating social divisions for years to come.
Stockholm’s rejection of lockdowns left the country an outlier in Europe. The decision came at the cost of higher infection rates than its Nordic neighbours but has helped spare the local economy. Europe as a whole will not see output return to pre-pandemic levels until 2022.
The headline numbers however, hide wide differences in the experience of Swedes in negotiating the coronavirus.
Bakir Ajlan ran a taxi firm in the southern city of Malmo until mid-2020, when the pandemic forced him to shut up shop and lay off 15 drivers, mostly foreign-born Swedes like himself.
“There were lots of customers,” he said. “But now there aren’t any after 9 or 10 in the evening. There’s nothing to do.”
Ajlan came to Sweden as a 17-year-old from Baghdad in 1993. Despite graduating with a degree in Middle Eastern Studies from Lund University – one of the country’s best schools – he only found work as a taxi driver.
A rigid labour market and a lack of low-skilled jobs means Sweden has been poor at integrating waves of immigrants, or “new Swedes”, since the 1970s – a social and economic divide that has been widened further.
Those with full-time work – most Swedish-born citizens – have been supported by furlough schemes and relatively few have lost their jobs. But contract workers and the self-employed – often foreign-born – have been badly hit.
Unemployment among foreign-born workers stood at 18% in the fourth quarter of last year, up 3.5 percentage points from a year earlier, according to Statistics Office data. For people born in Sweden, it was 4.1%, up just 1 percentage point.
Swedish central bank Governor Stefan Ingves acknowledged this month that there are “big, big differences” in what people are experiencing across the labour market as a whole.
WORSENING SOCIAL DIVIDE
Immigration has been running at high levels for the past two decades in Sweden, with a record 163,000 asylum seekers arriving in the country of 10 million in 2015.
Many of the most recent arrivals have yet to find jobs and research covering the last few decades shows 50% of immigrants take between five and 10 years to secure employment.
While economy is expected to bounce back after shrinking a relatively mild 2.8% last year and many jobs should return, worries are growing that the longer the crisis lasts the more people will slip into longer-term joblessness.
A record 180,000 Swedes had been unemployed for a year or more in February, up 26,000 on the same month a year ago and the figure is expected to continue rising, according to the Public Employment Service.
That in turn will do little to alleviate the divide between the “haves” and “have nots” that has blighted many immigrant-dominated suburbs in Sweden’s biggest cities, already suffering from crime linked to gangs and drugs.
“If you look at the development in Sweden, long-term unemployment is one of the factors that creates social exclusion,” Ali Esbati, a Swedish member of parliament and spokesman on employment issues for the Left Party said.
“It’s part of a long trend in Sweden of growing economic division which has been caused by changes in tax policy, pressure on public services, etc, and these have meant that the social divide in Sweden has increased.”
LONG-TERM CHALLENGE
The government has launched a raft of measures – some of which predate the pandemic – aimed at getting people into work, including subsidized employment, tax breaks for employers, on-the-job training schemes and its “knowledge-lift” programme that offers study opportunities for the unemployed.
Its economic package of emergency COVID-19 measures is worth around 400 billion Swedish crowns ($47.01 billion).
“Rising long-term unemployment is one of the most important challenges we face in the wake of the pandemic,” Employment Minister Eva Nordmark said in a written comment.
“During the spring, we will launch an ‘intensive year’ for newly arrived (immigrants) so that they can get a job within a year,” she added, referring to programmes that include Swedish lessons, work experience and social orientation.
But analysts are worried Sweden’s fragmented political landscape will undermine attempts to build a consensus around the kind of long-term measures needed to address the problem.
A proposal last year to give employers more flexibility in hiring and firing by easing strict “first-in-last-out” rules nearly brought down the centre-left government, which relies on small parties on the centre-right and the Left Party to remain in power.
Former taxi operator Ajlan, meanwhile, is seeking a different line of work. “I hope things will come back,” he said. “We have to cross our fingers. I can’t do much more than that.”
($1 = 8.5096 Swedish crowns)
(Reporting by Simon Johnson; Editing by Mark John and Alex Richardson)
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
