Sweden's hidden unemployment

By Alex Singleton | 15 January 2006

Sweden is a very interesting example for economists because at first glance it looks like it defies the economic laws that seem to operate elsewhere. But dig underneath the surface and things may not be so clear cut. Johan Norberg, the author of In Defence of Global Capitalism, points out how non-standard statistics mask unemployment in the country. On the face of it, Sweden has unemployment of 5.4%, not too dissimilar to Britain, Ireland, America or Australia. But, he says, something is not quite right:

Sweden has decided to measure unemployment differently from other countries. For example those who are looking for a job, but who are studying meanwhile, are not included in the workforce or the unemployment. Contrary to ILO's recommendations, and unlike almost all other countries. That's another 87 000 people.

Furthermore, there are more than 121 000 persons who are unemployed, and are therefore in special, tax-funded projects, which will - the theory is - increase their ability to get a job later on. They are not counted as unemployed in the statistics. Isn't that a bit too convenient?

The result? Unemployment is actually 10.3%. That's higher even than France.