A Canadian in Sweden

Swedish finance

Asking anyone how much they earn is a sure-fire way to bring a conversation to an awkward conclusion. However, I have been scratching away at this question in general since arriving here in Umeå, and the fact is that wages in Sweden are lower than in Canada. However, the difference between what the lowest wage-earners and the highest wage earners is also much lower. The socialist system and strong union framework mean that even unskilled workers earn what is called a "living wage". I read a report a little while ago which showed that Swedish CEO's earn on average 4 times what the lowest paid workers in their company make. In the UK, the difference was something like 15 times, and in the US about 200 times. I will set aside the question of whether such a system encourages and rewards excellence or not.

The thing that baffled me is how people make ends meet here. Wages are lower, yet virtually all consumer staples including food are noticably more expensive. Income tax is marginally higher than in Canada (yes even in Quebec). Even with rent control, rent is comparable or even a bit more expensive than back home.

So today then I read this it didn't surprise me at all. 33% of Swedes would have to move to cheaper accommodation if their monthly disposable income dropped by about $300. Fully 75% (!) would have to move if their monthly disposable income dropped by about $750. That is cutting it pretty close, I would say. It also means a few months of unforeseen expenses (car repair, dental bill, veterinarian bill, the list goes on) would put many people under.

This illustrates what I consider to be one of the great drawbacks to socialist policy: it encourages citizens to transfer their personal responsibility to the government. You can afford to live on the brink of financial disaster because the feeling is that the government will be there to pick you up and brush you off if the worst ever does happen.

I just hope that a lot of these folks have a plan B if the government isn't there in their time of need. Things should start getting interesting in the next 10 years or so when the number of Baby Boomer pensioners outnumbers the number of people who are working.

posted by Jeff @ 9:35 AM