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The Swedish government’s “wait and see” approach does not help

Sweden, as well as many other countries, has felt the impact of the financial crisis and the recession that followed. Construction output fell substantially and in 2009, the sub-sector new residential housing fell by 42 %. At that time, many feared that the Swedish construction sector would experience a similar downturn as in the nineties, when tens of thousands of our members were unemployed for a very long time.

Byggnads proposed early a number of initiatives to mitigate the effects of the downturn:
•Stimulating new residential housing – especially flats for rent. In relation to its population, the level of newly produced residential houses is not enough and has basically been to low for 20 years.. There is particularly a lack of flats for rent.
•1 million flats and privately owned houses were built in the sixties and seventies. A large proportion of those are in desperate need for renovation and improvement, particularly in terms of energy efficiency. Property-owners have often not the financial capacity to pay for the full renovation and part-subsidizing these renovation projects could have a huge impact on employment in the sector as these works are labour intensive. During a recession is the right time to stimulate.
•Young apprentices, the next generation of building workers, experience great difficulties to get the necessary practice to finish their vocational training. Without that, they will never be fully qualified. Actions to ensure that they have a future in the sector is vital.

The liberal/conservative government took a “wait and see” approach. Except from some increased spending in infrastructure projects and a tax credit for individual homeowners, they did not want to stimulate the residential market despite the relative good shape of public Swedish finances. The government has still not taken any initiatives to address the fact that Sweden in the last 10 years has built less houses and flats per 100,000 people than any other EU country.

Fortunately, but without support from government, the situation in the construction sector has improved. With a consistent demand for residential houses, low interest rates and an improved lending climate, we now see clear signs of increased construction output and employment. However, Sweden never experienced a “property bubble” where houses were built on speculation.

However, there is still a need for action to stimulate the residential market and it’s obvious that the government’s “wait and see” approach does not help. Without the general improvement in the economy, it could actually have been much worse.

Submitted by Hans Tilly, President of Byggnads – Swedish Building Workers Union