In a forthcoming book to be published by Edward Elgar (Jan 2017), I discuss challenges for the welfare state:
The angst of jobs and society being taken over by machines has received much attention. Less attention has been devoted to what digitalization means for more pressing questions affecting our daily lives: What are the implications for the modern welfare state? Will the government’s ability to collect revenue and finance welfare services be affected?
The Swedish welfare state finds itself in the middle of two major upheavals: The impact of technology and immigration. Having taken in more refugees per capita than most other countries, the pillars of the welfare state are being shaken. Digital technologies are set to strengthen already existing trends towards job and wage polarization. A central ingredient for all persons in the labor market, including the immigrants, is for developments in skills to keep pace with technology. Platform-based labor market could also help by opening a vast range of new work opportunities.
In this book, I ask what these trends imply for the Swedish welfare state. The issues are common to other OECD countries. However, in Sweden they are more pronounced due to the rigidity of the labor market and the comprehensiveness of tax-financed welfare services. Increasing costs from immigration and rising inequality could further reduce the willingness to pay high taxes and erode support for redistribution. To leave the challenges unaddressed will herald much more drastic changes down the road. There are already signs of tensions and there is a risk that the social contract could crack.