The Swedish government has called in Economics Professor David Blanchflower to help solve its unemployment problem.
Over the past four years, Sweden's unemployment rate has surged upward, climbing from 1.5 percent to nearly 15 percent, Blanchflower said. In response, Sweden's Ministry of Labor established a Parliamentary Committee on Swedish Labor Market Policy to develop a way to reduce the unemployment rate.
"They want someone from outside to say 'this is what you should do guys,'" Blanchflower said. "They want us to think the unthinkable."
The committee will examine how Sweden can promote economic growth, create jobs and make labor policy changes for the future, according to the Committee Terms of Reference, a report from the Ministry of Labor.
"The long-term aim must be adequate employment throughout the country," the report said.
The purpose of the non-Nordic Parliamentary institution is to compare Sweden's labor policies to those of other countries.
"This evaluation should lead up to a general assessment of how the design of the Swedish labor market policy has contributed to growth of employment and economic development," the report said.
According to Blanchflower, the parliamentary committee is looking for comparative advice.
He said his group will determine whether or not Sweden will have to introduce market reforms and whether or not they should make their economy more like that of the United States.
Blanchflower said he became interested in Sweden in the 1980s when he studied the country's prosperous labor system as an efficient model, he said.
Because Sweden is responsible for awarding the Nobel Prize in economics, it tends to be a focal point for economic conferences and is able to attract famous economists, he said.
"I'm a labor economist. I do international comparisons of labor economies," he said. "People like me went to Sweden in the '80s because it was doing so well."
"The stuff that I do is comparing labor markets," he said. "We're interested in trying to understand how you make labor markets work better. We look for patterns."
Blanchflower said he visited Sweden six times before he began the project. He flies to Sweden every three weeks for two days of non-stop meetings and then returns home to finish working on his book, "The Wage Curve."
Sweden's labor economy has a compressed wage distribution where every one "does the same job and gets the same pay," Blanchflower said.
He said 90 percent of the Swedish work force is unionized and said the county offers high unemployment benefits.
"From 1989 to 1990, the so-called Nordic countries went gangbusters in the opposite direction," he said. "Mostly with the collapse of the Eastern Block."
Blanchflower said Sweden spends much more of its gross domestic product on job training than does the United States; the United States spends less than one percent of its GDP on job training while Sweden spends six percent.
He said it is likely that the committee will have to decide where to make public expenditure cuts.
By the end of this year, the committee will submit an interim report containing an evaluation of the current labor market policy and a set of basic principles on which future policy should be based, the report said.
The entire evaluation, including a solution to the rising unemployment rate, must be completed by the end of 1995, the report said.
Though his first trip in early September was exhausting, Blanchflower said he enjoyed meeting prominent politicians.
He is not teaching Fall or Winter term this year, but will try to incorporate some of what he learns into his classes, he said.
