How Do Social Democrats Legitimize Cutbacks? Welfare Retrenchment to Save the Welfare State

Abstract

Social democratic parties have contributed to the development of welfare state retrenchment in many European countries. While numerous studies have attempted to explain this, few have focused on how parties legitimize cuts, given that they are often unpopular with social democratic voters. Examining Sweden, we argue that the Swedish Social Democratic Party has developed a legitimation model that presents welfare cuts as a way of safeguarding the welfare state. This model has been persistently used since the early 1990s and is now central to the party's rhetoric. This has implications for how we should understand the ideological development of Swedish social democracy and suggests that it may be fruitful to study how welfare cuts are justified in other empirical contexts.

Welfare state retrenchment has been a dominant trend in European welfare policy over the last four decades. As previous research has shown, social democratic governments have in various ways contributed to this development (Berman and Snegovaya 2019; Bremer 2018, 2023; Kitschelt 2001; Mudge 2018). Given that welfare cuts tend to be unpopular with voters (see Pierson 1996; Weaver 1986), and even more so with social democratic supporters, social democratic parties should have faced significant electoral risks. Against this background, we examine how social democrats legitimize welfare cuts in the face of these risks.

The function of policy legitimation is to persuade the public that government policies are justified. It is therefore a central dimension of policy processes. The need for strong legitimations is likely to be greater if policies are unpopular among party supporters, if they break with the historical legacies of a party, or if they have immediate negative effects on voters. All these conditions are present in most cases of social democratic retrenchment. But despite this, there are few studies that examine how social democrats legitimize welfare cuts. Our study focuses on the Social Democratic Party of Sweden (Socialdemokratiska Arbetarpartiet, SAP), which, according to previous research, has been central to the restructuring of the Swedish welfare state (see Hort 2014; Korpi 2003; Mudge 2018), even though the Swedish welfare model with universal social insurance and free-of-charge public services has remained popular among voters (see Edlund and Johansson Sevä 2013; SOM-institutet 2024; Svallfors 2011).

By analysing SAP policymaking from the 1990s and onwards, we find that the party has developed a legitimation model that portrays welfare cuts as a way of safeguarding the welfare state. More specifically, we show that party elites have adopted an economic analysis commonly associated with neoclassical economics and neoliberal thinkers, which proposes that cuts are necessary to generate economic growth. Since economic growth is understood as a precondition for sustainable welfare systems, welfare cuts can be described as necessary to secure the welfare state. Thus, despite the SAP's reorientation in recent decades, universal social insurance and free-of-charge public services remain an overarching goal of the party. When the party acts to reduce the cost of welfare, it is presented as a means to this end.

This argument contributes to the literature on contemporary social democracy in at least two ways. First, although Sweden is a recurring empirical case in scholarly work on social democracy and welfare state retrenchment (see Haffert and Mehrtens 2015; Mudge 2018), the social democratic model of legitimation that we find has not been described in previous research. Second, our analysis suggests that critiques of social democratic ‘neoliberalization’ and the adoption of ideas from neoclassical economics would benefit from considering how policies are justified. The fact that the SAP is still committed to the Swedish welfare model, even when justifying budget cuts, suggests a more complicated relationship between what SAP governments have deemed necessary and the overarching societal vision of the party.

The article is structured as follows. In the next section, we discuss previous studies on which we build. We then present our theoretical starting points and our empirical material. The empirical analysis is divided into four sections. We show (1) how the social democratic method of legitimation was developed to justify welfare budget reductions in the aftermath of the 1990s crisis and (2) how it was reproduced in the introduction of strict budget rules a few years later. We then analyse (3) the justifications of targeted cutbacks in sickness insurance in the early 2000s and for (4) social security cuts between 2015 and 2019. In the conclusion, we summarize our findings and discuss their broader implications.

Social democracy and welfare retrenchment

It has been widely acknowledged that many social democratic parties have shifted towards the political right, with varying degrees of adoption of market-oriented policies, austerity measures and workfare ideas (Arndt and van Kersbergen 2015; Berman and Snegovaya 2019; Huo 2009; Kitschelt 2001). A number of studies have also highlighted the role of social democratic parties in welfare state retrenchment more specifically (Anderson 2001; Bremer 2023; Mudge 2018). Consequently, recent scholarship has sought both to elucidate the causes of this development and to analyse its ideological significance. These two lines of inquiry provide an important context for our study.

Scholarly work seeking to explain the causes of social democratic transformation largely consists of small-n studies or case studies where Sweden is a recurring case. There is a general agreement in the literature that the Swedish party elite came to believe in a more limited role of the state in the economy during the 1980s and 1990s, which implied that traditional social democratic policy solutions were no longer seen as viable (see Andersson 2003; Lindvall 2004). In particular, Stephanie Mudge (2018) and J. Magnus Ryner (2004) both argue that party economists played a central role in this period. However, none of these studies offers in-depth analysis of how the political reorientation of the party was described to voters. Beyond Sweden, Christoffer Green-Pedersen and Kees van Kersbergen (2002) contend that social democratic transformation is the result of parties searching for a new formula combining economic efficiency and social justice, whereas Ashley Lavelle (2016) contends that the end of post-war growth forced Australian social democratic reorientation. The most developed explanation with regards to causes of social democratic austerity is offered in Björn Bremer's (2023) book-length examination, where he details how a complex interplay of ideational shifts, electoral pressures and pre-crisis policy commitments compelled the UK Labour Party and the German Social Democratic Party (SPD) to embrace austerity after the financial crisis of 2008.

With respect to the ideological significance of social democratic reorientation, we find a number of critical engagements, often highlighting and critically assessing the influence of neoclassical economics and neoliberalism. A number of studies have described how Swedish social democracy came to espouse a more rigorous stance on social insurances (see Altermark 2020; Altermark and Plesner 2021; Börjesson 2018; Jacobsson et al. 2019; Johnson 2010) and a more austere approach to fiscal policy (see Blyth 2001; Haffert 2019; Haffert and Mehrtens 2015), in both cases describing this as an ideological shift. Other studies have analysed support of privatization (Meagher and Szebehely 2019), workfare policies (Korpi 2003), cutbacks in social insurance and monetarism (Ryner 2004). Sometimes, these shifts are interpreted as expressions of ‘neoliberalization’ (Belfrage and Ryner 2009; Lavelle 2016; Ryner 2004), whereas Gerassimos Moschonas (2002) describes this ideological development as a process of ‘de-social democratization’, emphasizing the break with the ideological origins of the party.

These literatures offer a comprehensive overview of the current state of social democracy within and beyond Sweden. However, it is hard to find studies that examine how social democratic parties have justified their reorientation to voters. There are a few studies that divert from this trend and that have inspired our study. In their discussion on ‘progressive consolidation’, Lukas Haffert and Philip Mehtrtens (2015) trace some of the ideas behind social democratic austerity politics in 1990s Sweden and discuss how they are mobilized to legitimize policy. Björn Bremer and Sean McDaniel (2020: 447–448) similarly discuss ‘social investments’ in policy justifications. Although not specifically analysing legitimations of welfare cuts, these studies draw attention to the ideas that were informing and used to rationalize policy changes.

Finally, the literature on ‘blame avoidance’ has frequently focused on the construction of justifications employed by governments to avoid electoral consequences (see Vis 2009; Weaver 1986; Wenzelburger 2011). The social democratic legitimations of retrenchment that we identify can be understood as instances of blame avoidance. However, this literature tends to view policy legitimations as strategic devices, while overlooking their ideological significance. In contrast, we refrain from assuming that the legitimations we identify are consciously constructed to minimize political costs. Instead, we will focus on the ideas that are used to justify welfare cuts and discuss why they are important to an understanding of the state of contemporary social democracy.

Theoretical approach

Our theoretical approach is designed to help us capture how policies are legitimized. Thus, we are not concerned with whether policies are actually perceived as legitimate or to what extent they meet normative standards of democratic legitimacy. Rather, we are interested in acts of legitimation that are designed to convince voters and supporters that certain actions are called for and necessary. In this sense, a legitimation is a set of claims about why political decisions are appropriate.

This means that we study the use of language. Although the relationship between social reality and language has been the subject of a number of advanced theoretical elaborations since the 1970s, our approach is relatively simple. We argue that discourse, understood as the way things are described in language, is an important aspect of politics, affecting how policies are perceived and accepted. It is therefore important to study the language politicians use to construct arguments. Analysing policy legitimacy means understanding how politicians describe social reality in ways that make their actions seem adequate and worthwhile. Wherever we find policy debates, we are likely to find discursive legitimations seeking to convince audiences that the favoured policy decisions are necessary.

More specifically, our approach centres on how legitimations start from representations of problems. Following Carol Bacchi (2009) and the governmentality literature (see Dean 1999; Rose 1999), depictions of certain social phenomena as problematic define a space of legitimate policy solutions. Policy choices are justified through the representation of problems that they respond to. In the context of this study, we are interested in how Swedish social democrats depict aspects of social reality as problematic in ways that justify budget cuts. This is not to say that the problems used to legitimize policies are not real in the sense that they could just as easily have been ignored. In the case we will be studying, it is quite obvious that the economic downturn of the 1990s in Sweden required a policy response. Rather, the point is that legitimation of policy responses will often rely on how the problems in question are understood and described.

This theoretical perspective has informed a stream of empirically oriented studies in different policy areas (some recent examples are Fjellfeldt 2021; Padden and Öjehag-Pettersson 2021; Seddighi 2020), but it has rarely been used to study political parties or movements. However, the representation of problems is clearly central in political rhetoric, as seen in the ‘war on drugs’, the ‘war on terrorism’ or in fiscal policies responding to problematizations of rising budget deficits. Our analytical focus on problematization substantiates the propositions of the blame avoidance literature by explaining the mechanism by which blame is avoided through political communication: as certain aspects of welfare systems are depicted as problematic, it becomes possible to describe retrenchment as justified.

Case selection and material

We study social democratic legitimations of welfare cutbacks in Sweden, which is a central case in the welfare state literature and in research on social democracy. Researchers in these fields have repeatedly returned to study one of the most developed welfare states in the world, built by the electorally most successful social democratic party of the 20th century. Sweden is an apt case to study legitimations of cutbacks for precisely these reasons.

Looking more carefully at the development in Sweden in the last decades, the welfare systems have changed significantly and in numerous ways. For example, the overall tax quota has fallen from circa 50% of GDP in 2000 to about 42% in 2019. Public spending, which constituted 58% of GDP in 1995, sank below 50% of GDP in 2005 and has remained there since. The sharpest decline in spending is found in the sector of social protection, which includes age-based pensions, sickness and disability support systems, and other types of social insurance (OECD 2022). The social insurance system is significantly less generous today compared to the early 1990s (Johnson 2010). To a large extent, the SAP has administered this transformation (see Blomqvist and Palme 2020; Hort 2014), despite the above-noted general popularity of generous welfare in the Swedish electorate.

Our analysis focuses on social democratic legitimation of cutbacks from the election of 1994, up until 2019. We will focus on four episodes of welfare budget cuts: (1) the austerity programme of the mid-1990s and (2) the introduction of economic norm-politics and rules-based policy a few years later, (3) the cutbacks in sickness insurance in 2002–2006, and (4) the cutbacks in social insurance systems between 2015 and 2019. The first two periods involve broad government programmes, while the latter periods contain cost-reduction programmes on social insurance specifically. In the case of the budget rules, these do not constitute cuts by themselves, but constitute an institutional framework designed to hold back public spending. The reason for the narrower focus with regards to the latter periods is that the SAP has not enforced broad austerity programmes since the 1990s. Instead, the party has targeted specific welfare systems without making cutbacks part of an overarching policy agenda.

For the 1990s, the material consists of economic policy bills and the associated parliamentary debates. As complementary materials, we have used election programmes, press releases, press conferences and biographies. With regards to the periods of social insurance cutbacks in the 2000s, parliamentary debates are not relevant since the cutbacks were enforced through direct government steering of the relevant public agencies. Hence, we search for legitimations in government declarations, steering documents, press releases and opinion pieces. Together, this constitutes a broad material, reflecting the fact that policy legitimations can appear in different contexts.

The analysis was carried out in three steps. First, we coded sections of text that contain policy legitimations, sorting arguments about why the proposed policies were necessary. Thereafter, we mapped the problems for which welfare cutbacks were presented as solutions and the presumed mechanisms through which they operate. In the last step of the analysis, we identified patterns in the material that we used to summarize the social democratic model of legitimation.

Empirical analysis

1994–1996: Justifying cutbacks

The social democratic model of legitimizing welfare cuts developed in the 1990s, when the party came into government in a deep economic recession and opted to enforce large cuts and tax hikes to reduce budget deficits. At the time of the 1994 election, Sweden had seen three successive years of negative growth, unemployment had increased fourfold to over 10% and state debt lingered around 70% of GDP, which was a historical high (SCB 2023). Clearly, the government needed to respond and to find ways of justifying the measures taken.

The major election promise of the SAP was to rebuild welfare by fixing the economy, captured by the campaign focus on restoring welfare and sanitizing state finances. Thus, in accordance with Haffert and Mehrtens's (2015) description of progressive consolidation, fiscal balance was presented as a precondition of social democratic welfare policy and priority was given to trimming costs and increasing tax revenue (Hemerijck and Schludi 2000: 186; Lindvall 2004: 123). The underlying analysis was spelled out in the election programme:

Unemployment affects individuals and families. At the same time, it erodes state finances since tax revenue decreases and the costs of social benefits increases. Unemployment costs society more than 100 billion kronor every year. State debt has increased dramatically in the last three years. Interest rates are increasing and investments for future jobs are suspended. More people are unemployed. This vicious circle must be broken. (SAP 1994)¹

Even though budget deficits were presented as a result of unemployment, the government clearly understood public debt as the main problem that it needed to respond to. Hence, the government designed policy measures to fight budget deficits (the alleged symptom) rather than unemployment (the alleged cause). Göran Persson, minister of finance at the time, elaborated the argument in a 1995 budget debate:

Government policy … aims to free us from the crippling grip of state debt, to take us back to a situation where growth generates new jobs, to take us back to a situation where we pay for the benefits that we want to give to ourselves. This means that there is no easy way out of the current economic situation. Those who say so are wrong. We have extraordinarily difficult decisions ahead us of. (Göran Persson, Swedish parliament, 10 January 1995)

The view that Persson expresses in the quote rules out measures targeting unemployment by stimulating demand, which would only increase budget deficits. In fact, it is pointed out in several policy documents that the suggested cutbacks would reduce aggregate demand and hamper growth, all else being equal, but that this effect is outweighed by the gains of regaining trust for the Swedish economy (Department of Finance 1994a: 7, 1994b: 20).

In particular, the government projected that reduced state debt would lead to lower interest rates (Department of Finance 1994a: 7, 1994b: 20), which would stimulate investment and growth:

First and foremost, there has to be a healthy socioeconomic foundation for a sustainable development and a high level of employment. Sound state finances and price stability are necessary components of such a foundation. Therefore, the government is firmly committed to fulfil budgetary consolidation. To fulfil budgetary consolidation it is necessary to push down interest rates for our economy to grow over time. (Department of Finance 1995: 14)

It was often acknowledged that this course of action involved difficult decisions, as exemplified by Persson's quote above. However, since these were described as necessary, it also conveyed the message that the government was steadfast and took responsibility.

In parallel, this representation of budget deficits and state debt as problems was related to broader questions about waning sovereignty, which risked undermining welfare:

Without sound state finances, the foundations of welfare are threatened. Without sound state finances, power is wrested from elected politicians and moved to the closed rooms of the market. Those who are indebted are not free. Those who are forced to borrow money to handle their costs are dependent on the creditor. This holds for individuals in debt. This holds for households in debt. Those who are forced to borrow for consumption, to have food to eat, are not free in relation to the bank. (Göran Persson, Swedish parliament, 10 January 1995)

In the same parliamentary statement, Persson emphasizes that if the parliament does not vote for the cutbacks suggested by the SAP, foreign lenders certainly would force retrenchment upon Sweden anyway. Meanwhile, the budget sanitation process could be depicted as a question of democratic control: ‘Any state that chooses to fund its social benefits, its welfare system, by borrowing on international markets and from domestic capital asset holders, will sooner or later find themselves in a situation where political power is moved from elected politicians to the closed rooms of the market’ (Göran Persson, Swedish parliament, 10 January 1995).

The expressed suspicion against market actors aligned the social democrats' cutbacks with the historical mission of the party. Welfare cutbacks were presented as means to limit the reach of capital power. The premise of the argument is that creditors have the power to dictate Swedish policy design.

In summary, the welfare cuts of 1994–1996 were justified by presenting budget deficits and state debt as the main problems facing the Swedish economy, posing an existential threat to the Swedish welfare state. In his autobiography, Persson (2007) describes the Swedish public sector as being on the brink of collapse in 1994 (see also Hort 2014: 25, 64), quoting himself as saying to Prime Minister Ingvar Carlsson, ‘We must escape this morass of budget deficits as soon as possible. It threatens our whole societal model’ (Persson 2007: 98). The proposed mechanism through which welfare cuts respond to this problem is that lowered public debt pushes down interest rates, which spurs investment and creates growth. This aligns with ideas of ‘expansionary austerity’ (see Alesina and Ardagna 1998), which became increasingly popular at the time.

1996–2000: Permanent austerity

As the economy turned around in the last years of the 1990s, social democratic ministers of finance and Prime Minister Göran Persson emphasized that the time had come to invest in welfare (Åsbrink, 15 May 1997, Swedish parliament; Persson 1999). However, the cuts of the budgetary consolidation were never fully compensated and unemployment would continue to linger around 8%. As described by Haffert and Mehrtens (2015), the return to expansive fiscal policy never came.

Instead, the SAP opted to create a number of budget constraints that made expansive public spending more difficult, among other things requiring a yearly 2% surplus in the state budget. Although the party never had advocated for permanently underbalanced budgets, the fiscal regime that developed also ruled out counter-cyclical economic policy as well as long-term public investment not funded by taxes. The new regulations of the state budget were an expression of ‘rules-based politics’, first introduced into Swedish policy debate in the early 1980s with respect to monetary policy (see Lindvall 2009: 717–718).

The justification of the new fiscal order often incorporated the historical legacy of the SAP. In the budget debate of 1996, the new minister of finance, Erik Åsbrink, exemplified this:

There are reasons to raise our ambitions, to strive to have a permanent surplus in our state finances beyond 1998. This ties into a good old tradition in Sweden – and, dare I say, to a good old social democratic tradition. The most successful periods in the Swedish economy after World War II – as for example the 1950s and 1960s – have been periods with high growth that allowed for raised real wages and reforms, improvements of welfare. (Erik Åsbrink, Swedish parliament, 20 September 1996)

Drawing on the history of the party, strict fiscal policy was presented as a social democratic virtue, linked to the years of continuous growth and the welfare state expansion after World War II, but leaving out that this period was also marked by increasing taxation.

At the same time, there were also more recent influences. Ideas of rules-based fiscal policy were introduced in Sweden by Swedish economists clearly influenced by neoliberal thinkers such as James M. Buchanan and Milton Friedman (see Lindvall 2004, 2009), who had advocated for fiscal rules similar to those introduced in Sweden (see Chamayou and Brown 2021). In the 1980s and 1990s, public choice theory – positing that governments will always be tempted to spend money on popular reforms while overlooking long-term negative effects – gained influence in Swedish public debate, for example as seen in the ongoing debate about the state crowding out private investment (see Lindberg 2022). It not surprising that the SAP was affected by these ideas. But in the party rhetoric, they were mobilized to argue in favour of budget cuts that would service the welfare state in the long term.

The issue of market confidence in the Swedish economy was also brought up in the legitimation of the budget rules. The underlying logic, following public choice theory, was that governments will always be tempted to spend money on popular reforms, although this would have negative consequences for the economy over time. Budget rules would ensure that this would not be the case. In particular, it was seen as important to win the trust of foreign investors and credit institutions. In his autobiography, Göran Persson writes at length about how international market actors monitored the Swedish economy at the time: ‘During the whole period when I was minister of finance, Sweden was scrutinized by international capital investors and their estimation had great impact on how the Swedish economy developed. This had consequences for how I viewed my role as minister of finance’ (Persson 2007: 97–98). For Persson, the state budget rules were a solution to this problem, designed to win the trust of these actors. This was also stressed in the budget bills of the period:

The credibility of economic policies is strengthened if the state holds on to the goals that have been formulated. After the last years of big deficits and quickly rising debt, it is necessary that the development is turned around and financial strength regained; both so that we can manage new recessions and to secure our welfare. (Department of Finance 1995: 32)

Following this line of reasoning, commitment to strict fiscal policy over time generates confidence in the future of the Swedish economy, which creates investment and growth. Hence, budget discipline was understood as necessary for ‘a welfare system of the Swedish kind and to be a well-functioning state in open competition’, as Persson would later describe it (2007: 94).

A last problem that appears in the legitimation of the budget rules is based on a division between loan-funded state expenses and tax-funded investments, which is emphasized throughout the material. Hence, we find frequent references to a distinction between ‘honestly earned’ and ‘borrowed’ money. Exactly why ‘borrowed money’ is problematic is not elaborated in the material. This line of thought allowed the SAP to attack the previous right-wing government:

We try to pay for the costs that our benefits incur. Those [the former government] that brag about their higher morals but opted to borrow to finance reforms and introduced them months before a general election, declaring that this is congruent with a high political moral, have misunderstood our task to balance expenses and income. (Göran Persson, Swedish parliament, 10 January 1995)

A few years later, Persson's successor as minister of finance, Erik Åsbrink, stated, ‘We rebuilt a strong economy. Now, we have the opportunity to invest real, honestly earned money in this fight, not borrowed money. Everyone understands that employment policies that are premised on loans from foreign bankers can never be sustainable or lead to success’ (Erik Åsbrink, Swedish parliament, 15 April 1997).

By creating a distinction between ‘fair’ and ‘dishonest’ financing, and insisting that welfare needs to be financed by the former, the new fiscal regulations could be presented as contrasting with the former government's tax cuts, which by implication were presented as dishonest.

In summary, the introduction of a strict fiscal regulation framework, designed to create permanent budget surpluses, was legitimized by the idea that budget deficits would erode confidence in the Swedish economy and hamper economic growth. According to social democrats, the Swedish welfare state could only be sustainable through ‘honest’ financing. Although the fiscal rules were not in themselves cuts, they were designed so that falling tax revenues would force budget cuts, while making expansionary policies much more difficult. These rules would constitute the institutional context for all future decisions on the financing of the welfare state.

2003–2006: The halving goal

Previous research has shown that social democratic social insurance policy underwent a significant shift in the late 1990s and early 2000s (see Börjesson 2018; Johnson 2010). Although considerations of moral hazard and the effects of economic incentives had always figured in policy deliberations on compensation levels and eligibility criteria, these issues became a central concern for the party in the second half of the 1990s (Börjesson 2018; Johnson 2010).

The fiscal rules discussed above are an important condition of this process. In his autobiography, Pär Nuder, minister of finance between 2004 and 2006, gives an illustrative example of the relationship between fiscal policy, social insurance costs, and the possibility of new reforms: ‘There was uncertainty as to whether the high costs of the sickness insurance system would decrease and thereby create room for reforms. The budget ceiling did not allow for new costly reforms’ (Nuder 2008: 254–255). The budget ceiling in the quote is part of the fiscal rules discussed above. With regards to social insurance costs, Nuder refers to a government initiative presented two years previously by Nuder's cabinet colleague Hans Karlsson, responsible for the social insurance systems. When it was initiated, Karlsson declared that the total number of days on sickness insurance in the population should be reduced by 50% until 2008, the so-called ‘halving goal’. The strategy comprised 11 action points divided into four categories: (1) measures focusing on employers improving work health, (2) new procedures for speedy return to work, (3) research and (4) reforms to improve accessibility of healthcare services (Department of Finance 2002). This was signed into law in the budget process of 2003. The Social Insurance Agency (SIA) was charged with addressing the second category – procedures for speedy return to work. Its focus was reaching decisions faster, making stricter assessments and coordinating meetings with the insured individual, their employer and their doctors. In practice, this meant that it became harder to be granted sickness insurance (see Holmgren et al. 2014; Thomasson 2006).

This policy agenda clearly entailed sickness insurance cuts, at odds with the general social democratic rhetoric of strengthening welfare. However, the party did not make explicit the downward cost pressure on public spending instituted by the budget rules. Instead, in the early 2000s, the party started to problematize sickness insurance in a new way (see Börjesson 2018). In his statement of government intent in 2002, Göran Persson declared:

A continuation of the good economic development requires a broad coalition standing behind two issues of central importance for the future of our nation: first, we have to humanize working life and decrease sickness absence. The government goal is to halve the number of sick days until 2008. In parallel, the number of early retirement pensions should drop every year. (Persson 2002)

In this way, sickness insurance costs were connected to state finances and the future of the Swedish economy more broadly.

Two years later, the next step of social insurance reform was taken when Persson's government assigned a public commission to come up with a reconstruction plan for the sickness insurance system. It was led by the former social democratic social insurance minister Anna Hedborg. In the directives to the commission, the government explains how it sees the problem of rising sickness insurance costs:

That people live longer means rising costs, while tax revenue has a weak development since fewer are working. … Against this background, among other things, it is especially important that social insurance operates efficiently and with incentives and signals pointing in the right direction. For the legitimacy of the system, furthermore, it is central that the system is clear. … Future generations should be given the same welfare opportunities as the generation of today. Future generations shall not pay for the welfare of today. To achieve sustainable financing so that welfare services develop to meet demand, measures in other areas are needed. One such measure is to make sure that social insurance operates efficiently. (Department of Social Affairs 2004)

As Angelica Börjesson (2018) has shown, the idea of incentivizing people to work had not previously figured so explicitly in social democratic descriptions of social insurance policy. On the contrary, sickness insurance in particular had been presented as a basic social right. However, like in other countries in this period, welfare policy was increasingly focusing on the problem of idleness, a question emphasized also by the liberal and conservative parties. Moreover, in conjunction with the perceived need for tight fiscal policy, the rising cost of social security was presented as evidence that social security systems were unsustainable. Hence, the directives to the sickness insurance commission concludes with the statement that the future of sickness insurance depends on whether the system is financially sound (Department of Social Affairs 2004). Thereby, ‘incentives to work’ and stricter assessments, which would be what the commission proposed, are presented as necessary for the future of the welfare state.

In the coming years, the SAP developed this problematization by describing social insurance fraud and overuse as urgent problems that called for government action (see Johnson 2010). In the daily newspaper Dagens Nyheter, Hedborg claimed that some people use sickness insurance when they are suffering from ordinary ‘tiredness’, stating that: ‘For many, this message might appear as harsh and insensitive. But the truth is that if we are not defending our collective insurance today, we will not be able to afford to keep it the way it looks today’ (Hedborg 2004).

This problematization is by no means unique to Sweden, but resembles depictions of idle welfare recipients that have been mobilized to justify workfare policies in other countries, burdening the public and thereby threatening the sustainability of social insurances. By safeguarding costs and incentivizing people to work through less generous social insurance systems, cutbacks were presented as a question of the financial sustainability of the welfare state.

2015–2019: The 9.0 goal

After the SAP lost the election of 2006, the centre-right alliance would accelerate the emerging policy agenda of activation policy and social insurance cuts. This resulted in reforms that introduced set timeframes into the sickness insurance system and tightened eligibility criteria in social insurances more generally. Now out of government, the SAP described these changes as attacks on the foundations of the welfare state, promising in the election campaign of 2014 that they would improve social insurance (SAP 2014).

In 2015, a year after the social democrats had formed a new minority government, the responsible minister Annika Strandhäll announced a national programme to combat work absenteeism due to sickness. A press release for the initiative reads: ‘Since 2010, the sick leave level has risen by nearly 70% while costs of sickness insurance have risen by 11 billion between 2010 and 2014. It is a serious development that must be halted’ (Strandhäll 2015).

The reform was projected to save the state around 17 billion kronor (€1.5 billion) every year (see Dickson 2015). However, this way of calculating savings and problematizing rising costs was based on misleading interpretations of the available statistics. While sickness insurance numbers had increased, the government kept silent about early retirement pension numbers, which had decreased in the same period (SCB 2023). People denied early retirement pension – a benefit for chronically ill people – are likely to apply for sickness insurance when not being granted long-term support. Hence, when the development of sickness insurance is considered together with early retirement, there was no increase in work absenteeism in Sweden in this period. But by narrowly focusing on sickness insurance, it became possible to describe rising costs as a pressing problem threatening public finances. Minister Strandhäll clarified the stakes of the situation: ‘We need the teachers in school and the assistant nurses in health care, not on sick leave. We can't afford having these people absent’ (SVT 2015).

The centrepiece of the social democratic response to this problematization was the formulation of a new goal stating that the average number of sick days in the population should decrease from 10.9 to 9.0 before the end of 2020 (Department of Social Affairs 2015b). As with the halving goal, this was part of a larger package of measures targeting healthcare, employers and other agencies, but the steering of the SIA proved to be the most significant component. In the specified directives for the SIA, minister Strandhäll made clear that the government wanted to see a stricter application of the law (Department of Social Affairs 2015b). Thus, according to this view, the problem of rising costs was at least in part a problem of healthy people being allowed social support.

As a direct consequence, the SIA reorganized into a decidedly hierarchical structure and remodelled the roles of case workers and managers, primarily by stricter control of eligibility assessment procedures (see Jacobsson et al. 2019). These changes quickly reversed the increase in sickness insurance numbers. The number of denied applications for people who were absent from work longer than 180 days doubled in 2016 and would increase fivefold between 2015 and 2020 (Altermark 2020). According to government communication, this was evidence that Sweden was becoming ‘healthier’ (Strandhäll 2017).

In line with the model of legitimation described above, the goal of nine days off sick was presented as a measure guaranteeing the sustainability of the welfare state more generally:

The social insurance systems constitute a central part of the Swedish welfare model and have for a long time contributed to counteracting economic insecurity. … For the government, it is central to safeguard our strong social insurance systems. At the same time, the long-term legitimacy of our social insurance systems relies on clear requirements [of individuals] and efficient controls. (Department of Social Affairs 2015a)

Encouraging the SIA to make stricter assessments of eligibility was in this way framed as necessary to protect the sickness insurance system as such. In contrast to how the previous right-wing government had reformed Swedish social insurance by explicitly framing reforms as an overhaul of the Swedish welfare system, the SAP described the continuation of these reforms as a defence of the Swedish welfare model.

Concluding discussion

The four episodes of social democratic retrenchment that we have analysed all showcase how the party has developed ways of justifying cuts as necessary to save the welfare state. During the crisis of the 1990s, social democratic governments described rising budget deficits as an immediate threat to public finances. Cuts to curb public debt would help to lower interest rates and restore confidence in Swedish fiscal policy, thereby turning the economy around. If these measures were not taken, the recession would threaten the economic foundations of the welfare systems. The introduction of fiscal rules was a response to the same problem, designed to prevent future deficit crises. In addition, the party invoked a moral distinction between honest and dishonest financing of public expenditure and referred to the historical legacy of the party of running balanced budgets, seen as evidence of a sustainable economy. Sustainability was also central to the legitimation of cuts in social insurance systems, as rising social security costs were portrayed as a threat to public finances. Both episodes of such cuts that we analyse show legitimations focusing on the necessity of curbing rising costs to ensure the long-term viability of the Swedish welfare model. This was combined with an increasing focus on the problem of idleness and concerns about the incentive structures inherent to social insurance systems.

Thereby, ideas of austerity, suggesting that economic downturns should be met with cuts, and about how generous social insurance systems create welfare dependency, are central in SAP legitimations of welfare cuts. These ideas are associated with schools of thought broadly understood as part of the neoliberal movement. However, since they are specifying the preconditions of economic growth, and since economic growth is seen as a prerequisite for welfare, their adaptation by the SAP made it possible to construct arguments that present welfare cuts as a way of securing the welfare state.

As noted in the first part of the article, our analysis does not examine the validity or strength of these legitimations. Nor can we assess whether the arguments used by the SAP are best understood as reflecting the beliefs and worldviews of the party elite, or whether they should be seen as rhetorical constructions designed to minimize electoral risks. We see that there are three possible and partly overlapping interpretations of the SAP legitimations to be explored in further research. First, the problematizations used to justify welfare cuts can be understood as corresponding to real constraints that have essentially forced the hands of social democratic politicians. If this is the case, the party will either have to continue trying to reconcile its overarching social vision with the inherent problems of welfare provision, or it will have to settle for a new ideal of welfare that is less dependent on public funding. A related interpretation is that SAP elites have strategically used the popularity of the Swedish welfare state to justify cuts, acting to avoid blame. By this view, the SAP has primarily been driven by attempts to maximize its electoral success. Finally, the legitimations found can be seen as expressions of ideology, a set of ideas adopted by party elites that essentially prevents the party from realizing its social vision. Although the strength of these interpretations remains an open question, our research allows us to make two important observations that contribute to the literature on contemporary social democracy.

First, our findings suggest that descriptions of social democratic neoliberalization, at least in Sweden, need to be qualified. The SAP has consistently described itself as committed to the Swedish welfare model of the 20th century. What the party has done is to adopt conceptions of problems that are commonly associated with the neoliberal tradition, without letting this alter its overarching policy goals. This suggests that there is a latent tension within Swedish social democracy between ideals of universal social insurance and extensive public services, and an understanding of the state and the economy that suggests that such welfare systems risk hampering economic growth.

Second, this creates a situation in which the SAP has become quite similar to Sweden's liberal and conservative parties in terms of welfare policy. Indeed, the process of welfare restructuring in the country has followed the same trajectory in recent decades regardless of who has been in government (Altermark and Plesner 2021; Hort 2014). Rather, the main division between the SAP and the right-wing parties concerns how policies are justified, where liberal and conservative governments tend to describe social security cuts and tight fiscal policies as a break with the social democratic welfare state of the 20th century. It is interesting to note here that both the Swedish Confederation of Trade Unions and the largest party organization within the SAP (known as the ‘Reformists’) have become increasingly vocal in their calls for a more expansive fiscal policy and investment in welfare (see LO 2021; Reformisterna 2024), essentially suggesting that the SAP should abandon the problematizations that have informed decisions by the party leadership.

Although these conclusions respond to the question of how welfare cuts are legitimized, rather than seeking to explain why social democrats cut back on welfare, the findings resonate with the broader academic discussion concerning the role of ideas and belief systems for social democratic reorientation. As has been noted by David Bailey (2009) and Matthew Watson and Colin Hay (2003), social democratic uptake of ideas similar to the ones we have found has certainly influenced the policy choices made. This suggests that the legitimations we find may also have a role to play in explanations of the party's reorientation, consistent with Viviene Schmidt's (2008, 2010) description of ‘discursive institutionalism’ as an approach analysing ideas as drivers of policy change.

Beyond Sweden, the tension between retrenchment and voter preferences is not unique to the social democrats of this particular country. Social democratic parties elsewhere have faced similar challenges in justifying unpopular welfare cuts. The extent to which similar models of legitimation have developed in other countries is an empirical question for future research, as is the relative importance of legitimations compared to other forces shaping policy. What our study suggests is that studies of policy legitimations can help us build a richer picture of contemporary social democracy, and that scholars of these parties should therefore pay more attention to how social democratic parties legitimize welfare cuts.