Labour Market Policies in Transition: From Social Engineering to Standby-Ability

Abstract

The advent of ‘the Swedish Model’ was related to questions of economic crisis and high unemployment levels in the 1920s. New ideas, connecting insufficient demand with unemployment, were embraced by the Social Democratic Party (Blyth 2001). In the 1930s, the Social Democratic gov-ernment took a more pro-active role in stabilizing employment on a high level. New arrangements between state, business and labour were insti-tutionalized through the Saltsjöbaden Accord in 1938. At the end of the 1940s, following the government’s requests to moderate wage demands, the Rehn-Meidner Model was launched as an ingenious solution to the diverse aims of economic growth, full employment, price stability, and maintaining union solidarity.