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How Sweden’s Left Party Stopped the Social Democrats’ Undermining the Welfare State

Sweden's Social-Democratic prime minister Stefan Löfven has just been voted back into office — now having dropped proposals to abandon collective bargaining over rents. The change was thanks to pressure from the Left Party.

Stefan Löfven has been reelected as prime minister of Sweden. (Nils Petter Nilsson / Getty Images)

At the end of June, a long game of chicken over the deregulation of Sweden’s rental sector culminated in the fall of the government — and in an increasingly popular and confident Left Party. A new “Red-Green” minority government has taken form, having dropped the proposed marketization of rents under pressure from the Left.

What remains to be seen is how long such an administration can survive. The neoliberal Center Party, which was previously decisive to keeping the Social-Democrats in office, refuses to cooperate with the government if the Left Party is given any further influence — despite the risk that such a stance could lead to a right-wing takeover with far-right support.

On June 21, the day of the no-confidence vote against the government, Social-Democratic prime minister Stefan Löfven had accused the Left Party itself of playing with such a risk. He said it had “united with the right-wing conservative parties in a no-confidence vote against the government, forming a temporary majority. To prevent this, the government and its partners proposed a way forward in line with the Left Party’s own proposal. I regret that the Left Party turned this down. I too, like the Left Party, reject market-based rents.”

Yet, Left Party leader Nooshi Dadgostar painted a much darker picture of the government’s direction:

The government has made it clear that it intends to implement a proposal of market-based rents. This would be a seismic change in Swedish housing policy. But if Stefan Löfven and [Center Party leader] Annie Lööf want to implement the system of market rents, it will not be on my watch, nor that of the Left Party. What we are about to do today has not come lightly. We have done everything in our power to reach a solution. But since no one else has been open to negotiations, we are here today—and we will keep our promises.

To understand the two contradictory claims, the downfall of Sweden’s once stable social-democratic hegemony, and the Left Party’s attempts to fill that void, we need to step back in time a little.

Rising Sweden Democrats

The Social Democratic Party has become successively weaker following its neoliberal turn around 1990. Further, ever since the far-right Sweden Democrats entered the Swedish parliament (Riksdag) in 2010, there has been a consistent right-wing majority of 55-60 percent, for the first time since the early 1900s.

At that point, no party in the Riksdag was willing to form majorities with the far right. But when the Red-Green block remained marginally stronger (thanks to a growing Left Party) in the 2018 election, while the Sweden Democrats surged to 17.5 percent, the Moderates (neoliberal conservatives) and the Christian Democrats gave in to the temptation of seeking power with far-right support.

The rest of the Riksdag moved to block this — resulting in the Social Democrats and the Greens forming a new minority government, but only after four months of negotiations, and on two very contradictory conditions. Given its lack of a parliamentary majority the government had to negotiate its future budgets with the two liberal parties: the Center Party (the most neoliberal but also the least conservative right-wing party) and the Liberal Party. They also agreed on an extensive seventy-three-point program called the January Agreement. This included some moderately progressive proposals, but also radical neoliberal reforms like privatization of large parts of the state employment service, weakened labor protection laws and a deregulation of negotiated rents. As a result, the Red-Green government was tied to a neoliberal “Ulysses pact.”

Paradoxically, the January Agreement also required the Left Party to accept it, even though the deal specifically stated that the Left should have no influence over Swedish government policies. The signatory parties had enough seats in parliament to get their budgets through without Left Party support, provided the right- and left-wing oppositions did not unite. But for the government to be appointed, or remain in office, it also needed majority acceptance in the Riksdag.

The Left Party thus had to either tolerate the Red-Green government, or risk a right-wing government with far-right support. It opted for the former, but also declared that it would vote for its own proposals and withdraw its acceptance of the government if it crossed either of two red lines stated in the January Agreement: liberalization of labor protection laws and liberalization of the system of negotiated rents.

Standing Up for Negotiated Rents

In recent years, the Left Party has increasingly aspired to take up the Social Democrats’ own now-abandoned legacy. It is keen to prove that it is not only defending the social-democratic welfare state but also pointing out a way to update it. Especially since the election of new leader Nooshi Dadgostar in October 2020, the party has underlined this by pushing hard for an ambitious industrial green deal, challenging the Social Democrats on jobs and the economy as well as equality and welfare provision. This aims, among other things, to shift the political debate from immigration and law-and-order issues to questions of jobs, equality, and welfare.

There were predictions that the January Agreement would marginalize the Left, making these plans unrealistic. But in fact, the opposite happened, especially once the battle over regulated rents intensified, bringing social questions around housing and rents to the center of the political stage. On several occasions, the right-wing parties’ willingness to weaken the government enabled the Left Party to act as majority leader, forcing the government to change course on important matters: partially blocking privatization of the employment service and changing the January parties’ state budgets to provide billions in additional funding for the welfare sector.

But when it came to the two red lines the Left Party had set down, no help could be expected from the Right. Labor rights and negotiated rents are both cornerstones of the Swedish welfare state. The former limit employers’ right to fire staff without proper cause, while the latter form the foundation of Sweden’s unique housing policy, which has no social housing for the poor, like what exists in many other countries.

Instead, Swedish housing policy makes it mandatory for both public and private landlords to negotiate rents with the 500,000-strong tenants’ union, resulting in regulated rents not only for its members but for everyone with a first-hand rental contract. This, combined with massive investment programs, has historically resulted in Sweden achieving a huge stock of relatively modern and reasonably affordable rental apartments. Today, around 36 percent of Swedes live in such rented homes.

The Red-Green government did its best to stall and manipulate the process around these red lines — making it harder for the Left Party to use them as a clear basis for no-confidence votes. Close to an election, the right wing would have little reason to bring down a Red-Green government that was about to push through unpopular liberalizations, when the chance of grasping power would soon be at hand anyway.

Through the threat of legislation, the January parties managed to pressure large parts of the trade union movement into agreeing a defensive deal on labor rights in December 2020, thereby making it hard for the Left Party to push for a vote of no confidence on this question.

It seemed the January parties were trying the same tactic to prevent the Left from blocking liberalized rents. On June 4, a government inquiry proposed that rents for new builds or heavily renovated rental apartments would no longer be negotiated, but initially set by the market.

A similar reform had been pushed through in Finland, leading to an increase of between 26 and 42 percent in rents — in general, not only for new flats — in Finland’s capital Helsinki. Both the tenants’ and the property owners’ organizations believed that a similar development was to be expected in Sweden. Though the January parties denied this, the Center Party’s housing spokesperson also confirmed it.

When the January parties repeatedly refused to negotiate on this issue, on June 15 the relatively new Left Party leader Dadgostar gave the government forty-eight hours to declare that it would either: 1) drop the proposal, or 2) leave it to the tenants’ and property owners’ organizations to negotiate whether they wanted any improvements in the legislation on rentals. However, this negotiation could not be based on the proposed legislation: there should be no such threat overshadowing the talks.

The January parties ignored the ultimatum, so the Left Party, not having enough seats in parliament to call for a no-confidence vote, appealed to the Moderates and Christian Democrats to initiate it with them. Both parties were hesitant, but the Sweden Democrats were eager to beat them to it and prompted the vote themselves.

The rest of the opposition followed through the same day. The day before the vote, the January parties finally proposed that tenants and property owners could negotiate — but added that, if they did not agree, the proposed legislation would be implemented anyway. Both the tenants’ organization and the Left Party rejected the proposal.

“There can be no equal negotiation when one of the parties has a gun pointed to its head,” Dadgostar objected.

Red-Green Resurrected?

On June 21, the government thus finally fell. The Liberal leader immediately declared that the January Agreement was now history (the party had already said that it wanted to join a right-wing government after the next election). Shortly afterward, Center Party leader Annie Lööf finally agreed to drop the proposal for abandoning negotiated rents and proposed a renegotiated January Agreement.

The Left Party had been clear all along that it would not support a right-wing government, instead wanting Löfven to return, without any deregulation of rents. Since the Liberal Party was now out of the equation, a new government would need the Left Party to be able to get a state budget through. The Green Party proposed negotiations with the Left, but this was rejected by the Center Party. Finally, on June 28 the prime minister decided not to call an election but instead asked the speaker of the Riksdag to investigate who could form a new government.

The following day the speaker gave the Moderates’ leader Ulf Kristersson the first chance to investigate if he could form an administration of the right-wing parties. But since the Center Party would not back such a government —with most of its own voter base refusing any agreement involving the far right — Kristersson gave up after only two days, thus putting the ball back in Löfven’s court. Today, he was reelected prime minister.

Future Turbulence

At his last press conference before reelection, Löfven placed all the blame for the turbulence on the Left. In fact, the Center Party could have prevented the fall of the government if it had changed its mind on liberalized rents just two days earlier than it eventually did.

Löfven had attempted to shame the Left into submission — seemingly wanting to force it to accept a budget it had not been able to influence, to prevent a government influenced by the far right. But the move seems to have backfired. Some Social Democrat–leaning journalists were extremely critical of the Left Party and Dadgostar, but several left-leaning Social Democrats, not to mention the tenants’ union, have spoken out in support of the Left.

The voters seem happy too, with current polls giving the Left 12 percent support — its highest in almost two decades. At the same time, public confidence in its newly elected chair, Nooshi Dadgostar, has surged to 39 percent, compared with 35 percent for the prime minister; while confidence in the Center Party leader is clearly lower and dropping.

And if there were any remaining hopes that the Left would back down, they weakened considerably when Dadgostar gave her annual summer speech on July 4, declaring a more ambitious and confident project for the Left, compared to its historical role. She commented, ”we are happy to cooperate [with the government] side by side, but we will never again be a passive supporter of it.”

Dadgostar continued:

If the Social Democrats wants to continue being the junior partner of [the Center’s] Annie Lööf, that is their choice, but the Left Party will not be a doormat. . . . We have confided too much in the ability of the Social Democrats to shape the future of Sweden, but we do so no longer. We see now that for society to be improved, we [the Left Party] need to be stronger.

What is more, the conflict over regulated rents has strengthened an already ongoing trend of increasing support for the Left among blue-collar workers, who in recent years have increasingly migrated from the Social Democrats toward the Sweden Democrats. Given that the Left is also the only party that has not adjusted its immigration policy in response to the Sweden Democrats, the criticisms of teaming up with them in the no-confidence vote fall rather flat. In fact, some journalists approvingly speak of Dadgostar as “a new type of politician who stands up for what they say and believe.”

It thus seems that more political turbulence lies ahead for Sweden. If a new Red-Green government cannot get its budget through, Prime Minister Löfven says he will resign again. This could even lead to a fresh election, less than a year before the expected September 2022 vote.

All this could turn out differently if the Center Party finally accepts its voters’ own belief that negotiating with the Left is better than opening the door for a right-wing government with far-right support. But on Monday, Annie Lööf instead declared that the Center Party would put its own proposal for the state budget to the Riksdag this fall, rather than negotiate one with the government and the Left. This will surely make it very complicated — if even possible — for the government to get any budget passed.

The issue at stake is not only the color of Sweden’s future governments, but of political hegemony — that is, whether the vacuum left behind by the Social Democrats is to be filled by an increasingly nationalist right, or a strengthened popular left.

On both sides there are clear ambitions in this direction. The conflict over regulated rents might very well prove a turning point in this battle — determining whether the famous Swedish model will go on crumbling, or continue to provide inspiration for the Western left.