Challenges for the Swedish welfare system
Sweden has for a long time been regarded as the ultimate social welfare success story. At least by the left. Its citizens seem happy despite the high taxes, and they trust the government to do the right thing. Sweden pioneered welfare privatization, and its model is now being exported across the continent.
The Swedish Economic Crime Authority recently reported that a number of healthcare centers, vaccination services, schools, pre-schools and pharmacies have been taken over by organized crime. This is not surprising given Sweden’s liberal justice system. It is a disturbing reminder that outsourcing, and privatization might have some downsides unless there is a robust legal framework to support it.
Outsourcing, privatization and the introduction of voucher systems since the 1990s have marketized welfare services to a greater extent in Sweden than in any other European country. This has transformed the nation: what was once often portrayed as a socialist ideal is now seen more as a neoliberal showcase. It has also created a number of very wealthy welfare corporations. Once you let capitalism free within any system, some will make money and profits. For-profit welfare companies are now seeking to expand their businesses and business models abroad.
The idea behind the revised welfare system was that competition between a diversity of actors would both increase efficiency and give the users of services (pupils, patients, etc.) freedom of choice. Rather than privatizing through public procurement, where services bought from private providers are defined in contracts and limited in time, Sweden chose a voucher-style privatization in areas such as employment services, healthcare, schools and pre-schools. Though the alleged aim of the reforms was to increase freedom of choice, the Swedish public has become increasingly aware that the reforms have, more than anything, led to a proliferation of private providers who compromise quality in order to maximize profits. That is what corporations do in free market environments, maximize profits.
Education was the first subject of the Swedish privatization of fully tax-funded welfare services. Voucher-based funding of Swedish public schools was introduced in 1991. The idea was that pupils and their families should be able to choose how to spend resources allocated for schooling, meaning whether to attend a publicly run school or take the voucher to a private school. Inevitably, though, it is mostly privileged families who are able to exercise their freedom of choice. While profitable pupils are picked by private schools, socially disadvantaged pupils are often left in the public schools. This coincided with mass immigration. In addition to increasing socio-economic and ethnic segregation, the reform of the Swedish schooling system has been detrimental to the quality of education. No other country has experienced such a rapid fall in performance in the OECD’s Programme for International Student Assessment (PISA) rankings as Sweden. This is not surprising though.
Even so, Swedish school corporations are now expanding to other European countries. Recently, AcadeMedia, with 107 pre-schools in Sweden, bought 113 pre-schools in Finland in one go and is expanding rapidly on the German market: it already owns 98 pre-school units in six different Bundesländer.
In 2010, a voucher system was also made compulsory in Swedish tax-funded primary care. As with the school system, the aim of the healthcare reform was to increase patients’ freedom of choice. When the Swedish National Audit Office performed the first thorough evaluation, in 2014, it concluded that the voucher system had contributed to higher consumption of care, but also to more unequal care, where patients with less care needs and higher socio-economic status have been favored.
Digital care has proved to be particularly profitable for private providers, and Sweden has seen a virtual explosion of digital healthcare services. As with other forms of for-profit care, it is geared towards people with milder symptoms such as acne or common colds. These are quick and inexpensive for companies to treat, yet they burden regional budgets and lead to funds being redirected towards relatively healthy people with small needs, and away from people with larger medical needs. Kry, Sweden’s largest private company in the digital healthcare sector, has now established itself in Norway, France, the UK and, more recently, Germany.
Swedish for-profit elderly care companies are also rapidly expanding abroad. The two largest, Attendo and Ambea, both have operations in Norway and Denmark, and Ambea recently bought the Finnish company Validia Oy. What is being exported from Sweden are companies notorious for their exploitation of temporary employment contracts and part-time employment. The pandemic highlighted the consequences of this policy of precarity: a research study commissioned by the Swedish state inquiry commission into the consequences of the Covid-19 pandemic concluded that higher staff turnover led to higher death rates.
The problems with Swedish privatization do not end there. The raids of two tax-funded and privately run healthcare centers in the Swedish city of Göteborg in March 2025 is the latest development in an allegedly accelerating trend of criminal infiltration in Swedish tax-funded welfare services. The privatization of tax-funded welfare services has thus allegedly contributed to Sweden’s escalating problems with criminal gangs.
Sweden’s large-scale privatizations have enabled companies to develop profitable business models and have led to very wealthy private welfare providers, often owned by multinational companies and venture capital firms. These companies and venture capital firms are now ready to expand abroad across various welfare sectors.
If not contained, these companies risk outcompeting local providers of welfare services, strengthening the lobby for increased marketization and diverting tax funds intended for the delivery of welfare in several European countries, just as they have in Sweden.
It is important to highlight an additional risk factor: the somewhat romantic view of the Swedish welfare state, which has persisted ever since Sweden was described as an archetypical socialist welfare state.
This romantic view can be exploited by Swedish welfare corporations when they market themselves in other countries. For instance, when exporting childcare services to Germany, Swedish companies try to invoke a certain imagery, with blonde children playing in Astrid Lindgren-style meadows and birch groves, which serves to conceal the for-profit nature of their operations.
There is a risk that Swedish welfare companies, equipped with international venture capital, will now play a destructive role in other European countries. These companies have nothing in common with the Swedish welfare state that was once portrayed as a progressive model for other countries to follow. The old model is dead due to corruption, mistakes, reckless privatizations and uncontrolled immigration. The Swedish welfare model is transforming into a hybrid model and corporate profits are driving the model in a different direction that was originally intended.