What the plan includes
The Social Democrats announced key elements of their shadow budget on Friday, presenting a package designed to ease cost‑of‑living pressures on Swedish families while redefining fairness on the labor market. Central to the proposal is scrapping the karensavdrag, the sickness‑absence deduction, a reform they argue will reduce penalties on ordinary workers. The timing envisaged for removing the deduction is July 1, 2026, paired with a high‑cost safety net for small businesses to cushion the transition.
Abolishing the karensavdrag and protecting small businesses
In addition to ending the karensavdrag, the plan includes safeguards aimed at small firms. The government‑inspired high‑cost protection would accompany the removal to ensure that small employers are not suddenly hit with steep payroll costs. This framing positions the reform as a step toward greater fairness for workers without destabilizing family‑owned businesses.
Boosts to benefits and targeted tax relief
Further measures in the shadow budget involve a 200 kronor per month increase to both child benefits and study grants. The proposal also calls for a higher housing allowance for families with children and a targeted income tax reduction for “ordinary people,” explicitly excluding high‑income earners to avoid subsidising the wealthiest households.
Rationale and political framing
Social Democratic leader Magdalena Andersson framed the package as a move toward more justice and respect for Swedish workers. In her view, the cost‑of‑living crisis has strained ordinary families, and the budget should channel relief where it is most needed.
LO chairman Johan Lindholm praised the shift, calling the scrapping of the karensavdrag “real good politics.” He argued that the deduction has become a class issue that directly affects LO members and pointed out that civil servants are not penalised when they are sick, using the contrast to underscore perceived inequities in the current system.
Timeline, feasibility and political context
The plan hinges on removing the karensavdrag by July 2026, alongside the introduction of the small‑business protection. Whether the proposal can pass through Parliament will depend on budget negotiations and the broader political climate. Supporters argue the timing is designed to align with the ongoing cost‑of‑living pressures facing families, while opponents may scrutinize the fiscal impact of extending such benefits.
Nordic and public‑policy context
In the shadow budget narrative, Sweden is positioned as an outlier within the Nordic region for not having increased child benefits during the current cost crisis. Proponents argue this plan represents a targeted, fair approach that rebalances support toward families and workers rather than toward the wealthiest sectors. Critics, however, caution about the cumulative cost and the long‑term implications for public finances.
What happens next
As the parties move into committee discussions and ongoing negotiations, lawmakers will assess the feasibility of implementing the karensavdrag scrapping and the related measures. The policy package could influence voter sentiment and shape the fiscal debate ahead of future budget cycles, even as it remains contingent on parliamentary support.
