Overview: A shadow budget with a broad fairness agenda
In a Friday press conference, Sweden’s Social Democrats outlined a shadow budget that aligns with the Confederation of Swedish Trade Unions (LO). The plan centers on scrapping the karensavdrag, a waiting-day deduction that penalizes workers taking sick leave, and pairs it with stepwise tax relief for ordinary earners. The timing would see the karensavdrag removed from July 1, 2026, alongside a high-cost protection mechanism for small businesses to cushion the transition.
Andersson, speaking alongside LO president Johan Lindholm, framed the package as a major step toward fairness in Sweden’s labor market and a tangible lift for ordinary families facing cost-of-living pressures. She described the proposal as “an incredibly important reform” that would increase fairness and put more money in the pockets of working families.
Key measures: what the plan would change
In addition to ending the karensavdrag, the shadow budget would raise the monthly child allowance by 200 Swedish kronor and boost study grants, easing financial pressure on students and parents alike. The plan would also increase housing support for families with children, ensuring access to affordable housing becomes part of a broader social safety net. On taxes, the proposal seeks a relief for “ordinary people” by lowering income tax for those with average incomes, while explicitly omitting further cuts for the nation's highest earners.
Scrap Karensavdrag: a reform with cascading effects
LO’s leadership has framed the move as a class-forward reform. Johan Lindholm described the karensavdrag as a “class issue” that directly affects LO’s members. “The waiting day is a class issue that directly affects LO union members,” he argued, adding that civil servants are not punished when they are sick under the current rules. The policy aims to reduce built-in penalties for illness and create a more level playing field for workers who call in sick due to illness or caregiving responsibilities.
Support for families and affordability
Andersson emphasised that Sweden is currently the only Nordic country without an increase in child benefits during the ongoing cost crisis. The proposed 200 kronor per month increment would be targeted at helping families cover rising costs, while the higher housing subsidies and expanded study grants would complement this effort. The package is presented as a practical response to rising prices and a signal that the welfare state remains committed to supporting families with children.
Tax relief with limits
The plan’s tax component signals a shift toward making taxation more progressive, with relief directed at ordinary earners. However, the leadership insists that relief should not accrue to high-income groups that have already benefited from previous tax bonuses under the current government. The LO-S combination argues this approach would preserve fiscal space for essential services while narrowing gaps in take-home pay for the many families reliant on wages and benefits.
Context, reactions, and next steps
The announcement takes place in a broader political context where parties are jockeying for position ahead of formal budget negotiations. A key question is whether the shadow budget’s measures—particularly the elimination of karensavdrag and the accompanying family-support packages—will be adopted into official policy or become a point of leverage in parliamentary discussions. The target date of July 2026 gives small businesses time to adjust, while the cost-of-living crisis adds urgency to the reforms.
Conclusion: A test of fairness and political will
With LO backing, the Social Democrats are presenting a bold plan that ties labor-market fairness to direct family support. The coming weeks will reveal how the proposal resonates with other parties, employers, and voters who are watching closely as Sweden’s political landscape debates relief for ordinary households in a time of rising prices.
