Introduction

Over the next fifty years developed countries will be ageing to such an extent that net population growth – when positive – will mostly take place in age groups that are retired. This is a new historical experience. It is obvious that a number of problems will arise in economies that have a much higher proportion of elderly. Many of these problems will have a direct impact on public finance and public services. As argued in Flodén's chapter in this book (chapter 14), such ageing can be expected to lead to a financial debt problem. That applies particularly to Sweden, where the average tax rate is already somewhere around 60 per cent and, as Huber and Norrman point out in chapter 12, it will be difficult even to maintain the current rate of taxation – much less raise it – in view of the tax competition within the EU.

Although Sweden has an exceptionally high ratio of public expenditure to GDP, it is by no means exceptional in terms of its ageing process. Other countries are ageing much faster and will end up with a much higher proportion of persons above 65 (see figure 3.1 for estimates according to UN 1998). As argued in the introduction to this book, this fact provides incentives to discuss whether there are more efficient ways to organise a welfare state.

In three senses Sweden leads the way into this ageing society.