OVERTORNEA (Sweden): This small town near the Arctic Circle has a jobless rate far above the average for Sweden, but many say it highlights a nationwide underemployment problem that could topple the government in elections on Sunday.

“I’m going to Trelleborg in the south of Sweden,” says Jenny Ek, sitting in a pizza restaurant in Overtornea, a far northern community of just 5,000. “I don’t have a job there either, but there’s more chance of getting one.”

With Sweden’s economy booming and official unemployment low, Overtornea with its 14.5 per cent jobless rate, if people on job schemes are included, might look like an isolated case.

But Sweden’s right-of-centre opposition alliance, which holds a slight lead over the ruling Social Democrats and their allies in opinion polls, says it is typical.

Officially, unemployment in Sweden is around six per cent and Prime Minister Goran Persson has said strong economic growth will bring this down. By comparison, France has nine per cent and Germany 10.6 per cent.

But, says the biggest opposition party, the Moderates, if you include Swedes who have retired early, are sick or on training schemes there are about 1.5 million people who either have no work or not enough out of a workforce of some 5 million.

Stefan Folster, chief economist at the Confederation of Swedish Industry, believes some 20 per cent of those who are not working could.

Like the opposition, he blames hefty labour taxes, the high cost of hiring, the hurdles to firing and welfare benefits that often make it nearly as lucrative to stay at home as to work.

“Conditions for small- and medium-sized firms are not good. The tax burden is twice as high as the European average. On the supply side, benefits are very good if you don’t work,” he said.

The opposition alliance, which comprises the Moderates, Folk Liberals, Centre and Christian Democrats, plans to slash taxes, especially for the poorly paid and for employers.

They say lower unemployment benefits should also encourage people to look for jobs. Persson has said that such policies are simply aimed at punishing the unemployed and will not create further work opportunities.

But some employers in Overtornea say things need to change.

Hans Hietala, a local tomato farmer, gave the example of one woman whose unemployment benefit was the same the wages he was offering. “She left immediately,” he said.

Leif Toolanen, chief executive of Overtornea Development, said better conditions for small business would encourage more use of the region’s rich forestry resources — by using them for biofuel, for instance.

“One must create the conditions for people to help themselves,” he said.

Still, the opposition’s policies may be a hard sell in areas like Overtornea.

Since two local sawmills closed down a couple of years ago, the local and regional authorities are the biggest employers and many residents rely on state handouts.

“There aren’t any real jobs here,” said Gunnar Arbro, 59, who is on a government learning programme.

“The sawmills and forestry industry were always the biggest employers and since those have gone, unemployment has risen. At nearly 60, I don’t believe I will get a job on the open market.”

The Social Democrats say already marginalised Swedes like Arbro will suffer most under the alliance.—Reuters