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Home Opinion The insider-outsider dilemma
Labour Markets • New Inequalities • Sweden

The insider-outsider dilemma

Johannes Lindvall & David Rueda - 18 July 2013

A study of the last four Swedish elections reveals the extent of the insider-outsider stranglehold on social democracy

The most important event in Swedish party politics in the past twenty years is the decline in the electoral fortunes of the Social Democratic Party.

For most of the post-war period, electoral support for the Social Democrats hovered around 45 percent. As late as 1994, in fact, the Social Democrats won 45.3 percent of the vote. Their best election since then was in 2002 (39.9 percent). In 1998, they received 36.4 percent; in 2006, 35.0; in 2010, only 30.7.

What sets the elections of 2006 and 2010 apart is that the combined support for the center-left fell sharply. The Social Democratic losses in 1998 were associated with a surge in support for the Left Party, allowing Göran Persson to remain as prime minister after the election. Between 2002 and 2010, by contrast, the support for the Left Party and the Greens did not increase at all; the combined support for the center-left therefore fell from 53.0 to 43.6 percent.

These are momentous changes, and scholars and political commentators will no doubt puzzle over them for years to come. In a recently published paper, we show that an important part of the explanation is that the Social Democrats have become unable to reconcile the demands of two groups of voters that have traditionally sup-ported them: on the one hand labour market “outsiders,” who have insecure jobs or no jobs at all; on the other hand labour market “insiders” with stable employment. The deep economic crisis in the 1990s changed the Swedish labour market. It greatly increased the number of outsiders, rendering the latent conflict between insiders and outsiders salient.

This placed the Social Democrats in a bind. Insiders are less vulnerable to unem-ployment than outsiders, and therefore less prone to support parties that dedicate substantial resources to employment promotion or benefits for the unemployed. Outsiders are either unemployed already or enjoy little employment protection. They are therefore more concerned about employment policies and favor generous benefits for the unemployed. In weak labour markets, it is difficult for center-left parties to appeal to both groups. If they emphasize policies that benefit insiders, center-left parties push outsiders to support more radical parties or to exit politics; if they propose policies that benefit outsiders, they risk losing support among insiders. In the Swedish case, the election of 1998 exemplifies the first risk. The elections of 2006 and 2010 exemplify the second.

We begin with the election of 1998, when support for the Social Democrats de-creased by approximately 9 percentage points. In the election campaign of that year, the Social Democrats emphasized issues that appealed to middle-class insiders and had less to say about the problem of unemployment than they had in 1994. The clearest example of the middle class-oriented strategy was the Social Democratic campaign promise to cap user fees in public childcare. The effect of this policy was to reduce childcare costs for medium- and high-income earners with children, who are clearly more likely to be insiders than outsiders.

In our empirical analyses of electoral behavior in 1998, we show that outsiders be-came about twice as likely to vote for the Left Party as insiders, and also twice as likely to abstain from voting, suggesting that when the Social Democrats concentrated on winning insider support, outsiders moved further left or exited politics. We also show that the large electoral losses for the Social Democrats between 1994 and 1998 were much more pronounced among outsiders: according to our estimates, a typical member of the labour force became 18 percentage points less likely to support the Social Democrats if he was an outsider, but only 8.5 percentage points less likely to do so if he was an insider.

In 2006 and 2010, insiders and outsiders behaved differently. In both 2006 and 2010, the center-right parties, and especially the Moderate Party, made a targeted electoral appeal to insiders, whereas the Social Democrats were seen to protect the interests of outsiders. The labour market policies that the center-right parties pro-posed in the 2006 election campaign and implemented in 2006–2010 were designed to cut benefits for the long-term unemployed while cutting taxes on incomes from paid employment. The Social Democrats, the Left Party, and the Green Party objected to most of these reforms, both in 2006 and in 2010, defending the interests of outsiders.

This strategy protected the Social Democrats from the losses to the Left Party and the increase in non-voting among outsiders that occurred in 1998, but it had other costs. The most important conclusion that we draw from our analyses of the 2006 and 2010 elections is that in the course of the 2000s, insiders became increasingly less likely than outsiders to support the center-left.

According to our analysis of the 2002 election, a typical member of the labour force was only 4.7 percentage points more likely to vote for a center-right party if he was an insider than if he was an outsider (and this difference was not statistically signifi-cant). In 2006, the difference had become 12.2 percentage points. By 2010, it was 18.3. Between 2002 and 2010, the likelihood that a typical insider voted center-left declined by 11.3 percentage points; the likelihood that such a voter supported the center-right increased by 13.2 percentage points.

Our general point is that an insider-outsider dilemma complicates the electoral choices that center-left parties face. The Swedish case is particularly important in this context since it has been suggested that conflicts between insiders and outsid-ers should be less intense in a country such as Sweden than elsewhere. According to this view, Sweden’s encompassing and centralized trade unions and labour market institutions, and its proportional representation system, should render the insider-outsider divide less relevant to voters.

The importance of the insider-outsider dilemma to Swedish politics since the early 1990s therefore suggests that the differences between insiders and outsiders may be even starker elsewhere. A more systematic examination of how the insider-outsider dilemma affects the politics of other countries is needed. It is likely that national differences make left parties more or less sensitive to the preferences of insiders (and more or less vulnerable to the threat of losing outsider support).

It is also likely that several recent trends in the politics of advanced democracies can be at least partly explained by the sorts of mechanisms that we discuss here. A notable case is the failure of center-left parties in Europe to benefit politically from the economic crisis that began in 2008. One reason for this failure is arguably that although unemployment has increased in many rich democracies, this has not made it is easier for center-left parties to reconcile the interests of insiders and outsiders: it is not possible to win elections without considerable support from insiders, who, in many countries, have not faced a significant risk of unemployment even in the difficult economic circumstances since 2008.

It remains an important challenge for center-left parties, including the Swedish So-cial Democrats, to develop policies that can appeal to both insiders and outsiders. Throughout its long history, Sweden’s Social Democratic Party has skillfully reached out to new electoral constituencies, while preserving the support of their core voters – reconciling the demands of anticlerical and religious workers in the 1910s and 1920s, workers and farmers in the 1930s, blue-collar and white-collar employees in the 1950s, and so on. Time will tell if the Swedish Social Democrats are able to adapt to the social and economic changes that made the distinction between insiders and outsiders so salient in the 1990s and 2000s.

Johannes Lindvall is an associate professor of political science at Lund University

David Rueda is professor of comparative politics in the Department of Politics and International Relations, Oxford University, and a fellow of Merton College

David Rueda will speak at the Policy Network event The insider-outsider dilemma: A stranglehold on social democracy? on November 18th 2013.

This is a contribution to Policy Network's work on Party Politics, Government and Elections .

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