"If anything, the most profitable companies show higher quality"

19 January 2017

On Thursday January 19, Henrik Jordahl, IFN, presented a report he authored in collaboration with David Sundén: ”Vinstbegränsningar i välfärden” (“Profit caps in the welfare sector”, published by the Confederation of Swedish Enterprise). The report shows the socio-economic impact of introducing the kind of profit caps suggested by Illmar Reepalu in a report to the government. Jordahl explained that the bases for the Reepalu report are false. For example, there is no big money to be made from the so-called leakage of tax revenue from for-profit firms in the welfare sector. "We are talking about 6 per mille of the costs for these services," he said.

A criticism regarding for-profit enterprises in the welfare sector is that these firms have inferior quality of services − in order to make more money. "That's not true," said Henrik Jordahl. "If anything, the most profitable companies have higher quality."

Henrik Jordahl showed that the economic consequences of the Reepalu-proposal would be:

- Increased costs
- Fewer start-ups
- Reduced investments
- Lower productivity
- Future threats to the quality of welfare services
- Impaired freedom of choice

Read the report

A second report was presented: "Avkastning på bokfört operativt kapital i välfärdsbolag" ("Return on operating capital of firms in the welfare sector," PwC). Two separate discussions followed, both moderated by Robert Thorburn, Confederation of Swedish Enterprise:

What does Reepalu’s suggestions entail and what’s up for your company?
Professor Pär Strömberg, Stockholm School of Economics discussed with Peter Nyllinge, CEO of PWC.

How will the Reepalu-commission's suggestions impact the Swedish welfare model?
The panel consisted of: Lars Stjernkvist, Mayor of Norrköping (S), Maria Arnholm, Party Secretary (L), Matz Nilsson, Chairman of Sveriges Skolledarförbund (The Swedish Association of School Principals and Directors of Education ), and Anders Morin, Confederation of Swedish Enterprise.

 

Published January 19 2017