Immigrants Still Welcome

Reinfeldt's government introduced some of the OECD's most liberal regulations for immigrant workers, letting employers hire people from wherever they want as long as wages are not lower than for Swedes.

Despite a recent backlash against immigration - a trend right across recession-weary Europe -- polls show a large majority of Swedes still support the tradition of welcoming asylum seekers.

Challenges remain, however, particularly in integrating migrants. Widespread riots in poor immigrant suburbs in 2013 highlighted the difficulties Sweden has had in absorbing asylum seekers, now arriving at about 100,000 a year, and employment rates among low skilled immigrants are nearly 25 percentage points lower than for native Swedes of similar level.

Sweden is also facing other pressures - despite the pension system being formally disconnected from government finances - as life expectancy for an average 65-year-old has risen by more than two years to 85 since the 1994 pension reform.

That means the pension system, though successful right now, may in future come under pressure from voters to be more generous.

"Our pension system is economically sustainable the way it is constructed," said Tommy Bengtsson, a professor of economic history at Lund University's Center for Economic Demography. "The question is whether it is politically sustainable."

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