Evaluating the Market Reforms of Sweden’s Compulsory School System in the 1990s

The aims of the Swedish education reforms in the 1990s were to increase choice and competition in the school market, bring greater efficiency to education funding and improve the overall quality of its provision (Björklund et al., 2005). The question of whether these aims have been realised has created debate since the turn of the millennium, reflected in contradictory studies and a lack of clear consensus. The severe decline in Swedish students’ scores in the most recent international surveys by the Programme for International Student Assessment (PISA) have reignited the issue.


Sweden is internationally renowned as a beacon of social democracy. It boasts comparatively high levels of social equality and standards of living. This has been achieved through its progressive taxation, social services and education systems (Björklund et al., 2005). In 1842 Sweden led the world by establishing compulsory schooling as a key feature of its welfare system to equalise opportunities and lessen the impact of family background on educational attainment (Björklund et al., 2003; Björklund et al., 2005; Bunar, 2008; Fredriksson, 2009; West, 2014). Its public expenditure on education as a share of its Gross Domestic Product (GDP) has been significantly higher than most other countries in the Organisation for Economic Cooperation and Development (OECD). Considering the strength of its welfare system, it seems unexpected that Sweden would implement such radical market-focused education reforms in the 1990s, but this move is aligned with the ideological shift towards education’s role to further economic aims (Björklund et al., 2005).


Macroeconomic crises of the 1970s and growing dissatisfaction with centrally managed economies saw many OECD countries adopt neoliberal reforms that embraced competition through decentralisation (Björklund et al., 2005).  David Harvey’s (2005) definition of neoliberalism identifies deregulation, privatisation and the withdrawal of the State in providing social services as key mechanisms employed “…to bring all human action into the domain of the market” (p. 3). The increasing globalisation of the economy and growing political forces in favour of such reforms influenced even Sweden to adopt similar measures (Bunar, 2008; Wiborg, 2015). Changes included tax reform, membership of the European Union and deregulation of markets (Björklund et al., 2005). The radical restructuring of Sweden’s education system from the late 1980s is particularly interesting given the history of the Nordic quest for equality through centrally-managed structures (Björklund et al., 2005; West, 2014).


The reforms were motivated by arguments with both egalitarian and economic foundations (Björklund et al., 2005). Sweden was also affected by the global macro-economic downturn and suffered a decline in its national economy and employment levels (Klitgaard, 2007). Public frustration with the bureaucracy of the welfare system developed (Bunar, 2008; Klitgaard, 2007). The role of education came to be viewed not only as a public good but also as a mechanism to promote greater economic efficiency and development (Alexandersson, 2011; Bunar, 2008). Economic concerns were compounded by growing public pressure over slipping academic outcomes and the lack of school choices available in the public system (West, 2014). A combination of these factors facilitated the election of Sweden’s first neo-liberal government in 1991. The main goals of the centre-right government’s market-oriented education reforms were greater cost-effectiveness through decentralisation of administration, competition and choice with the establishment of more independent schools (friskolor), and a higher quality of education (Björklund et al., 2005; Bunar, 2008; West, 2014; Wiborg, 2015).


To this end, Sweden’s decentralisation process was extensive and rapid. It completely restructured the governance of what had been a highly centralised compulsory education system in the late 1980s, making it one of the most decentralised in the OECD by the mid-1990s (Björklund et al., 2003; Wiborg, 2015). The Social Democrats regained power in 1994 but were constrained as a minority government and caught between new ideology and old traditions. They did not dismantle these reforms but presented the changes as modernisation of the welfare state (Björklund et al., 2005; Klitgaard, 2007).


One of the most significant changes brought by these reforms was the money diverted from compulsory schooling to tertiary education (Björklund et al., 2005). This has affected the funds available to employ teachers and therefore the ratio of students to teachers in classes.


The initial move towards the reforms was in 1989 when the Social Democrats gave municipalities the responsibility for employing teachers. Following the 1991 election, the authority for school budgets was also handed over to the municipalities in the form of block grants. Remaining restrictions were relaxed further in 1993 and it was the prerogative of the municipality to spend these resources as it deemed appropriate, with no minimum requirement of resources earmarked for education (Björklund et al., 2005, p. 46; Klitgaard, 2007). When schools became responsible for teacher salary negotiations in 1994, teacher unions challenged it because it threatened teachers’ working conditions and allowed for school managers to bring in individual pay schemes for teachers (Björklund et al., 2005). While total government expenditure on schools was fairly constant throughout the decade and higher than many OECD countries, funds dedicated to teacher salaries was significantly lower than the OECD average. Low salary and performance-drive pay structures has led to teaching being seen as a less attractive occupation (Björklund et al., 2005). This belittling of teaching as a profession has also led to an increase of noncertified teachers. By the school year 2009/10, twenty percent of teaching staff in public schools had no pedagogical training, to nearly half in independent schools (Alexandersson, 2011, p. 201-202). This is concerning because extensive research concludes that the quality of teachers is one of the most important factors in student achievement (Björklund et al., 2005).


The majority of the research on class size, especially that from Sweden, argues that smaller student to teacher ratios have a positive effect on educational achievement (Kreuger, 2003, cited in Björklund et al., 2005). These ratios increased substantially with the reforms. In 1991/92 the average Swedish class size was 21.8 students, compared to 25.8 students by the end of the decade (Björklund et al., 2005 p. 45). Not only does this worsen teachers’ working conditions, it is possible such changes can have an effect on student achievement, particularly that of disadvantaged students (Björklund et al., 2005).


In response to calls for more choice and competition within the school system, the Swedish reforms allowed for greater outsourcing of schools to private providers of independent schools, or friskolor. It was hoped that allowing more choice would inject competition into the school system, ideally resulting in poorly performing schools improving their efficiency and productivity in response to the pressure (Björklund et al., 2005; Friedman, 1997).


In 1992 there were approximately 90 independent primary and lower secondary schools, which increased to 539 in 2002/03 (Björklund et al., 2005, p. 83). The friskolor use a voucher system, are funded by municipalities according to student numbers as in the public system, and are now unable to charge extra fees (WIborg, 2015; Sandström & Bergström, 2005). They are forbidden to be selective over admissions, but critics contest that enforcement of this rule is difficult (Björklund et al., 2005), and until 2010 they did not have to comply with the same regulatory framework as their public equivalents (West, 2014). The substantial majority of these schools are run by for-profit companies (Ministry of Education, 2010) and are most common in large cities (Björklund et al., 2005; Bunar, 2008).


Although friskolor hoped to reduce costs, the evaluation of Björklund et al. (2005) deduces that there is “no support for the conclusion that private school choice either increases or decreases cost” and suggests that if there are benefits of school competition it must be realised in higher student achievement (p. 88).


The effects of school choice on achievement is a contentious question due to the variety of other influential factors within and outside of the education system. Björklund et al. (2005) noted a moderately higher performance of independent schools over public, but acknowledged this could be a consequence of self-selection rather than a causal relationship. Sandström & Bergström (2005) suggest that greater competition in the Swedish education market led to overall better student results and therefore quality of education, but it must be noted that both of these studies were undertaken before two most recent PISA surveys. Sweden is being urged to reform its education system again by the OECD after its students’ PISA scores fell more steeply than any other country over the last decade, especially between 2009-2012, to well below average (OECD, May 2015).


The privatisation of Sweden’s public school system seems to have encouraged segregation along gender, ethnic, social and religious boundaries. Diversity of choice in the school system has seen a concentration of friskolor in more advantaged areas, and the OECD notes that the reforms seem to have favoured students from well-off and educated families over others (OECD, March 2015). The increased segregation of neighbourhoods could have limited choices for some groups in Sweden (West, 2008). Fewer opportunities for social mixing across the lines is a problem for Sweden’s educational outcomes, as there is significant research that demonstrates the effect of peers on student achievement (Björklund et al., 2005). The OECD warns that these growing inequalities within the school system could also negatively affect the intergenerational mobility that Swedish society is known for (OECD, March 2015).


To conclude, the aims of the Swedish education reforms to improve financial efficiency and student achievement levels have not been realised. Sweden’s incumbent Education Minister Gustav Fridolin has lamented the drop in achievement levels, educational equality and the international reputation Sweden once held, referring to the reforms as “a political failure” (The Guardian, 2015). Sweden’s marketisation of education has been looked to as an example by reformists in the United Kingdom and New Zealand, but these countries risk creating even greater inequalities in their contexts as they do not have the strong welfare system or narrow income distribution that Sweden still maintains.




Alexandersson, M. (2011). Equivalence and choice in combination: the Swedish dilemma. Oxford Review of Education, 37(2), 195-214.


Björklund, A., Clark, M. A., Edin, P., Fredriksson, P., and Krueger, A. (2005). The market comes to education in Sweden: An evaluation of Sweden’s surprising school reforms. New York: Russell Sage Foundation.


Björklund, A., Lindahl, M., Sund, K. (2003). Family background and school performance during a turbulent era of school reforms. Prepared for Swedish Economic Policy Review.


Bunar, N. (2008). The free schools “riddle”: Between traditional social democratic, neoliberal and multicultural tenets. Scandinavian Journal of Educational Research, 52(4), 423-438.


Fredriksson, A. (2009). On the consequences of the marketisation of public education in Sweden: For-profit charter schools and the emergence of the ‘market-oriented teacher’. European Educational Research Journal, 8(2), 299-310.


Friedman, M. (1997). Public schools: Make them private. Education Economics, 5(3), 341-344.


Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press.


Klitgaard, M. B. (2007). Do welfare state regimes determine public sector reforms? Choice reforms in American, Swedish and German schools. Scandinavian Political Studies, 30(4), 444-468.


Ministry of Education and Research. (2010). OECD review on evaluation and assessment frameworks for improving school outcomes: Country background report for Sweden. Retrieved from https://www.oecd.org/edu/school/45957739.pdf


OECD. (2015, January). OECD Income inequality data update: Sweden. Retrieved from https://www.oecd.org/els/soc/OECD-Income-Inequality-Sweden.pdf


OECD. (2015, March). Sweden Policy Brief. Retrieved from  https://www.oecd.org/sweden/sweden-achieving-greater-equality-of-opportunities-and-outcomes.pdf


OECD. (2015, 4 May). Sweden should urgently reform its school system to improve quality and equity. Retrieved from http://www.oecd.org/sweden/sweden-should-urgently-reform-its-school-system-to-improve-quality-and-equity.htm


Sandström, M., and Bergström, F. (2005). School vouchers in practice: Competition will not hurt you. Journal of Public Economics, 89, 351-380.


Weale, S. (2015, 10 June ). It’s a political failure: How Sweden’s celebrated schools system fell into crisis. The Guardian. Retrieved from https://www.theguardian.com/world/2015/jun/10/sweden-schools-crisis-political-failure-education 15.11.16.


West, A. (2014). Academies in England and independent schools (fristående skolor) in Sweden: Policy, access and segregation. Research Papers in Education, 29(3), 330-350.


Wiborg, S. (2015). Privatising education: Free school policy in Sweden and England. Comparative Education Review, 59(3), 473-497.


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