Abstract
In 1975-91, the “Swedish model” broke down, but – the authors argue – the basic components of the original model of the 1950s are now back in place. Responses to the deep economic crisis of the early 1990s have included the reinstatement of an anti-inflationary macroeconomic policy and the refocusing of active labour market policy on supply - side measures.Yet Sweden’s recovery from high unemployment and inflation also owes much to the re-coordination of wage bargaining in pursuit of three objectives: industrial peace, limiting the negative employment effects of an uncontrolled wage drift, and “subsidiarity” in adapting the provisions of industry-wide agreements to firms’ competitive needs.