Published 2019-11-06

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History of Wage-Earner Foundations

The report ‘The Research Foundations: A Rollercoaster Ride from Wage-Earner Funds to Research Funding’ (Stiftelserna ett kvartssekel – en hisnande resa från löntagarfonder till forskningspengar) describes how Mistra and five other foundations were created from the money derived from the discontinued wage-earner funds. The report is also about how the various foundations have been able to spend many billions of kronor on research while their capital has grown.

Hello Klas Eklund…

Eklund is the Senior Economist whose report on the history of the Wage-Earner Foundations (‘The Research Foundations: A Rollercoaster Ride from Wage-Earner Funds to Research Funding’) was published in October 2019 to coincide with Mistra’s Silver Jubilee.

What did you learn that you didn’t know before?

That the Foundations had proved so very successful. They’ve funded major projects and programmes linking different disciplines at various higher education institutions. They’ve generated important results, yet the money remains and has grown too. I doubt whether regular government grants over 25 years would have produced equally good results. I don’t know, of course, but I doubt it.

So you think the foundations have been well run?

Yes, and that’s also shown in reviews by the Royal Swedish Academy of Sciences (KVA) and the Royal Swedish Academy of Engineering Sciences (IVA). They are mostly positive.

What about their actual history?

There was a historical run-up of almost 20 years. The ‘wage-earner funds’ proposed by the Swedish Trade Union Confederation economist Rudolf Meidner would eventually have led to the trade unions taking over ownership of the business sector. Naturally, the proposal caused an impassioned debate. By the time the funds were finally about to become reality in the early 1990s, they were wishy-washy and toothless. But they were still found objectionable, and the Bildt Government dissolved them. That meant 15 billion kronor became available. The battle was then instead about how the money was to be used, and Per Unckel, the Education Minister, campaigned for the idea of ​​a major research initiative that would modernise Sweden.

I myself was the Ministry of Finance planning director during the years when the wage-earner funds were debated. In fact, I was sitting next to the then Finance Minister Kjell-Olof Feldt in the Riksdag Chamber when he composed the famous rhyming couplet:

‘Wage-earner funds are a blooming mess,

But can we finally use them? Yes!’

That was his entry in an internal competition we had there, on the Riksdag bench, to write some verse about wage-earner funds. Feldt won. His verse actually continued:

‘So in with all VIPs, biggest and best,

Who supported us in our ill-fated quest.’

It was ironic, of course.

Sweden was in crisis during those years. Deciding on long-term research funding during such a critical period — could that happen today?

Maybe. We had a homemade currency crisis then, as well as a property crisis and a banking crisis. Unckel thought it was precisely the right time to invest for the future. To emerge strongly from the crisis, the business community needed capital — but also long-term technological development. Today we’re entering a recession, but we have major technological and social challenges ahead, relating to the climate, the housing shortage and a great deal else. A similar initiative is probably needed today.

How do you see the future of the foundations?

One question all foundations need to grapple with is how long they should live. From the start, the intention was for the capital to be used up, but that didn’t happen. The stock market has been strong. I think all the foundations are thinking of carrying on for a while longer, but they’ll need to deal with the question of whether to aim for eternal life or not.

Eklund has long been involved in the foundations’ work, especially at Mistra, where he has served on the Board and its Asset Management Committee. His report ‘The Research Foundations: A Rollercoaster Ride from Wage-Earner Funds to Research Funding’ was jointly published by the Foundation for Baltic and East European Studies, the Knowledge Foundation, the Swedish Foundation for Cooperation in Research and Higher Education (STINT), Riksbankens Jubileumsfond (the Swedish Foundation for Humanities and Social Sciences), the Swedish Foundation for Strategic Environmental Research (Mistra) and the Swedish Foundation for Strategic Research (SSF).