[FOUNTAIN]Can Sweden be a corporate model for us?

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[FOUNTAIN]Can Sweden be a corporate model for us?

Sweden is a small yet powerful Scandinavian nation with many special records. It is the country where a leftist party, the Social Democratic Party, has held power since 1932, the longest such rule in the world. Sweden has the world’s highest equality index, and the highest rate of labor union membership at over 90 percent. The per-capita national income is over $25,000, and union strikes are rare.
Women’s status is considered among the highest in the world, while sexual harassment and assault rates are the lowest. Sweden is often referred to as the best possible capitalistic model created by the working class. Korea’s Democratic Labor Party, which recently won seats in the National Assembly, is said to have set the Swedish socialist system as a model.
What sets Sweden apart is the presence of the Wallenberg Group, the largest conglomerate in the country. The total market value of its 14 listed companies makes up more than 40 percent of the Swedish stock market. Internationally known companies such as Ericsson, Electrolux, ABB, Saab and Scania are subsidiaries of Wallenberg. With 150 years of history, Wallenberg is a strictly family-oriented company. The current executives are the fifth generation descendants of the founder. Sweden is well known for its concentration of economic power, with the top 10 companies’ total annual revenues amounting to nearly 65 percent of gross domestic product.
Such a structure was made possible by the Saltsj Baden Agreement between the ruling party and the Wallenberg family in 1938. In return for an acknowledgement of its control over companies, Wallenberg promised to contribute to the national economy by providing jobs, investing in technology development and paying up to 85 percent in income tax.
Recently, the liberal magazine Mal published a controversial article that proposes to recognize Samsung Group ‘s management structure and encourage the business giant to voluntarily contribute to society. “As long as the management is transparent and rational, it does not matter who has control of a company,” the article claimed.
A more important yardstick than whether someone is a family heir and a career businessman is whether an executive is competent or not. It might be the right moment to consider a Korean version of the Saltsj Baden Agreement.

by Lee Se-jung

The writer is an editorial writer of the JoongAng Ilbo.
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