Wage Formation Report

Wage Formation Report 2019

Wage Formation Report 2018

Wage Formation Report 2016

Wage Formation Report 2015

Wage Formation Report 2014

Wage Formation Report 2013

Wage Formation Report 2012

Wage Formation Report 2011

Wage Formation Report 2010

Wage Formation Report 2008

Wage Formation Report 2007

Wage Formation Report 2004

Wage Formation Report 2003

Wage Formation Report 2002

  • Wage formation can boost employment

    The Swedish economy is in a slowdown phase, and unemployment has risen sharply in recent months. Profitability in the business sector is currently close to the historical average. In manufacturing, profitability is likely to fall as export growth and business conditions deteriorate. The social partners can help keep unemployment down by showing wage restraint. However, further subdued wage growth may mean that very low interest rates continue to be needed to meet the 2 per cent inflation target.

  • Many reasons for limited wage growth in the current boom

    Variables such as resource utilisation, inflation expectations and productivity growth are not sufficient to explain recent years’ weak wage growth. This year’s Wage Formation Report analyses a variety of possible explanations for how wages have moved.

  • Increased risk of unemployment in industries with low wage flexibility

    Wages generally adjust to variations in regional unemployment in the Swedish labour market, but this flexibility varies between industries. Wages in industries where national pay settlements are particularly normative do not seem to be affected to the same extent by the labour market situation. Instead, workers in these industries run an increased risk of becoming unemployed.

  • Social partners can influence unemployment

    The economic boom will continue in 2016-2017, and there are shortages of labour in many sectors. Divisions in the labour market are also growing, with much higher unemployment among those without the required skills and qualifications. The social partners can contribute here with measured pay settlements and minimum wages that ease entry into the labour market for groups currently excluded.

  • Low as well as high pay increases present risks

    The participation rate and the employment rate are high in Sweden relative to other countries, but unemployment is also high. The social partners can normally hasten a return to lower unemployment through wage formation with support from monetary policy, but monetary policy cannot be made much more expansionary in the current situation. Very low pay increases will not therefore lead to lower unemployment. Changes to minimum wages and active labour market policies could, however, permanently reduce unemployment.

  • A divided labour market — challenge for the social partners

    The Swedish labour market contains a divide between those who are firmly established and those who are not.  Collective agreements take little account of the less well established. To address these structural challenges, both labour market policy and the social partners need to take vulnerable groups into account.

  • Pay settlements bring stability, but major challenges remain

    Given the weak economic outlook, the year´s central pay settlements were in line with previous patterns. However, there are also some worrying signs in the labour market. The average period of unemployment will soon be up at the levels of the early 1990s crisis.The long time to fill vacancies despite high unemployment points to matching problems which could prevent a permanent decrease in unemployment. In addition, the long-term unemployed do not seem to be having a moderating effect on wage formation. Such are the conclusions of the latest Report on Wage Formation in Sweden from the National Institute of Economic Research (NIER), published today.

  • Smaller pay increases and lower interest rates can mean more jobs

    The next few years will be marked by high unemployment and low productivity growth in the business sector. Pay increases at the central and local levels are expected to average 3 percent per year in 2013—2015, and unemployment will decrease to 7 percent, though not until 2015. Economic recovery could proceed faster if more limited pay increases were backed up by a lower policy interest rate. One factor making it harder to reduce unemployment more quickly, however, is that firms face growing problems in finding personnel with the right qualifications. This is the NIER´s assessment in the Report on Wage Formation.

  • Possible to reach an unemployment rate of 5 percent

    An unemployment rate close to the low levels of the 1980's can be achieved. For an unemployment rate of 5 percent to last, however, earnings must not increase more than 3.1 percent annually in 2012—2014.

  • Modest pay settlements to soften effects of downturn

    Hourly earnings in the business sector are expected to rise by an annual average of 2.3 percent in 2010-2012. The pay increases are modest by historical standards, which will benefit employment. Unemployment is expected to remain high until 2014, however. As an effect of the economic downturn, employment has fallen more for men than for women, whereas women have left the labour force to a greater extent.

Economic conditions for wage formation

Wage Formation in Sweden
is a summary of the annual report
(in Swedish), analysing the economic conditions for wage formation in Sweden.