Öberg: The financial crisis and wage formation
Öberg clarified that he would neither give any recommendations to the social partners nor that he would report any new view of economic developments beyond that presented in the monetary policy update of 16 december last year.
Öberg noted that the financial crisis has affected the Swedish economy in two ways. In a first stage, the financial markets and the financial sector have been impacted negatively – a problem that has now in principle been addressed.
In second stage, the financial crisis has led to a decline in world GDP and world trade. For Sweden, this has led to a clear division of the economy, in which the Swedish export industry has been impacted severely while other parts of the economy with a focus on the domestic market have coped better.
Against the background of these economic developments, the social parties have four primary issues with which to deal in this year's collective bargaining. The first of these is that of agreeing on an appropriate level for the average rate of wage increases during the agreement period. Considering the drawn-out recovery and the weak labour market, the Riksbank’s view is that the scope for wage increases seems to be highly restricted.
The second problem is that there are currently major differences between the capabilities of the various industries to bear a specific rate of wage increases. The industrial sector, which is exposed to competition, faces greater difficulties than the service sector in bearing wage increases. The development of wages along similar lines in both sectors would undoubtedly lead to smaller pay differences, but also to a faster transformation of the economy.
The third problem is that of which sector should play a normative role for wages in this year's collective bargaining. During the most recent agreement periods, the industrial sector has played this very important role. If this normative role in wage bargaining were to be assumed by the service sector, it is likely that wage increases, and thereby inflation, will be greater.
The fourth problem is that of the extensive prevailing uncertainty regarding future economic development. This means that the parties may find it difficult to make contractual commitments in respect of agreements for longer periods of time.
Finally, Öberg noted that wage formation has functioned well over the last ten to fifteen years. It has contributed to our success in maintaining inflation on a low and stable level, at the same time as real wages and growth have developed strongly. He expressed the hope that this year’s collective bargaining will contribute towards Sweden’s continued positive economic development, once the effects of the financial crisis have ebbed away.
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