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Strong wage increases for industry


Published 1 April 2023 at 07.09

Economy. The unions and employers have agreed to break the Swedish record for wage increases with an industrial agreement that extends over two years and provides a wage increase of 7.4 percent, the parties write in a press release. It is thus clear that inflation will take hold in Sweden.

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– This is the highest annualized value we've had in history, says Ulrika Lindstrand, president of the Swedish Engineers' Association.

The wage increases are also expected to push the Swedish krona down to new lows, which favors the export industry's competitiveness.< /p>

“They are at a level that can set standards in the Swedish labor market and at the same time benefit Sweden's competitiveness”, the parties write in their press release.

The unions admit that there will be real wage cuts this year, when inflation is at 12 percent.

But like Anders Borg, the parties claim to know more or less that inflation has fallen to 2 percent before the turn of the year, which would mean that the wage increase in 2024 will actually be a small real wage increase.

– We will be able to return to real wage increases next year, IF Metall's chairman Marie Nilsson promises her members in a statement to SVT.

But most members understand probably already now that this will not happen.

The new agreement comes after the Riksbank announced that it is considering ignoring raising the interest rate in April, and thus giving up the fight against inflation.

In practice, a long period of so-called repression is thus planned, where the better borrowers receive higher wages and thus reduce their debt ratios in the long term thanks to inflation.

Only when the debt ratio of the large voter groups is manageable can interest rates be raised without major protests and inflation can then decrease over time.

The method has been used in Asia to reduce states' debts at the expense of the population. But for Sweden, it is rather about reducing the borrowing of important voter groups at the expense of less important voter groups.

High wage increases do not automatically mean increased purchasing power for wage earners. During the inflationary years of the 1970s, nominal wages increased by an average of 8.1 percent per year, but real wage increases stalled at only 0.5 percent per year.

The combination of high inflation and low interest rates makes financial repression very harmful for the unsecured, pensioners and low-income earners, as prices rise sharply for many years while the value of savings falls.

In the industrial agreement, they try to partially compensate for this by raising the minimum wages by SEK 1,350, which however is based on the happy calculation that inflation will be gone before the new year.

The important industrial agreement now lays the foundation for the total of 470 union agreements to be renegotiated this year. In total, they affect approximately 2.3 million employees.