Swedish industrial employers warn against wage rises exceeding 1 pct

Excessive pay rises mean tougher conditions for exporters
By Johan Sennero
|payroll-reporter.com|Last Updated: 12/10/2015

STOCKHOLM (Reuters) — Swedish industrial employers said on Wednesday that wage rises in the sector must come in lower than one per cent next year or risk threatening the Nordic country's competitiveness.

Employers said international competition must be in focus in the upcoming wage talks and excessive pay rises would mean tougher conditions for Swedish exporters already struggling with high labour costs compared with European competitors.

"... coming wage deals must be less than one per cent a year if we are going to start our journey toward an improved competitiveness," the heads of seven industrial employers associations said in a signed article in daily Dagens Nyheter.

In early November, Sweden's main industrial unions sought pay rises of at least 2.8 per cent for next year, saying this was is in line with the central bank's inflation target and shrugging off worries over competitiveness.

The wage talks between employers and unions affecting about 500,000 Swedish industrial workers are due to begin in the coming weeks and are complicated by the fact that inflation has been flat or negative for much of the past three years.

Unions say wage rises should use the central bank's two per cent inflation target as their baseline while employers argue wage deals should be based on current inflation. In October, headline consumer prices rose 0.1 per cent year on year.

The Riksbank, which has slashed its key interest rate to a record low of -0.35 per cent, forecasts inflation will hit its target some time in 2016.

A survey of key financial and business groups commissioned by the central bank released separately on Wednesday showed wages were expected to rise 2.2 per cent over the coming year.

A new wage deal is expected before March.

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