• Sweden edition
 
Op-Ed
'Sweden's entry-level wages are too high'
Swedish kronor. Photo: Shutterstock

'Sweden's entry-level wages are too high'

Published: 18 Mar 2014 11:37 GMT+01:00

Typically, someone who starts a new job must go through a learning curve. It takes some time to become better at a new job. This is not least the case for young people with little or no previous job experience. Therefore, the starting salary tends to be relatively low, and to grow with time. Sweden is however unique in that the starting salary is relatively high compared to that of experienced workers.

In a new report, Susanne Spector, economist at the Confederation of Swedish Enterprise, illustrates this by comparing the wages of a newly hired individual to someone who has worked in the same place for over 15 years. In the average rich EU country the more experienced worker will earn around 50 percent higher in wages. In Sweden the difference is a mere 20-percent increase.

The laws of economics work in the same way in Sweden as in other European nations. Experienced workers are typically more productive than new ones. The difference is that Swedish labour unions have long prioritized raising the entry-level wages. And so, a situation has been created where new employees are often paid more than what is motivated by the productivity of the worker.

As a response, employers become reluctant to hire new employees. Like many other commodities, when the price and demand of new jobs do not match, problems are created on the marketplace. Firstly, few entry-level jobs are created. And secondly, those that exist often go to friends or family. In fact, fully seven out of ten new recruitments into firms are obtained through personal contacts.

Demanding high entry-level wages might, at first glance, seem to be a way to encourage young people to have a good start to their careers. But the effect is the opposite, since the wage levels make entering the labour market quite difficult. The immediate effect is high youth unemployment. Most young people in Sweden do enter the labour market, but even they can suffer from the lack of entry-level jobs, since the lack of entry-level jobs slows down the transition to employment.

During recent years, a number of studies have shown that early unemployment can “scar” individuals. Even somewhat delayed entry makes it more difficult to gather the social capital needed to progress in one’s career, slowing down long-term wage growth and increasing future risks of unemployment. The scarring effects of youth unemployment have been shown to remain up to twenty years later in life.

The current practice of demanding unusually high entry-level wages favours the few young people who do not have trouble getting their first jobs, often with help from family and friends. It creates significant disadvantages to the majority whose labour-market introduction is slowed down and, of course, to the employers who hire fewer new people than they would otherwise like to.

Normalizing entry-level wages to mirror those of other rich EU states could mean significant improvements for the Swedish labor market, benefiting most in the long term. In a country with no formal minimum wages, it is up to employer organizations and labor unions to negotiate a common solution. 

Nima Sanandaji, a Swedish writer of Kurdish origin, has written numerous books and reports about policy issues in Sweden. He is a regular contributor to The Local.

The Local (news@thelocal.se)

Your comments about this article

Today's headlines
Swede Stenson on track for Dubai defence
Photo: TT

Swede Stenson on track for Dubai defence

Swedish world number four Henrik Stenson is on course to successfully defend his title at the DP World Tour Championship, the red-hot Rafael Cabrera-Bello may still pose a threat after Saturday's third round. READ  

Stolen ancient gold rings returned by post
A Swedish postman. Photo: TT

Stolen ancient gold rings returned by post

A collection of gold rings which date back some 3,000 years mysteriously turned up at the offices of a Swedish newspaper on Friday after they had gone missing from a museum collection. READ  

Up to 300 Swedes fighting with Isis: report
Photo: TT

Up to 300 Swedes fighting with Isis: report

As many as 300 Swedes could have joined the Islamic State insurgency, Sweden's intelligence chief said Saturday. READ  

Body of Irishman found in Stockholm
Stockholm's Old Town in the rain. Photo: TT

Body of Irishman found in Stockholm

The body of an Irishman who had been missing since November 10th was found in the harbour by Stockholm's Old Town on Thursday, it has emerged. READ  

Ibrahimovic returns as PSG claim top spot
Photo: TT

Ibrahimovic returns as PSG claim top spot

Swedish striker Zlatan Ibrahimovic made his first start for two months as Ligue 1 Champions Paris Saint-Germain went top for the first time this season with a 3-2 win at mid-table Metz on Friday night READ  

Julian Assange
Ecuador 'guarantees' Assange asylum
Julian Assange at the Ecuadorian embassy in London in 2012. Screen grab: SVT

Ecuador 'guarantees' Assange asylum

WikiLeaks founder Julian Assange was on Friday guaranteed political asylum by Ecuador for "as long as necessary," one day after he lost an appeal against a Swedish warrant for his arrest. READ  

Abba's Björn defends Sweden's Spotify
Swedish artist Laleh alongside Björn Ulvaeus. Photo: Björn Ulvaeus

Abba's Björn defends Sweden's Spotify

Björn Ulvaeus has joined the row over Spotify's streaming costs, saying the music industry had to evolve but admitting that songwriters are losing money. He spoke to The Local's blogger Natalia Brzezinski from his newly adopted home, New York. READ  

Dark weekend looms for southern Sweden
Stockholm City Hall under the cover of clouds. Photo: TT

Dark weekend looms for southern Sweden

Southern Sweden looks set to stay under a blanket of cloud until at least Tuesday, as the darkest November in decades continues. READ  

Gothenburg rabbi reacts to death threats
Rabbi Hillel Ḥayyim Lavery-Yisraëli. Photo: Private

Gothenburg rabbi reacts to death threats

Gothenburg's rabbi received death threats following an attack on a synagogue in Jerusalem earlier this week. Leading figures in the Jewish community have told The Local they fear that anti-Semitism is spreading across Sweden, with Malmö already a key target. READ  

Rush hour chaos after train signal failure
The signal failure is affecting the service between Södertälje and Stockholm. Photo: Thomas Eneborg/TT

Rush hour chaos after train signal failure

Passengers travelling to and from the Swedish capital were forced to make alternative travel arrangements on Friday morning after a signal failure ground the rail service between Södertälje and Stockholm to a standstill. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Society
What's on in Sweden: November 20th to 27th
Lifestyle
How to make Swedish mulled wine
Lifestyle
How an Umeå museum is rewriting Swedish history
National
Timeline: Julian Assange sex allegations
Sponsored Article
Introducing... Family life in Stockholm
Blog updates

21 November

Editor’s Blog, November 21st (The Local Sweden) »

"Hello from Stockholm, Our week started with reports another Russian plane had been spotted in Sweden’s airspace,..." READ »

 

21 November

Exclusive Interview with Abba’s Bjorn Ulvaeus (Stockholm in my American Heart) »

"Most of us will agree that actions speak louder than words. But when the two are..." READ »

 
 
 
Lifestyle
Five unique backpacker hostels in Stockholm
National
How to boost your career in Skåne, Sweden's south
National
Bones show off Sweden's history
National
What new word are Swedes voting on?
National
Why African Swedes are angry about Santa's helper
National
Pine, tar, and tinder: flavours from the north
Gallery
Selfies, solidarity and Hillary Clinton: Stefan Löfven on tour
Gallery
People-watching: November 19th
Society
Why are international professionals leaving Sweden?
Business & Money
Meet the Swedes who made suits for The Hunger Games
Technology
'I'm among the first Swedes with a microchip'
National
What is Sweden doing about bird flu?
Gallery
Property of the week: Eriksberg
National
Vecka45: Sweden's most innovative week
Gallery
In Pictures: The clubs and loves of Sweden's Sven-Göran Eriksson
Society
What's On in Sweden: November 13th to 20th
Gallery
People-watching: November 16th
National
Driving (expats) home for Christmas?
Lifestyle
Make your own Swedish pea soup
Politics
"Totally unacceptable": Defence Minister on Stockholm submarine
Society
The A-Ö guide to making life in Sweden easier
National
How a Swedish party inspired a masterpiece
National
Seen the new Ace of Base yet?
National
Meet the Irish woman thundering into Swedish rock
Gallery
In Pictures: Ace of Base through the years
Society
Ten things you should never say to a Swede
Gallery
People-watching: November 12th
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
National
Opinion: 'We have to talk about Sweden's Isis fighters'
Business & Money
Price hike for new mortgages in Sweden
National
Toy store catalogues 'too white' in Sweden
National
Pirate Bay co-founder released from prison
National
Southern Sweden had 201 days of summer
Gallery
Sweden's ten most powerful people
Gallery
Property of the week: Mariestad
National
Introducing... Healthcare in Stockholm
National
What you need to know about Stockholm hospital bug epidemic
Lifestyle
Young Serbian shouts for students in Sweden
Lifestyle
How to make your own chocolate kladdkaka
Sponsored Article
The best options for oversea transfers
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

819
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
aa-europe.org/sweden
The Local Spain is hiring!
The Local is seeking a new editor for our site in Spain to join our growing team of internationally-minded, driven, ambitious and clued-up journalists
Click here for the full job description