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Sweden's minimum wages 'too high': OECD
Sweden needs to do more for people excluded from the labour market, the OECD said on Monday, citing high minimum wages and integration policies have left some groups trapped in poverty.
Published: 17 Dec 2012 14:53 CET
The OECD on Monday urged Sweden to do more for those excluded from the job market, saying high minimum wages and poorly targeted integration policies were leaving some groups mired in poverty.
"Some groups such as youth with limited education, some immigrants, and those on sickness and disability benefits are not well integrated," the Organization for Economic Cooperation and Development said in the report.
To boost employment in those groups it said Sweden should lower wages for entry-level jobs, improve vocational and academic training, and ensure active labour market policies were better targeted to individual needs.
Sweden, famous for its egalitarian policies, also needed to reduce the gap in job protection between temporary and permanent employment so that people were not trapped in temporary contracts, it said.
The Paris-based organization added that "relatively high minimum wages set through collective bargaining tend to push up labour costs", noting that minimum wages in Sweden averaged around two thirds of the median salary.
Although the country's wage setting has become more decentralized, that ratio was still the second highest in the OECD in 2010.
"The government should continue talks with social partners to find ways to improve job prospects for groups at risk," it said.
The OECD also warned that Sweden's large banking system "entails risks and potential costs", singling out high household debt as a risk should housing prices fall or unemployment rise.
The Swedish unemployment rate stood at 7.6 percent last year, compared with an 8.2 percent average for the organization's member countries.
However, youth unemployment was comparatively high at 22.9 percent, compared with 16.2 percent in the OECD.
The OECD also said it expects Swedish economic growth to drop to 1.2 percent this year, down from a growth rate of 3.9 percent in 2011.
Growth is expected to recover somewhat in 2013, rising to 1.9 percent before increasing to 3.0 percent in 2014, according to the OECD.
AFP/The Local/dl
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"Some groups such as youth with limited education, some immigrants, and those on sickness and disability benefits are not well integrated," the Organization for Economic Cooperation and Development said in the report.
To boost employment in those groups it said Sweden should lower wages for entry-level jobs, improve vocational and academic training, and ensure active labour market policies were better targeted to individual needs.
Sweden, famous for its egalitarian policies, also needed to reduce the gap in job protection between temporary and permanent employment so that people were not trapped in temporary contracts, it said.
The Paris-based organization added that "relatively high minimum wages set through collective bargaining tend to push up labour costs", noting that minimum wages in Sweden averaged around two thirds of the median salary.
Although the country's wage setting has become more decentralized, that ratio was still the second highest in the OECD in 2010.
"The government should continue talks with social partners to find ways to improve job prospects for groups at risk," it said.
The OECD also warned that Sweden's large banking system "entails risks and potential costs", singling out high household debt as a risk should housing prices fall or unemployment rise.
The Swedish unemployment rate stood at 7.6 percent last year, compared with an 8.2 percent average for the organization's member countries.
However, youth unemployment was comparatively high at 22.9 percent, compared with 16.2 percent in the OECD.
The OECD also said it expects Swedish economic growth to drop to 1.2 percent this year, down from a growth rate of 3.9 percent in 2011.
Growth is expected to recover somewhat in 2013, rising to 1.9 percent before increasing to 3.0 percent in 2014, according to the OECD.
AFP/The Local/dl
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True, Sweden does not have minimum wages. For a decade ago even an outsider, who has never lived in Sweden could hardly get any information about the maximum and minimum wage for different jobs. It's possible to find it (salaries) now on the SCB site "L?atabasen"; however, it's not common in job interviews and job announcements to inform anybody about the max and minimum wage, and no any employer follows SCB information.
The wages are mostly mutual agreements by considering the union agreements and the kind of business (companies). It's how immigrants and refugees can be underpaid, and one of the major reasons that Sweden has interest to get refugees.
Most of refugees have to accept different jobs and to be as much flexible as possible, because most of them can hardly find qualified jobs, and can't go back to their own countries as easy as immigrants in the case of being unsatisfied.
As a matter of fact Sweden would not accept lot of refugees if it had a controllable minimum wage system!
Okay, and what do working wages have to do with the integration of people on sickness and disability benefits? haha That doesn't even make any sense!
Wages of any kind have no relation to people on sickness benefits.
Another Einsteinien quote: "relatively high minimum wages tend to ''push up''' labor costs." WOW how much money do they get paid to come up with gems like that? I can't wait to tell everyone of this new discovery, that paying more raises your costs.
It sounds more like they want to exploit the current social climate that Sweden isn't 'doing enough to help immigrants integrate' as a way to help rich companies get richer. They want to boost employment in any group they could pay unlivable wages to.
As far as immigrant groups being 'mired in poverty' goes, that's some kind of a joke.