Central bank policies "cost 50,000 jobs"

The Local
The Local - [email protected] • 12 May, 2005 Updated Thu 12 May 2005 10:19 CEST

The head of the Swedish Employment Service, Anders L Johansson, has blamed the central bank for persistent unemployment in Sweden.


During the course of his presentation of April’s figures he attributed the weak job creation figures to high levels of productivity and the unsuccessful interest rate policy being pursued by the Swedish central bank.

"There is no strict scientific evidence but in our view about 50,000 jobs have been lost because of erroneous interest rate policy in Sweden," said Johansson.

But on a brighter note, Johansson forecast that the open-unemployment rate will fall to 4% during the first half of 2006.

During April, 348,000 people - 7.9 % of the labour force were either unemployed or engaged on some labour market scheme. The most troubling aspect of the April statistics was the increasing level of unemployment among women and young people.

The open-unemployment figure was 5% while the labour market schemes accounted for 2.9% - an increase of 0.6% compared with the same month last year.

Johansson told news agency TT, "The goal of 4% open-unemployment is realistic seeing that we can offer employers support with recruitment as well as financial assistance for employing new people - which in turn will encourage employment."

A month ago the finance minister announced a 1.4 billion kronor package designed to create 20,000 new jobs next year. Much of that will take the form of tax exemptions to employers to encourage them to take on people who are long-term unemployed.

Anders L Johansson stated that increased productivity has allowed the Swedish economy to grow without this being reflected in higher levels of employment.

"However, in the longer term this improvement in productivity will make the Swedish economy more competitive and this will gradually lead to new employment," he said.

But a barometer of small companies taken during April and published by Föreningssparbanken sends a note of caution.

According to the survey of 4551 companies, 44% have taken the decision to cut back on staff costs in the coming year. Tough competition has made it difficult for small companies to raise prices and this has squeezed profitability, leading to cost cuts.

Some sectors are more badly hit than others. More than two thirds of small businesses operating in the hotel and catering sector plan to shed staff and more than half of electronics firms plan to lay off people. On the other hand, the building industry will be least affected by layoffs.

David Murphy

David Murphy is managing director of Word of Mouth Communications

Sources: Dagens Nyheter, FSB, Dagens Industri


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