Unprecedented job cuts at Ikea due to crisis

Swedish discount furniture retailer Ikea has been forced to slash 5,000 jobs globally due to the economic crisis, but still expects a new sales record, the CEO said on Tuesday.

Unprecedented job cuts at Ikea due to crisis

The unlisted family-owned company expects sales of €21.5 billion ($30.1 billion) excluding currency effects for its fiscal year ending August 31, managing director Anders Dahlvig told Swedish financial daily Dagens Industri.

Dahlvig, who will step down on September 1 and pass the baton to Mikael Olsson, provided no detailed earnings figures for this year, but said the do-it-yourself company founded in 1943 would post a strong profit despite the worst global recession since World War II.

“We have never had to implement such massive job cuts before…. But it is completely necessary to adapt our costs and our capacity to demand, which is weaker than we expected,” Dahlvig said without disclosing where the jobs were slashed.

“For example, in the previously rapidly-expanding Chinese market there is virtually no growth,” he added.

He said Ikea was caught off guard by the severity of the economic crisis.

“The sharp downturn of the economy has really surprised us. This downturn is very closely linked to the housing sector and is therefore even worse for our industry. Home decorating has plunged much more than the retail sector in general,” he said.

Despite that, “thanks to our low-cost profile we are doing better than most and are now gaining market share,” Dahlvig said.

The company had initially expected sales to drop by 11 percent this year.

But so far sales have fallen by just one percent, and thanks to billions of dollars invested in opening new stores the company now expects sales to rise by three percent to the above-mentioned €21.5 billion.

Dahlvig said Ikea’s coffers were full and the company would continue to invest heavily despite the downturn.

This year the company plans to open 14 new stores, an investment worth some 12 billion kronor ($1.5 billion), he said.

And new staff will be needed for those stores, so Ikea expects its number of employees worldwide to remain at around 130,000 despite the cutbacks.

Because Ikea is an unlisted, privately-owned company it does not release regular earnings reports.

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Reader question: When am I eligible for a Swedish pension?

A reader got in touch to ask how long he had to work in Sweden before he was eligible for a pension. Here are Sweden's pension rules, and how you can get your pension when the time comes.

Reader question: When am I eligible for a Swedish pension?

The Swedish pension is part of the country’s social insurance system, and it can seem like a confusing beast at times. The good news is that if you’re living and working here, you’ll almost certainly be earning towards a pension, and you’ll be able to get that money even if you move elsewhere before retirement.

You will start earning your Swedish general pension, or allmän pension, once you’ve earned over 20,431 kronor in a single year, and – for almost all kinds of pension in Sweden – there is no time limit on how long you must have lived in Sweden before you are eligible.

The exception is the minimum guarantee pension, or garantipension, which you can receive whether you’ve worked or not. To be eligible at all for this, you need to have lived in Sweden for a period of at least three years before you are 65 years old. 

“There’s a limit, but it’s a money limit,” Johan Andersson, press secretary at the Swedish Pension Agency told The Local about the general pension. “When you reach the point that you start paying tax, you start paying into your pension.”

“But you have to apply for your pension, make sure you get in touch with us when you want to start receiving it,” he said.

Here’s our in-depth guide on how you can maximise your Swedish pension, even if you’re only planning on staying in Sweden short-term.

Those who spend only a few years working in Sweden will earn a much smaller pension than people who work here for their whole lives, but they are still entitled to something – people who have worked in Sweden will keep their income pension, premium pension, supplementary pension and occupational pension that they have earned in Sweden, even if they move to another country. The pension is paid no matter where in the world you live, but must be applied for – it is not automatically paid out at retirement age.

If you retire in the EU/EEA, or another country with which Sweden has a pension agreement, you just need to apply to the pension authority in your country of residence in order to start drawing your Swedish pension. If you live in a different country, you should contact the Swedish Pensions Agency for advice on accessing your pension, which is done by filling out a form (look for the form called Ansök om allmän pension – om du är bosatt utanför Sverige).

The agency recommends beginning the application process at least three months before you plan to take the pension, and ideally six months beforehand if you live abroad. It’s possible to have the pension paid into either a Swedish bank account or an account outside Sweden.

A guarantee pension – for those who live on a low income or no income while in Sweden – can be paid to those living in Sweden, an EU/EEA country, Switzerland or, in some cases, Canada. This is the only Swedish pension which is affected by how long you’ve lived in Sweden – you can only receive it if you’ve lived in the country for at least three years before the age of 65.

“The guarantee pension is residence based,” Andersson said. “But it’s lower if you haven’t lived in Sweden for at least 40 years. You are eligible for it after living in Sweden for only three years, but it won’t be that much.”