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Surprise dip in Sweden’s jobless figures

Unemployment in Sweden took an unexpectedly large dip in October, easing pressure on the Riksbank to lower interest rates, as new statistics point to a strengthening job market.

Surprise dip in Sweden's jobless figures
A welder in Sweden. File photo: Bonny Håkansson/TT
In October, 374,000 people, or 7.3 percent of the workforce, were unemployed, according to figures released on Thursday by Statistics Sweden (SCB), down from 7.5 percent the previous month. The decline was unexpectedly large, with analysts predicting Sweden's unemployment rate to remain unchanged, according to a survey carried out by Reuters.
 
Among young people aged 15 to 24, the unemployment rate was 18.9 percent, or roughly 121,000 people. Nearly half of Sweden's unemployed young people are engaged in full-time studies, SCB explained, adding that the October figure represents a 3.1 percent drop in youth unemployment compared to the same month last year.
 
The jobless figures caused the krona to strengthen a few öre against both the euro and the dollar, and market interest rates increased slightly as well.
 
Other figures released by SCB also pointed to a strengthening labour market in Sweden, with the overall employment rate rising by 0.9 percent to 66.2 percent in the last year, the highest level of labour participation by 15- to 74-year-olds since 2001.
 
"Despite the stagnant economy, the labour market has developed quite well during the past year," Andreas Wallström, an economist with Nordea bank, said in a statement. He added that the figures took pressure off Sweden's central bank to lower interest rates in the wake of figures released earlier in the week that indicated Sweden had entered a period of deflation.

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WORKING IN SWEDEN

EXPLAINED: Can you negotiate a pay rise in Sweden to offset inflation?

With Sweden's central bank expecting inflation of nearly 8% this year, everyone working in the country is in line for a real-terms pay cut. We asked Gunilla Krieg, central ombudsman at the Unionen union, what scope there is to negotiate a salary hike to compensate.

EXPLAINED: Can you negotiate a pay rise in Sweden to offset inflation?

With Sweden’s central bank expecting inflation of nearly 8% this year, everyone working in the country is in line for a real-terms pay cut. We asked Gunilla Krieg, central ombudsman at the Unionen union, what scope there is to negotiate a salary hike to compensate.

How soon can I get a pay rise to compensate for high inflation? 

Probably not for a while. 

About 90 percent of workers in Sweden are covered by the collective bargaining agreements made between employers and the country’s trade unions. The last round of salary deals was negotiated at the union-employer level back in 2020, and most of them will remain valid until March or April next year.

This means that most employees in Sweden will not see their salaries adjusted to take inflation into account for at least nine months. 

“Under this special model that we have, we already have a level for the wage increases for this year, so you can’t get compensation for the inflation right now,” Krieg explained. 

You might be able negotiate a pay rise in addition to what the unions have agreed in your personal salary review, she added. 

“Of course, you have that freedom. Whether you work in a small company, or a big company, a company that has a collective agreement, or one that doesn’t, you always have the freedom to ask for a salary rise,” Krieg said. 

The only issue is that most unionised companies only offer personal salary reviews once a year, and for the majority of employees, the window of opportunity passed in the spring. 

“You have to find out when you have a salary review as part of the collective agreement you have at your own workplace,” Krieg recommended. “For most collective agreements, that is in the spring, although some collective agreements have it in the autumn.” 

What if I’m not part of a union? 

If you are among the 10% of workers not covered by a collective bargaining agreement, you can ask for a pay rise whenever you like, but unlike union members, you have no right to a pay rise. The decision is wholly up to your employer. 

Gunilla Krief is the central ombudsman for the Unionen union. Photo: Patrik Nygren/Unionen

So will the unions eventually negotiate above-inflation pay increases? 

Probably not. 

Unions in Sweden have historically been quite responsible, and understood the risk of creating a wage-price spiral by demanding wage increases that match or exceed inflation.

“Twenty-five years ago, we had a really high wage increases in Sweden, and we had very, very big inflation, so people got more money in their wallets, but they couldn’t buy anything, because inflation went up much higher than wages,” Krieg explained, putting the union perspective.

“We always take responsibility for the entire labour market, and that’s good in the long term,” she added. “There’s been much more money in the wallet for employees in Sweden over the past 25 years. That’s why we think we should we should not panic because of inflation. It may be that for one year it will mean less money in the wallet, but in the long run we benefit.” 

Can I argue for an inflation-busting pay rise in my salary review? 

You can certainly argue for a pay rise of 8 percent, or even more, but you don’t cite inflation as a reason for it. 

“Everything is individual, so you can, of course, negotiate up your salary, and there is no limit to how much you can ask for,” Krieg explained.

“If you have a job or an education for which there’s a shortage on the Swedish market, then you can get a much higher wage increase. Up in the north of Sweden, where we have [the battery manufacturer] Northvolt, and we have mines and the steel industry, they are looking for a lot of competence right now, and there you can have a much higher rise in wages.” 

But, particularly if you’re covered by collective bargaining, you can’t really cite inflation as justification, as that is one of the factors that unions and employers are supposed to factor in during their negotiations. 

What’s the best way of getting a big pay rise? 

The best way to get a pay hike of as much as 5,000 kronor or 10,000 kronor a month, Krieg suggests, is to apply for other jobs, even if you don’t end up taking them. 

“You can get offers from other companies, and then you can tell your employer that ‘I really liked it here, I enjoy this work, and I want to stay here, but now they are offering me 10,000 kronor more at another company, and if you can raise my salary like that,  of course I will stay here’,” she said.

In a normal salary interview, she adds, it’s important to be able to demonstrate your results. Look again at your job description, and what your goals are for the year, and identify concrete achievements that meet or exceed these goals. If you have any additional duties, you can cite them to argue for a higher salary. If you’ve done any courses, or learned any skills, you can cite these. 

At any time in the year, if your superiors praise any work you have done, keep those emails, or write it down, so that in your salary review, you can say, “you said that this report I did was ‘the best you’ve ever seen’,” or such like. 

Finally, you should find out in advance if there are any salary criteria being applied, so that you can argue that you exceed them, and so demand a higher raise than that agreed for the company as a whole with the union. 

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