Sweden company boards show boost in women

Almost 30 percent of board members on Swedish companies are expected to be women this year, a rise of around five percent. The increase comes ahead of a possible law change in 2016, as the coalition government seeks to ensure the figure rises to 40 percent.

Sweden company boards show boost in women
A Swedish business meeting. Photo: Henrik Trygg/Image Bank Sweden
While Sweden has a global reputation for gender equality, men continue to dominate two thirds of  management teams on the Swedish stock market. But the proportion of women on company boards appears to be rising faster than ever.
According to Allbright, a Swedish foundation that works for more women in leadership positions and more diverse management teams and boards, many firms are "feeling the pressure" ahead of government plans to introduce quotas of 40 percent next year and have therefore already started to compile more diverse top teams.
"It's a combination of things. There is an intense debate going on right now so some compaies are feeling the heat because of that, some are worried about the threat of formal legislation and others are just getting more knowledge when it comes to more diverse recruiting," Allbright's CEO Amanda Lundeteg told The Local.
"The problem in Sweden is we tend to have small powerful networks of people in business in Sweden and they recruit people who are also part of those networks and they are mostly men," she added.
"Another issue is that I think people are a little bit afraid of people who are different to themselves and they tend to hire people who remind themselves of them," said Lundeteg.
Among the 95 Swedish companies that have already held their annual meetings this spring, 31.5 percent of board members are now female, compared with 27.5 percent last year, the foundation has discovered. 
It predicts that once all 239 stock market listed corporations in Sweden have reported on their staffing for 2015, the average percentage of women on company boards will dip to 29 or 30 percent, up from 25 percent a year ago.
But Lundeteg argues that Sweden still has a lot to do to catch up with neighbouring Norway, which formally introduced 40 percent quotas in 2008 as well Iceland, where the figure is 48 percent, following similar legislation.
She also cites Latvia as a positive example. Here, 31.4 percent of top executives are women, the highest proportion among European countries that have no special quotas for female representation.
"There is a lot we can learn from other countries. Sweden may have a reputation at being the best for gender equality, but that is not the case."
Swedish investment firm Investor, which is owned by the country's iconic Wallenberg family is among the companies thought to have made some of the biggest changes to staffing over the past 12 months, with female board members increasing to 40 percent from 25 percent a year ago.
Chairman Hans Wibom, told the TT news agency that it was "hard to avoid" thinking about the Social Democrat-Green coalition's proposed law change, but insisted that all appointments at the firm were made with the company's "best interests" in mind.
Earlier this year the ten largest listed companies in Sweden were criticized for failing to display ethnic diversity on company boards, with just eleven out of ninety top staff having a non-European background.
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EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”


Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti