Swedish unemployment rate rises towards 2008 financial crisis levels

Swedish unemployment rate rises towards 2008 financial crisis levels
With unemployment close to 10 percent, how long will it take for the labour market to recover? File photo: Petra Älvstrand / TT
Unemployment in Sweden rose in June, with over half a million people in total without work, and young people are the most severely affected.

“We are in principle back at the peak of unemployment during the financial crisis,” said Olle Holmgren, an economist at bank SEB. “The peak in a single month in 2009 was at 9.3 percent, adjusted for seasonal variations.”

In total, 557,000 people were jobless in June 2020, equivalent to an unemployment rate of 9.8 percent, up 2.6 percentage points from the previous month. That's an extra 150,000 people without employment. 

Even adjusted for seasonal variations (for example, during summer maybe students are registered as unemployed), the rate remained high at 9.2 percent, up from 8 percent the previous month.

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Among young people, the unemployment rate was even higher at 32 percent, an increase of 8.7 percentage points according to Statistics Sweden. 

The biggest change was in the hotel and restaurant industry, both hard hit by the coronavirus crisis and global travel restrictions even if Sweden never fully locked down society as many other countries did.

In this branch, the number of hours worked (adjusted for differences in the calendar) dropped by 41.1 percent compared to June last year.

SEB predicts that unemployment will continue to rise throughout the rest of 2020 and the start of next year, reaching a peak of around 10.5 percent unemployment after seasonal adjustments. That's a slightly more severe outlook than the forecasts from Sweden's Central Bank, which predict that a peak of 9.6 percent will be reached in 2020's third quarter.

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