SHARE
COPY LINK
For members

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?
In Sweden, you need to come prepared to your salary review. Photo: Lieselotte van der Meijs/Imagebank Sweden

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. 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

EXPLAINED: What can foreigners in Sweden do about the weak krona?

The Swedish Krona last week hit a record low against the dollar, hammering the international buying power of anyone earning their salaries or holding assets in the currency. We asked Johan Löf at Handelsbanken what they can do.

EXPLAINED: What can foreigners in Sweden do about the weak krona?

How low is the krona right now? 

On Tuesday, September 27th, the krona to dollar exchange rate hit an all-time-low of 11.37, easily beating the previous record low for the currency of 11.04, which it reached at the nadir of the dot com bust back in 2001. At the time of the financial crisis in 2008, a dollar would have got you less than 6 kronor, meaning the currency has almost halved in value in less than 15 years. 

A euro now gets you 10.9 kronor, which is not quite a record, with it briefly topping 11.4 in 2009, but more than it has been for most of the past decade. 

The only major currency which is more or less stable against the krona is the pound, which will now buy about 12.39 kronor, down from 13 in February, but above the levels of around 10.5 the pound hit shortly after the UK voted to leave the European Union. 

Why is the krona worth so little? 

Johan Löf, the head of forecasting at the Handelsbanken bank, told The Local, that the kroner always tended to take a hit at times of financial uncertainty. 

“The krona is a relatively small currency much like the Swedish economy is a relatively small economy,” he said. “You could compare it to a small boat sailing the big ocean, so when you don’t go on the course that you thought you were going, it can be a bit of a shaky ride,” he said.

“Right now with financial market conditions being volatile, with a lot of uncertainty and risks, the Swedish krona takes a hit. Investors and various agents of the economy don’t want to hold so much of this smaller currency. Instead, they they go to safe havens like the US dollar.

“So even though there are fundamentals that would suggest that the Swedish kroner will strengthen again over time, for the time being and for some foreseeable future, we think that the krona will remain quite weak.”

How are foreigners living in Sweden affected? 

It very much depends on their individual financial situation: which currency they earn their salary in, which currency they hold assets in, and which currencies they have the highest outgoings in. 

People who live and earn in Sweden, but travel regularly to countries with stronger currencies, or perhaps send remittances back to family at home, are likely be negatively affected, Löf said. 

“It makes you lose purchasing power in these other countries: you get fewer goods and less services for the money that you have in the Swedish currency.”

It’s a similar situation for people or small businesses based in Sweden, who need to, or perhaps only want to, buy goods outside of Sweden. 

On the other hand, for people who have substantial savings abroad in dollars or euros, this might be an opportunity to convert them into kronor for use in Sweden.  

“If you have savings abroad, and you feel the need to use some of those savings, when you then sell your foreign currency to buy Swedish kroner, then you will get more Swedish kronor,” Löf explained. 

What can foreigners living in Sweden do to lessen the impact of a weak krona? 

Change the currency in which you get paid 

The best way to protect against currency exchange shocks is to make sure that you’re paid in the same currency that you spend in, so if you live in Sweden but have a lot of your outgoings abroad, it’s an advantage to be paid in dollars or euros. 

If you’re considering getting a new job, perhaps favour international employers that can pay you in one of the major currencies, or if you work for a big international company, perhaps you can ask to be paid in a different currency. 

Get freelance or part-time work outside of Sweden

If you work as a freelancer, or have some spare time for additional work, consider getting part-time freelance gigs with companies abroad that pay in euros or dollars. The lower the krona sinks, the higher your real wage when you spend in Sweden. 

Time major spending for the best point in the market 

If you have savings in kronor and are considering, for instance, buying a holiday house abroad, it is probably worth waiting until the kronor has strengthened and the Swedish economy is back growing strongly. 

Similarly, if you have savings outside of Sweden in euros or in dollars, and have been planning on buying a property in Sweden, now might be a good time to consider doing so (although it may be worth waiting a few months until interest rate rises have been fully reflected in reduced Swedish property prices).

Get a multiple currency account 

It can be helpful to have an account in multiple currencies, such as those provided by banks such as Wise and Revolut. Keeping any cash in a combination of dollars, euros and kronor can reduce your exposure to any single currency. 

The advantage for foreigners living in Sweden is that you can set up US dollar, Euro and Pound accounts, each with their own local bank number, which you can use to receive and make payments domestically in each country. 

With the krona so low right now, it may not be a good idea to convert all your assets from krona to euros or dollars right now, as the currency is probably more likely to strengthen than weaken over the coming year.

SHOW COMMENTS