Swedish wage growth continues to be weak at start of 2018

Swedish wage growth continued to be weak at the beginning of this year in spite of a tight labor market. According to the Swedish Mediation Office, the hourly wages rose 2.6 percent year-on-year in January and February and revised down wage rises to 2.4 percent for last year.

Preliminary figures showed that wage growth in business sector is even lower, coming in at 2.4 percent for the initial two months, a slight uptick compared to 2017. Wage growth fell in the public sector; however, it continues to be at elevated levels. In municipalities, wage growth came in at 2.8 percent. Although higher wages in municipalities impact overall demand, other sectors have a more direct effect on inflation.

The bottom-line is that wage growth continues to be weak in spite of a tight labor market, stated Nordea Bank in a research report.

“We see wage increases at 2.7 percent for 2018 and 2.7 percent for 2019, thus well below its 20-year average at 3.4 percent The Riksbank forecast is markedly higher at 2.9 percent in 2018 and 3.2 percent in 2019. Today’s outcomes reinforce our view that the Riksbank will stay side-lined until Q4 2019”, added Nordea Bank.

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