Swedish wages rise year-on-year in March

Swedish wages grew on a year-on-year basis in March. The Swedish Mediation Office showed that wages rose 2.9 percent year-on-year. Although this is a rebound compared to the growth paces seen earlier this year, as well as the average at 2.4 percent in 2017, the Office judges that temporary factors are at play.

The year-on-year rate was higher than the 2.6 percent rate in January and February. But the rise in March was to a large degree because of temporary effects. The overall picture is still that wage growth continues to be muted despite a rather tight labor market. And there are few signs of wage growth rebounding in any marked way. Centralized wage agreements are set at just above 2 percent yearly up to and including the spring of 2020, which would continue to anchor wage expectations and be a drag on wage growth in 2018 and 2019. Wage expectations according to the Prospera survey are in line with a wage growth at just 2.5 percent over the next year.

“We see annual wage increases at 2.7 percent in 2018 and 2019, i.e. well below its 20-year average of 3.4 percent. The Riksbank’s forecast is 2.8 percent in 2018 and 3.1 percent in 2019”, said Nordea Bank.

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