When the Swedish central bank, Riksbanken, last week made an announcement about interest rates, their signal was clear: excessive wage cost increases in this year’s collective wage bargaining round will lead to quicker and higher interest rises. The financial consequences for many companies would be serious. LO’s plans amount to a serious threat to jobs. Taking the Riksbanken analysis of the connection between wage rises and employment figures and applying it to the bank’s projected scenario for wage rises, a couple of thousand of jobs are at risk.
There is every reason for concern over LO’s actions in the current wage talks. Their demands threaten the impending upswing in the economy and would hoist already high unemployment figures.
At the moment, it is imperative that businesses are given the chance to recuperate after last year’s drastic drop in demand and reduction of capacity utilization. If wages are allowed to shoot up the way LO wants – out of step with the rest of the world – we would be in a very tough situation with a lasting and high level of unemployment. Is this really the scenario LO wants?
LO’s demands are for fat wage increases but also for the right to full-time jobs and limits to the renting of manpower staff. The unions are defending their own narrow interests and in a short-sighted way. Long-term, LO’s members are not served if companies are saddled with higher wage increases than in Finland, Germany, Denmark and other countries. Neither do LO members gain if part-time workers are let go so that others can work full-time, or if businesses lose competitive power when banned from hiring manpower resources if needed.
The union demands live a life of their own but seem disconnected from the reality that businesses are struggling against. Greater openness is needed about what the finance crisis has wrought and what is needed to get Sweden’s economy and employment moving again. And little respect is being shown to the hundreds of thousands currently outside the labour market. The collective wage negotiations are now entering their decisive phase; are the unions really prepared to push wage demands that in many areas exceed four percent at the same time as unemployment continues its rise towards ten percent? If wages increase the way the union confederation wants, there’s something wrong with the way the labour market and wage settlements work.
