This would hit the regions impacted by the crisis hardest and the number of industrial jobs would decline more rapidly. Another important question concerns the implications of the division of the economy for the Industrial Agreement’s normative role in wage bargaining, a role which has been very important during the most recent agreement periods. The Industrial Agreement has been a restraining force, contributing towards retaining the competitiveness of that part of the Swedish economy exposed to international competition and keeping inflation at a low and stable level at the same time as real wages have risen and growth in the Swedish economy has been strong – until the financial crisis. In the period ahead, a drawn-out recovery, weak labour markets and low price and wage increases are also expected internationally. The sector exposed to international competition is the area of the Swedish economy to be most tangibly and directly affected by these external conditions for wage developments within Sweden. This suggests that this sector should also play a normative role in this year’s collective bargaining. The service sector is not as sensitive to cost increases, but finds it easier to pass these on to prices. If the service sector plays a normative role in this year’s collective bargaining, it is likely that wage increases, and thereby inflation, will be greater than would be the case if the sector exposed to competition were to be normative. Another issue that may play a major role is uncertainty concerning the future.
Underlying inflation has fallen in both geographical areas since the middle of 2008. One contributing cause of this low and, for a period, negative inflation is the weak development of the labour market. In the United States, employment levels have continued to decline during the autumn, with unemployment rising to approximately 10 per cent. Likewise, in the euro area, the situation in the labour market has continued to deteriorate and unemployment has increased to approximately 10 per cent. An expected weak growth in wages together with low inflation expectations is contributing towards dampening inflation. Falling market expectations for the policy rate during the autumn may also be compatible with lower expected inflationary pressure. Both survey results and implied forward rate curves indicate that market participants’ monetary policy expectations in the United States and euro area have fallen somewhat during the autumn. Sweden also experiences recovery but low resource utilisation Developments in the rest of the world have impacted small, open, export-dependent countries such as Sweden hard. However, even in Sweden, the lowest point of the recession has been passed and recovery has started. GDP increased slightly during both the second and third quarters of 2009, after having previously fallen four quarters in a row. The National Institute of Economic Research’s Economic Tendency Survey and Swedbank’s Purchasing Managers’ Index have also reached levels indicating growth in the Swedish economy (Figure 10).