This time, nurses and teachers were the first onto the field with regard to wage bargaining and they signed 5-year agreements, which roused some concern that high wage agreements stemming from the favourable demand situation would spread to the rest of the labour market. The average level of the wage agreements in the economy was around 3 per cent, which is slightly higher than the previous bargaining round in 1998, when the agreements came out at around 2.6 per cent. However, it shows that the social partners have moved closer to a non-inflationary wage agreement, despite the fact that economic activity was high when the bargaining rounds began in autumn 2000. Why has the rate of wage increase been subdued over the past decade? Studies made by the Riksbank show that the slowing down in the rate of wage increase during the 1990s was primarily due to the fact that the formulation and organisation of monetary policy had led to lower inflation expectations (since 1996 inflation expectations among the social partners have  1  See, for instance, Nils Elvander, "Industriavtalet och Saltsjöbadsavtalet - en jämförelse" (The industrial agreement and the Saltsjöbaden agreement - a comparison), Arbetsmarknad & Arbetsliv No. 3, 2002, pp. 191-204. 2  Gösta Edgren, Karl-Olof Faxen & Clas-Erik Odhner, Wage Formation and the Economy, Allen and Unwin, 1973. 3  The National Mediation Office, "Avtalsrörelsen och lönebildningen 2001" (Bargaining rounds and wage formation 2002), annual report from the National Mediation Office, 2002.
Future challenges for wage formation The Municipal Workers' Union's termination of its collective wage agreement for 450 000 members before the third year and the demand for relative wage changes entail touchstone for wage formation. The union has for a long period watched its wages situation deteriorate in relation to industrial workers and other groups in the public sector. During the previous bargaining rounds, however, the LO unions were agreed that the Municipal Workers' Union should receive higher wage increases than the other member unions in order to improve its relative wages. However, the union is dissatisfied with the outcome so far, which it claims has given only 0.4 percentage points above the wage increases achieved through collective bargaining. This union's members are currently among those with the lowest wages in the labour market, with an average wage of approximately SEK 16 000. The Municipal Workers' Union's wage demands are not in themselves a threat to the inflation target, as long as other groups in the labour market are prepared to stand back in favour of this union's members. However, there is a risk that other trade unions will follow their example and also demand higher wages. Approximately 70 per cent of the employees in trade and industry have the possibility of renegotiating their agreements during the final year of the agreement. Already, there have been demands for compensation if the Municipal Workers' Union members should be given higher wages.