This will be decided by the government and parliament, following a referendum on this question. The timetable for a decision will be determined by a political process. Statements by, for instance, Prime Minister Göran Persson indicate that a referendum will be held as early as next year. If the result were a “yes”, parliament would decide to send in an application to the European Commission and the ECB to examine whether we meet the convergence criteria. In connection with making a decision on application, Sweden would probably also have to take a position on participation in ERM2. The government has said earlier that if Sweden is to take part in stage three of EMU, it would be logical to first tie the krona to this exchange rate mechanism. The economic criteria are the inflation rate, long-term interest rates, exchange rate stability and the budget balance and debt in the public sector. Following this scrutiny, the European Parliament and Council of Europe would give their opinion on the Commission’s proposal and after this the ECOFIN Council would take a decision on whether Sweden could participate. If Sweden were accepted as a member of the Eurosystem, there would be negotiations on when membership could occur and at what exchange rate the krona would be fixed against the euro. Parliament decided as early as 1997 that Sweden should keep the door open for future membership by creating the highest possible level of readiness for action, by means of technical and practical preparations.
In addition, the number of persons being notified of redundancy could rise in the near future as a result of Ericsson’s cutbacks. A problem for the Swedish economy is that there will be a large increase in the percentage of very young and very old members of the population during 2003 and 2004, which limits the supply of labour. The labour supply is also affected by how the regulations on unemployment benefit, sickness insurance, etc. are formulated. The large number of employed persons who are absent from work as a result of sickness or other reasons also comprises a significant uncertainty factor. It is difficult to estimate to what extent these people could come back to work and boost production capacity. (Diagram 4 - number of employed persons, excl. sick and other absentees). The public sector is expected to provide a positive contribution to growth in employment during the entire forecast period. While employment in industry is not expected to increase until the latter part of the forecast period. During 2001 wages increased by 4.3 per cent, according to preliminary data. It is partly due to this high rate of wage increase that inflation has been above the Riksbank’s target level during 2001-2002. The wages statistics that have been received so far this year indicate a continued high rate of wage increase, or approximately 4 per cent. The design of the central wage agreements and a slightly weaker labour market situation are some important factors in subduing the rate of wage increase.