The number of hours worked rose during the years following the crisis at the beginning of the 1990s. But developments were strongly affected by the upturn in the economy, which enabled unemployed persons to gradually return to the labour market and obtain work. The positive growth in employment was supported by an increase in the number of persons of working age at the same time as sick leave was at a relatively low level. In recent years, this trend has been broken, partly due to an increase in sick leave. The picture of productivity in recent years has been somewhat brighter. For the economy as a whole it has stood at 2 per cent per year, or just above this figure. This is a marked improvement on the 1980s, when the increase remained at around 1 per cent per year, and even more so compared with the 1970s, when the productivity trend was negative. Factors such as the change in fiscal and monetary policy regimes and stiffer competition have probably played a role in this development. Despite the fact that the strong growth in productivity during the 1990s partly reflects both rapid growth in the private sector relative to the public sector and the large expansion in the ICT sector, there is reason for relative optimism regarding the future. Our economy has become more open, with greater competition and price pressure in many sectors. The problem is primarily the labour supply. Here, developments seem to have turned in a negative direction.
The implication of this is that the Riksbank could then be forced to raise interest rates and tighten monetary policy at a lower rate of growth compared with the last ten years. The problems of a weaker labour supply are particularly serious in Sweden, even if an ageing population is something shared by many other countries. This is because an unusually large part of the expenditure ensuing from an ageing population in terms of medical treatment, care of the elderly and pensions comes from the public sector budgets. In turn, this means that an unfavourable population development will in our case have direct and tangible effects on the public finances. The only realistic means of counteracting these effects is for more people to work and pay taxes and for fewer to utilise the transfer payment system. Finally, we should have learnt from the crisis more than ten years ago that it is important to prevent problems. To deal with difficulties and challenges in good time - before they grow out of control. Failing to take action does not make the problems disappear. On the contrary, they risk becoming much worse in a few years time, when the population development has taken a significantly negative turn. Then it might be necessary to make larger and more painful changes under less orderly conditions. Thank you! BIS Review 44/2003  5