The agreement primarily contained important rules on the system of negotiating, such as rules to reduce the risk of periods with no agreement and to reduce the risk of conflicts breaking out. Similar bargaining agreements were signed between the parties in the central government, local and regional government sectors and for white collar workers in commerce. These agreements stipulated that industry should lead the way in wage agreements in relation to other sectors of the economy, an idea that originated in the EFO model designed by the Swedish Trade Union Confederation (LO), the Confederation of Swedish Enterprise 2 (SAF) and the Swedish Confederation of Professional Employees (TCO) at the end of the 1960s. There was also a development towards a more decentralised and individualised wage formation, which has had a subduing effect on wages. Many agreements gave the local social partners the freedom to determine and distribute the wage scope themselves. However, the local negotiating scope was often limited to some extent by block rules regarding the size of this scope and guarantees for a minimum wage increase for each individual. The 1998 bargaining rounds marked a break in trend with regard to the rate of wage increase. The annual nominal rate fell from approximately 8 per cent during the period 1970-1997 to around 3.5 per cent during the period 1998-2000. The outcome may be regarded as moderate taking into account the rapid recovery in the economy and the large increase in employment that took place during the period covered by the agreement.
In addition, we still believe in an appreciation of the krona during the forecast period due to fundamentals, which have subduing effect on imported inflation. It is therefore estimated that payroll expense could increase by an average of just over 4 per cent a year during the forecast period without any threat to the inflation target. However, 4 per cent is too high in the slightly longer term. There is a great risk that this figure will become established as a norm, as payroll expenses have increased by approximately 4 per cent a year over the past five years. If Sweden were to participate in Stage Three of EMU, we cannot have a rate of wage increase that deviates from the average in the euro countries. If the "norm" for payroll expense increases is 3.5 per cent, this means that nominal wage agreements must be signed at lower levels. This is because the scope must also cover wage drift and other wage costs, such as collective fees and reductions in working hours. Conclusion  In the October Inflation Report we foresaw a slightly more prolonged economic recovery than had earlier been expected. The weak development in the financial markets in the wake of bankruptcies and accounting scandals had contributed to the start of a decline in confidence from companies and households. In Sweden demand had been upheld relatively well, but it was estimated that fiscal policy needed to be tightened up to manage the expenditure ceiling. This means that growth may be more subdued in future.