The Rehnberg Agreements of 1991–1992 resulted in significantly lower agreed wages than previously and – more importantly – they removed the price and wage clauses from the agreements, thus contributing to breaking the price and wage spiral. The Industrial Agreement of 1997 was another important change. The wage bargaining rounds of 1995 had resulted in relatively high wage increases of over 5 per cent per year for the following two years. This resulted in pressure from the government of the time on social partners to change wage formation through negotiation. The Industrial Agreement was exactly this kind of change. It assumes that the manufacturing sector, exposed as it is to international competition, should determine the level of wage increases. The Agreement also means that there are rules for the conducting of negotiations, for example that demands should be specified well ahead of the expiry of agreements and that the conclusion of negotiations should be supported by mediators, the so-called impartial chairman. There are also similar, but not as far-reaching, agreements in other sectors. The National Mediation Office, which was set up in 2000, was another important change. As is widely known, the Office’s tasks are to mediate in labour disputes and to actively promote efficient wage formation. The active promotion of efficient wage formation entails, among other tasks, ensuring that wage formation permits the strong growth of employment.
This is probably partially because, over time, there are smaller variations in wage growth than there are in inflation, and partially because wage agreements provide important information on future  2  See J. Johansson, S. Palmqvist and C. Selander, “The CPI will increase more rapidly than the CPIF over the next few years”, Economic Commentary no. 5, 2011, Sveriges Riksbank. 3  Hourly wage costs are estimated to increase above hourly wages by 0.2 per cent per year. For the sake of simplicity, I have chosen to disregard this difference. 6  BIS central bankers’ speeches  wage growth. Over the last 14 years, the Riksbank has had an average forecast error of 0.4 percentage points in its spring forecasts of the next year’s wages. However, the error has been significantly larger in certain years. Wage increases in the years ahead will ultimately be determined both by the final agreements and by economic developments. There is a risk that the rapid improvement of the labour market will push up wage increases faster than we have calculated. This applies to both agreed wages and wages over and above agreement. There are signs that matching on the labour market may have deteriorated. Labour market shortages are increasing rapidly, even though unemployment is still relatively high (see Figure 12). The Beveridge curve, which shows the connection between unemployment and vacancies, also indicates impaired matching. On previous occasions when the vacancy rate has been at the current high level, unemployment has been just below 6 per cent.