Given that no agreements are cancelled prematurely, 2007 will be a very busy agreement year, since the majority of the collective bargaining agreements concluded in the business sector and the central government sector in 2004, as well as the municipal sector from 2005, will be due for renegotiation.4 The social partners and individual companies have gradually adjusted to the low inflation rate. Wage setting also has become more decentralised, entailing increased opportunities to change relative wages within the scope of a given rate of wage increases. But despite this, we have a compressed wage structure in Sweden in comparison with many other countries. Wage structures differ between blue-collar and white-collar workers. Blue-collar employees’ wage structure is considerably more compressed and constant across age groups.5 The wage spread for white-collar workers is larger and increases up to 45 years of age, after which it gradually decreases. It is mainly in the higher income groups that the wage differences between blue-collar workers and white-collar employees are large. In the lower-income groups the differences are very small.6 But on average white-collar employees have long been pulling away from blue-collar workers, which risks building up tensions in the labour market ahead of future negotiations. Wages can also vary across different regions. But this wage spread is not especially large in Sweden either. It is mainly Stockholm, Jämtland and Gotland that have a clearly different wage situation. Stockholm has the country’s highest wage level, while Jämtland’s and Gotland’s wage level is below the national average.
Between 1975 and 1995, Swedish inflation averaged 8 per cent a year. Real wages rose by only 0.5 per cent a year. Swedish companies’ competitiveness deteriorated and industrial production dropped. Sweden slipped from 4th place in the OECD’s standard-of-living league to 18th place – below the average for OECD countries. We became a relatively poor country in Europe and the industrialised world. Meanwhile, deregulation in the credit market during the 1980s resulted in a sharp expansion in credit, with an accumulation of debt among the general public as a consequence. Demand increased but supply was weak and productivity growth low. The economy overheated, inflation picked up and competitiveness was eroded. In 1990, the international economy began to weaken and prices of assets and property fell. The economic climate deteriorated dramatically and eventually the banking crisis hit the country, with large loan losses as a result. The Riksbank defended the fixed krona exchange rate to the very last, but after large currency flows and extreme rises in interest rates the fixed exchange rate was abandoned on 19 November 1992. The outcome of the performance during the 1970s and 1980s was that we slipped down the standardof-living league, suffered mass unemployment and saw a drop in GDP of 4-5 per cent. It was at this juncture that an explicit inflation target was introduced. The depreciation of the krona in 1992-93 of almost thirty per cent gave the manufacturing industry a powerful boost.