Since the beginning of the 1990s, the increase in productivity throughout the  4  Friberg, K. and E. Uddén Sonnegård, "Changed wage formation in a changing world? ", Sveriges Riksbank Economic Review 1, 2001. 5  Calmfors, L. & Driffill, J., (1988), "Bargaining structure, Corporatism and Macroeconomic Performance", Economic Policy 6. BIS Review 63/2002  3  economy has been approximately 2.0 per cent, while the average increase during the 1980s was only around 1.2 per cent. The strong growth in productivity at the beginning of the 1990s was partly due to the fact that primarily companies with low productivity were driven to closure during the crisis, at the same time as there were extensive cutbacks in staff. There has also been a structural transformation in Swedish trade and industry towards a more knowledge-intensive production. During the second half of the 1990s there were deregulation processes in several fields, for instance the electricity and telecommunications markets, which led to an increase in productivity. In addition, Sweden benefited from the strong growth in the IT and telecommunications sector, which has shown greater increases in productivity than other areas of the economy. Increased use of IT in traditional manufacturing industry and service operations probably also contributed to the increase in productivity. In addition and at a more general level, greater macroeconomic stability has probably reduced uncertainty and facilitated long-term investment decisions, which in the longer term is positive for the development of productivity.
The second entails initial profit margins being sufficiently high to stimulate investment and enable continued rapid growth in the economy. The final assumption concerns the overall, average wage scope for the country as a whole. The definition of a long-term sustainable wage increase may differ between sectors and regions depending on the different conditions for production technology, productivity development and competition. If the economy is not balanced, there may be a short-term deviation in nominal wage developments from the long-term sustainable level. This could be due to a stronger exchange rate, for instance. The inflation target is expressed in terms of CPI, which consists of the prices of both imported and domestically-produced goods and services. If imported inflation, which comprises approximately onethird of CPI, develops weakly as a result of a stronger krona or lower international price pressure, domestic prices may rise more rapidly than 2 per cent over a period of time without causing a threat to the inflation target. There is then temporary scope for nominal wage increases above the level implied by productivity growth. Payroll expense has risen on average by approximately 3.9 per cent a year from the beginning of the 1990s up to 2001, which is slightly more than the "wage norm" implies. At the same time, inflation has been at an average of only 1.8 per cent. An important explanation as to why the increase in payroll expense could be so high without triggering an acceleration in domestic inflation is that productivity has developed strongly.