April 2, 2013 / 12:01 PM / 5 years ago

Swedish industry strikes 3-year wage deal

STOCKHOLM, April 2 (Reuters) - Sweden’s industrial employers organisation said on Tuesday it had struck a deal with unions that will boost compensation for blue and white collar employees by 6.8 percent over three years.

The agreement, which is traditionally seen as the benchmark for other wage deals across the Nordic country’s economy, covers 300,000 employees in the industrial sector, employers association Teknikforetagen said in a statement.

“The deal offers a stable planning horizon for Sweden’s key export industry,” Teknikforetagen head Ake Svensson said.

The rise in compensation under the deal, which runs until March 2016, also included funds allotted for pension payments. It would also incorporate more flexibility in terms of working hours and simpler rules on overtime, Teknikforetagen said.

Swedbank analyst Knut Hallberg said the wage deal was roughly in line with market expectations and that its longer duration - three years compared to the previous 14-month agreement - provided stability.

“If you look for a drawback, it is perhaps that it is somewhat high considering the strength of the Swedish crown. The industry will continue to have tough conditions ahead,” he said.

“From a monetary policy perspective, I do not think it will mean anything in the short term, but it could mean a flatter rate path further ahead, since this translates into lower cost and price pressures in 2015.”

Sweden, home to manufacturers such as truck maker Volvo and telecom gear maker Ericsson, saw industrial output slump at the end of last year as the euro zone downturn weighed, underpinning demands from employers for a long-term agreement of limited wage rises.

“The international competition is tough and wage costs in Sweden are much higher than in important rival countries,” Svensson said. “In addition, the strong Swedish crown is unfavourable for production in Sweden which means the situation remains difficult for our industry.”

However, recent months have seen tentative signs of improvement for the industrial sector with sentiment among purchasing managers in the manufacturing sector rising to its highest level last months since June 2011.

Industrial union IF Metall chairman Anders Ferbe said the wage deal struck provided scope for increases in real income for its members by offering the stability of a long-term deal. (Reporting by Niklas Pollard and Daniel Dickson; Editing by Alistair Scrutton)

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