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Swedish Employers Ready Defense of Labor Deal to Keep Wages Down

Swedish Employers Ready Defense of Labor Deal to Keep Wages Down

(Bloomberg) -- Sweden’s main employer group is preparing to defend the key pillar of the Nordic country’s labor market against a brewing union wage rebellion.

The deal setting industrial workers salaries as a benchmark for overall wages is crucial in maintaining Sweden’s welfare state and is the envy of competitors, according to Fredrik Persson, chairman of the Confederation of Swedish Enterprise.

The two-decade deal is coming under increasing fire from a number of unions as Sweden prepares for wage negotiations next year. A broad swath of Sweden’s labor market, in particular those involved in the domestic economy, are starting to question the system that was put in place to protect jobs and prevent out-sized wage gains that could erode Sweden’s competitiveness.

But other unions support the deal, including the powerful metal workers group and Persson hopes he can count on his allies in the conflict ahead.

“On our side, there’s total backing of the model,” he said in an interview on Monday. “It doesn’t look like the union side will end up in the same 100% backing, but I still have strong faith that it will work out well.”

Swedish Employers Ready Defense of Labor Deal to Keep Wages Down

Critics say the benchmark system wasn’t set up to solve the kind of shortages seen today in providing workers to Sweden’s welfare state. Teachers, nurses and doctors have seen slightly higher wage increases in recent years, but not enough to solve the situation.

Unions and employers are now gearing up for the next round of collective bargaining talks, which set the wages of nearly 3 million workers in the country of 10 million.

Higher wages could also go some of the way in alleviating the Swedish central bank’s inflation problem. The Riksbank has been forced to push rates far below zero over the past four years in part because of meager wage growth.

But Persson warned that even workers not exposed to direct exports should be wary of pricing themselves too high in a globalized world.

“I think the service sector as well as retail would agree that they are competing on prices in a completely different way compared with before,” he said. “The model’s aim to keep competitiveness is more relevant than ever.”

To contact the reporters on this story: Amanda Billner in Stockholm at abillner@bloomberg.net;Rafaela Lindeberg in Stockholm at rlindeberg@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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