Economic forecast by LO economists
Substantial growth but insignificant decrease in unemployment
The Swedish growth is being subdued as the recoil effect of the crisis ebbs away and monetary policy is being tightened. The GDP will grow by 4.3 per cent in 2011 and by 3 per cent in 2012. Employment is to increase by approximately 200,000 people over the period 2010-2012. Along with a fairly wide choice of job opportunities, it implies that unemployment is expected to drop to merely 7 per cent until late 2012, according to the economic forecast by LO economists.
We cannot see any signs of overheating in the labour market. Moderate wage increases and fair productivity growth suggest an inflation rate below the 2012 goal of the Bank of Sweden, states the LO chief economist Ola Pettersson.
There are great differences in employment development in various sectors. Employment grows vigorously within services and construction sectors, but it remains stagnant within industry and public sector. Wage formation has become a key playing field in economic policy, both in Europe and in Sweden. The Swedish government’s economic policy is targeted to increase employment through lower wage demands from particularly LO groups, which would lead to wider wage discrepancies.
Sweden should not go this way. Instead, through investments in skills improvement measures within active labour market policy and basic education system, those who are far from the labour market may achieve the qualifications needed to be able to get rewarding and well-paid jobs, maintains Ola Pettersson.
LO economists want the government to take advantage of the strong public finances. These provide scope for reforms that increase demand for labour and make it more attractive in the labour market. This also protects against development towards lower wages and deteriorated working conditions, maintain LO economists.