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The average salary increase throughout the year 2020 remained at 1.9 percent. There is no lower annual average, even if one goes back to the 1960s, according to Petter Hällberg, an economist at the Institute for Mediation.
– That it is low has to do mainly with the delay of collective agreements. But you have to remember that it’s not just pay agreements that determine how wages are developed, Hällberg says.
At the same time, depressed inflation in the crown crisis caused real wages to rise last year. Real wages are a kind of measure of how purchasing power changes, something that is calculated by adjusting increases in nominal wages for inflation.
When the so-called CPIF inflation held at 0.5 percent in 2020, real wage growth averaged 1.4 percent for the year. This is the highest level since 2015, according to the Mediation Institute.
At the same time, last year’s wage formation was characterized by great uncertainty. The industry benchmark for wage increases, which would take effect on April 1, was postponed seven months due to the uncertain situation of the pandemic. This affected the timeliness of the new wage agreements for a large part of the country’s wage earners.
The new benchmark, which is applied from November, foresees salary increases of 5.4 percent until March 31, 2023. Calculated as of April 1, 2020, this agreement implies salary increases of approximately 1 , 8 percent per year.
Low paid people lost their jobs
However, there are some issues related to the pandemic when it comes to calculating last year’s salary increases.
A contributing factor is that a large proportion of those who lost their jobs in the pandemic were young, low-paid, fixed-term employees. According to Statistics Sweden, the number of fixed-term employees decreased by 62,000 in the fourth quarter of 2020 compared to the previous year.
This is a category of wage earners who generally have lower wages than other wage earners and when removed, it is a purely statistical boost for wage increases on average.
– The average salary increases if those with the lowest salary are not included. But it is a statistical effect. After all, no one gets a higher salary individually because someone else loses their job, Hällberg says.
Another factor of uncertainty
At the same time, you are aware that many in the Swedish job market have not experienced 2020 as a year of good pay.
– Those who have a job and have received a salary increase get a completely different change in purchasing power than those who lose their job or who have not received any salary increase.
Short-term layoffs in the pandemic are another factor of uncertainty. When the crisis erupted at its worst during the second and third quarters, around 300,000 people were laid off. They then received significantly fewer hours worked, but nearly the same pay, meaning substantial hourly wage increases.
However, the Mediation Institute has taken this effect into account when calculating in its report the base salary of those laid off instead of the actual hourly wage.
