Sweden's National Institute of Economic Research (Konjunkturinstitutet) sees scope for real wage increases in the coming collective bargaining round, largely because of rising business productivity, the agency's director-general Albin Kainelainen told Swedish Radio's Ekot programme. The assessment comes in the institute's new wage formation report, which examines pay trends, the labour market, productivity growth and company profitability ahead of next year's negotiations. The agency does not, however, make its own recommendation on what wage increases would be appropriate.
Kainelainen pointed to productivity as the main source of headroom. "What we see now in the coming years is that productivity continues to rise, perhaps around 1.5 percent per year. That gives room for real wage increases in Sweden," he told Ekot, according to Publikt.
Why it matters
The report lands as unions and employers prepare to square off over pay, and the two sides are already far apart. Dagens Nyheter reports that the Swedish Trade Union Confederation (LO) has rejected employers' demands for a slower pace of wage increases, while Arbetet has published the employers' case for holding pay down. Dagens Industri describes the dispute as heating up. Against that backdrop, the institute's finding that the economy can absorb real wage growth gives unions a factual anchor — though the agency deliberately stops short of saying how much.
The report also matters because Sweden's wage setting is export-led: the industrial agreement, known as the mark, sets the benchmark that other sectors follow. How the next round is framed will shape household purchasing power for years.
Growth is strong, but unemployment remains high
In its September forecast, the institute concluded that the recovery from the recent downturn is well advanced. Gross domestic product is expected to grow by three percent this year, compared with an average of two percent a year since 2000. Unemployment, however, is still high.
Next year, the institute expects inflation to pick up and interest rates to rise, which would dampen growth. It also expects unemployment to fall as a consequence. According to the report, faster inflation next year is set to slow the pace of real wage gains.
The current industrial agreement was signed in April 2025 and was valued at 6.4 percent over two years. Since then, real wages have risen, the report states, although the institute notes that real wages in Sweden have developed somewhat more slowly than in the euro area.
Productivity is the deciding factor
The institute's picture of business profitability is mixed. The profit share sits above its historical average, while the return on capital is somewhat low. Productivity growth, by contrast, has strengthened. Over the longer term, the agency expects productivity to expand at the same rate as it has historically since 1980 — 1.6 percent a year.
That long-run figure sits close to the 1.5 percent annual pace Kainelainen cited to Ekot, and it is this trend, rather than profits, that the institute treats as the foundation for higher real pay.
The wage formation report is intended to describe the economic conditions facing the next bargaining round rather than to prescribe an outcome. Its findings will nonetheless be read closely by both sides as talks approach.
What to watch: whether the industrial mark is settled in line with the institute's productivity assumptions, and how next year's expected rise in inflation affects real wages once agreements are in place.
