Factors that affect
wage formation in Sweden 
An independent Swedish Central Bank (Riksbanken) is required to pursue a low-inflation policy. The Swedish Central Bank has set an inflation goal of 2 per cent (+ - 1 per cent) annum. Excessively large pay increases may force the Central Bank to raise the interest rates.
A floating rate of exchange was introduced in 1992 for the Swedish currency, the krona.
Internationalisation is affecting the Swedish economy.
The social partners in Sweden have assumed greater responsibility for wage formation by reaching special collective agreements on cooperation and bargaining procedure. In order to be registered an agreement must include timetables for negotiations, rules concerning the appointment of mediators and the extent of their powers, and rules concerning the termination of the agreement. Employer and union organisations, then, conclude special accords designed to make it easier to settle wage differences in time without resorting to industrial action.
The first such accord, known as the Agreement on Industrial Development and Wage Formation, was concluded in 1997 on behalf of some 700,000 blue-collar and white-collar workers in industry. It was signed by 12 employer organisations and seven trade union organisations, who thereby established a macroeconomic framework for their negotiations. Since then, similar agreements have been concluded between the parties in central, regional and local government and on behalf of white-collar workers in the retail trade. Sectors that are not covered by such agreements include the transport industry, much of the retail trade and the construction industry.
Sweden is moving towards a decentralised and individualised system of wage formation. In many areas, agreements have been reached that make no reference to centrally negotiated pay structures - everything is decided at the local workplace. Most agreements, however, still incorporate stipulated guarantees regardning the minimum pay rise level.
For about 40 years, up until the late 1980's, pay in the private sector was determined in national agreements centrally negotiated by, on the one hand, the Confederation of Trade Unions (LO) and the Negotiation Cartel for Salaried Employees in the Private Business Sector (PTK), and on the other the Swedish Employers' Confederation (SAF). Since 1990, however, wage agreements have been negotiated by the individual union and employer associations. This model was first introduced (in 1983) by the Association of Swedish Engineering Industries and the Swedish Metal Workers' Union. As the number of sector-specific agreements grew, so in theory did the scope for conflict.