During the last quarter of 2015, and in preparation for the 2016 wage bargaining rounds, there was an intensive debate in Sweden on how best to reduce unemployment. One of the proposals put forward was to lower entry-level wages, thereby encouraging employers to hire additional staff.
Supporting this measure, politicians and several employer associations argue that entry-level wages have increased sharply over the past 10 years from an international perspective. These high levels, they argue, are discouraging employers from hiring and thus risk adversely affecting the possibilities of getting a first job (in Swedish). Therefore, many employers and employer associations have proposed freezing entry-level wages in the upcoming wage bargaining round.
The debate has also arisen in connection with the refugee crisis and the proposal has been mentioned as a way of facilitating the integration process. The Confederation of Swedish Enterprise (in Swedish), the National Institute of Economic Research (in Swedish, 2.3 MB PDF) and the Swedish Fiscal Policy Council (in Swedish, 58 KB MS Word doc), among others, argue that by lowering entry-level wages and increasing the number of ‘simple jobs’ or ‘everyday jobs’ (jobs that require little or no education), more people could establish themselves in the Swedish labour market.
Some politicians and trade unions have criticised the proposal, stating that such a move would risk a lowering of wages across the whole labour market and that freezing or reducing entry-level wages would be particularly harmful for workers whose wages are already very low (in Swedish). Development of wages for these groups is highly dependent on the entry level and the sectors in which they work, which are often characterised by short and insecure forms of employment. Furthermore, some fear that women would be particularly affected by the lower wages (in Swedish). Critics have also stated that previous attempts to lower costs for newly employed staff have proved unsuccessful (in Swedish). For example, in 2007 the payroll tax was lowered for young people but had a very limited effect in terms of combating youth unemployment.