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Political Economy

Swedish economy is really hurting as fears of continued job looses drag on

Tuesday, 08 January 2013
The Swedish economy continues to hurt and especially the job market is seeing more pain. The Swedish job market has been complex for many years and this complexity is being strengthen today by a "tiger economy" that has lost its running strides.

Job Losses continues to pull ahead in Sweden such that experts warn that more notices than previously thought are being executed. The reason for this is that the economy has weaken so much that it is reaching the level of the last financial crisis. This is compounded by the euro crisis, which continues to hit the Swedish industries, being Sweden's main export market.

According to the minutes of the Swedish central bank, the Riksbank in its December policy meeting, it show that the six-member board discussed making a bigger cut to the main interest rate than the quarter of a percentage point cut they eventually decided on.

But the critics of the Riksbank's action say that their view was that a biger policy rate cut would save tens of thousands of jobs.

Until November 2012, nearly 66,000 people were given notices, according to the Swedish Employment Service's latest statistics. In December employers got more notice, including 200 from employment agency, Lernia as a result of Volvo's downsizing.

For the full year, the number of redundancies is expected to be between 70,000 and 75,000 people, which is a historically high numbers. But still, this is lower than the aftermath of the financial crisis a few years ago when as high as 115 000 workers were given notices in 2009, according to reports. However, it is a long way from 1992, when more than 185,000 workers were told off.

A lower policy rate would have saved tens of thousands of jobs, critics argue. With a lower interest rate, it makes it cheaper for businesses and consumers to borrow money. Thus increase both consumption and more investment from enterprises, goes the reasoning from teh critic and theblame on the Rikbank persist.

Just a few years ago, despite warnings from Scandinavian companies and market, Sweden seemed resilient to the debt crisis that has gripped much of Europe. Basking in its strong public finances, Sweden posted growth after growth and was named the tiger economy. But the largest Scandinavian country which still relies heavily on its exports to the struggling euro zone, where economic activity has contracted for the past two quarters is seing what happned to others beginning to happen to it. This forces the country's economy to start starving and gradually reversing.
By Scancomark.com Team

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