After discussions with Ericsson’s chair Leif Johansson, minister for enterprise Mikael Damberg chose to activate a crisis group for handling potentially huge redundancies.
The news that telecoms giant Ericsson plans to move all manufacturing from Sweden, which would cost 3,000 jobs, was met with surprise and dismay by employees, politicians and unions.
Mikael Damberg spoke directly to chair Leif Johansson on Thursday and says that he has been given confirmation that there is no closure decision. However the conversation did not provide any further reassurance as the minister decided to activate a crisis group of several state secretaries afterwards. “It is a group that works with large changes in business, which is now being activated to be able to act if a decision in that direction comes from the company,” says Mikael Damberg.
The centre-right alliance introduced a 50 per cent cut in payroll charges for young people when they were in government and the Centre Party intends to expand this reform in its coming shadow budget, announce Centre leader Annie Lööf and the party’s chief economist Martin Ådahl in Svenska Dagbladet today.
The party proposes to shelve all payroll charges for those aged between 19 and 26 and to introduce a so-called “entry deduction” (ingångsavdrag). This means that payroll charges will be axed for all young people for the first two years of employment, for the first 16,000 kronor of the monthly salary.
The Swedish government has proposed that certain companies in the financial sector, such as banks and insurers, will not be able to deduct interest expenses on some subordinated debt.
The country’s central bank, the Riksbank, welcomes the proposal, saying it will probably improve the quality of the capital base, which will in turn improve financial stability.
The Swedish Bankers’ Association (Bankföreningen) disagrees, saying it will be harder to safeguard financial stability, and tougher and more expensive for companies to borrow money.
Added to this, there are plans to levy a new bank tax, a new crisis management directive is in the pipeline as is Basel IV. “If you add all of this together, it could have a quite dramatic impact on the Swedish economy,” warns Bankföreningen’s MD Hans Lindberg.
A PMP Marknadskonsult survey shows that 65% of Sweden’s listed companies are unhappy with the centre-left government’s fiscal policies, saying they have done little or nothing at all to contribute to growth and job creation. They also say that the government will need to up its game if it is to win the vote of corporate leaders in 2018.
The poll also showed that companies want to see lower payroll charges and taxes. This would allow them to invest in research and employees, which in turn would boost the economy. Highest on the companies’ wish list is better integration of new arrivals on the labour market.
Following on from the cross-party energy agreement in the spring, Sweden’s coalition government is planning tax cuts of some SKr 10 billion. The output tax on nuclear power will be phased out over two years, starting in 2017, while the property tax on hydropower will be reduced over four years, from 2.8% to 0.5% of the taxation value. In practice, Vattenfall, Uniper and Fortum will each receive a share of the cuts, with households footing the bill. Taxes on electricity for an average household will rise by SKr 800 per year, say experts.
Authorities in the USA and the Netherlands want Telia Company to pay 1.4 billion, around SKr 12 billion, in a settlement for the Uzbekistan deal.
Telia’s management estimate the proposal covers all ongoing investigations in all countries, including Sweden, although not criminal accusations against individuals in the Swedish preliminary investigation.
CEO Johan Dennelind says that it is difficult to make detailed comments before the proposal has been gone through in detail. “Many times before I have said that Telia Company went into Uzbekistan in an unethical and wrong way and we are prepared to take responsibility for that,” he says.
The authorities are investigating transactions Telia made whilst establishing a presence in Uzbekistan in 2007. Swedish TeliaSonera, Russian-Norwegian Vimpelcom and Russian MTS are suspected of having bribed Gulnara Karimova, daughter of Uzbekistan’s then president Islam Karimov.
Despite lowering the repo rate to -0.50%, the Riksbank has failed to bring up inflation to the two per cent target, which the bank’s leadership has been criticised for. The Riksbank now says that inflation targets could be made more flexible and a divergence of a percentage point up or down from the target could be allowed.
However Professor Lars Calmfors is critical. “This creates a greater uncertainty than what the Riksbank is aiming for. It is adapting to what has happened and increasing acceptance for divergence and there is no reason for that.”
However Annika Winsth, head economist at Nordea, welcomes the Riksbank’s thinking. “This has been eagerly awaited. We have long said that it would be better with a flexible view on inflation. They have fastened onto something that does not benefit Sweden.”
The Ikea group is putting a new record year behind it. Globally total sales increased by 7.1% to 34.2 billion euros, around SKr 326 billion. E-commerce represents 12% of growth.
“The growth is driven by everything food related. We see that it is a good platform for continued growth and that the strategy we have put in place is working. We are growing in our existing stores and as long as we see continued good growth there, it will take a lot of expansion to beat that,” says Ikea President Peter Agnefjäll.
At the end of 2017 Ikea enters a new market with over a billion inhabitants when it opens its first store in Hyderabad in India. Peter Agnefjäll says that Ikea is planning to open stores in Mumbai, Bangalore and Delhi as well over the next few years.
Volvo and Scania may be competitors but in order to develop the manufacture of heavy powertrains they are to collaborate in a new research lab.
The new research centre at the Royal Institute of Technology (KTH) in Stockholm goes under the name of Powertrain Manufacturing for Heavy Vehicles Application Lab and is to be inaugurated on Tuesday. Scania and Volvo are industrial partners investing around SKr 10 million each plus a large number of engineering hours.
It did not take long for reactions to come to the government’s proposal on Friday for a quota system for company boards and the proposal is likely to be outvoted in parliament.
The message from the Moderates was clear: quotas are not the right medicine for increasing equality. “We believe that business can do better, but we do not believe that legislation is the right way to go,” says the party’s group leader Jessica Polfjärd.
Centre Party leader Annie Lööf accused the government of making it harder for women to start companies in the welfare sector and believes they ought to be dealing with the equality issues that women meet everyday in their regular jobs and incomes. The Christian Democrats and the Liberals are also against the idea.