Economists call for more low paid jobs

11 min

An expert council is calling on trade unions and employers to agree on a kind of "starter jobs" with significantly lower salary than today's lowest paid jobs.

In a new report called "Time for a wider wage distribution?" the Swedish Labour Policy Council (AER) weighs in on the debate that so far has concerned mainly whether more lower paid jobs would help more of the newly arrived immigrants onto the labour market.

Professor Lars Calmfors is the chairman of the council, and he says their idea of "starter jobs" would not just be offered to people who are new to this country.

"These jobs could come in question for all that are new to the labour market who have not yet managed to get a job. It is not just for immigrants, but could also be for youth," he told Swedish Radio News.

The council sees itself as independent, but was established in 2015 by the Confederation of Swedish Enterprise. That is also where it gets its funding from. According to the council, the current programmes offering training, financial support to employers or tax rebate on household services will not be enough to ensure jobs for people with little education or who are new in this country.

"In our opinion it will not be possible to address the employment problems without a larger wage distribution. It means that the high Swedish minimum wages must be lowered," Calmfors told Swedish Radio News.

The economists in the council would like to see an agreement between employers and trade unions on a kind of "starter jobs". According to the proposal, they ought to be limited to three years, the employers will not have to pay any payroll tax, and the employee will get extra tax rebates in order to make ends meet.

The council does not specify how much salary such a job would give. But according to Calmfors, in two of the intended sectors - retail and restaurant businesses - the average wage is some 70 per cent of the median wage on the labour market. This should be more like 50 percent, said Calmfors.

That would mean several thousand kroner less in a monthly wage, compared to the minimum wage today.

"Something in the region of 15,000 kroner, but that is my personal opinion, and not something that the Labour Policy Council has written about in its report," Calmfors told Swedish Radio News.

And he adds that it is urgent to get this kind of agreement in place, "preferably in the current round of wage negotiations".

With 163,000 people applying for asylum in Sweden last year, and some of them with low or no education, several politicians have brought up the need for more low paid jobs as a way to help ease more people onto the labour market. Lately, all four centre-right Alliance parties have come with different proposals that reminds of the proposal from the Labour Policy Council.

But the chief economist at the trade union federation LO, Ola Pettersson, dismisses the proposal outright.

"We believe that this would spread to other parts of the labour market, and that there would be a risk that it lowers the salary for a lot of people," he told Swedish Radio News.