Unlike many countries we work with, Sweden stands out for not having a statutory minimum wage. Instead, it relies on a robust system of collective bargaining, where trade unions and employer organisations collaborate to agree on fair pay across different sectors. While this approach may seem unusual at first glance, it’s a model built on flexibility, trust, and mutual respect – a pillar that resonates strongly with our values at Leap29.
From our experience supporting international clients, we’ve seen how Sweden’s wage-setting process can be both an opportunity and a challenge. Export-focused industries like engineering and manufacturing often take the lead in wage negotiations, setting the path for other sectors and ensuring that wage growth remains manageable for the economy. This is crucial for companies that are competing for the international export business.
This model of coordinated wage setting of negotiating and benchmarking, where the industrial sectors collaborate first, has been in place since 1997. To minimise wage gaps, low-paid workers tend to get a fixed rise rather than a percentage increase. These agreements can last for three years, although they can be reduced due to inflation or when the economy is uncertain.
For younger workers, special rules ensure that pay increases occur as the workers become more experienced and training has been completed, setting a milestone pathway for the workers’ development.
At Leap29, we believe that engaging with Sweden’s collective agreements is more than just a compliance exercise – it’s a strategic move to build trust and attract the best talent. Collaboration and mutual respect are at the heart of Sweden’s success, and we’ve seen firsthand how international employers who embrace this model enjoy long-term benefits, from improved retention to a stronger employer brand.
Regular updates from Sweden’s National Office of Mediation provide valuable insights on wage trends, gender pay gaps, and labour market developments.
At Leap29 we always recommend that our clients stay informed and use these resources to benchmark their own practices against national standards.
If you’re considering expanding into Sweden or want to ensure your salary setting is aligned with local expectations, our EOR and PEO teams will combine global reach with local expertise to support you as you enter Sweden’s unique employment system.
