Chief of Sweden’s finance watchdog appointed next Riksbank governor

Stefan Ingves, the central bank governor who helped steer Sweden through the 2007 financial crisis, and then presided over years of negative interest rates, is to step at the end of the years.

Chief of Sweden's finance watchdog appointed next Riksbank governor
Erik Thedéen, the next governor of Sweden's Riksbank, holds a press conference following his appointment. Photo: Pontus Lundahl/TT

Ingves, who has spent 17 years as Governor of the Riksbank since taking up the post in 2006, will leave the bank when his term expires at the end of this year, to be replaced by Erik Thedéen, who currently leads Sweden’s Financial Supervisory Authority. 

“These years have been eventful and stimulating and it has been a great honour to head up the Riksbank’s work, together with… all of the knowledgeable and dedicated employees at the bank,” Ingves said in a statement.

“I have had the privilege of working with the best, both in Sweden and around the world, and I have been involved in making the Riksbank into an institution ranked as one of the best central banks in the world. This has been a source of great joy.” 

At a press conferene, Thedéen said he was “proud and humbled” to have been chosen as the bank’s next governor, and said he had accepted the offer immediately. 

“That’s because this is, I believe, and extremely exciting job, an important job, and a job that comes with great responsibility.” 

Thedéen has been given a six-year appointment to the position.

Alexandra Stråberg, chief economist at Sweden’s Länsförsäkringar insurance group, expressed her surprise that a woman had not been chosen for the first time since the Riksbank was founded in 1929. 

“Erik in an insider in the world of Swedish government agencies and has to be seen as a conservative choice,” she said.

Robert Bergqvist, chief economist at SEB, said it would be “interesting to see” if Thedéen would be a hawk or a dove in monetary policy, but said that the return of inflation as a threat was anyway changing the approaches of central bankers worldwide. 

Torbjörn Isaksson, an economist at Nordea, predicted that Thedéen might bring a tougher approach towards controlling inflation. 

Susanne Eberstein, the chair of the Riksbank’s board, and the vice chair Michael Lundholm praised Ingves for what he had done in his time. 

“Under Stefan Ingves’s leadership the Riksbank has taken big, innovative steps, among them being the development of the e-krona,” she said. “His engagement in communicating the role of the central bank, its goals and decisions has helped make the Riksbank more transparent and accessible.”  

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Immigrants’ skills ‘badly matched’ to Swedish labour market

Sweden is experiencing a labour shortage, partly due to the fact that the skills of immigrants in the country are not well matched with the labour market, a new report suggests.

Immigrants' skills 'badly matched' to Swedish labour market

Many countries are experiencing a record high labour shortage, and Sweden is no exception. The number of available jobs is around 50 percent higher than it was before the pandemic, and around 200 percent higher than in the years following the 2008 financial crisis.

“Despite the economy slowing down and unemployment rising, the labour shortage is a growing problem,” wrote Lund University associate professor Martin Nordin, one of the authors behind the study.

There are multiple reasons for this, including a demographic shift as elderly people leave the workforce, as well as a lack of key skills and an inability to correctly match immigrants’ skills with the needs of the labour market.

“Immigration is often considered to be a solution to a labour shortage,” Nordin said. “But the wave of refugees has probably resulted in a poorer match [of skills to jobs] on the labour market.”

He added that this may change as this group becomes integrated into society and onto the labour market.

“For the most part, it’s about learning the language, but it could also be about getting a professional licence, in nursing for example. This already seems to be happening in the health and social care sector,” he said, adding that immigrants’ skills could be an asset in the long-term.

The solution is not for people to move from one part of the country to another, he said, as all areas of Sweden are experiencing a labour shortage.

“The shortage is not yet obviously larger in Norrland than in the rest of Sweden,” Nordin said. That could change due to ongoing industrialisation in the north of the country, he added, but in that case this would be at the expense of other parts of Sweden.

There are benefits to a labour shortage, he added. As skilled workers move to more productive sectors which can offer higher salaries and better working conditions, growth increases.

“But the wage adjustment which we should be seeing alongside a labour shortage is not happening,” Nordin added. 

“This isn’t a Swedish phenomenon, rather the lack of wage adjustment seen since the financial crisis has been described as a global mystery.”

This could be due to weak competition on the labour market, he added.

The government’s decision to tighten up labour migration by raising the minimum salary could increase salaries across the labour market in the long-term, as foreign workers are forced to leave and competition on the labour market increases, but it may also have the knock-on effect that some sectors which cannot offer higher wages, like healthcare, will need more assistance from the government.

“Targeted wage initiatives may be needed for regions and municipalities outside of the ordinary wage negotiations,” Nordin said.

Foreign workers’ skills are also more well matched to the labour market in the healthcare sector, so pushing these workers out through harsher labour migration rules could worsen the labour shortage in this sector.