Sweden – Mass Job Cuts Belie Government Optimism

TeliaSonera AB (TLSN) yesterday became the latest in a string of Swedish companies to announce mass job cuts, prompting economists and unions to question the government’s forecast that unemployment will fall next year.

TeliaSonera, Sweden’s biggest phone company, said it will eliminate 2,000 jobs as growth stalls, declining to say how many cuts will be in its home market. That follows similar announcements from Volvo Car Corp., truckmaker Volvo AB (VOLVB), paper maker Holmen AB (HOLMB), steel manufacturer SSAB, and guarding provider Securitas AB (SECUB) as some of Sweden’s biggest companies reduce their workforces to stay competitive in declining markets.

“The mobile market has grown for 20 years, and suddenly you don’t see any growth anymore,” TeliaSonera Chief Executive Officer Lars Nyberg said yesterday in an interview. “No one can be surprised” about the job cuts, he said.

Yet the government of Prime Minister Fredrik Reinfeldt is predicting a drop in joblessness. Sweden’s unemployment rate will average 7.6 percent this year and decline to 7.5 percent in 2013, the Finance Ministry estimates. Economists say that forecast is too optimistic.

“Unfortunately things look pretty bleak considering that we’re in, or on our way into, an economic recession,” said Par Magnusson, Royal Bank of Scotland’s chief economist in Sweden. He predicts the jobless rate will average 8.5 percent next year. “We will see a long period of poor demand in Sweden. The economy will not have the kind of pace that will push down unemployment,” he said…

via Mass Job Cuts in Sweden Belie Government Optimism: Nordic Credit – Bloomberg.