Vol. 72/No. 49 December 15, 2008
Some 400 contract workers will be laid off at the Scania truck company plant in Södertälje, south of Stockholm, at the beginning of 2009. Workers employed for a specific amount of time are simply laid off when their contracts run out.
The auto industry and paper mills are among the hardest hit. More than 9,000 workers with permanent jobs will be laid off around the country at Volvo plants that produce cars, trucks, and construction equipment. A majority of those workers live in Gothenburg and the surrounding area. Paper mills have given notice to more than 2,200 workers.
Auto, metal, wood, and paper are among the most important industries in Sweden. An October 29 report by the National Institute of Economic Research estimates that 100,000 jobs will be cut in the next two years. The institute also expects negative economic growth in 2009.
During the last three months the Swedish kronor has dropped 30 percent in relation to the U.S. dollar and 7 percent in relation to the euro and the British pound.
The Swedish parliament adopted a government-initiated stability fund October 29 to guarantee 1.5 trillion kronor of borrowing by banks and financial firms. (US$1=8.3 kronor.) The record package, equivalent to half of the entire gross national product of Sweden, was passed unanimously.
That same day Carnegie, a Swedish investment bank, asked for an emergency loan of 4 billion kronor from Riksbanken, the Swedish national bank. Carnegie claimed a loan guarantee made a few days before of 1 billion kronor was insufficient.
The Swedish Financial Supervisory Authority revoked Carnegies operating licenses November 10. Half an hour after the announcement the Swedish National Debt Office took it over in order to protect financial stability.
On October 30 Riksbanken made 40 billion kronor available to companies, with the exception of financial institutions, that might need emergency loans. Despite these and other measures the credit squeeze continues.
As of November 15 only one bank, Swedbank, had decided to join the stability fund. Swedbank has many ties to the Baltic countries. Swedish banks control 85 percent of the banking system in Estonia as well as a majority in Lithuania and Latvia.
On November 10 the Latvian government took over Parex bank, the largest Latvian-owned bank, to avoid bankruptcy. According to Viktor Krasovitskij, one of the former owners, the Swedish rescue package, including a 500,000 kronor deposit guarantee, was the reason Parex was near collapse, as people withdrew their money to deposit it in Swedish banks in Latvia.
Related articles:
Industrial slowdown yields cutbacks, layoffs
Cities, states plan education, health-care cuts
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