Who benefits from the Industrial Agreement? Uncovering the trends and structures of wage inequality at play in the Swedish wage-setting model

Sweden's Industrial Agreement (IA) has long been heralded as a cornerstone of the country's balanced growth model – anchoring wage formation to export sector norms while also promoting wage equality across the labour market. This paper interrogates the IA's distributive outcomes between 2014 and 2023, a period spanning both pre-pandemic stability and post-pandemic inflation. Using occupational wage data and multinomial regression analyses, we find a growing divergence between the IA's intentions and its effects. While the manufacturing sector maintains its benchmark function, wage growth has become increasingly stratified by occupational hierarchy and wage level. High-status groups, such as those in advanced-education occupations, generally outperform others in wage growth, particularly during inflationary periods. In contrast, many low-wage and mid-tier occupations face poorer wage increases. These findings suggest an institutional drift in the IA model: though it retains formal coordination at the industry level, it fails to contain wage growth dispersion across occupational and income strata. As wage level and occupational hierarchy shape outcomes, the solidaristic underpinnings of Sweden's wage-setting regime appear to erode – raising fundamental questions about the future of the balanced growth model and the legitimacy of IA as a mechanism for equitable wage development.