Blue-collar workers' pay falls behind

In December 2002, the blue-collar Swedish Trade Union Confederation (LO) presented a report on the development of its members' pay since 1994. One of the key findings is that wage differentials between white- and blue-collar workers, to the latter's disadvantage, have widened. In future collective bargaining, LO intends to make up for this 'lost decade' in terms of wage increases.

On 6 December 2002, the blue-collar Swedish Confederation of Trade Unions (Landsorganisationen, LO) presented a report on its members' wages and their development from 1994 to 2002. The data is based on structural wage statistics from Sweden Statistics (Statistiska Centralbyrån), divided into five main sectors. LO has also examined the extent of the 'wage spread' and its development over 1994-2001.

The LO study finds that the trend of increasing wage differentials between blue-collar workers and white-collar workers, to the former's disadvantage, that started in 1994 has been continuing since. In 2001, the average monthly pay for a blue-collar worker increased by 3.9% and for a white-collar worker by 5.3%. Average monthly pay in 2002, according to LO's calculations, stands at SEK 16,900 for blue-collar workers and SEK 24,000 for white-collar workers. White-collar workers' pay in the municipal sector increased by almost 2 percentage points more than that of LO workers in the same sector in 2001. Wage differentials between women and men persist, with female workers currently earning an average of 81% of male workers' monthly pay, a figure that remained fairly constant over 1994-2001. The main reason for the overall stability in the relationship between men's and women's pay is that female LO workers throughout the public sector have been falling behind over a period of many years.

Increasing wage gap

According to LO, during the 1970s, the wage gap between blue- and white-collar workers narrowed, and then remained unchanged during the 1980s. In the 1990s, however, the wage gap widened again. Since 1994, the pay differential between the two groups has been steadily increasing. In 2001, the average pay of white-collar workers was 42% higher than that of the blue-collar workers organised by LO.

Building workers had the highest pay and the largest pay rise in 2001. Blue-collar workers in this sector earned SEK 20,600 per month and white-collar workers SEK 24,700, with the overall average standing at SEK 21,700. Pay was lowest in the muncipal sector, where blue-collar workers earned SEK 14,900 per month and white-collar workers SEK 20,100, with an average of SEK 17,400.

Among white-collar workers, those in manufacturing industry earned the most in 2001, at SEK 26,900 per month, and those in the municipal sector the least, at SEK 20,100. The biggest pay rise from 2000 to 2001, at 8.9%, was awarded to white-collar workers in the banking and insurance sector.

With regard to the gender pay gap, in 2001 female workers across all categories earned an average of SEK 18,500 per month while male workers earned SEK 22,900 (the average for all employees was SEK 20,800). One major reason for the gap is the low pay of female blue-collar workers in the public sector.

The LO study also examines the wage spread - in this case defined as way in which the wage differentials between all workers have changed in 22 sectors of the labour market. For blue-collar workers, the wage spread narrowed in many sectors over 1994-2001, while for white-collar workers it increased in all sectors. The wage spread for female white-collar workers increased more than that for male white-collar workers (by 12.1% compared with 9.8% over 1996-2001).

The example of municipal workers

The issues examined by the LO report were highlighted in October 2002, when the Swedish Municipal Workers' Union (Svenska Kommunalarbetarförbundet) decided to cancel the current three-year pay agreement for blue-collar employees of municipalities and city councils, one year early (SE0211103N) - a possibility that had been included in the agreement. The accord now expires in March 2003 and new negotiations will start possibly in January 2003. The reason for canceling the agreement is widespread discontent about wage developments among the union's 400,000 or so members. The union's demands for a new agreement, presented to the employers - the Swedish Association of Local Authorities (Svenska Kommunförbundet) and the Federation of County Councils (Svenska Landstingsförbundet) - in December 2002, focus on the typical low-wage groups, with a call for pay rises of up to 5.5% and a guarantee that no worker will earn less than SEK 14,000 per month. Another, more general, demand is that during the period of the new agreement (2003-4) at least a quarter of the current difference between the average monthly pay of municipal workers and that of manufacturing worker should be eliminated.

Canceling a pay agreement in advance, even if it is allowed by the agreement itself, is something that rarely happens, and it was generally feared that Municipal Workers' Union move might lead to new demands from other trade unions. For example, representatives of the National Bank of Sweden (Sveriges Riksbank) and the National Mediation Office (Medlingsinstitutet) were anxious about wages consequently rising by more than was helpful for inflation. However, these fears were assuaged when the 'leading' Swedish Metalworkers' Union (Svenska Metallarbetareförbundet) and some other unions declared that they would not follow the muncipal workers' lead

The Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO), the confederation of white-collar workers' unions, commented a few days after the release of the LO report that it is sceptical about the official wage statistics. The truth about the wage increase rate is not told by the statistical data, says TCO's chief economist, Roland Spånt. Structural effects such as age, gender and profession are not excluded from these figures. According to Mr Spånt, this means that the wage increases for blue-collar workers and white-collar workers in the private sector are overestimated by 0.5 to 0.8 percentage points a year.

Commentary

LO accuses all the employers and the white-collar trade unions for not taking responsibility for wage developments or taking into account the pay rise norm in competing EU countries. LO claims that it alone has been considering these matters in relation to its members. However, from now on LO-affiliated unions and their members must regain a 'lost decade' in terms of wage increases. The tone at the press conference at which the report was presented was rather sharp. However, it will be LO-affiliated unions, rather than the confederation itself, which will, in due time, fight this battle. Talks will not start until spring 2004, when most current pay agreements will expire (SE0105102F). As for the example and possible exception of the Municipal Workers' Union, all optimistic commentators believe that the other trade unions will keep a low profile, maybe as a manifestation of their old wage solidarity policy which favoured special pay rises for low-wage workers.

All the social partners study wage developments carefully. The discussion will grow more and more intense during 2003 as the first demands in the bargaining round over new three-year agreements appear in the latter part of the year, with negotiations starting at the end of the year. (Annika Berg, Arbetslivsinstitutet)