Wage bargaining round for 2010 concludes

Sweden’s latest wage bargaining round has ended, and both employees and employers are claiming victory. A comparison of the social partners’ positions prior to the bargaining round and the actual outcome, however, shows that the picture is not at all clear-cut with some gains and losses on both sides. The biggest winner to emerge from the process, which affects the future wages of two million people, may turn out to be the bargaining model itself.

Background

The summer of 2010 marks the end of an intense period during which wage agreements were made for about two million employees in Sweden’s industry sector (the negotiations for the public sector will start shortly after the summer). Even before the negotiations began it was apparent that wage setting in the 2010 bargaining round would be challenging, in view of the high level of restructuring in Swedish industries and the financial crisis (SE0910019I). The trade unions claimed that wage rises of about 3% were feasible, while the employers argued for no increase at all, due partly to the financial crisis and to the high wages negotiated in the last bargaining round of 2007. In addition to the wage negotiations, other important questions were highlighted by the social partners prior to the 2010 bargaining round, such as unemployment levels among young people, gender equality, increased investments in service training, the right to full-time employment and the use and misuse of temporary agency workers.

Tensions between social partners

Both the Swedish Trade Union Confederation (LO) and the Confederation of Swedish Enterprise (Svenskt Näringsliv) made serious efforts to present a united front throughout the 2010 bargaining round in order to put pressure on the opposing side. Internally, however, significant differences and disputes grew as the 2010 bargaining round evolved.

On 29 April, the Association of Swedish Engineering Industries (Teknikföretagen) revealed that from 31 October 2010 it would no longer be part of the Cooperation Agreement on Industrial Development and Wage Formation – known as the Industrial Agreement (Industriavtalet) – signed in 1997 (SE0910029I). The Industrial Agreement is the traditional norm-setting agreement among the Swedish Unions within Industry (Facken inom Industrin), a partnership of six industrial trade unions set up in order to create a more united platform for negotiations (SE1004019I). In a press release, the Director General of the Association of Swedish Engineering Industries, Anders Narvinger, stated that a primary objective of the agreement, to promote the competitiveness of industry, had not been the benchmark for this year’s wage negotiations. The association’s unexpected withdrawal from the Industrial Agreement was not popular among other employers within industry.

Outcome of 2010 bargaining round

Trade union solidarity was also tested during the 2010 bargaining round. On 20 March, the first agreement was reached, between the trade union for professionals in the private sector (Unionen) and the Swedish Association of Graduate Engineers (Sveriges Ingenjörer), valid for 18 months and including a wage increase of 2.6%. The Union of Metalworkers (IF Metall) was not a party to the agreement, however. This revealed a division among blue-collar and white-collar members of the Swedish Unions within Industry.

One week later, IF Metall concluded an agreement for 22 months that included a wage increase of 3.2% as well as its own agreement on temporary agency workers, which was heavily criticised by LO. The agreement on temporary agency workers concerns only IF Metall and will complement the statutory right of precedence that is valid for the first nine months after an employee is made redundant, and that allows the hiring of temporary agency workers during this period. The new agreement strengthens the right of precedence during the first six months after an employee is made redundant by limiting the time during which a temporary agency worker can be hired to 30 days. After this period, the redundant employee must be re-hired.

The Food Workers’ Union (Livsmedelsarbetarförbundet) and the Swedish Union of Forestry, Wood and Graphic Workers (GS) also signed an agreement valid for 22 months and including a wage increase of 3.2%, but with another model for temporary agency workers. In this agreement, if a worker’s right to precedence is violated through the hiring of temporary agency workers, the employer will be ordered to pay damages amounting to €6,739 (SEK 63,600 as at 18 August 2010).

By the end of March, the Swedish Paper Workers’ Union (Pappers) was the only one of the Swedish industrial trade unions that had not finalised a collective agreement. Pappers turned down a proposed agreement on 11 April and, by doing so, reminded its counterparts that the trade union was not obliged to stick to the agreements signed by the rest of the manufacturing industry (SE1004019I). On 12 April, Pappers announced the first strike since the signing of the Industrial Agreement in 1997. After 11 days of strike, an agreement was reached for the following 22 months, ensuring a 3.4% wage increase, slightly higher than other industry trade unions, as well as a model for dealing with the issue of temporary agency workers similar to those agreed by the Food Workers’ Union and GS.

The Swedish Electricians’ Union (Svenska Eektrikerförbundet), which negotiates its own agreement with the Swedish Electric Contractors’ Association (EIO), dismissed a similar proposal for the same reasons as those put forward by the paper industry.

Both winners and losers

The Confederation of Swedish Enterprise had to accept agreements stipulating centrally determined wage increases, but at half the level agreed upon in the last bargaining round of 2007. In practice, this will not translate into real wage increases. LO succeeded in reaching an agreement for female workers on low wages. The price of this agreement, however, is that wages for workers belonging to the unions with the lowest wage levels will increase less than for others. This goes against one of the demands put forward by LO prior to the bargaining round. The discussion on temporary agency workers was intense during the negotiations. However, it is difficult to say whether any of the social partners gained more than the other from the new agreements because so far no abuse of temporary agency workers has been proven either in court or in practice. All parties are satisfied with the way the issue of temporary agency workers was resolved.

Commentary

According to some press commentators, the biggest winner in this negotiation round was the bargaining model itself, since the social partners managed to overcome their differences and finalise the most important agreements in a period of economic crisis and industrial restructuring. The unity among the Swedish industrial unions was, however, damaged during the bargaining round and it is unclear whether the Industrial Agreement will continue to act as the norm for other sectors when the next bargaining round commences.

Mats Kullander and Johannes Henriksson, Oxford Research

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Коментар