Upcoming wage bargaining round of 2011

There are increasing hopes in Sweden that last year’s disagreement between white-collar and blue-collar unions has been resolved, and that fears of a wage battle in the 2011 bargaining round will be groundless. These fears arose when negotiations in 2010 modified the 1997 framework for wage setting. This led to several different agreements and a concern that Sweden’s economy could be destabilised. However, this year, the manufacturing unions aim for a joint agreement.

Background

During the early 1990s, Sweden experienced high unemployment and rising inflation. To avoid large pay increases that could threaten the country’s economic stability, the Swedish government advised unions and employers to set up a new framework for wage setting and negotiations within industry. Since 1997, when the Industry Agreement (Industriavtalet) was finalised, the manufacturing industry has set the norm for wage increases in Sweden. The general idea behind this approach is that sectors exposed to high international competition should set the wage levels in the labour market. However, this norm was questioned by several major social partners during the wage bargaining round of 2010 (SE1006019I).

2010 negotiations

On 20 March 2010, the first agreement of the bargaining round was reached between the trade union for professionals in the private sector (Unionen) and the Swedish Association of Graduate Engineers (Sveriges Ingenjörer). This was valid for 18 months and included a wage increase of 2.6%. Surprisingly, the metalworkers’ union (IF Metall) was not a party to the agreement and, one week later, it negotiated a higher wage increase of 3.2%, valid for 22 months. Then the Association of Swedish Engineering Industries (Teknikföretagen) announced that it no longer intended to be a part of the Industry Agreement (SE1005019I). These events created uncertainty among other social partners, because there was no longer any benchmark for wage bargaining.

Trade unions also disagreed over wages and conditions for temporary agency workers. This led to several different agreements between social partners during 2010, each setting out different rules and different wage increases for temporary agency workers. Most social partners agree that the 2010 negotiations were less chaotic than expected, but there are worries for the bargaining round of 2011.

Coverage of 2011 negotiations

The 2011 negotiations will concern about 10% of the working population, less than the proportion covered by the 2010 bargaining round. It is expected that 70 agreements will be negotiated for roughly 400,000 employees this year. Several agreements not concluded during the latter half of 2010 will also be settled in 2011.

Fears for stability of Sweden’s economy

The setting of new norms in wage negotiations has caused concern since this may harm the stability of Sweden’s economy. If agreements are negotiated separately, blue-collar and white-collar workers’ unions may engage in wage battles. Negotiations between the Transport Workers’ Association (Transport) and the Car Traffic Employer Association (Biltrafikens Arbetsgivarförbund) have been a particular cause for concern, since the transport sector has been recently riddled with conflict. Last year, four out of eight industrial actions were in the transport sector. It is even more worrying that the transport workers have openly criticised the white-collar industry agreement.

Unions agree to work together

However, on 15 January 2011, all the manufacturing unions revealed they intend to begin the 2011 bargaining round simultaneously, on 30 September, and to conclude their agreements by 30 November. This means that the blue-collar unions will start negotiating four months earlier than planned, with the white-collar unions delaying their agreement by a couple of months. The parties strongly agree that joint agreements are preferable.

Commentary

It still remains to be seen if the events of 2010 will affect the Swedish wage-setting model in the long run. However, based on recent events, the disagreement was most probably temporary. The risk of a wage battle is unlikely since the white-collar and blue-collar manufacturing unions have agreed to start negotiations on the same date,. This agreement is good news for the stability of the economy, since the Swedish wage-setting model is dependent on responsible social partners.

Mats Kullander and David Björnberg, Oxford Research

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