Government forced to cooperate after election setback

Sweden held general elections on 20 September 1998. The result was a setback for the Social Democrat government which now has to rely on two other parties to stay in power. The Government will focus on economic growth to combat the unemployment problem and promote cooperation between trade unions and employers' organisations to ensure stability and development.

On 20 September 1998, Sweden held a general election. The result was a major setback for the ruling Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP). It won 36.6% of the votes, down 8.7 percentage points compared with the 1994 election, but remained the largest of the seven parliamentary parties. The two best performers in the election were the Christian Democrats (Kristdemokraterna) and the ex-communist Left Party (Vänsterpartiet). The major non-socialist opposition party, the Conservatives (Moderaterna), secured roughly the same share of the votes as in the 1994 election, at 22.7%.

Since their former partner, the rural-based Centre Party (Centerpartiet), said that it would no longer back the Social Democrats, they had to look for support elsewhere to be able to stay in power. The result is a cooperation - though not a coalition - with two anti-EU parties, the Left Party and the Green Party (Miljöpartiet de Gröna).

Both the Lefts and the Greens have policies for a general reduction of weekly working time from 40 to 35 hours as a means of reducing unemployment. This heavily debated question is one where the Social Democrats and the two other parties differ. The Social Democrats and the closely linked Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) strongly advocate that the issue of working time should be regulated in collective agreements, to suit the conditions in each sector. The non-Socialist opposition is also against a general reduction of working time. ALMEGA, the important employers' organisation for industrial and service companies, claims that any political intervention in the working time issue would change the prerequisites for the collective agreements concluded in the recent bargaining round (SE9806190F). The three-year agreements were, according to ALMEGA, concluded under certain conditions, and if these conditions alter, ALMEGA will have to consider revoking the agreements. The Government, the Greens and the Left have agreed to appoint a working group to analyse the consequences of changes in working hours and to present proposals for the future.

The major issue facing the government will be the question of unemployment. Unemployment is decreasing and in September 1998 stood at 6.1%. However, the number of jobs has not increased in line with the decrease in unemployment, as many people are in training and other similar schemes. The Government's goal is to reduce unemployment to 4% by 2000. The Government believes that an economic growth rate approaching 3% is possible in the next few years.

Prime Minister Göran Persson believes that cooperation between the social partners will be of increased significance, and that voluntary agreements provide long-term and stable solutions. Methods for pay determination, labour legislation, working hours and other industrial relations issues should be formulated through cooperation between trade unions and employers' organisations. The aim of cooperation should be to achieve full employment, low inflation and good working conditions for both employers and workers. The Government also stresses the importance of education to achieve economic growth.

Mr Persson reshuffled his government after the election and merged four ministries, among them the Ministry of Labour, into a new Ministry of Industry and Commerce, which will be coordinate the Government's growth policy.

Reactions from employers and unions are varied. Some unions fear move to the right by some of the new ministers, while some employers' organisations want the Government to continue to give attention to flexibility and economic growth.