Paper industry agreement likely to set the standard for other sectors

Negotiations on wages and general terms of employment for workers in the paper and pulp industry were completed in January 1998 with the conclusion of three-year agreements, which provide for reductions in working time and small increases in nominal pay. As the first agreements in private industry, the deals traditionally set the standard in subsequent negotiations in other sectors. The negotiations also represented the first time that the 1997 procedural agreement for industry was put to the test.

The first collective agreement in each bargaining round in Sweden usually sets the standard for others that follow. It is significant that the first agreement in the 1998 bargaining round has occurred in an export industry - the paper and pulp sector.

Collective agreements for various sectors expire at different times. In 1998, for example, the agreements for the engineering industry, which account for half of all Swedish exports, run until the end of February. However, the pay agreement for around 80,000 salaried employees in commerce, trade and service expired at the end of 1997 and - according to the procedural agreement between the six employers' organisations cooperating as the Swedish Federation of Trade, Commerce and Service (Svensk Handel och Tjänsteföretagen) and the two trade unions in question, the Salaried Employees' Union (Handelstjänstemannaförbundet, HTF) and the Association of Graduate Engineers (Civilingenjörsförbundet) - negotiations for a new pay agreement for 1998 were due to be completed by that time.

If this bargaining round had been an ordinary one, the negotiating parties in the commerce, trade and service sector would normally have signed an agreement of at least one year's duration. But as this year's negotiations took place place under new conditions (SE9710145F) they could reach an agreement, in November 1997, only for the first six months of the year (SE9711156N). According to the trade unions, the reason for this unusually short duration was that the employers never entered into real negotiations, as they were strictly exhorted by the Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) not to bargain on certain matters. The employers did not deny this. The trade unions finally decided to propose a short-term agreement, giving room for the parties in the industry to set the standard - regarding the issue of working time, for example.

Personal working time accounts agreed

The bargaining round's first agreement was reached on 4 January 1998 between the delegations of Employers' Federation of Swedish Forest Industries (Skogsindustriförbundet) and Swedish Paper Workers' Union (Pappersindustriarbetareförbundet), covering blue-collar workers in the paper and pulp industry. It runs until 31 January 2001, but by giving notice of termination before the end of September 1999, either party can terminate it for the third year.

During 1998, the deal gives each worker a monthly increase of SEK 210. A further 0.65% of the total paybill is to be allocated through company-level negotiations. For each of the two following years all workers are guaranteed a raise of SEK 200 per month. The "pot" for allocation at company-level will be 0.65% in 1999 and 0.7% in 2000.

The main stumbling-block in the talks was the trade union's demand for a reduction in general working time. The two impartial chairs, Lars-Gunnar Albåge and Rune Larson, who intervened according to the rules of the 1997 procedural agreement for industry (SE9703110N), produced a solution which leaves it to the parties at company level or even for individual workers to decide how working time should be reduced. The agreement leaves them two options:

  • either the employer and the local trade union branch could conclude a local collective agreement according to which annual working time is reduced by 27 hours on a step-by-step basis until 2001; or
  • if they do not reach such an agreement before the end of September 1998, the employer shall instead make provisions for a personal "working time account" for each worker - into which will be placed 0.5% of his or her salary for the first year, 1.0% the second year and 1.5% the third year. In 1999 the workers are able to start to make withdrawals from their accounts in the form of paid holidays, pension contributions or even cash, according to each worker's own choice.

In return, the agreement gives the employers the possibility to agree with individual workers that a certain share (a maximum 40 hours a year) of their regular working hours should be reserved for use by peak workloads. Furthermore, the local parties in companies with intermittent production are given the authority to conclude local collective agreements to continue production outside the ordinary timetable.

Example for others, Government hopes

Four days later, the Association of Graduate Engineers accepted an equivalent agreement for its members in the same sector. After considerable internal debate the other white-collar union, the Swedish Union for Technical and Clerical Employees in Industry and Service (Svenska Industritjänstemannaförbundet, SIF), also did so. The most important difference between these two agreements and the one for the blue-collar workers is that the former leave it to the discretion of the parties at company level whether working time should be reduced at all. They may instead prefer to use the concession to increase pay.

The Prime Minister and other members of the Government have expressed their satisfaction with the result of the negotiations and their hopes that the paper industry agreement will serve as an example for other sectors. The employers' costs for workers covered by it are calculated to increase by 2.4%-2.9% per year, wage drift (ie increases outside the agreement) included. If this example is followed by the rest of the labour market, employment will increase considerably until 2002, according to simulations carried out by the Economic Council for Industry at the request of Mr Albåge and Mr Larson.


The blue-collar agreement must still be approved by a representative body within the Paper Workers' Union before it can be applied, and there are representatives who plan to vote against it, as the working time reduction is far too small. At the time of writing, it is however unlikely that they will form a majority when the body meets on 19 January, considering that the alternative would be a strike in a sector which already has difficulties. If I am not mistaken on this point, the procedural agreement for industry has on the whole passed the first test. It is true that no new agreements were reached when the old ones expired, but the settlements were only slightly delayed in spite of difficulties in the negotiations, and the agreed pay increases are well within the limits of what is seen as "responsible". (Kerstin Ahlberg, National Institute for Working Life)

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