Sweden: Latest working life developments – Q3 2016

A proposal to change the state pension age, suggested changes to requirements for public procurement contracts and an increase in the use of permanent employment contracts are the main topics of interest in this article. This country update reports on the latest developments in working life in Sweden in the third quarter of 2016.

Proposed rise in state pension age

Sweden does not have a statutory retirement age. However, there are proposals to raise the age at which people can collect the public occupational pension, from 61 to 63.

A report by an official government inquiry also proposed that the Employment Protection Act should be changed, raising the age limit on working from 67 to 69. The reason for the proposed reform is that the increase in life expectancy over the past decades has not been met with a corresponding increase in the average number of working years.

Göran Hägglund and Göran Johansson, who are leading the inquiry, met with the social partners to discuss the issue and to hear what was needed to make the necessary adjustments in collective agreements and insurance systems. Most trade unions favour the reform, although some have expressed concerns, particularly about the effects on workers who are unable to work until the age of 63. The union for nurses and midwives, the Swedish Association of Health Professionals, also fears that the reform could lead to increased economic inequality.

The Confederation of Swedish Enterprises is also opposed to the pension reform, especially the prolonged right to remain in employment (from 67 to 69). It argues that, while it is important to use the experience and skills of older workers, it should be a matter for the employer and the employee and not be regulated in law.

New requirements suggested for public procurement

The government recently proposed making collective agreements (or conditions in line with agreements) mandatory in companies applying for public contracts. This comes as a response to the recurring problems of wage dumping and poor working conditions in, among others, the taxi and construction sectors. The public procurement of goods and services in Sweden amounts to around SEK 62 billion every year (approximately €6.4 billion as at 17 October 2016). This proposal can be seen as part of the government’s campaign for ‘orderliness on the labour market’.

Several stakeholders, including employer organisations, have criticised this, with the Confederation of Swedish Enterprises saying that it will lead to an increased administrative burden on small businesses.

Until recently, it looked as if a majority in the Swedish Parliament were in favour of the proposal. But, after a U-turn by the Swedish Democrats, the chances of the bill passing on 30 November are slim. However, the Minister of Public Administration, Ardalan Shekarabi, has stated that he will keep working for the issue.

New form of employment, unsuccessful ‘fast tracks’, and an increase in permanent contracts

After many months of debate on how to create more low-skilled, or so called ‘simple jobs’, (see previous Eurofound articles reported in February and August), the government has proposed a new form of employment called ‘matching employment’, a system through which companies will be able to hire workers via temporary work agencies (TWAs) for a trial period. Over the past years, several different types of subsidised employment have been launched to help certain groups enter the labour market. Unfortunately, employers have often felt that they are too complicated, bureaucratic and unpredictable, and as a result the job creation effects have been fairly modest. This new type of employment is meant to remedy this by making the TWAs responsible for all administrative duties. The social partners are tentatively in favour of the measure.

On a related note, the ’fast tracks’ to the labour market for newly arrived immigrants, previously reported in a Eurofound article in February, have recently come under scrutiny. The programmes, which were launched as a solution to the problems with matching skills and jobs, have had very few participants with only a small number going on to find employment. The Public Employment Service has now initiated an evaluation of the fast tracks.

Also in Q3, Statistics Sweden reported that almost 100,000 more people have permanent employment contracts compared to last year. However, the number of workers on fixed-term contracts have remained fairly constant, meaning that employment overall has increased.

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