Largest employer organisation in industry leaves industrial agreement
The industrial agreement has served its purpose well, with moderate, stable wage increases and no industrial conflicts. However, with the turmoil surrounding this year’s major bargaining round – where trade unions in the paper industry went on strike – opinions on the benefits of such strong bargaining centralisation have changed. Now, the biggest employer organisation in the industry, the Association of Swedish Engineering Industries, has decided to leave the agreement.
Background to industrial agreement
In 1996, the Swedish government advised the social partners at sectoral level to propose, by the end of March 1997, a new framework for wage setting and negotiations within industry. The purpose of this new framework was to ensure a better functioning of the wage negotiations that would be more in line with the European average of wage increases. The government argued that Swedish industry needed to adjust itself to the international context in order to secure more moderate wage increases and thus to combine low unemployment and stable prices with high international competitiveness. The industrial partners signed the solution – called the Cooperation Agreement on Industrial Development and Wage Formation (Industrial Agreement for short) – in March 1997.
The most prominent signatory partners were the Association of Swedish Engineering Industries (Teknikföretagen), the Manufacturing Industry Employers’ Association (Industriarbetsgivarna), the Swedish Forest Industries’ Federation (Skogsindustrierna) and the Swedish Food Federation (Livsmedelsföretagen) on the employer side, as well as the partnership Swedish Unions within Industry (Facken inom Industrin) on the employee side. The partnership Swedish Unions within Industry is made up of six industrial trade unions and it incorporates the trade unions that have signed the Industrial Agreement.
An important part of the agreement was that the partners decided to give the manufacturing sector the role of a norm-setting partner in central negotiations. The rationale behind this was that the manufacturing sector was more exposed to international competition and that it would therefore negotiate agreements that would be more in line with the rest of Europe and that could be signed and implemented by the other industries.
Emerging cracks in agreement
Since its creation in 1997, the Industrial Agreement has served its purpose well, with moderate and stable wage increases and no major industrial conflicts. However, some discontent on the employer side emerged in the negotiations of 2004 and grew even stronger in the 2007 talks. This discontent was primarily rooted – from the employers’ perspective – in the poor implementation of the manufacturing sector’s role as a norm-setting partner. This problem was further highlighted in this year’s negotiations, when the Swedish Paper Workers’ Union (Svenska Pappersindustriarbetareförbundet, Pappers) did not follow the norm-setting agreement signed by the Union of Metalworkers (IF Metall) and the employer side (SE1004019I).
Employer organisation leaves agreement
The step away from the practice stipulated in the Industrial Agreement angered several organisations on the employer side, particularly the Association of Swedish Engineering Industries. When the bargaining round was over, the association declared that it would be leaving the Industrial Agreement from 31 October 2010. The Chief Executive Officer (CEO) of the association, Anders Narvinger, made the following statement (see also news release (in Swedish) 29 April 2010):
‘One of the two most important purposes – to support the competitiveness of the industry – has not been part of the outset in this year’s negotiations concerning the Industrial Agreement. The Unions in Industry has accepted that the agreement has been re-institutionalised to become a tool for the protected domestic industries’ demands for higher wage increases.’ [author’s translation]
Reactions of social partners
The social partners on both sides have criticised the rather strong actions of the Association of Swedish Engineering Industries. IF Metall states that it is unfortunate that the association is leaving the agreement straight away instead of trying to negotiate a solution to the problem. Its departure is, according to IF Metall, particularly regrettable as it will create instability and fragmentation in the future wage negotiations. The Steel and Metal Employers Association (Stål och Metall Arbetsgivareförbundet) believes that the underlying purpose of the departure is to scrap the agreement altogether and start over with a different framework, a solution that is not supported by the organisation.
It is unclear whether the actions taken by the Association of Swedish Engineering Industries will affect the other employer organisations and ultimately lead to the downfall of the Industrial Agreement. The partners on both sides still emphasise the importance of a unified framework for collective negotiations. They also highlight the fact that the underlying purpose of and need for an agreement is well-justified and necessary in order to ensure reasonable wage increases and international competitiveness in Swedish industry.
However, the Association of Swedish Engineering Industries has declared that it does not believe in this kind of framework. Instead, all sectors should negotiate their own agreements under their own prerequisites. The association states that it is now important that all partners retain an impartial mindset so that a constructive solution can be found to resolve the problem.
Heikensten, L., Sex frågor om penningpolitiken, Swedish Central Bank (Riksbanken), 7 November 2000.
TT, Teknikföretagen lämnar Industriavtalet, Dagens Nyheter, 29 April 2010.
Weihe, A., Teknikföretagen lämnar Industriavtalet, Teknikföretagen, 29 April 2010.
Mats Kullander and Oskar Eklund, Oxford Research