2002 Annual Review for Sweden

This record reviews 2002's main developments in industrial relations in Sweden.

Political developments

A general elections was held in September 2002, resulting in the return to power of the minority Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP) administration, which will continue to operate with the support of the Left Party (Vänsterpartiet) and the Green Party (Miljöpartiet de Gröna) (SE0210102F). Göran Persson remained Prime Minister and Hans Karlsson, a former senior official of the Swedish Confederation of Trade Unions (Landsorganisationen, LO), was appointed to the new position of Minister for Working Life (SE0211102N).

Collective bargaining

2002 was a quiet year in terms of bargaining, as the majority of sectors were still covered by three-year agreements concluded in 2001 (SE0105102F). However, there were several exceptions. First, in the 2001 collective bargaining round, the bargaining partners in the central government sector concluded pay agreements of only one year's duration for the three groups of employees - blue-collar workers, white-collar workers and professionals. The reason for the unusually short agreement period (most sectoral agreements in Sweden currently run for three years) was that the parties were still bargaining over an overall accord on supplementary pensions for government employees. This deal was finally concluded in December 2001 (SE0201112N) and new pay negotiations started in early 2002, ending in May with new agreements that will expire in 2004. Second, bargaining occurred late in 2002 in the information and communications technology sector, resulting in a new agreement that runs until March 2004 (SE0212103F). Thus, as the central government and ICT agreements expire in 2004, these two sectors are now aligned with the rest of the labour market, where the current three-year agreements will also be renegotiated in 2004.

Pay

The three-year agreements concluded in spring 2001 bargaining round provided for an average pay increases of around 3% in 2002. Turning to agreements concluded during 2002, the deal for blue-collar central government workers provides for a total increase in costs of 7.5% over 2.5 years. All workers are guaranteed a monthly pay rise of at least SEK 600. If the parties cannot agree on another distribution arrangement, pay will be increased in two instalments of 3% and 3.3%. Holiday pay will also be increased. The agreement for white-collar central government workers provides for almost identical pay terms. The deal for central government professional workers is, as in the previous bargaining round, 'without figures'- there are no recommendations on percentage or cash increases. New wage rates are to be decided in negotiations at each individual government authority. The employer may also suggest that an employee's pay should be decided directly in talks between the employer and employee. In the event of disagreement over pay setting, a local wage committee will rule on the matter in the first instance, and it disagreement persists the case will be taken to negotiations at the national central level. If this is not successful, a central wage committee will make the final decision. All wage committees are composed of an independent chair and representatives from both sides.

New pay agreements were concluded in the two parts of the ICT sector - information technology (IT) and telecommunications - in December 2002 by ALMEGA the Employers' Association of the IT Trade and Industry (ALMEGA IT-företagens Arbetsgivarorganisation) and five trade unions. Before the bargaining, ALMEGA had demanded a wage freeze, referring to the current economic difficulties being experienced in this industry (SE0202107F). The agreements finally left pay setting to local bargaining, but minimum paybill increases of 2.6%-2.8% apply if no agreement can be reached at this level.

In October 2002, the Swedish Municipal Workers' Union (Svenska Kommunalarbetareförbundet, Kommunal) decided to cancel the current three-year pay agreement for blue-collar employees of municipalities and city councils, one year early (SE0211103N). This possibility had been included in the agreement. The accord thus expires in March 2003 and new negotiations will be held before then. The reason for cancelling the agreement was widespread discontent about wage developments among the union's 400,000 members.

Working time

Working time reductions featured in many of the three-year accords negotiated during 2001, typically in the form of annual working time cuts, which can in some cases be exchanged by workers for extra pay or extra pension contributions. In 2002, the telecommunications agreement continued the process of working time cuts in this branch, reducing annual working time by one more day in 2003, which brings the total cut to six days since the process started in 1998. Under their new agreement, IT companies have the same possibility to negotiate a working time cut at local level.

Outside bargaining, the issue of working time reduction was high on the industrial relations agenda during 2002. In March, the National Institute of Economic Research (Konjunkturinstitutet, KI) published the findings of research into the economic effects of a general cut in working time. It predicts generally negative effects, at least in the short term, on production, economic growth, consumption and wages. The Institute's report will feed into the work of a parliamentary commission examining a possible statutory reduction in working hours (SE0204103F). It looked at four different models as follows:

• a cut in statutory normal working time from 40 to 38 hours over 2004-7;

• a cut in statutory normal working time from 40 to 35 hours over 2004-13;

• five extra days' statutory leave per year introduced over 2004-7 through amendments to the Annual Leave Act; and

• five extra days of leave for a variety of reasons (paid as ordinary working time) introduced over 2004-7 by a new Act on Paid Leave.

Further, in June, a governmental working time committee (Kommittén för nya arbetstids- och semesterregler, KNAS), with social partner involvement, set up in late 2000 to examine the entire system of legislation on working time and leave and make proposals for reform (SE0101176N), issued its report (SE0206105F). The report calls for new legislation to give all workers an additional five days of leave per year, to be introduced in stages by 2007. It also proposes measures to give workers more influence over their working time. The report was generally welcomed by trade unions but rejected by employers. A government decision on this long-running working time issue is expected during 2003 or 2004.

Job security

No significant developments in bargaining over job security were reported in 2002. However, there was a significant amount of enterprise restructuring over the year, particularly in the ICT sector, with the potential to affect employment levels and job security. Thus, in the light of a rising number of company closures and relocations to other countries, the government is considering tightening up rules in this area. In December 2001, it commissioned a study of the legal situation in the EU Member States regarding employers' responsibilities in company closures (SE0202104N).

One large merger, which was announced in March 2002, between the Swedish telecommunications company Telia and the Finnish Sonera, was generally welcomed by trade union representatives at Telia, as the merger was not regarded as a threat to employment (SE0203106N).

White-collar workers in the private sector and central government sector are covered by collective 'adjustment agreements', providing them with support and benefits in the event of redundancy. In July 2002, a government-appointed committee presented a report on adjustment agreements, recommending that similar accords should be established across the whole labour market, as they bring advantages for all parties (SE0208101F).

Equal opportunities and diversity issues

No significant developments in bargaining over equality issues were reported in 2002. In March, however, the government decided to appoint a special commissioner with the task of examining women's representation in leading positions in private sector business (SE0204101N). The commissioner will review the participation of women at management and board levels and look at matters such as the gender distribution among managers and deputy managers in various branches and geographical areas. Taking account of current research in this area, the commissioner will summarise the current state of knowledge regarding the obstacles to women's participation and the structures that determine developments in this area. The commissioner will also examine the working conditions for women in management positions.

Legislative developments

Several governmental committees presented reports during the course of 2002, proposing changes to current labour legislation. A number of new laws were also introduced. The main developments were as follows:

• a government-appointed commissioner presented a number of proposals on potential new measures concerning sick pay and the rehabilitation of workers in January (SE0202103N). Subsequently, tripartite talks took place between the social partners and Kenth Pettersson, the head of the Work Environment Authority (Arbetsmiljöverket), with the aim of presenting an action plan to the government concerning the sick pay system. In December 2002, however, private sector employers, represented by the Confederation of Swedish Enterprise (Svenskt Näringsliv) left the talks. On 17 December 2002, Mr Pettersson submitted a programme to improve health at work, which will be discussed and worked on by the social partners and other bodies (SE0301104F);

• in March, a governmental committee proposed a new law on protection of personal integrity and privacy at work. This would introduce a general ban on employers reading personal e-mail. It also suggested strengthening protection for employees regarding employers' use of drug tests, medical examinations and information technology (SE0203104F);

• in April, parliament passed a law reforming the occupational insurance scheme. The new legislation relaxed the criteria for acceptance of occupational injury compensation claims (SE0201198F and SE0206101N). In June, unemployment benefits were increased (SE0206102N);

• in April, the government proposed a bill introducing a new system of individual learning accounts. (SE0204102F) (see below under 'Vocational training');

• in May 2002, parliament adopted legislation aimed at implementing EU Directives (97/81/EC) on part-time work (EU9706131F) and (1999/70/EC) on fixed-term work (EU9907181F), which subsequently came into force on 1 July 2002 (SE0208102N); and

• in November, a government-appointed commission issued recommendations on changes to legislation on job security and parental leave. It proposed less complicated rules, stronger employment protection for fixed-term employees and workers taking parental leave, and new principles governing consultation between employers and individual employees (SE0211104F).

The organisation and role of the social partners

During 2002, work on possible mergers between trade unions and between employers' organisations advanced, albeit slowly in most cases.

Among unions affiliated to the blue-collar LO confederation, in January 2002, the Swedish Municipal Workers' Union (Kommunal) merged with the Agricultural Workers' Union (Lantarbetareförbundet) (SE0203101N). In October, the Swedish Metalworkers' Union (Svenska Metallindustriarbetareförbundet) and the Industrial Workers' Union (Industrifacket) announced that they were starting to cooperate on a possible merger (SE0212101N). The Graphical Workers' Union (Grafiska Förbundet Mediafacket, GF), the Electricians' Union (Elektrikerförbundet, SEF) and the Union for Service and Communication Employees (Facket fõr Service och Kommunikation, Seko) continued work on their 'SEGEL project' to examine the possibility of a merger to create a 230,000-strong union. The unions' members are somewhat divided in their views and a future merger is far from a certainty. Furthermore, the Commercial Employees' Union (Handelsanställdas förbund, Handels) and the Transport Workers' Union (Transportarbetareförbundet, Transport) are currently seeking to find ways of cooperating over a possible merger.

The two main employers' associations in the local authority and city council sector, the Swedish Association of Local Authorities (Svenska Kommunförbundet) and the Federation of Swedish County Councils (Landstingsförbundet) decided to propose a merger to their members in November 2002.

Industrial action

2002 was a quiet year in terms of industrial action, with no major strikes or lock-outs taking place. In fact, the number of days lost to industrial action over the year was among the lowest since 1906 (with 838 lost working days and 711 workers involved). Industrial action is normally very rare during such years where most major sectors are covered by collective agreements which run for the whole year, as the parties are covered by a peace obligation (fredsplikt).

Employee participation

In autumn 2002, the government set up a commission with the task of preparing for the implementation of the EU Directive (2001/86/EC) on employee involvement linked to the European Company Statute (ECS) (EU0206202F). The commission, chaired by a trade union lawyer, will present its proposals by 15 May 2003. Simultaneously, the Ministry of Justice is drafting a separate European Company Act to implement the EU Regulation on the company law aspects of the ECS. So far, however, the Swedish business community has not shown very much enthusiasm for this new form of company incorporated at European level, and therefore it seems that there are not many Swedish companies waiting for the opportunity to start forming a European Company. No activity was reported on national transposition of the 2002 EU Directive (2002/14/EC) on informing and consulting employees (EU0204207F).

Telework

There was some discussion in Sweden on how to implement the agreement on telework signed in July 2002 by the EU-level central social partners (EU0207204F). The trade unions generally believe that this is best done through collective agreements. However, the main private sector employers' organisation, the Confederation of Swedish Enterprise, finds this view unfeasible. The employers maintain that there is no relevant practice in terms of implementing this kind of agreement, due to its innovative character. The social partners will have to find a solution through discussions and as yet there have been no results.

Vocational training

There was no specific response in 2002 by the Swedish social partners to the 'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F). However, on the legislative front, in June, a narrow majority in parliament accepted a government bill on a new individual learning and skill development system. The system will involve special accounts for all employees, providing tax incentives for learning and study activities, plus encouragement for employers to contribute to their employees' learning accounts. The reform will come into operation on 1 July 2003 (SE0204102F).

New forms of work

In legislative terms, 2002 saw the adoption of legislation aimed at implementing the EU Directives on part-time and fixed-term work (see above under 'Legislative developments'). A government-appointed commission proposed stronger employment protection for fixed-term employees, though these proposals still have a long way to go, and the social partners have varying objections (see above under 'Legislative developments').

With regard to temporary agency work, pay and conditions in this sector are regulated by national collective agreements. The current collective pay agreements for 30,000-50,000 white-collar agency workers will expire in 2004 (SE0112101N), while the agreement for 10,000 blue-collar agency workers (members of affiliates of the LO union confederation) expired in autumn 2002 (SE0011163N) and no new agreement had been reached by the end of the year. It is generally estimated that the number of temporary agency workers, especially in the white-collar area, has grown, though not dramatically, over the past two years.

Outlook

The new Social Democrat government announced in October 2002 that the two most important employment-related issues for the coming four-year period would be managing the problems related to increased ill-health at work - which is resulting in a very high rate of sickness absence - and the problems related to the labour market integration of immigrant workers. It also announced some changes to employment legislation (SE0210102F).

In the field of labour law, 2003 should see a major discussion around the report and proposals presented in autumn 2002 by a government-appointed commission which had been examining legislation on job security and parental leave (see above under 'Legislative developments'). In particular, the proposal for a change in the job security rules for fixed-term employees may be difficult for the social partners to accept. It is not yet clear when the government will issue a bill, nor what it will contain. In spring 2003, a final report from the governmental working time committee is expected. It is, however, doubtful that there will finally be a solution to this long-running debate. The committee's June 2002 proposal for a cut in working time of five days a year was not met with enthusiasm (see above under 'Working time').

A reform that may be successful in the long run is the new individual learning accounts system that will begin in July 2003 (see above under 'Vocational training'). Similarly, current work on improving occupational health, although difficult for those involved, may yield some results.

In terms of bargaining, during the autumn of 2003 there will be much discussion before the start of the next bargaining round in early 2004. The main topic will be the level of pay increases, within the context of the wage situation in competing countries and employers' wish to keep down labour costs in difficult times. Inflation will be another certain topic of debate, as the rate of inflation is set to pass the limit of 2% set by the National Bank (Riksbanken). Independent economic experts have already written off 2003 as a lost year in terms of growth. Further, the unemployment rate is expected to increase from 3.9% 2002 to around 4.5% in 2003.

Finally, the biggest issue of 2003 is expected to be the referendum in September on the possibility of Sweden applying to join the third stage of EU Economic and Monetary Union (EMU) and the euro single currency. (Annika Berg, Arbetslivsinstitutet)