'Adjustment agreement' concluded for blue-collar workers in private sector

In February 2004, after three years of negotiations, the Confederation of Swedish Enterprise and the Swedish Confederation of Trade Unions (LO) concluded an 'adjustment agreement' for blue-collar workers in the private sector. The agreement provides financial benefits and other support to workers who are made redundant.

On 24 February 2004, a new 'adjustment agreement' (omställningsavtal) for private sector blue-collar workers was concluded between the Confederation of Swedish Enterprise (Svenskt Näringsliv) and the Swedish Confederation of Trade Unions (Landsorganisationen, LO). The agreement provides for an 'adjustment insurance' scheme aimed at easing readjustment problems for workers faced by redundancy. Some 950,000 workers in the private sector are covered by the agreement, which will come into force on 1 September 2004.

Under the adjustment insurance scheme, older workers covered by LO who are given notice of collective or individual redundancy in a situation of 'work shortage' (SE0311104T) will receive monetary support (avgångsbidrag, AGB) when they leave their jobs. The company and the local trade union concerned should apply together for this AGB payment. A condition for receipt of the support is that the workers concerned must be aged between 40 years to 64 years and 11 months. Another condition is that their employment must have lasted at least five years with one or more employers covered by the AGB insurance (AGB has existed since 1965, and was most recently amended in 2001, but the new AGB is more generous).

All workers who have been employed for at least one year by one or more companies covered by the AGB insurance may also receive 'adjustment support' (omställningsstöd) under the new adjustment agreement. This individual form of support for workers of all ages may involve help with education/training, finding a new job or starting an enterprise, or may take any other form that the local social partners agree upon.

An exception is set out in the agreement: workers involved through their trade union in a court procedure concerning the 'last in, first out' rules for selection for redundancy (SE9912111F) set out in the Employment Protection Act (Lagen om anställningsskydd) may not receive any support from the insurance scheme until the dispute is resolved and the worker in question has to leave their job.

Employers will pay a contribution based on their wage bill to the insurance scheme, rising in stages from the current 0.03% to 0.3% in 2009. A foundation (Trygghetsfonden, TSL) set up in 1983 by LO and the predecessor of the Confederation of Swedish Enterprise - the Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) - will be responsible for decision-making over, and the administration of, the new adjustment insurance. Local trade unions and employers will apply joint to TSL for AGB redundancy payments and adjustment support.

The negotiations over the new scheme lasted - on and off - for three years (SE0208101F). The deal between LO and the Confederation of Swedish Enterprise will, it is hoped, make it easier for the social partners to conclude pay agreements in the current 2004 bargaining round (SE0401104F), both parties stated when the new adjustment agreement was presented. It was also pointed out that, formally, the agreement should be seen as a recommendation for the time being, as it must be accepted (before 15 May 2004) by all the signatories' member organisations.

As for the other major sectors of the labour market, in December 1997, SAF and the white-collar workers' bargaining cartel, the Federation of Salaried Employees in Industry and Services (Privattjänstemannakartellen, PTK), concluded an adjustment agreement for the 650,000 members of the Swedish Confederation of Salaried Employees (Tjänstemännens Centralorganisation, TCO) and the Swedish Confederation of Professional Associations (Svenska Akademikers Centralorganisation, SACO) (SE9712158N). In the central government sector, the current adjustment agreement was concluded in 1990, with the scheme run by the Job Security Foundation (Trygghetsstiftelsen) and providing for financial support and active measures. Only the municipality and city council sector now does not have an adjustment agreement. However, it is expected that negotiations for this sector will start at the latest in 2005.