Are trade union activities expensive for employers?

The annual cost to Swedish employers of trade union activities is about SEK 4,400 per employee, according to the results of a survey commissioned by the SAF employers' confederation, published in April 1999. The total annual costs in respect of the 650,000 employees in the four private sector industries covered by the research amount to SEK 2.9 billion.

On 21 April 1999, the Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) presented the results of an investigation into the costs to companies of trade union activities ("Företagens kostnad för facklig "verksamhet). The study was carried out on SAF's behalf in May-June 1998 by the Demoskop research company. It consisted of 807 interviews with personnel managers and departments in 981 enterprises with 50 or more employees, in four industries in the private sector (manufacturing, hotels and restaurants, building and transport) which employ around a quarter of the total private sector workforce. The survey covered firms employing some 650,000 workers, or around 50% of the workforce in the industries concerned.

There is a high level of union density in Sweden, with 82%-85% of all workers belonging to a trade union. The results of the SAF-commissioned survey indicate that there is a union representative in 90% of the workplaces covered, giving a total of some 27,000 local union representatives. In other words, 4% of all employees in the four sectors concerned function as union representatives.

Legal rights

Rights to time off for local-level trade union representatives are based on the Acts on Co-Determination in the Workplace and on Trade Union Representatives.

The Act on Co-Determination in the Workplace (SFS 1976:580) gives an employees' organisation the right to negotiate with an employer on any matter relating to the relationship between the employer and any member of the employees' organisation who is employed by that employer. The employer has an equivalent right to negotiate with an employees' organisation. Before an employer takes any decision regarding significant changes in its operations, it must on its own initiative enter into negotiations with the employees' organisation with which it is bound to negotiate pursuant to a collective bargaining agreement. The Act also gives employees' organisations a right to receive information. For example, an employer is obliged regularly to inform an employees' organisation to which it is bound by collective bargaining agreement as to the manner in which the business is developing in respect of production and finance, and as to the guidelines for personnel policy.

The Trade Union Representatives Act (SFS 1974:358) states that a worker who is elected as a local trade union representative has a right to perform his or her union duties - negotiations, administrative work - without losing pay or other rights and privileges. If, for example, the employer decides that negotiations will be carried out outside regular working hours, the union representative is compensated by overtime pay. The time off for union activities may not. however, be longer than "necessary". For example, the time taken travelling to travel to a conference and back and the time taken for meals and for a normal night's rest could be regarded as "necessary". Union workplace activities - such as meetings, union elections or political activities - are not covered by this legislation.

How much time and money are spent?

SAF calculates that the time spent on local union activities in the companies surveyed corresponds to 6,500 full-time jobs, or the equivalent of 1.9 full-time jobs in every workplace. The survey shows that around two people work full time - on average - on trade union matters in the workplaces covered by the survey. Given that the survey covers 650,000 employees, this means that the equivalent of one in every 100 workers is a full-time union representative.

The companies pay SEK 2.3 billion every year for union activities, according to SAF. This sum is calculated on the basis of a monthly salary, including payroll taxes, of SEK 24,000 for a blue-collar worker and SEK 42,000 for an academically qualified white-collar worker. The enterprises in manufacturing industry pay average annual union costs of SEK 3,918 per worker employed, compared with: SEK 3,792 in hotels and restaurants; SEK 2,663 in transport; and SEK 2,159 in building (which has a different union structure, with many regional representatives). The average annual cost is SEK 3,546 for every worker covered by the survey.

In terms of the annual cost per workplace, the survey finds that this ranges from SEK 975,000 per unit in manufacturing industry, to SEK 495,000 in transport, SEK 435,000 in hotels and restaurants and SEK 310,000 in the building industry.

Management costs

The personnel managers interviewed in the study stated that they spend about 10% of their working time in various contacts with unions and their representatives, and the total cost of these contacts is calculated as SEK 570 million per year. The overall total cost for the companies of union activities and union-related management activities, union education, travel and other expenses that the employer pays, is, according to the survey, SEK 2.891 billion. This means a total cost per employee of SEK 4,411 a year.

The researchers also asked the respondent companies if they themselves had costed union activities, and 70% of those interviewed replied that they had not, with relatively small companies particularly unlikely to have made such a calculation. When personnel managers were asked if they thought that they spent too much time on union work, the answer was generally "no". Half of the managers thought that they did not spend too much time on such work, and were happy the way things were. The other half stated that they hardly spent any time at all on dealing with unions. In any case, they stated, many aspects of relations with employees are handled in ways other than strictly dealing with unions. In 23% of the workplaces covered by the survey, personnel managers were of the opinion that relations with employees were best handled without the involvement of unions.

Whilst the survey concentrated on the cost of union activities in workplaces, Dick Kling, in charge of the project at SAF, stated in a foreword to the research report that there are also benefits for employers: relations between management and employees are of great importance and cannot be dealt with without costs. However, he added that the results of the survey were worth some reflection.

The chief economist at the Swedish Trade Union Confederation (Landsorganisationen, LO), PO Edin, said that he was not surprised by the survey results: "I think that the Swedish system of making and following up contracts is rather inexpensive and very effective." He added that the costs of using lawyers and other consultants in an alternative system would be much larger: "there would probably be more conflict as well and more working days lost."

Commentary

In Sweden there are about 2.8 million workers in the private sector. An average union activity cost per worker of SEK 4,400 per year means an overall total of SEK 12 billion. In 1998, Sweden's GNP amounted to SEK 1,804 billion, and union costs can thus be estimated at 0.7% of GNP.

The employers' survey of the costs of union activities is the first that has ever been carried out, so there is nothing to compare it with. In that respect, it is interesting to have some idea of the total cost of union activities, purely from an economic standpoint. It is also evident that most companies, or at least the personnel management, on the whole are satisfied with their present relations with the unions. (Annika Berg, Arbetslivsinstitutet)