First agreements in 2004 bargaining round concluded in industry

Main points of agreements

The new three-year pay agreements, which cover about 300,000 employees (170,000 of whom are in engineering), provide generally for a 6.8% pay rise, plus working time cuts worth a further 0.5%. For blue-collar workers, the agreements are worth an extra 0.15% - which is the value of the new 'adjustment agreement' recently concluded for this group (SE0403101N), providing financial benefits and other support to workers who are made redundant - bringing the total to 7.45%. Graduate engineers receive only a 5.3% pay rise (as they have higher salaries), working time cuts included. The agreements run for three years until 31 March 2007. The pay agreements follow the model of the three-year agreements concluded in 1998 (SE9806190F) and 2001 (SE0105102F). The average pay rise in the earlier agreements was 7.5% in 1998 and 7% in 2002. In both bargaining rounds, a working time cut worth 0.5% a year was agreed, bringing the overall outcomes to average increases of 9% and 8.5%.

Under the new agreements, individual workers are guaranteed monthly pay increases over the whole period of SEK 675 (for Metall members), SEK 700 (SIF) and SEK 800 (Pappers). For the lowest-paid members pf Industrifacket, there will be a minimum pay rise of a little over 3% in the second and third year of the agreement period. Wages for low-paid workers represented by Metall will increase by 10% in engineering and 12% in steel. The minimum holiday pay will be increased by 4% for all LO workers.

In the steel industry, the working time cut of 0.5% - or about eight days over the whole period - may be used a 'life working time premium', supplementing the provisions of the occupational pensions agreement between LO and the Confederation of Swedish Enterprise's predecessor, SAF (Avtalspension SAF-LO). Similar arrangements are allowed under the other agreements, for example saving the working time cut in a working time account provided by the employer, allowing older workers to stop working a little earlier than the stipulated pension age. These provisions also follow up those in the 1998 and 2001 agreements.

Projects to improve skills development, conclude work environment agreements (SE0402101N) and improve the financial possibilities for workers on parental leave are welcomed in the agreements.

Finally, if the government decides to introduce new sickness insurance rules (SE0401105F) or amend the working time legislation (SE0206105F), the parties are allowed to cancel the collective agreements. Furthermore, during the last year of the agreements' duration, any party is entitled to cancel an agreement in advance.

Bargaining process

Bargaining in industry started in January 2004 after the social partners had exchanged demands (SE0401104F). At the end of December 2003, the Metall, SIF and CF trade unions had handed over their list of demands for a one-year agreement, which included:

• a pay rise of 2.7% a year;

• a continued working time reduction of 0.5% a year;

• an increase of at least SEK 350 per month as a guaranteed mimimum for individual workers; and

• an improved work environment,

On 12 January 2004, employers in the engineering and steel industry offered:

• a pay-rise of 1% per year on average;

• no further working time cuts;

• employers should have greater freedom in the allocation of working time, for example on Saturdays and Sundays, without having to consult trade unions

• the creation of annual 'pay pools' at workplace level, providing for wage increases of 0.7%-1.1% (with different increases for different unions). Pay rises within these pools should be directly bargained at local level; and

• no minimum guaranteed pay rise for graduate engineers;

Responses

'The new pay agreements contribute to more justice in the labour market and gives the National Bank [Sveriges Riksbank] a possibility further to decreases the interest rate,' commented Erland Olausson, vice-chair of LO, adding 'as inflation is low, our members will have some increase in real wages.' Göran Jonsson, the chair of Metall, was happy that working time cuts (which have been continuing since 1998) have not been stopped completely, and that the employers’ attempt to establish a new wage formation process with pay pools and fully local bargaining was dropped during the negotiations.

The settlements are 'very expensive', according to the chair of SSIF, Göran Lundin and the other employers' representatives. However, the employers seem satisfied at having obtained three-year pay agreements ensuring peace in the labour market for an extended period.

Prime Minister Göran Persson was satisfied with the first pay agreements of the 2003 round and said that the social partners had behaved in a responsible way.

On 19 March 2004, the day after the industry settlements, the social partners in the commerce sector - the Swedish Federation of Trade (Svensk Handel) and the Commercial Workers’ Union (Handelsanställdas Förbund, Handels) - concluded a new three-year pay agreement. The 120,000 employees in the commerce sector will received a pay increase of 3% a year, or SEK 500 per month on average, adding up to 9% over three years. There is an individual guaranteed increase of around SEK 800 per month over the agreement's period. Out of the total average increase of SEK 1,500 over three years, at least SEK 677 should be distributed through local negotiations.

Commentary

The pulp and paper, steel and metal, chemicals and engineering industry agreements will soon be followed by agreements in banking, finance, media, construction and other sectors that have alreasy started to negotiate. However, bargaining in these sectors has been more or less held back by the National Mediation Office (Medlingsinstitutet), which prefers the industry agreements to be settled first, thus maintaining the normal order in the labour market.

The previous three-year pay agreements in the industry sector were due to expire on 31 March 2004. According to the 1997 'industry agreement', the social partners should start negotiations for the next agreement well in advance. If the parties want they can call in the impartial negotiation leaders, or 'Opos', who, at the latest two weeks before an agreement expires, can join or lead the negotiations. In 2004, the social partners in the four industry sectors agreed to call in the Opos at the beginning of March.

The social partners which signed the new pay agreements in March 2004 are seemingly satisfied with the results of the negotiations. The reactions from others have so far been positive, expressing respect for the social partners’ sense of 'balance' and concern for the wider contect, and the trade unions acceptance of modest pay rises. Inflation will probably be kept low, and the National Bank can decrease interest rate a little more if the other parties in the bargaining round follow the pattern set in industry. (Annika Berg, Arbetslivsinstitutet)