New National Mediation Office to be established

On 9 December 1999, the Swedish government presented a bill to parliament concerning a new National Mediation Office, possibly starting work from 1 June 2000. The purpose of the new National Mediation Office will be to mediate in labour conflicts and work towards satisfactory pay determination. The government is taking these measures after years of disputes and disagreement between the social partners.

An important government bill (prop.1999/2000:32), presented to the Swedish parliament on 9 December 1999, will establish the new National Mediation Office (Medlingsinstitutet). The bill results from the work of a committee set up by the government in 1997 with the task of proposing measures leading to an improved system of pay determination, whereby public mediators would be given improved opportunities to promote "overall public interests" in negotiations (SE9812129F).

Role of the National Mediation Office

The new governmental body will mediate in labour conflicts and work towards a well-functioning system of pay determination. The National Mediation Office - which will possibly begin work on 1 June 2000 - will be obliged to act early in the collective bargaining process, for example by calling the social partners into talks about timetables and claims before the negotiations start over a new agreement. In this way, the National Mediation Office will receive a better exchange of information, and insight into the negotiation process will be augmented, the government states.

The new National Mediation Office is to publish a special report every year on the development of wages in the Swedish labour market, intended to form a basis for subsequent negotiations, while the National Institute of Economic Research (Konjunkturinstitutet, KI) will be responsible for drawing up a new annual report on national economic conditions. The National Mediation Office will be responsible for the official wage statistics from 1 January 2001, with statistical material produced for some 50 sectors. The differences between women and men will be made more evident in the new wage statistics.

The National Mediation Office will be able, with the consent of the parties negotiating a collective agreement, to appoint a qualified person or a mediator to lead the negotiations, when this is thought necessary. This is not applicable if the social partners are already committed to an existing collective agreement with rules on negotiation and mediation that are similar to the rules set out in the "industry sector agreement" (industrins samarbetsavtal). This agreement was concluded in March 1997 by eight trade unions and 12 employers' organisations in industry. it aims to promote growth, profitability and competitiveness in industry and has its own rules for pay bargaining (SE9703110N). The industry sector agreement will thus go on working alongside the new National Mediation Office.

Under the proposed new legislation, the notice period for a strike or a lockout will be prolonged from seven days to seven working days, allowing a weekend to be included. A social partner organisation that fails to give notice to the National Mediation Office about coming industrial action will be fined through a "fee of notice" (varselavgift) to the state of SEK 30,000 to SEK 100,000. If it thinks it appropriate for the favourable resolution of a conflict, the National Mediation Office may, on the demand of a mediator, postpone industrial action for which notice has been given for at least 14 days. Such a postponement decision can be issued once for every set of negotiations. An organisation that starts a conflict without the National Mediation Office's approval can be fined at least SEK 300,000 to SEK 1,000,000.

No proportionality rule

In the end the government did not include in the bill the establishment of a "principle of proportionality" for industrial action, as this was a political issue which proved too difficult to be resolved. However, the National Mediation Office will, in its reports, give an account of the reasonableness of industrial action taken. That is one step towards the proportionality principle that has often been propounded by the employers, like many of their counterparts elsewhere in the European Union. The basic idea is that any industrial action conducted by trade unions at low cost to themselves, but which results in major negative economic effects for enterprises and society as a whole, should be forbidden. Another issue that had been much discussed was a possible ban on industrial action against sole traders and small family companies. Employers have long believed that it is absurd that the unions can expose such small companies to industrial conflict. The trade unions, however, cling so tightly to this traditional union right that the Social Democrat government has not touched it. Furthermore, an earlier proposal from the relevant committee to withdraw the right to take sympathy industrial action from a trade union supporting another union in a strike or another industrial action (SE9812129F) was not considered by the government.

To sum up, the government believes that the proposed new legislation is necessary because it is an important condition for a satisfactory development of employment that the rate of nominal pay increases remains moderate. This is especially important in achieving a lower rate of unemployment and a much higher rate of employment than is the case today. Over the past five years, the Swedish wage-formation system has, in spite of a high rate of unemployment, continued to generate higher wage increases than those in its most important competitor countries. The government also states in its proposal that the pay-determination process is primarily a matter for the social partners. However, there is a need for a stronger national framework, which also takes into account unemployed people and students.

Long-running debate

The issue of creating a new National Mediation Office and stricter pay-determination rules has been a focus of public debate for about 20 years in Sweden. In recent years, the debate has intensified with a government-appointed commissioner, Svante Öberg, issuing a proposal for a new "National Institute for Mediation" in November 1997 (SE9712160N). The proposal was strongly criticised, especially by the two white-collar trade union confederations, the Swedish Confederation of Salaried Employees (Tjänstemännens Centralorganisation, TCO) and the Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation, SACO). They expressed concerns about a possible "state incomes policy" and wanted the government to withdraw the proposal.

In 1997, the abovementioned agreement on cooperation and bargaining in the industry sector was concluded, which proved to be a success, with many other sectors following its example in terms of pay determination (SE9806190F). In November 1998, the government-appointed committee set up to examine the issue presented its final report to Minister Mona Sahlin at the Ministry of Industry and Commerce (SE9812129F). It contained all the elements which had arisen from the long public discussions - the principle of proportionality, a ban on industrial action against sole traders and family companies, limitations on sympathy action, and the establishment of a National Mediation Office. The reactions were again immediate and negative, with most social partners still strongly opposed to any state interference in pay negotiations.

The private sector employers and the trade union confederations then made their own efforts to address the issues and started talks on a "pact for growth" (SE9901135N), which however broke down in March 1999. Two government-appointed commissioners, ex-Prime Minister Ingemar Carlsson and the abovementioned Mr Öberg, assisting at the talks, reported afterwards that there was much disagreement between the parties and that it was time for governmental action. This had constituted the final opportunity for the social partners to draw up their own rules for bargaining procedures. The government announced that it would prepare a bill to be put before parliament during the autumn 1999 (SE9903150N), which resulted in the proposal submitted in December 1999. At the time of writing, it is not possible to assess when parliament will make its decision on the bill.

Reactions

The comments from the trade union confederations on the new bill on a National Mediation Office are somewhat milder than during earlier discussions. Hans Karlsson, the spokesperson for the Swedish Trade Union Confederation (Landsorganisationen, LO) stated that the proposed legislation would increase the possibilities in future to combine increased real pay and full employment with a low rate of inflation, and that the new National Mediation Office will function as a basis for more information about pay developments. LO is pleased that the government has not considered changing the rules on industrial action against sole traders and family companies. However, LO does not approve of the National Mediation Office's right to postpone a conflict for a fortnight.

The chair of TCO, Sture Nordh, commented that the new rules are a step in the right direction: "The responsibility of the parties for the wage formation is focused by the new National Mediation Office. And the government makes clear that further centralisation and coordination of all agreement areas are no longer possible." The other white-collar union confederation, SACO, stated that it could live with the new rules, and that the National Mediation Office must be seen as a putting a stop to further state interference in pay determination.

For its part, the Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) was far from mild in its comments. "There is a major lack of balance in the conflict system" stated Göran Tunhammar, SAF's managing director: "The government's proposal is not enough to make a reasonable balance. A government has to place the interest of society before trade union privileges. The government has chosen to be influenced by LO and that is tragic."

The Council of Legislation, which examines all legal texts before the final process in parliament, has remarked that there is a section in the bill that may risk being in conflict with international law and conventions. The Council has stated to the government that the proposal to allow postponement of industrial action contains a risk of excessive interference in the parties' rights to take industrial action.

Commentary

Time, practice and the demands of European Union membership have shown that there is a need in Sweden for stricter rules on the pay bargaining procedure. However, it is always hard to propose new rules that result in conflict with established rights. It is, of course, difficult for employees to accept limitations on the rights to take industrial action, just as it is difficult for private sector employers, by tradition, to accept governmental interference in pay negotiations. However, the demands from surrounding European states to keep increases in pay and prices, as well as unemployment, at a reasonable level are definitely taken seriously by the parties. Negotiations in export industries have always taken the lead in pay rises and other issues, and there is nothing that suggests that the industry sector, with its own cooperation agreement, will not continue to take a leading role in the future. The bargaining procedure proved successful in 1998, with a norm of an 8% pay rise over three years. The next major bargaining round will start in spring 2001. By then, if parliament accepts the bill at the beginning of 2000, the new National Mediation Office will have become adapted to its tasks. (Annika Berg, Arbetslivsinstitutet)

Further relevant EIRO records: SE9704111F; SE9712160N; and SE9811121F.