1998 bargaining brings moderate pay increases, flexible working time rules and declarations on skill development
Published: 27 June 1998
On 12 June, the 1998 central bargaining round was completed by the conclusion of the agreement on pay and general terms of employment for 70,000 graduate employees in municipalities, county councils and parishes. Only a few very small bargaining units had not yet reached an agreement. In many respects the 1998 bargaining round was notable for the facts that:
Sweden's 1998 central bargaining round resulted in agreements of three years' duration in both the private and the public sector. The resulting increases in pay average around 3% per year, taking account of expected wage drift. Almost all agreements contain new provisions on both the length and organisation of working time, while many contain provisions for skill development.
On 12 June, the 1998 central bargaining round was completed by the conclusion of the agreement on pay and general terms of employment for 70,000 graduate employees in municipalities, county councils and parishes. Only a few very small bargaining units had not yet reached an agreement. In many respects the 1998 bargaining round was notable for the facts that:
all important sectors were involved in negotiations;
the course of negotiations took a different form than previously; and
there was a significant breakthrough on the issue of working time.
The 1998 central bargaining round will be the last one in this millenium. Both the private and public sector are now covered by three-year agreements, which is an unusually long duration. However, some of the agreements may be renegotiated after two years, and workplace negotiations will take place every year where the centrally agreed increases are allocated to individual workers through local bargaining. Such local agreements are, however, subject to a peace obligation.
The course of negotiations
Unlike previous bargaining rounds, there were very few threats of industrial action - and none took place. Most agreements were reached before, or shortly after, the previous agreements expired. This can be largely attributed to the effect of the new procedural agreement for the industry sector (SE9703110N) which was put to the test for the first time (SE9801161F. The procedural agreement stipulates that negotiations should start earlier than previously, and provides for the services of a conciliator if the negotiations over a new agreement appear to be in difficulties when the old agreement is due to expire.
Unusually, the employers and trade unions in export industries were the first to conclude collective agreements. This was significant as the first agreement tends to set the standard for the rest of the labour market. This was achieved as a result of close coordination among the employers by the Swedish Employers' Association (Svenska Arbetsgivareföreningen, SAF). Although SAF was not part of the negotiations and is opposed to centralised bargaining, it played an influential role from the sidelines. In particular, it seems to have successfully persuaded employers in trade and commerce not to arrive at an early settlement at the end of 1997.
The outcomes
On several points the contents of the 1998 agreements are similar. This can most likely be explained , at least in part, by the fact that the same two persons acted as conciliators in many of the sectors.
Before the bargaining round started, the Swedish Government had made it clear that pay should not be allowed to increase by more than 3.5% in 1998. The agreed increases vary by a few tenths of a percentage point around the 3% mark for the year. Unlike earlier agreements, this figure includes provision for expected wage drift at local level, based on previous experience. This assessment of likely wage drift is, of course, uncertain, but it is meant to serve as a restraint on the parties at workplace level. An increasing number of agreements entrust the parties at local level with allocating the centrally negotiated pay increases among workers.
The unions representing low-paid workers had claimed that their members should be awarded higher increases than their higher-paid counterparts (SE9710145F), and they did manage to achieve this, although the difference amounted to only a few tenths of a percentage point.
Working time was another important issue in the negotiations. In the 1997 bargaining round, most employers were opposed to even discussing the matter. However, in 1998 almost all agreements, apart from those for state employees, contain new provisions on both the length and the organisation of working time. There are different types of solutions for the length of working time. Some agreements provide for working time to be reduced by 27 hours in a year, but leave it to the parties at company level or to individual employers and employees to decide whether this should lead to a reduction in the length of the working week, provide for longer holidays or even be used for early retirement purposes. Most of the agreements do not prescribe any particular form of reduction but leave it to the parties at local level to choose between a reduction of working time and an increase in pay. Consequently it will be some time before it is possible to determine to what extent the 1998 agreements do in fact lead to a reduction of working time.
In return for the (possible) reduction of working time, provisions on the organisation of working time have been made somewhat more flexible.
A third issue mentioned in many of the new agreements is skill development. These provisions are usually limited to rather general declarations stating that all workers are entitled to recurrent training, and that the employers should map out the training needs for each employee. However, the financing of such skill development programmes is not spelt out. Both sides of industry are obviously waiting for the proposals of the working party on continuing training in working life, whose report was due to appear at the end of June 1998.
Commentary
The peaceful course of negotiations and their balanced outcome may be partly explained by the fact that Svante Öberg, director-general of the National Institute of Economic Research (Konjunkturinstitutet, KI), has been commissioned by the Government to propose measures leading to a "better functioning" process for wage determination, comprising mechanisms that prevent pay increases that further inflation and put employment at risk (SE9704111F). This could include strengthening the powers of the public mediators, which today have no powers of compulsion. As both employers and trade unions want to settle their affairs without any public interference, they have been eager to show that they are able to conclude responsible agreements on their own. In a newspaper article published on 18 June, Mr Öberg however reveals that he is not yet convinced. Even if the new agreements are more moderate than previously, pay increases in Sweden will still be greater than in other countries during 1998-2000, he wrote. Leading representatives of the Swedish Trade Union Confederation (Landsorganisationen, LO) have also expressed their doubts as to whether the present bargaining procedures can guarantee a satisfactory result at a time when the Swedish economy is on an upward trend. Thus both Mr Öberg and LO's chair, Bertil Jonsson, have invited the parties concerned to make use of the breathing-space of the three-year agreements to find other ways of improving pay determination mechanisms. (Kerstin Ahlberg, Arbetslivsinstitutet)
Previous EIRO reports of agreements in the 1998 bargaining round include:
Eurofound recommends citing this publication in the following way.
Eurofound (1998), 1998 bargaining brings moderate pay increases, flexible working time rules and declarations on skill development, article.
