State subsidies to call centres cause controversy

The Swedish government offers subsidies for the establishment of call centres in high unemployment areas. In August 2000, the Salaried Employees' Union (HTF) criticised the government for granting subsidies to call centres where terms of employment and working conditions are said to be unsatisfactory. The Ministry of Industry, Employment and Communications has set up an informal group to follow up the issue.

On 24 August 2000, representatives of the Salaried Employees' Union (Tjänstemannaförbundet, HTF) expressed their concern to Mona Sahlin, minister at the Ministry for Industry, Employment and Communications (näringsdepartementet), about the terms of employment and working conditions for employees at certain companies within the call centre industry. They criticised the government for giving financial support to companies that do not observe collective agreements.

The concept of call centres is originally American. Briefly, an external call centre may be described as an enterprise taking care of customer relations, telemarketing etc for several other companies. A call centre uses modern computer and telecommunications technology to achieve the highest efficiency. As companies with different "call patterns" are often matched together, the operators can be kept fully occupied. The client companies pay only for services actually performed at the call centre. International studies often describe call centre jobs as low-skilled, repetitive and subject to a high level of control, and as causing stress and demanding great flexibility from the workers. However, at the same time call centres are depicted as friendly and social workplaces, where qualities traditionally described as "female" are valued. These new low-technology jobs in a high-technology infrastructure are of interest to researchers from different disciplines, in Sweden as elsewhere.

State subsidies

As the call centre industry is among the fastest growing in several European countries, the Swedish government actively tries to attract new call centre agencies to Sweden. The task of the Invest in Sweden Agency (ISA), an authority under the Department of Foreign Affairs, is to attract foreign enterprises and to facilitate the establishment of companies in Sweden. Call centres often locate to regions where unemployment is high, and in many cases state subsidies are provided in Sweden to companies setting up or expanding within designated areas. Subsidies are available for capital investment and recruitment, for example.

In order to obtain subsidies for recruitment within a "grant area" a company must pay wages and other employment benefits that are at least equal to those provided for in the applicable collective agreement. The working environment has to be satisfactory and subsidies are given only with respect to permanent positions.

In June 2000, HTF, a private sector union with approximately 150,000 members in commerce, transport, and service industries, presented a study undertaken at 15 Swedish call centres where the employees are unionised. Close to 250 HTF members responded to a questionnaire about issues such as wages, working hours and the working environment. According to the study, 80% of the employees surveyed at the call centres are women and almost 50% are under the age of 25. Some of the workers have permanent positions, while others are hired for shorter periods or on an hourly basis. The wages are relatively low, especially in companies without collective agreements. Employees hired on a day-to-day basis are paid only for days when job is supplied.

Some call-centres are described in the study as functioning well and willing to accept the standards of the Swedish labour market. However, in a couple of companies HTF found that there was an employer attitude hostile towards unions and a certain disinclination to comply with labour legislation. At their August meeting with Ms Sahlin, the union representatives questioned the appropriateness of granting subsidies to these companies and pointed to the risk of "social dumping".

"Sometimes the picture of subsidies is not completely clear to us," stated Tomas Oskarsson, a union secretary at HTF: "Apart from subsidies based on location in a grant area, there may be subsidies in the form of business premises, supplied by a municipally-owned company, at a very low rent. We have also seen examples of call centres receiving free labour from the public employment offices, as the job is considered as some kind of measure against unemployment."

Some call centre companies hire workers only by the hour. When there is no work available, the workers are obliged to live on unemployment benefits. This means that the unemployment insurance systems takes the risks that the companies themselves ought to bear, according to HTF.

Informal group established

As a result of the criticism communicated to the government, an informal group was formed with the task of following up the questions raised by the trade union. The group will consist of officials of the Swedish National Board for Industrial and Technical Development (Närings- och Teknikutvecklingsverket, Nutek), the National Labour Market Board (Arbetsmarknadsstyrelsen, AMS) and the National Board of Occupational Safety and Health (Arbetarskyddsstyrelsen, ASS).

Decisions on subsidies to companies within grant areas are taken by the County Government Boards (länsstyrelserna) or by Nutek. Nutek official Kurt Ekelund did not immediately recognise the problems raised by HTF, when asked. To receive subsidies within a grant area, a company has to meet certain requirements. Theoretically a decision on subsidies could be revoked, but to his knowledge this has never happened. The picture is, however, complicated by the fact that there are several different forms of subsidies available and several authorities involved, each of them with knowledge chiefly within their own area of expertise.

Commentary

The call centre service industry has grown rapidly in Sweden over recent years. Figures estimating the number of call centre employees vary, depending on the definitions used. According to the Invest in Sweden Agency, in September 1999 approximately 7,100 persons annually worked at external call centres in Sweden. Over the past two years, these companies have experienced a growth in employment of more than 50%. If a wider definition of call centres is used (including for example call centres within a company, giving service to this company's customers only), figures of 35,000-46,000 employees are mentioned. Approximately 40% of the largest call centres have received governmental subsidies because of their location within a grant area.

To many regions where unemployment is high, the establishment of a call centre may be a genuinely positive factor, many Swedish experts agree. The drawbacks of the controlled and repetitive work are compensated for by the fact that call centres give young, unskilled workers an opportunity to enter the labour market.

Since the government actively supports the growth of the call centre industry in Sweden, it is of some political importance that working conditions, wages etc at those call centres that receive subsidies are satisfactory. A trade union such as HTF, for its part, has an interest in putting these questions into focus, since unsatisfactory conditions emphasise the need for a union and makes the recruitment of new union members easier. It seems to be of mutual interest to the government and the unions that the call centre companies now setting up or expanding in Sweden compete under the same conditions as other companies. (Margareta Edling, Arbetslivsinstitutet).