Engineering employers and unions make proposals for new agreement

In January 2004, Swedish engineering employers' associations made their proposals for a new collective agreement for the sector's 300,000 employees. They offered a three-year deal, with an annual pay increase of about 1% and no further working time reductions. Trade unions countered with a demand for a one-year pay agreement, with a wage rise of 2.7%, plus continued cuts in working hours. Engineering traditionally sets the pace in Swedish bargaining rounds.

On 12 January 2004, Teknikarbetsgivarna, the bargaining body for employers in the engineering industry - bringing together the Association of Swedish Engineering Industries (Teknikföretagen, until recently Verkstadsindustrin) and the Steel and Metal Association (Stål - och Metallförbundet) - made the first move in Sweden's 2004 bargaining round. It proposed a three-year pay agreement for the industry's 300,000 employees in 3,200 member companies to the three trade unions concerned - the Swedish Metalworkers' Union (Svenska Metallarbetareförbundet, Metall), the Swedish Union of Technical and Clerical Employees in Industry (Svenska Industritjänstemannaförbundet, SIF) and the Association of Graduate Engineers (Svenska Civilingenjörsförbundet, CF).

Employers' proposals

The engineering employers propose that there should be annual 'pay pools' providing for wage increases of 0.7%-1.1% in each of the agreements' three years. For 2004, this would mean average increases of: 0.9% for Metal members, with a minimum rise of SEK 250 a month for full-time employees; 0.7% for SIF members, again with a minimum rise of SEK 250 per month; and 0.7% for CF members, with no guaranteed minimum rise, but with employers recommended to offer 'competence-raising' measures to those who have not recently enjoyed a favourable wage development.

The employers also propose that pay rises within these pools should be directly bargained at local level. The normal order for pay bargaining in Sweden is a 'from the top to the bottom' procedure, starting with national/sectoral/central agreements setting the norms, followed by local company agreements which often provide for a rise above the central norm, with the size of the additional increase varying among companies and branches. The employers now wish to see this order turned upside down, with pay bargaining starting at local level. Only in cases where company negotiations do not succeed could the local social partners turn to the national/sectoral level, then finally to three special joint committees for wages and salaries (Lönenämnden) made up of Teknikarbetsgivarna and Metall, SIF or CF (such committees are stipulated in the 1997 agreement on cooperation and bargaining procedures in industry - SE9703110N). The proposed local bargaining process contains a possibility of local wage cuts, a Teknikarbetsgivarna representative admitted when asked at a press conference.

Teknikarbetsgivarna proposes no working time cuts over 2004-7 - such reductions were provided for in the two previous agreements in 1998 (SE9803177N) and 2001 (SE0102182F). On the other hand, changes in the current collectively agreed working time rules are suggested, with the employers seeking a more flexible approach. Among other matters, the employers want to allow for work on Saturdays without overtime pay and without consulting trade unions. The employers also want more scope to hire fixed-term workers.

It is also proposed that the collective agreement should contain a clause stating that if, during the agreement's term, there any changes in the legislation concerning sick leave or working time, any of the signatories may cancel the agreement with six months' notice, and there should be new negotiations. This proposed clause is linked to the expectation that the the government will issue regulations on these matters during 2004 (SE0401105F).

'The costs of labour in the world around us are decreasing very fast,' stated Anders Narvinger, the managing director at the Association of Engineering Industries, when presenting the proposals, and 'it is our responsibility to protect the competitive conditions for our Swedish member companies. The levels of pay rise must as far as possible be agreed by those who actually feel the effects.' Mr Narvinger concluded that long-running agreements and local bargaining, based in real conditions, are the best way to strengthen the competitiveness of Swedish companies.

Trade union demands

On 18 December, Metal, SIF and CF handed over their detailed demands for a new agreement to the engineering industry employers. They demanded a one-year pay agreement providing for a rise of 2.7%, with a minimum monthly wage increase of SEK 350, and a continued cut in working time, worth about 0.5% of wage costs per year. Efforts to improve the working environment are another important demand. The trade unions in industry (in engineering, information technology, chemicals, services, the forestry and wood industry and the food industry) had already presented their initial general demands in October 2003 (SE0310104F).

The reaction from the trade unions to the employers' proposals was sharp, calling them 'unacceptable' and 'impossible'. An exchange of views regarding real wage rises took place, with the unions stating that the employers' offer would lead to a cut in real pay, as inflation is expected to be around 2%. The employers responded that there will, as usual, be wage drift of 0.5%-1.0% plus a certain wage rise for many workers above the provisions of the collective agreement. The unions also oppose the idea of halting the progressive working time cuts, worth 0.5% a year, which have been continuing since the 1998 collective agreement.

Employers in the other sectors of industry (outside engineering) are likely to present their proposals for new agreements towards the end of February, and the engineering employers have announced that they too plan to make a revised proposal around then. Current collective agreements in industry expire on 31 March 2004.

Commentary

It is a tradition (with few exceptions) in Swedish pay bargaining that the social partners in the engineering industry start the negotiating round. The engineering industry contains many of the export companies which are especially sensitive to competition from other countries. In recent years, industry has faced major problems of decreasing profitability and has made a large number of workers redundant.

The proposals for a new pay agreement made by Teknikarbetsgivarna should be seen in the light of the difficult economic situation of the engineering sector. The proposals, however, still came as something of a surprise. They contain items aimed at cutting wage costs, based on ideas that have been aired before. For example, the arguments for local bargaining and flexibility have roots in the 1980s and early 1990s. The unions are unlikely to be receptive about the demand to concentrate on local bargaining, or the proposals of no working time cuts, no specific efforts to help low-paid workers, and the very low starting level for the 'pay pools'.

However, there is some mutual understanding about the poor economic situation of export industry. It may turn out that the pay issue will not be the major stumbling block in the engineering negotiations, but rather working time, with the trade unions strongly attached to continuing the working hours reductions that have occurred over the past six years. Furthermore, the employers’ wish for greater unilateral control of working time decisions, such as the proposed right to order workers to work on Saturdays, without overtime pay, will be hard to handle.

By tradition, the pay agreements in engineering and the export industry very often set the pattern for wage bargaining in other sectors. It is likely that the employers' associations in other parts of industry will follow the approach taken by their counterparts in engineering when they present their proposals in late February . The outcome of the negotiations is hard to foresee. (Annika Berg, Arbetslivsinstitutet)