Social partners’ battle over pay set to continue

Swedish social partners in industry managed to sign a collective agreement on 13 December 2011, after long and difficult wage negotiations. However, although the employer organisations are satisfied that potential strikes have been averted, they claim the agreement is at ‘breaking point’. Unions are split over how much influence the agreement will have when other sectors begin wage bargaining in the spring of 2012, even though it has been accepted since 1997 as norm-setting.

Background

The cooperation agreement on industrial development and wage formation (Industrial Agreement) was signed by 12 employer organisations and six unions in 1997. It acted as a framework for wage negotiation and wage setting until 2010 when a new agreement was reached by the social partners with stricter negotiation rules and stronger incentives to maintain the manufacturing industry’s norm-setting role (SE1105019I). The new agreement also gives more power to impartial mediators to make sure that the agreement is concluded and effectively coordinated.

Delay in reaching agreement

The first negotiations of the wage bargaining round of 2011 were set to commence on 30 September and conclude on 30 November 2011. However, on August 29, the same day as the Swedish Trade Union Confederation (LO) presented its wage demands, the Swedish unions within the Unions in Industry partnership (Facken inom Industrin) presented different joint demands of their own. This split was caused by a disagreement over a new ‘gender equality fund’. The fund had originally been created to provide a top-up for low paid workers, predominantly women. The split was exacerbated by the fact that only 12 of the 14 unions on the LO board supported the confederation's call for the new fund. As a result, there was uncertainty about whether the industrial agreement would continue to act as a framework for wage-setting (SE1109039I).

The Unions in Industry partnership has five members:

• The Union (Unionen);

• the Union of Metalworkers (IF Metall);

• the Forestry, Woodworking and Graphic Workers' Union (GS);

• the Swedish Association of Graduate Engineers (Sveriges Ingenjörer);

• the Food Workers Union (Livsmedels arbetareförbundet).

They initially demanded substantial wage increases to compensate for low pay rises over the last few years. In turn, the employer organisations proposed wage increases around the same levels as in 2010. On the same day that the wage negotiations were meant to conclude, these unions turned down a proposed wage increase of 2.6% for 13 months.

It took until 13 December 2011, nearly two weeks after the scheduled conclusion of wage negotiations, for an agreement to be signed, with the manufacturing social partners eventually agreeing the second highest pay rise in their industrial agreements’ history. This sets out centrally determined wage increases of 3% for 300,000 workers over a period of 14 months, starting on 1 February 2012. This will cost employers an extra 2.6% annually. The agreement also guarantees wage increases for all workers and a monthly guaranteed minimum rise per full-time employee.

Disunity remains

While industry employer organisations describe the agreement as being at breaking-point, they are happy that the agreement is in place and has averted a potential strike. The unions are, in turn, satisfied by the agreement since in practice the agreement will result in increased real wages for their members.

However, the Confederation of Swedish Enterprise (Svenskt Näringsliv) says the industrial agreement is ill-suited for the service sector because the rises are too high in relation to the current economic situation. LO Chair Wanja Lundby-Wedin says the new industrial agreement will not affect LO’s framework of joint demands, which will not be revised before this Spring’s wage negotiations. IF Metall, on the other hand, argue that the industrial agreement needs to be used as the national framework in order not to endanger the entire wage mechanism.

Commentary

The battle between Sweden’s social partners looks set to continue, despite the industry agreement. It remains unclear to what extent the agreement will be accepted as a benchmark by other LO affiliated unions, when they start negotiating in 2012. It seems, from LO sources, that they will seek to top up the industrial agreement, at the same time as employer organisations are signalling that they hope to agree pay levels at around the same level as in 2010, because of uncertainty in the global and Swedish economy.

Mats Kullander and Malin Björklund, Oxford Research