Halt in social partner talks to tackle unemployment

Unions and employers in Sweden have blamed each other after talks on a government initiative to tackle youth unemployment stalled. The intention was to encourage closer cooperation between unions and employers to create 30,000 jobs specifically for young people. However, after six months of talks between the Swedish Trade Union Confederation the Confederation of Swedish Enterprise, the future of the government strategy is now in doubt.

Background

Swedish Prime Minister Fredrik Reinfeldt presented a strategy to tackle unemployment amongst the young during the Swedish annual political summit in July 2012. Youth unemployment levels in Sweden are worringly high, and the new strategy was designed to encourage close cooperation between the government, trade unions and employers.

The Swedish Government believes employers should combine on-the-job training and education to help young people with no experience to enter the labour market. The centrepiece of the proposal involved letting people under the age of 25 combine education and work following completion of studies at upper secondary school.

Thw government’s the job pact had three elements:

• agreements on vocational training;

• adjustment agreements concerning the termination of contracts due to redundancy;

• agreements on short-time work.

It was hoped that eventually 30,000 jobs for young unemployed would be created (SE1208019I).

Sudden collapse of talks

There were 18 meetings between the government, the Swedish Trade Union Confederation (LO) and the employers’ organisation the Confederation of Swedish Enterprise (Svenskt Näringsliv) before the talks suddenly collapsed. The unions and the employers blamed each other.

The Chair of LO, Karl-Petter Thorwaldsson, said in a news article (in Swedish) that he was surprised by that the job pact negotiations had stalled. He claimed Urban Bäckström, Chair of the employers’ organisation Svenskt Näringsliv, had decided to say no to the continuing discussions. Thorwaldsson said LO would try to find another forum to formulate strategies to fight youth unemployment.

The Vice-Chair of Svenskt Näringsliv, Christer Ågren, blamed LO for the problems in an article (in Swedish) on the company website. He accused LO of being irresponsible in its attempts to broaden the job pact agreement to include matters unrelated to youth unemployment. According to Ågren, trade union negotiators, among other things, wanted to discuss labour laws and pensions. He said Svenskt Näringsliv would return to the negotiation table if LO dropped its attempts to change Swedish labour laws.

As a response to the statement, Thorwaldsson said in a news article in (Swedish) that he was prepared to let go of all claims to change the labour laws through political decisions, and look at a range of alternative solutions.

Importance of the pact is downplayed

Finance Minister Anders Borg played down the significance of the interrupted negotiations in a news article (in Swedish). He said key discussions would continue at sectoral level. Borg refused to pass judgment on the actions of LO and Svenskt Näringsliv but agreed in another interview that it would be better if the two sides reviewed their positions. Borg said he was convinced that the most effective strategies to target unemployment were created by agreements between the main social partners and not through legislation.

Meanwhile, Social Democrat Party Leader Stefan Löfven, said in a news report (in Swedish) that he was concerned that the job pact was the government’s only initiative to tackle youth unemployment. Löfven is a former Chair of the Swedish industrial workers’ trade union IF Metall, an important member of LO. He advised the government to take notice of a Social Democrat Party proposal to establish a political agenda for a ‘maximum tolerance level of youth unemployment of six months’, independently of agreements between LO and Svenskt Näringsliv.

Lars Calmfors, Professor of International Economics at the Institute for International Economic Studies, Stockholm University, also questioned the significance of different labour policy strategies. Calmfors said in a news article (in Swedish) that such policies had a limited impact when unemployment rates reached certain critical levels.

Commentary

The job crisis will probably continue to dominate the political agenda in the foreseeable future and affect the balance of power between the social partners. As a result of the high rate of unemployment, the employers are likely to hold a position of strategic advantage in demanding lower wages and reduced working time in the on-going bargaining process.

There also seems to be a growing trend in the private sector to reorganise collective agreements in favour of lower pay and reduced working time to the great dismay of unions.

Emilia Johansson and Lisa Ringqvist, Oxford Research