Deadlock in negotiations on new central agreement

Negotiations for a new central agreement between the social partners have ended in deadlock due to disagreements regarding restrictions on industrial action and the renegotiation of the Employment Protection Act (LAS). The employers argued that the priority rules in the case of dismissal set out in the LAS should be changed to focus more on workers’ competences and skills. The trade unions rejected this demand and submitted a counterproposal that would incur costs for employers.

Background

Negotiations were initiated between the social partners to replace the current central agreement, Saltsjöbadsavtalet, from 1938. The organisations involved included the Confederation of Swedish Enterprise (Svenskt Näringsliv), the Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) and the Council for Negotiation and Cooperation (Privattjänstemannakartellen, PTK). The European Court of Justice (ECJ) ruling in the Laval case showed that change was necessary and the social partners thus considered it time to reform the model. The social partners in Sweden have a role that corresponds to functions that, in many other countries, lie with the public authorities and legislation. The labour market is mainly regulated by the Saltsjöbadsavtalet and collective agreements. Previous attempts have been made to renegotiate the central agreement in the 1970s and 1980s, but these negotiations did not result in a new central agreement. According to the Confederation of Swedish Enterprise, the most recent negotiations have also failed to conclude a new central agreement due to the collapse of the talks.

This article looks at the reasons behind the breakdown in negotiations and is a follow-up of earlier EIRO articles dealing with the Swedish labour market model negotiations (SE0811029I) and the Swedish Laval inquiry (SE0901029I, SE0804029I).

Reasons for collapse of negotiations

The aim of the recent negotiations between the social partners was to reach a new central agreement in the first quarter of 2009. However, on 11 March, the Confederation of Swedish Enterprise announced that it intended to withdraw from the negotiations. The confederation attributed its decision to the strong disagreements that had arisen between the parties involved in the negotiations, insisting that they could therefore not manage to reach an agreement.

The main disagreements related to the priority rules and the right to take industrial action. The Confederation of Swedish Enterprise wanted to reduce the right to take industrial action and to renegotiate the Employment Protection Act (Lagen om anställningsskydd, LAS, 1982:80 (in Swedish)). However, LO and PTK did not agree with these demands. The LAS includes rules about the ‘order of priority’ in the case of dismissals. The order of priority means that the last person employed in a company should be the first one to lose their job in the event of dismissals. According to the Confederation of Swedish Enterprise, these rules are not compatible with the competitive nature of today’s economy. Therefore, the confederation wants to change these rules of priority so that they are based on competences and skills. The parties to the negotiations also disagreed on restrictions regarding the right to take industrial action. The employers proposed to limit the right to organise industrial action such as sympathy strikes, but the social partners also disagreed on this issue.

Position of employers

The Confederation of Swedish Enterprise made it clear from the beginning of the negotiations that restrictions on industrial action, particularly sympathy actions, and the renegotiation of the LAS priority rules were necessary. The confederation highlighted that the ongoing global economic crisis also affects the Swedish economy and results in a situation where demand for flexibility and ability to adapt is more important than saving enterprises and jobs. Therefore, the employers argued that a reform of the old central agreement is needed. At the beginning of March 2009, the confederation handed over a proposal for a new central agreement. When LO and PTK presented their response to the employers’ proposal, it became obvious that they would not even consider meeting the demands tabled regarding these issues.

Instead, a counterproposal from LO and PTK contained several trade union demands that would have resulted in considerable costs for employers. The Confederation of Swedish Enterprise stated that it would discuss the demands of LO and PTK, provided that its own demands were heard. When this appeared impossible, the confederation decided to withdraw from the negotiations. The employers therefore blame the trade unions for the breakdown in negotiations. According to them, it became obvious that LO and PTK were not willing to negotiate on the grounds of the proposal that the employers presented when the negotiations started. The Confederation of Swedish Enterprise believes that LO and PTK at a central level understand the need for reform but that it was the local-level trade unions that objected to the employers’ proposals.

Trade union view

LO and PTK expressed their disappointment that the employers decided to end the negotiations, but they also confirmed that they were unwilling to meet the employers’ demands. According to LO and PTK, changing the priority rules in the case of dismissal would mean abolishing employment protection and would leave it to the employer to decide who should be fired in cases of dismissals. The parties argued that the Confederation of Swedish Enterprise has demanded extensive reforms that would seriously weaken the situation of employees by causing insecurity in the case of change and in the future. LO and PTK were also critical and cautious of reducing the right to organise industrial action, such as sympathy strikes, and the consequences this change might have. Therefore, the trade union side argued that the employers have demanded far-reaching changes that would strongly weaken the situation of employees and the responsibility of the parties with regard to the Swedish labour market, as well as undermining the Swedish labour market model. On this basis, LO and PTK decided to reject the employers’ demands regarding these issues.

Karolin Lovén, Oxford Research

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