New procedure for collective bargaining in services sector

Since the mid 1990s, the manufacturing industry has set the norm in terms of the level of wage increases in Sweden. This approach stems from the idea that a sector exposed to international competition should set wage levels. Thus, the social partners in the services sector have set up a similar agreement to avoid conflict and contribute to a responsible wage-setting mechanism. Reactions to the agreement have been mixed, and actors left out of the process are surprised and critical.

Industry Agreement used as a model for Services Agreement

The Industry Agreement (Industriavtalet) was concluded between the social partners in the industry sector a decade ago, creating a method for wage formation in the manufacturing industry which has also become the norm for other sectors of the economy.

This agreement implied a more regulated method of collective bargaining to ensure that Swedish wages increase simultaneously with wage levels in the EU, and to ensure that competition within the sector is based on industrial qualities instead of impairment of conditions.

For several years, discussions have continued on a similar agreement for white-collar workers, as the services sector is characterised by fast technological development and a high level of competition. The social partners have declared the need for a comprehensive agreement within the services sector. Thus, the recent Services Agreement has been concluded using the Industry Agreement as a model.

New agreement for services sector

The Services Agreement was signed by four trade unions – the trade union for professionals in the private sector, namely Unionen, the Swedish Association of Graduate Engineers (Sveriges Ingenjörer), the Swedish Union of University Graduates of Law, Economics, Personnel Management and Social science (Förbundet för jurister, civilekonomer, systemvetare, personalvetare och samhällsvetare, Jusek) and the Civil Economists (Civilekonomerna) – and the employer and trade organisation for the Swedish Service Employers’ Association (Almega). The agreement covers 400,000 employees within 9,000 companies in the services sector.

The purpose of the agreement is to try new models of collective agreements and simplify the rules for concluding agreements, along with creating a responsible wage-setting system. As part of the agreement, the signatory parties jointly take responsibility for developing models for cooperation within the sector to encourage good relations between employers and employees and to avoid any forms of industrial action. Four permanent development groups will be created to address issues regarding wage formation, negotiations and financial and economic policies.

The agreement strives for a wage formation mechanism that is free of conflict, and the parties agree to create and pursue conditions for constructive collective agreements: the employer organisations have agreed to pursue a high level of density, while the trade unions agreed to try to develop new models for collective agreements.

Reactions from social partners

Reactions from the social partners regarding the new agreement have been mixed.

The parties to the agreement evidently consider it a very positive development, and believe that organising members from both trade unions and employer organisations will lead to good conditions for cooperation and trustful relations in the sector. The Swedish Association of Graduate Engineers believes that the new, simplified rules are an opportunity to encourage more companies to sign collective agreements, which is favourable for trade union members.

However, some criticism has been voiced by other organisations. Despite the fact that both blue-collar and white-collar workers are to be found in the services sector, the agreement only covers white-collar workers. This has caused negative reactions from the Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO), which has members in the sector that have been left out of the agreement. LO was completely unaware of this development and the agreement came as a surprise to the confederation. The management of LO is dissatisfied with not having been informed about the negotiations. The Chair of the confederation, Wanja Lundy-Wedin, is surprised that LO-affiliated trade unions were not included in the discussions, as a close cooperation between LO and employees in the services sector has been emphasised in the wage negotiation round.

In response to the criticism, Unionen stated that the agreement is aimed at parts of the services sector where only white-collar workers are found. Almega justifies the agreement as an adjustment to parts of the sector where trade union density is low, where employers can contribute to raise the level of organisation and in return get agreements that are adapted to these parts of the sector.

The Union of Service and Communication Employees (Facket för Service och Kommunikation, SEKO) criticises the fact that the agreement has been realised without its knowledge, and argues that sector-related agreements with simplified regulations can imply a weakened employment protection. Other LO members, such as the Swedish Municipal Workers’ Union (Svenska Kommunalarbetareförbundet, Kommunal), have stated that they feel left out and that trying new models of agreements and adjusted solutions is often only profitable for employer organisations.

However, reactions to the agreement are not only negative among LO members. The Swedish Union of Metalworkers (IF Metall), one of the founders of the Industry Agreement, believes it is important to have order and clear rules for collective bargaining.

Commentary

A common agreement for the services sector may influence wage formation and simplify collective bargaining in the sector. It may somehow seem remarkable, however, to talk about developing bargaining in the services sector, when only parts of the sector are covered by the agreement.

References

Axelsson, C., ‘Tjänstesektorn får samarbetsavtal’, Svenska Dagbladet, Web article, 23 October 2009

Jacobsson, G., ‘Svårt att kommentera från läktaren’, LO-tidningen, Web article, 26 October 2009

Mats Kullander and Ellinor Häggebrink, Oxford Research

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