Retailers urge manufacturers to reach trend-setting collective agreement

This year’s bargaining round in Sweden is bigger than ever before. Most of the 600 agreements covering 3.3 million employees are due to be signed by the end of March 2010. However, norm-setting negotiations between social partners in the manufacturing sector have stalled. If an agreement is not signed soon, the Swedish Trade Federation warns that it will ignore the preceding industrial negotiations and seek a settlement in order to avoid strikes during Easter.

In Sweden, sectoral collective agreements are negotiated to determine wage levels and working conditions at local level. Currently, the country is in the midst of an intense bargaining round, where 550 of the 600 Swedish collective agreements will be renegotiated, covering 3.3 million employees. In 2007, 12 employer organisations and seven trade unions signed the Cooperation Agreement on Industrial Development and Wage Formation (Industriavtalet), which concerns about 600,000 employees. The Swedish Unions within Industry (Facken inom Industrin) coordinates the trade unions’ positions and comprises: Unionen, the Union of Metalworkers (Industrifacket Metall, IF Metall), the joint Graphics Industry Union and Forestry and Woodworkers’ Union (Grafiska Fackförbundet Mediafacket och Skogs- och Träfacket, GS), the Swedish Association of Graduate Engineers (Sveriges Ingenjörer), the Food Workers’ Union (Livsmedelsarbetarförbundet) and the Swedish Paper Workers’ Union (Svenska Pappersindustriarbetareförbundet, Pappers).

Disagreement over wage increases

The central social partners have decided to let the industry agreement set the norm for wages in other sectors of the economy, as the manufacturing sector is exposed to international competition, which ensures that wages are set in accordance with the level of other European countries. This has worked well in the past, with moderate but stable pay increases during the last 12 years. The current negotiations have, however, stalled as the social partners continue to disagree over wage increases and the state of the economy (SE0910029I).

The Swedish Unions within Industry are more positive about the recovery of the economy and they have therefore demanded pay increases of 2.6% to sustain purchasing power. Meanwhile, employer organisations – with the Association of Swedish Engineering Industries (Teknikföretagen) at the forefront – have argued that the economic recession is still putting pressure on the already struggling manufacturing sector. Thus, employer organisations have initially demanded that zero wage increases are the only reasonable solution in order to relieve some of the pressure. Nonetheless, as negotiations have continued, employers have agreed to an increase of 0.7%.

Tighter regulations for employment agencies

A further controversial issue in the collective bargaining round is whether regulations concerning tighter controls on temporary work agencies should be implemented. The trade unions have argued that they cannot accept a deal that does not involve changing the regulation of employers’ abilities to lay off workers and rehire them through temporary work agencies. This practice of laying off and rehiring workers is a way for employers to bypass the Swedish Employment Protection Act (Lag (1982:80) om anställningsskydd, LAS).

Trade unions argue that this practice is wrong and that the social partners should sign agreements that make it legally impossible. In contrast, employer organisations consider that such regulation would be just another way for trade unions to restrict and dictate how companies do business. The restriction will, according to employer organisations, create a static labour market and worsen Swedish companies’ ability to compete internationally.

Some progress made

Until 1 March 2010, the parties negotiated on their own, after which mediators stepped in to facilitate the process. The six mediators (opartiska ordförandena, OpO) are part of the industry agreement and consist of experienced negotiators from both sides of industry. Nevertheless, despite the mediators’ intense efforts over several weeks, the difficulties in concluding agreements remain.

On 20 March, the white-collar trade union in the manufacturing sector, Unionen, did however agree with the employers on an 18-month agreement stipulating a 2.6% wage increase while an additional 0.2% will go towards updating skills and vocational training. The much debated issue surrounding temporary agency workers was put aside for the attention of a bipartite working committee.

Unionen’s acceptance of a deal was unexpected, as there is a tradition among the trade unions in the manufacturing sector to act jointly, partly because of their role as trendsetters. This split among the trade unions is significant in a historical context and may have serious consequences for the continuing development of the collective bargaining round.

Employer reaction to slow progress

Other social partners have expressed discontent about the slow progress of the negotiations in the manufacturing sector. The Swedish Trade Federation ( Svensk Handel) – representing employers in the wholesale and retail trade sector – declared in a statement that the whole idea of using one agreement as a norm for the others is that it should be signed before the other agreements expire. The employer federation argues that since the current agreement in the wholesale and retail trade sector expires on 1 April 2010, a deal will have to be signed as soon as possible. Otherwise, an impending strike during Easter, which is one of the busiest holidays of the year, will wreak havoc in the wholesale and retail trade sector.

Other employer organisations are concerned that, if the Swedish Trade Federation signs an early deal, it will be to the benefit of trade unions and not employer organisations. The rationale behind this belief is that wholesale and retail trade is a less exposed sector in the international market and that it therefore is likely to agree to larger wage increases which could act as norms for all of the other agreements.

Commentary

On 31 March 2010, the three-year agreements concluded in 2007 come to an end for two million employees, including in the manufacturing sector. The Food Workers’ Union has already given notice of industrial conflict, and the remaining process will not be easy.

As of now, the main issue is whether an industrial agreement will be signed within the next week. If a settlement is not reached soon, the Swedish Trade Federation has stated that it will strike a deal with the Commercial Employees’ Union (Handels). This will have unforeseen consequences on the model of norm setting. In 2007, the wholesale and retail trade sector also stood out, that time through higher wage agreements than stipulated by the norm.

Moreover, a solution to the controversial issue of temporary work agency regulations remains uncertain. This is perhaps the largest point of disagreement in the negotiations to date.

Sources

Andersen, I., ‘Nya avtalet – En provokation’, Arbetaren, 17 March 2010.

Forssblad, M., ‘Urban Bäckström till attack mot facket’, Sveriges Radio, 15 March 2010.

Hillbom, C., ‘Flera parter avvisar medlarbud’, Sveriges Radio, 14 March 2010.

Jacobsson, G., ‘Konflikt rycker närmare’, LO-Tidningen, 15 March 2010.

Jacobsson, G., ‘IF Metall spindeln i nätet’, LO-Tidningen, 17 March 2010.

TT, ‘Klackenberg hotar trotsa industrin’, Dagens Nyheter, 16 March 2010.

Mats Kullander and Oskar Eklund, Oxford Research

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