Working life country profile for Sweden
This profile describes the key characteristics of working life in Sweden. It aims to provide the relevant background information on the structures, institutions and relevant regulations regarding working life.
This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are systematically updated every two years.
Sweden has an extensive welfare state characterised by universal coverage, high levels of social protection and a large public sector. The labour market is regulated mainly through collective agreements, without interference from the government.
Between 2012 and 2022, Swedish real gross domestic product (GDP) increased by 14.54%. During this time, the unemployment rate decreased for all categories considered, in particular for young people. In this group, unemployment decreased by 1.3 percentage points to a rate of 21.7% in 2022, when the total unemployment rate was 7.5%. The employment rate over the entire period was above the EU average in all categories. In 2020, due to the pandemic, GDP contracted by 3.5%. In addition, the overall unemployment rate grew by 1.5 percentage points; the most notable increase was in youth unemployment, increasing by 3.8 percentage points compared with 2019. Because lockdown had less of an impact in Sweden than in other Member States, the economy bounced back in 2021 with a 5.1% increase in GDP. However, in 2023, the economic growth projections were worse. The European economic forecast for the winter of 2023 projected that, apart from Germany (for which a decrease of 0.6% was forecast), Sweden would be the only Member State in which GDP would decrease, by 0.2% over the year.
The Employment Protection Act (LAS 1982:80) regulates the relationship between employees and employers in the public and private sectors. It describes different types of employment and the rules that apply when employment is terminated. The law is subject to an ongoing reform process, and the government is incorporating into law a bipartite agreement signed by the social partners. In 2020, under pressure from the government, a bipartite agreement was concluded on new employment protection insurance and associated unemployment insurance issues; a new public organisation for restructuring support that will offer and finance basic adjustment and skills support; and a new and parallel public student grant.
The Employment (Co-Determination in the Workplace) Act (MBL 1976:580) regulates collective agreements, and provides for an employee’s right to trade union representation and to join a trade union and an employer’s right to join an employer organisation. It describes employees’ and employers’ rights and obligations during negotiations and conflict.
The Swedish Work Environment Authority (Arbetsmiljöverket) is the labour inspectorate. The authority ensures that the Work Environment Act (AML 1977:1160) and the Working Hours Act (Arbetstidslagen) (ATL 1982:673) are followed.
The main agreement regulating collective bargaining between social partners (Saltsjöbadsavtalet) was signed in 1938. The agreement gives employers and trade unions the right to determine wages and employment conditions in collective agreements. Self-regulation through collective bargaining is a strong tradition in the Swedish labour market.
Until the 1980s, bargaining mainly took place centrally. But after an economically turbulent period due to the deregulation of the financial markets, with a high inflation rate and no real wage growth, there was a subsequent shift in bargaining from central to sectoral level. Bargaining at local level is also becoming increasingly common.
The Industrial Cooperation and Negotiation Agreement (Industriavtalet) has guided wage formation in collective agreements since 1997. The agreement is intended to ensure that wages are sustained at levels that take into account Swedish productivity and international competitiveness. The social partners in the industrial sector set a joint ‘cost mark’, which they promote to the wider labour market. This has generally been successful, although there is no guarantee that social partners in other sectors will adhere to the mark. In 2020 and early 2021, following a delay of around six months due to the COVID-19 crisis, around 500 collective agreements were negotiated. The Industrial Cooperation and Negotiation Agreement of 2020 set a benchmark wage increase of 5.4% over three years, which also became the standard for other sectors for the rest of the year. Negotiations on new agreements started in April 2023 (National Mediation Office, 2020, 2023).
