Engineering pay deal agreed

In February 2001, new pay agreements, valid for over three years, were concluded in Sweden's pattern-setting engineering industry. Blue-collar workers will receive a pay increase of 7% over the period and white-collar workers and graduates a rise of 5.5% (though with greater scope for subsequent local bargaining). Working time reductions were also agreed for all groups.

A new collective agreement for the engineering industry (verkstadsavtalet) was signed by Swedish Engineering Industries (Sveriges Verkstadsindustrier, VI) on the employers' side and the Metalworkers' Trade Union (Svenska Metallindustriarbetareförbundet, Metall) on 8 February 2001. The deal is valid for 38 months from 1 February 2001. The engineering industry deal is the main pattern-setting settlement for bargaining over pay and employment conditions in Sweden. In parallel, VI signed a very similar agreement with the trade unions representing white-collar workers and university graduates in the engineering industry, the Swedish Union of Technical and Clerical Employees in Industry (Svenska Industritjänstemannaförbundet, SIF) and the Association of Graduate Engineers (Civilingenjörsförbundet, CF).

The new VI-Metall blue-collar agreement, covering some 220,000 workers, provides for pay rises of 7% over 38 months, plus working time cuts worth an additional 1.5%. "Before the bargaining round started our goals were to ensure increases in real wages, shorter working time and better conditions for skill developments and work environment. All these issues are represented in the new agreement," said Göran Johnsson, the chair of Metall, after the accord was signed.

Main provisions

The VI-Metall agreement lays down rises in 2.3% from 1 February 2001, 2.0% from 1 February 2002 and 1.7% from 1 March 2003, with the details to be negotiated at company level. In addition, pay will be revised through a so-called "wage spread guarantee" of 1% over the whole agreement period. Workers are guaranteed a minimum SEK 700 monthly pay increase over the whole period: the lowest-paid workers will thus receive a pay increased of 9.5% over the 38 months.

Working time is reduced for day-time workers by 30 minutes per week and for workers in two-shift systems by 36 minutes per week. The agreement means that annual working hours will have been cut by about 66 hours over the period from 1995 to 2004 (SE9803177N). Weekly working time will be 38.6 hours for daytime workers and 36.8 hours for workers in two-shift systems. The "time-banks" established by earlier agreements will be used to save up these working time cuts and overtime hours, which may be taken as paid leave or, if the individual worker so wishes, as an additional pension contribution. Overall, the working time reductions will add 1.5% to pay costs.

Minimum annual holiday pay will be increased by 13%, or SEK 35 per year. Furthermore, blue-collar workers are now for the first time guaranteed a right to take an annual holiday "without having worked a sufficient time during the year to have gained the required days of leave entitlement for this holiday -" a right that white-collar workers in engineering have had for a long time. This is especially favourable for newly recruited workers who normally do not have sufficient service to qualify for a full annual holiday.

Current collective agreements on the work environment and company healthcare will be strengthened on certain points concerning the quality of company healthcare services. A working group containing representatives from all three trade unions and the VI employers' association will conduct a survey of the work environment problems in the sector. The current collective agreement on skill development will also be given more impact. Skill development must be considered for workers in an unfavourable wage situation, while the right to negotiate skill development issues will be stronger. Furthermore, individual workers will be entitled to a skill development plan on demand.

There is one issue with clear gender relevance in the agreement. Male workers will receive an additional 10% pay supplement on top of normal parental leave benefit (SE9909192F), if they take parental leave in certain situations, such as when the family is going to have a baby or adopt a child. This right has hitherto applied only to female workers. This section in the new collective agreement is also valid for engineering industry workers represented by other unions.

White-collar and graduate agreement

For the 100,000 or so SIF members and 30,000 CF members in the engineering industry, the new agreement contains a pay rise of 5.5% over 38 months - 2.1% on 1 February 2001, 1.8% on 1 February 2002 and 1.6% on 1 March 2003. Pay revisions should occur on the same dates. Annual working time will be cut by one day per year over three years, as for blue-collar workers. The cost of the new agreements for employers will be about the same for all groups, as university graduates and white-collar workers, although fewer in number, have higher salaries to start and greater possibilities to receive an extra pay rise in local negotiations.

Negotiating process

In autumn 2000, Metal requested pay rises amounting to an increase in costs of about 3% per year, plus a reduction in annual working time by 15 hours at a cost of about 0.8% (SE0010170N). SIF and CF made essentially the same claims. VI offered a 4.0% pay rise over three years to Metal and 3.5% to SIF and CF, plus a working time cut amounting to a cost increase of 0.9%. However, the employers also demanded the right unilaterally to decide the flexible distribution of working time over the year (within the legal framework).

Negotiations started in late autumn and on 6 December 2000 the three unions announced that they had declined the offer from VI. The impartial mediators, appointed in line with the 1997 cooperation agreement on bargaining procedures in industry (industrins samarbetsavtal) (SE9703110N), intervened to assist the further negotiations. On 1 February 2001, the existing agreements in the engineering industry expired. The last week in January was thus very intense for both mediators and negotiators: when an agreement expires. the parties are no longer bound by any peace clauses (fredsplikt) and can therefore start industrial action if they wish. SIF would still not accept the employers' compromise demand for a free hand in the allocation of a six-week period of working time per year. Nor would the white-collar workers' union shift from its demand for local negotiations over the distributions of the guaranteed monthly pay rise of SEK 700. This caused the mediators to order a week's suspension of the talks on 1 February 2001 (SE0102180N). However, there was no real fear of a conflict, at least not so early in the process. It was generally hoped that the mediators should succeed in bringing all the parties together on 8 February after a week's rest.

On 8 February, the four parties duly signed the new collective agreements. The Metal and CF negotiators, who were ready to sign a week earlier, were notably pleased to see that the mediators had succeeded in reconciling VI and SIF. SIF's chair, Marie-Ann Krantz, obtained a right for her members to negotiate at local level over the distribution and timing of the SEK 700 guaranteed pay rise. VI's director, Heinrich Blauert, obtained the right for employers freely to allocate six weeks of working time year. SIF finally accepted this point, following the introduction of a new formulation in the collective agreement about the possibilities for the local parties to impose limitations on this rule.

Commentary

It is obvious that both the mediators and the bargaining parties in the engineering sector were anxious to reach a solution, and that nobody wanted to start industrial action. The mediators would normally have stopped work on 1 February and let the parties decide for themselves about further developments. However, the 1997 agreement on cooperation and bargaining procedures in industry includes a provision for allowing the parties time to consider in such cases.

The long-running (three years plus) collective agreements constitute a competitive advantage for Swedish engineering companies, compared with those European Union countries with, for example, one-year collective agreements. The agreed annual pay rise in engineering - as well as those earlier agreed upon in the chemicals (SE0101177N) and paper industries - is about 2.5%, excluding the working time cut. In the local negotiations at company level, workers are likely to receive 0.3% to 0.5% extra above the agreed levels. If these calculations hold true, it is possible that Sweden can maintain reasonable pay growth over 2001-4, compared with other EU countries. This asumes that all the other sectors that are now negotiating, or will do so later on in the spring, follow the same modest pattern as industry. That has been the case several times before, as in the previous bargaining round over three-year agreements in spring 1998 (SE9806190F). (Annika Berg, Arbetslivsinstitutet)