Divergent social partner positions prior to 2010 bargaining round

Wage formation in the 2010 bargaining round will be difficult due to the high level of recent restructuring in Swedish industries and the financial crisis. The social partners have begun to outline their positions before the large wage negotiation round for 2010 commences. Trade unions claim that there is scope for some wage increases, despite the financial crisis and low level of economic activity. Employers assert that there is no room for wage increases in times of recession.

Background

The recent report from the National Institute of Economic Research (Konjunkturinstitutet, KI) entitled ‘Wage formation in Sweden 2009’ focuses on next year’s wage bargaining and the relations between wages and economic development. KI highlights the importance of a responsible wage formation in order to ease the effects of reduced employment levels and to avoid deepening the economic crisis. In 2010, about 500 out of 600 collective agreements will be renegotiated, covering 90% of the country’s total workforce. The majority of the national agreements have to be renegotiated before the end of March 2010. The bargaining round will be a huge challenge for the social partners in light of the ongoing recession and large tensions between the parties (SE0910019I).

KI estimates that wage increases of between 1% and 2.5% could balance the risks of deflation, on the one hand, and high labour costs in general, on the other. KI states that higher or lower wage levels will carry the risk of deflation spirals or large increases of unemployment levels and as a consequence long-term social exclusion. The institute highlights the need to increase flexibility in next years’ national collective agreements in order to adapt to specific realities of various industries. The social partners have different views, however, with employers giving a zero bid for wage increases and trade unions calling for a wage increase of about 3%.

The social partners have organised congresses to debate what issues, besides wages, should be prioritised in next year’s bargaining round. This article will try to give an overview of the social partners’ positions before the negotiations in 2010.

Trade union positions

The trade unions have started to prepare themselves and their members for the large bargaining round in 2010. Most trade unions argue that there is scope for wage rises and that wages should increase by more than the level recommended by KI.

The President of the trade union for professionals in the private sector (Unionen), Cecilia Fahlberg, and the Swedish Unions within Industry (Facken inom Industrin) – a partnership between the industry trade unions that have signed the Cooperation Agreement on Industrial Development and Wage Formation – claim that there is room for wage increases and accuse the employer organisations of taking advantage of the recession by arguing that Sweden has a problem of high labour costs.

According to the Swedish Unions within Industry, the problem is not related to high labour costs but rather a large deficit in demand for products. Unionen will focus on the high unemployment levels among young people and gender equality in next year’s bargaining round. It also emphasises the need for increased security for employees, improved restructuring insurance systems and increased investments in service training. Furthermore, Unionen also suggests making agreements valid for only one year due to the ongoing recession.

The Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO) has suggested a controversial change of the bargaining tradition by arguing the advantages of giving the retail sector the norm-setting role for the wage negotiations next year by letting the Swedish Trade Federation (Svensk Handel) and its counterparts set the norm in terms of wage increase instead of the industry sector. LO believes that the industry sector may be too weak in the aftermath of the recession in order to carry out its role in setting the norm in terms of wages for the rest of the economy. LO also argues that employees should no longer have to pay for the financial crisis in the form of temporary layoffs and reduced salaries. The confederation argues that about a 3% increase in pay is reasonable. In addition, LO highlights four central issues for next year’s bargaining round, which include:

  • preventing companies from avoiding the order of selection regulation (last employee hired should be made redundant first), as defined in the Employment Protection Act (Lag (1982:80) om anställningsskydd, LAS), by using short-term employment (temporary agency workers). This should be achieved by introducing limits for these types of contracts;
  • gender equality and equal pay;
  • the right to full-time employment;
  • ending the possibility to hire employees for so-called ‘limited periods’.

The Swedish Association of Health Professionals (Vårdförbundet) emphasises that companies’ growth and profits should be reinvested in the workforce instead of ending up in owners’ pockets and to a much larger extent be reflected in the workers’ pay checks.

Employer organisation positions

The Confederation of Swedish Enterprise (Svenskt Näringsliv) highlights that there are large differences among companies in their capacities to increase wages between various trades and industries. This is due to the fact that the recession has had diverse effects in the Swedish economy and among its actors.

Therefore, the Confederation of Swedish Enterprise highlights the need for increased flexibility and adjustments to companies’ present situations. It also questions KI’s wage formation report’s recommendation for a wage increase of 1%–2.5%. The employer organisations have announced a ‘zero agreement’ for next year and argue that higher wage rises will result in further increases in unemployment levels. The employer confederation has been very critical of the proposal to make the retail sector the norm setter for wages instead of industry.

Both the Confederation of Swedish Enterprise and the Association of Swedish Engineering Industries (Teknikföretagen) argue for more flexibility regarding wages, working time as well as types of employment. The Confederation of Swedish Enterprise has for a long time argued for a reform of the LAS, especially the order of selection of redundancy, in order to help companies to retain the competences they need for survival.

The employer confederation also emphasises the need to increase the use of temporary agency workers in order to increase flexibility and adjust the costs of labour in line with production levels. However, the trade unions are strongly against this request and want to reduce the extent and scope of the use of temporary agency workers. According to an article in the newspaper Dagens Arbete on 6 Ocober, the issue of temporary agency workers may be one of the most contentious issues among the social partners.

The public sector employer organisations have argued for zero agreements. The Swedish Agency for Government Employers (Arbetsgivarverket) wanted to settle for a zero agreement at last year’s negotiation round and is expected to do the same during the upcoming bargaining round. The Swedish Association of Local Authorities and Regions (Sveriges Kommuner och landsting, SKL) has adopted the same position as the Confederation of Swedish Enterprise and the Association of Swedish Engineering Industries. SKL, as usual, does not want to settle wages at national level. However, it has outlined that there might be room for as much as a 2%–2.5% increase in pay at local levels.

The Swedish Service Employers’ Association (Almega) has initiated a debate on reforming the whole bargaining system and demands more modernised national agreements, in line with the positions of the Confederation of Swedish Enterprise and the Association of Swedish Engineering Industries noted above. Almega wants to completely decentralise all collective bargaining to company level in order to be able to increase flexibility and adapt to different industries’ needs (SE0910019I).

Karolin Lovén, Oxford Research

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