Sweden: Latest working life developments Q4 2018

Gender wage differences, the participation of older workers in the labour force and the 80-year-old agreement that established the framework for collective bargaining in Sweden are the main topics of interest in this article. This country update reports on the latest developments in working life in Sweden in the fourth quarter of 2018.

Narrowing of wage gaps

In 2017, the government commissioned the National Mediation Office to map changes in relative wages between different occupations from a gender perspective and these were published in late 2018. The authority looked at wage data for 383 occupations between the years 2014 and 2017, and found that while wage development in many occupations stayed fairly close to the average growth rate of 2.3% per year, a majority of occupations deviated negatively or positively by 0.5% or more. Both male-dominated and female-dominated occupations were found among those that deviated positively. But as the female-dominated occupations were larger, the aggregated effect was a decrease in the gender wage gap.

The share of women increased in occupations that require a higher level of educational attainment. This point, coupled with the fact that such occupations saw a stronger level of wage development, contributed to a reduction in the gender wage gap. Occupations with lower educational requirements, on the other hand – such as work in administration and customer services – experienced a weaker than average level of wage development. Furthermore, wage development was strongest in occupations with labour shortages or where specific wage-related initiatives had been launched (e.g. teachers and assistant nurses).

The authority also found that wage formation in Sweden was greatly influenced by the wage norm set by the manufacturing industry. This wage norm has often been criticised for reinforcing relative wage differences, although the study results did not find evidence to support this hypothesis within the 2014­–2017 period.

• Swedish National Mediation Office: Yrke lön och kön – En kartläggning av löneläget för 383 yrken mellan 2014 och 2017 – ett jämställdhetsperspektiv

Older workers stay in work longer

In October, the Institute for Evaluation of Labour Market and Education Policy (IFAU) published a report about the length of working life. The results showed a clear increase in the share of older workers remaining in the workforce. The percentage of men aged 60–64 in the workforce increased from 55% in the late 1990s to 75% in 2017, while the percentage of women also increased, reaching 70% in 2017. One influencing factor seemed to be the gradual removal of the option to retire early.

Little has changed among those aged 65 and over, with only around 25% of men and 20% of women in the 65–69 age group working. One of the report’s authors, Lisa Laun, commented that it was still very common for people to retire after turning 65, despite older workers being healthier today than ever. ^[1]

Saltsjöbaden Agreement turns 80

December marked 80 years since the Swedish Trade Union Confederation (LO) and the Swedish Employers Association (SAF) signed the Saltsjöbaden Agreement (SAF later merged with the Federation of Swedish Industries to form the Confederation of Swedish Enterprise). The agreement – initially made in response to the many industrial conflicts and subsequent threats of increased government involvement – laid the foundations for what is now known as the ‘Swedish model’ of collective bargaining. It has also come to stand for a form of industrial relations known as the ‘Saltsjöbaden spirit’, which is marked by a willingness to cooperate, mutual respect, the desire to arrive at peaceful solutions based on compromise and a sense of responsibility for developments in the labour market.

The agreement sets out rules relating to collective bargaining, industrial action and disputes threatening the public interest. There were also originally rules on termination of employment, but these were replaced by employment protection legislation in 1974.

While the agreement is still highly relevant, threats to the model have been identified by trade unions and employer organisations. The previous director-general for the National Mediation Office, Claes Stråth, recently highlighted three such challenges: policymakers meddling in wage formation and employment protection, departures from the usual negotiation procedures, and incompatibility with EU law. Social partners acted upon the last of these threats in early October by setting up a joint Labour Market EU Council, a new forum for discussing and promoting the common interests of Swedish social partners relating to EU matters.^[2]

Outlook

Sweden has been without an official government since the general elections of September 2018 resulted in a hung parliament. ^[3] At the time of writing, discussions about the formation of a new government are ongoing and this is likely to remain a key topic in early 2019.

The pre-election government – the Social Democrat and Green Party coalition – currently leads a transitional government, which is not traditionally allowed to introduce any major changes or reforms. In addition, in December, the parliament voted down the transitional government’s budget in favour of the budget of the Moderates and Christian Democrats. If another election is to be avoided, the parties need to collaborate and potentially compromise. According to media reporting about the ongoing negotiations, the main obstacle is the trade-off between employment protection and labour market flexibility.

A second topic that is likely to be discussed in the coming months is the new strike regulations. A proposal for tightened conflict rules, based on an agreement between several major social partner organisations, was recently sent out for consultation. ^[4] If the proposal passes through parliament, the new regulations are scheduled to enter into force on 1 January 2020.