Ericsson's Norrköping model for helping redundant workers reviewed

In spring 2001, the Swedish-owned Ericsson electronics group announced a massive programme of redundancies in Sweden and elsewhere. These events have focused attention on the innovative project launched in 1999 to find new jobs for 587 workers made redundant earlier at the Ericsson Telecom plant in Norrköping. The "Norrköping model", widely regarded as having been very successful, brought together the company, trade unions, the Proffice temporary work agency and various local government and labour market bodies.

On 25 January 1999 Sven-Christer Nilsson, the chief executive of the Swedish-owned Ericsson electronics group announced that Ericsson Telecom was to stop production at its system production centre at Norrköping in south-east Sweden. On 4 February, all 587 employees at the factory - 190 white-collar workers and 397 blue-collar workers - were told that they were to be given notice of redundancy. The Norrköping plant manufactured, among other products, the AXE switchboards for computerised telephone systems, for which there was no longer market demand, according to Mr Nilsson. Thus there would be no outsourcing or transfers of production elsewhere.

The usual "co-determination negotiations" (MBL-förhandlingar) then started with the trade unions represented at the company - the Swedish Metal Workers' Union (Svenska Metallindustriarbetareförbundet, Metall), the Swedish Union for Technical and Clerical Employees (Svenska Industritjänstemannaförbundet, SIF) the Swedish Association for Managerial and Professional Staff (Ledarna) and the Association of Civil Engineers (Civilingenjörsförbundet, CF). Over the course of four months, four different strategies for helping the redundant workers were discussed. The strategy that interested management most was to let a temporary work agency hire the workers for a maximum of one year and pay the workers until they had received a new job (if this happened within the one-year limit). Compared with the normal six months of final pay provided for by a local company agreement on redundancy compensation, this optional solution was considered more favourable by the parties, which then worked out the details.

The Norrköping model

Four months later, on 25 May 1999, Ericsson Telecom presented officially the project for the redundant workers. This involved several parties - above all the trade unions (which were still positive to the idea), the temporary work agency Proffice, the county labour market authority (Länsarbetsnämnden), the local job centre (Arbetsförmedlingen), the Norrköping municipal council (Norrköpings kommun), the County Board (Länsstyrelsen) and Ericsson Telecom itself. The stated aim of the project was to make it easier for the redundant workers to find new jobs or another occupation. The project that was accepted by all parties was named the "Norrköping model" (Norrköpingsmodellen). On 3 June, the negotiations ended and it was stated that the parties' common goal was that all workers affected by the end of production at the Norrköping plant would have a new job or another new source of income at the end of the project period.

The 587 workers were given three alternatives:

  • fixed-term employment with Proffice for one year;
  • an agreed pension for those aged 58 years and older; or
  • immediate redundancy with the normal compensation of six months' pay provided for by the local collective agreement.

Most of the workers (429) chose the option of fixed-term employment at Proffice. Of the remainder, 58 chose the pension, while 100 found quite soon permanent employment at other Ericsson companies or other firms. Just two employees, both nearing retirement age, chose the redundancy payment

When the project ended at the end of 2000, of the 587 redundant workers: 346 (59%) had received new jobs; one worker (0.2%) had started their own business; 51 (9%) had started studies; 62 (10%) had taken the agreed pension; and 127 (22%) were registered at the local job centre or the social insurance office while awaiting various measures – finding a new job, starting education or training, or receiving long-term sick pay or an early retirement pension because of sickness or work injuries.

The project groups

A steering group, a consultation group and a working group were set up at the beginning of the project period. The steering group, which met for two hours every other week, consisted of three representatives of company management and five of trade unions (the latter figure should have been eight but, as the redundant civil engineers very soon found new jobs, their trade union CF was never present). Proffice, the municipal authorities and the other organisations represented in the project attended the group when needed. Within the steering group, various measures were initiated, policy decisions were made and progress was followed up - eg how many Ericsson workers working for Proffice had received a new job or started training at a given time. The steering committee also took financial decisions that could not be made in the working group (see below).

The consultation group consisted of representatives of all parties in the project, a total of 15 to 17 people. This group was responsible for information, cooperation and problem-solving on an overall level. The working group met at least once a week and consisted of six persons: three from Ericsson, two from Proffice and one from the local job centre. Its tasks included: making decisions on work, placements and education for workers; coordinating and channelling new jobs; drawing up and assembling the necessary information; following up individual workers; and reporting to the steering group.

The Proffice programme

The programme for the 429 Ericsson workers who chose to work with Proffice was built on a skill development scheme, initially tested and then applied more widely by Proffice. Each worker concerned was "surveyed" as to their interests in terms of work, vocational education and other studies. The workers were divided into 15-person groups that worked with a supervisor at Proffice for five days a week between 08.00 and 17.00. Work on self-support and job-seeking activities at Proffice was interspersed with periods of placement at various local firms. The participants had access to two supervisors at Proffice, two career officers from the local job centre and two job-search officers. There was also a full-time rehabilitation officer (hired by Proffice for the project from the local job centre), who worked together with officers and doctors at the local social insurance office and with a physiotherapist from the Ericsson healthcare centre. All the people involved in the project worked at a former factory, which belonged to Ericsson. In this way, it was easy for the redundant workers to have informal meetings, discussions and three-way talks with Proffice and the representatives of the various authorities.

Resources

The former Ericsson workers had access to unusually substantial and diverse resources, according to Roland Ahlstrand, a researcher who studied the project on behalf of the National Working Life Institute (Arbetslivsinstitutet, ALI) office in Norrköping. The workers had access to all the competences brought together by the project in one place. There were also advantages for Ericsson through the new arrangement. The agreement between Ericsson and Proffice was constructed so that responsibility for the workers was transferred to Proffice, with Ericsson thus outsourcing the measures for the redundant workers. Ericsson paid the wages and payroll taxes for the workers but did not have to maintain direct contact with its former staff.

Model develops

The Norrköping model was supplemented and developed as experience grew. For example, when the personnel at Proffice realised that the trade unions were demanding considerably more information than was foreseen at the beginning of the project, contacts with the unions were enlarged. When it became clear that more job-seeking resources were needed, the local job centre allocated an extra official. Furthermore, Ericsson, Proffice and the job centre coordinated their follow-up activities and improved access to them. The job centre and Proffice started a local forum for discussions on subjects such as how to stimulate the redundant workers to apply for existing jobs. Ericsson decided that those who received new jobs with lower pay than at Ericsson should have their pay topped up to the Ericsson level – but only until the end of the 12-month period, so as to make the pay equal for all the workers involved in the project.

Ericsson had been deeply criticised in Norrköping when it announced the 587 redundancies, not least by the trade unions, the workers concerned and the local population. There were demonstrations and sympathy activities such as signing protest petitions (SE9704114N). However, on 10 January 2000, six trade union representatives who worked on the Norrköping model steering group wrote in the local press (Norrköpings Tidningar) that "the market should follow the example of Ericsson", and that there were many good lessons to learn from the Norrköping model in the future, not least the importance of good resources and the personal engagement of all the actors in the project. The ALI researcher , Roland Ahlstrand, also interviewed the workers who had participated in the project. The results from the interviews confirmed on the whole a positive attitude, both as to the various officials the workers met and their competence, and to the personal gains for the workers. These latter included greater self-confidence (reported by 64%) and more knowledge about the labour market (80%).

Commentary

According to Roland Ahlstrand, the conclusions that may be drawn from the results achieved by the Norrköping model project are that:

  • the project had at its disposal an unusually large and diverse set of resources in terms of capital, knowledge and social networks;
  • Ericsson provided the capital resources and was the actor which decided the direction of the project;
  • the project was coordinated through a very clear structure of meetings. Managing staff from all the organisations concerned came together at the meetings of the steering group, the consultation group and the working group;
  • besides these formal meetings, there were many opportunities for informal and spontaneous meetings. The project was thus very much characterised by discussions, negotiations, agreements, learning and continuing development of experience and knowledge; and
  • the cooperation between the different actors in the Norrköping model was ground-breaking, in that these actors had never before in Sweden coordinated their resources in such a systematic way.

In 2001, Ericsson is facing huge financial problems. At the end of March, it announced a "comprehensive efficiency programme", involving "streamlining" its operations and cutting costs (SE0104193N). As a result, 2,100 employees at the company's two Swedish factories manufacturing mobile telephones, in Linköping and Kumla, will be given notice of redundancy. Mobile telephone production at Ericsson's UK factories in Carlton and Scunthorpe, which employ 1,200 workers, will cease and Ericsson will try to find a buyer for the plants. About 7,500 consultants working for Ericsson worldwide will have their contracts terminated. Some weeks later, on 20 April, Ericsson widened the impact of coming redundancies to 6,000 employees in Sweden and about the same number outside Sweden. Many of the workers affected and public authorities hope that the redundant employees in Sweden will be offered programmes similar to the Norrköping model. Hans Karlsson, a former senior official at the Swedish Trade Union Confederation (Landsorganisationen, LO) has been charged by the government with following the redundancy situation at Ericsson. He has already expressed some doubt as to the possibilities of Ericsson using the Norrköping model again, stating, for example, that it may not suit other places in Sweden. There is also some doubt whether Ericsson will come up with all the money that would be needed for a re-run of such a well-resourced project. (Annika Berg, Arbetslivsinstitutet)

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