- Observatory: EMCC
- Published on: 02 March 2008
Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.
This report explores the employment impact of globalisation and reviews the attitudes and responses of national governments and the European social partners to this phenomenon in Sweden.
According to the report ‘The Globalisation of Swedish Economy’ from 2007 by the Confederation of Swedish Enterprise (Svenskt Näringsliv), the Swedish economy is highly internationalised and has been particularly strong during the last fifteen years. The 1980’s became a period of extensive deregulation in Sweden. As a result of this, by the end of the 1980’s, Sweden was a full participant in a world of free capital movement and highly liberalised service trade. Hence, the Swedish industry learned to exist and develop in global competition. In the period after 1990’s, internationalisation has taken a huge step. The main reasons behind this are:
- Free movement of capital
- Lower trade barriers and free right of establishment in the internal market of the EU
- New technology and better-functioning markets contribute to fragmentation of the value chain
- New technology contributes to the growth of the competitive sector
- Integration of large, advanced low-cost countries into the world economy
In the 1990’s, the Swedish economy was in the beginning of an intensified period of globalisation. It has fundamentally changed the prerequisites for Swedish economy. During the past two or three decades, the companies operating in Sweden have increasingly had the entire world as a field of operation. This applies to all dimensions of companies’ activities: production, employment, sales and ownership.
There is also a clear tendency that internationalisation is most extensive in the largest companies. Globalisation has meant that a growing share of Swedish companies has foreign owners. The number of foreign-owned companies in Sweden was 2,563 in 1990 and increased to 10,435 in 2005. If we consider those companies that are Swedish-owned, these have increasingly transferred their activities abroad. As a whole, these changes mean that the strategic decisions surrounding production, investments and employment in Swedish economy are being taken in an ever-increasing degree against the background of a global perspective, and decision-making is often done outside Sweden.
It is not possible for a high-wage country like Sweden to compete with low costs. This means that the positive economic development in Sweden requires an ability to attract and develop advanced economic activity, which is capable of bearing high wage costs. This will happen in competition with other industrialised countries with the same ambition. In this respect, it is as yet unclear whether Sweden is headed in the right direction.
With regard to attitudes among the social partners and the public, the overall answer seems to be positive. The Confederation of Swedish Trade Unions, (Landsorganisationen, LO) believes that globalisation is a reality we are living in that we to cope with and adapt to. The Confederation of Swedish Enterprise is strongly positive about the opportunities globalisation creates for the companies and the Swedish economy as such.
Institutional responses to globalisation
Government action to prevent or reduce the extent of off shoring/relocation
Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?
The issue regarding political interventions in relation to cases of relocation is made topical particularly when larger companies and many jobs are involved.
One example of intervention by the government is the case of the car making company SAAB and its factory in Trollhättan. SAAB is a strong Swedish car brand, nowadays owned by General Motors (GM). In 2004 GM planned to move the manufacturing line to the Opel plant in Germany. The former social democratic government feared of losing the car factory and agreed in negotiations with GM to launch an investment package to secure the future presence of the factory; € 10 million (SEK 95 million) in public funds was invested in infrastructure and R&D. The intention was to strengthen the region, which would complicate a move of the plant and make it seem less favourable. Even though some of the production was transferred to Germany, GM decided to continue using the plant in Trollhättan for manufacturing, and most of the affected employees could keep their jobs.
In other cases, such as Electrolux in 2004 and the tyre manufacture Continental’s acquisition of Gislaved in 2002, the government did not stop the development, rather engaged national, regional and local actors to smoothen the redundancy of individuals. In the first case the government asked the company to take social responsibility for the unemployed people, i.e. offer other jobs or good severance pay. In the second case, the government criticised it to be a political game moving a factory from one country to another using EU funding.
Social partner attitudes towards off-shoring/relocation
Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?
The answer depends on whom you ask. According to the Confederation of Swedish Enterprise there are no known cases where relocation of production has featured as a factor in collective bargaining. There are no official statistics or reports on this. It is a discussion between the social partners and is rarely made public. Usually, the companies make an economic estimate on where, when and how the companies’ investments will be most beneficial and it is not a discussion about the phenomenon of relocation of production as such.
LO perceives another picture. There are many collectives bargaining that involve relocation of production. One example is the relocation of Electrolux in 2004 when the production moved from Västervik to Hungary. No further information on this case was revealed.
According to the Swedish Union for Technical and Clerical Employees (Svenska Industritjänstemannaförbundet, Sif), there are cases where this has occurred. Companies use the argument to relocate if the unions do not agree with the companies’ conditions. No reference was made to any specific case.
In general, employers are obligated by law to continuously inform trade unions. Section 19 in the Co-Determination Act (MBL) states that employers continuously have to inform the trade union, to which the company is covered by collective agreement, regarding the company’s developments and personnel policies. If an employer is not covered by a collective agreement, he is obligated to inform the trade unions with members among the company’s employees.
Furthermore, section 11 in MBL states that before an employer takes a decision regarding significant changes he shall enter into negotiation with trade unions to which he is covered by collective agreement. This shall also apply prior to any decision regarding significant changes in employment and working conditions. The transposition of directive 2002/14/EC has given extended rights concerning information to employees’ organisations that are not covered by collective agreements.
Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?
LO’s strategy is not to resist plans against relocate production. Simultaneously, LO aim to attain more knowledge and high-quality data to map new developments regarding cases of relocation to be able to have a future strategy and standpoints in forthcoming cases and negotiations.
Sif’s strategy is similar. It is important to provide facts and results that can demonstrate that the cost benefit of relocation is not always as valuable as companies estimate. These documentations may include: financial cost estimates; accounts of which tasks and positions will be moved how many employees this will affect; project plans, communication plans; and accounts of how these will be implemented. According to Sif’s report ‘Outsourcing and Offshoring – a check list for trade unions’ (‘ Outsourcing & offshoring - en facklig checklista’) from 2006, union representatives should be involved directly from start when the company starts to consider outsourcing. It is important that the union is part of the decision-making process at an early stage. If the project has a steering group or a working group, there should be a union representative in the group from the early start.
Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?
The policy of LO is not to resist new developments, but to be aware of them. For union it is important to have a high employment in the economy. However, the important thing is that people in Sweden have a job regardless in which company they are employed. Sweden is very unique to have this open attitude to globalisation.
Sif’s policy is comparable. For Sif it is important that the companies perform well as Sif’s members are dependent on them. When a company is exposed to strong, global competition, there is sometimes no other option than relocate production abroad.
Government policy on foreign-owned firms controlling significant sections of the economy
Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?
There is no such explicit policy to restrict acquisition of domestic companies by foreign-owned companies. On the contrary, the government has an open attitude to globalisation.
Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?
There are no such restrictions in Sweden.
Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?
Nor are there any restrictions in specific sectors. The previous government decided to introduce a so-called ‘stop law’ (stopplag) for private companies to operate emergency care, but did not indicate any specifically restrictions for foreign-owned companies. The new government has now removed this law.
Social partner responses to the take-over of domestic firms by foreign-owned ones
Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?
There is no specific case referred to. However, LO’s attitude is that ‘a good owner is a good owner’ no matter what nationality. As regards to European integration and relocation with Europe the trade unions are well organised, because of EWC (European Works Councils). Hence, it is easier for the trade unions to coordinate information and reactions if foreign acquisition is from a country within Europe.
Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?
There are no reported cases where the argument for resisting acquisition is specifically referred specifically the nationality of the foreign-owned firm, according to the Confederation of Swedish Enterprises. However, sometimes there are strong emotional feelings involved, but it is not the main argument against acquisition, rather it is basic economic factors that are considered.
Attitudes to globalisation
Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
There is no doubt about that the official opinion by the Confederation of Swedish Enterprises on the topic of globalisation is simply positive, both regarding relocation and ownership. For Swedish companies it creates a market for additional financial means and know-how. In addition, it generates stronger competitiveness and access to a greater, global market.
According to the Confederation of Swedish Enterprise (source: ‘The Globalisation of Swedish Economy’) it is important that the openness of Swedish economy to globalisation in the coming years be complemented by policies clearly orientated toward providing the Swedish economy with an environment, which is attractive for the establishment and development of advanced economic activities. Dynamic small business is part of such an environment. Furthermore, this is also important if Sweden wishes to have an economy with extensive Swedish ownership in the future. In a globalised world, a small country like Sweden cannot expect to have national ownership of world-leading companies on the scale we had only a couple of decades ago. No answers received or data found for individual sectors.
Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?
LO has no stated position towards globalisation. However, the overall attitude toward globalisation is that it is necessary. Sweden is such a small country and we need globalisation to survive and develop a strong economy and future prosperity.
Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?
One public survey was located. In 2006 Temo (a market research agency, now called Synovate) and the Liberal Party of Sweden (Folkpartiet liberalerna) made a survey on peoples attitude to globalisation, ‘The public opinion about globalisation’ (‘ Allmänheten om globaliseringen’). The target group was 1,007 people from 16 years of age and older. The main results were:
- 80% has a positive attitude to globalisation.
- 70% consider the Swedish politicians doing a poor job preparing Sweden to the intense, global competition.
- 70% regard the high tax pressure producing poor conditions to tackle the competition for low cost countries.
- 60% believe that an increasing globalisation is good for the economic development in Sweden.
- 50% suppose that increased globalisation will add employment.
- 60% believe globalisation will gain themselves and their families.
- 20% know someone, who has lost their job due to the competition from low cost countries.
No other public survey has been found. However, the Confederation of Swedish Enterprise is about to finish a huge survey mapping the companies’ attitudes to and know-how about globalisation (a so-called globalisation index) in each municipality in Sweden. It will be released in the end of June this year. Some of the findings reveal that almost every company knows that globalisation ‘is here’. About 80% are aware of what it is all about and know how it will, or may, affect the individual company. The preliminary results surprised the Confederation of Swedish Enterprise. They believed the figures would have been much smaller.
Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?
The public survey found has not made any distinction between different dimensions. The other survey mentioned above may answer this question, but is too early to say. Nevertheless, according the previous report ‘The Consequences of Relocation’ (‘ Utflyttningens konsekvenser’) by Confederation of Swedish Enterprise in 2005, approximately 116,993 jobs have been relocated abroad between year 2000 and 2004 (It does not illustrate figures for each individual year). These figures are based on a survey with roughly 5,000 enterprises from all sectors and all sizes conducted 2004/2005.
Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by non-EU companies?
The surveys located had not made a distinction between globalisation and European integration.
Reports and surveys:
‘The Globalisation of Swedish Economy’, the Confederation of Swedish Enterprise, 2007.
‘Outsourcing and Offshoring – a check list for trade unions’, Sif, 2006.
‘The public opinion about globalisation’, Temo, 2006.
‘The Consequences of Relocation’, the Confederation of Swedish Enterprise, 2005.
Thomas Brunk & Jenny Lundberg, Oxford Research