Sweden: No wage coordination – new trend or just an exception?

Disagreement over how to reduce the gender pay gap led to Swedish blue-collar unions failing to coordinate their wage-bargaining for the first time since the 1980s. The fragmented 2016 wage bargaining round has led to uncertainty over how this breakdown will affect future bargaining, the Industrial Agreement’s role as a benchmark for pay increases and Swedish competitiveness.

Failure to agree on how to address the gender wage gap and low pay

Traditionally, the Swedish Trade Union Confederation (LO) has coordinated wage negotiations on behalf of the 14 blue-collar trade unions. However, in October 2015 it was decided that the LO-affiliated trade unions would negotiate independently in the upcoming bargaining round, largely due to the unions’ failure to agree on how to reduce the gender pay gap

In Sweden, as in most other countries, women earn less than men on a structural level. And while men and women are quite evenly dispersed in positions in organisational hierarchies, they are often concentrated in different sectors. Thus, the gender pay gap in Sweden is mostly due to the fact that wage levels in male- and female-dominated sectors differ considerably (PDF). And since LO organises both types of sectors, the organisation has a role in levelling the gap.

Before the bargaining round, the unions had agreed that the relative wage gap between men and women should be halved by 2028, with relative wage increases for LO's women members. The Swedish Municipal Workers’ Union (Kommunal – a predominantly female union that organises around a third of LO’s members) demanded that assistant nurses should be prioritised for wage increases, being one of the professions generally regarded as considerably underpaid. However, when it came to how this should be accomplished, negotiations broke down. LO proposed a general low-wage investment for all workers earning less than SEK 25,000 a month (€2,690 as at 8 June 2016). Some unions argued that the proposal did nothing to reduce discrimination against female-dominated sectors and occupations. Others said that the wage rise should be occupation-specific as not all low-wage earners could be considered as being subject to discrimination.

Consequently, cooperation was not possible even though a majority of the LO governing board was in favour of joint negotiations. As a result, 2016 was the first year without any central coordination since the 1980s.

Industrial action and bargaining results

In March this year, the Industrial Agreement was concluded and set the pay increase benchmark at 2.2%. But the split in the LO collective meant that the remaining negotiation processes were characterised by a somewhat anxious atmosphere. Many employers and employers’ associations were worried that the unions would not stick to the levels set in the agreement and so would risk weakening Swedish competitiveness.

The decision that there would be no coordination by LO was followed by the formation of new groups among its members. The 6F, a collaboration between the Swedish Building Workers’ Union, the Swedish Electricians’ Union, the Building Maintenance Workers’ Union of Sweden, the Swedish Painters' Union and the Swedish Association for Service and Communication, demanded wage increases of 3.2%, considerably more than the benchmark figure.

After negotiations had failed and the mediators’ proposals had been rejected, the Building Workers’ Union and the Painters’ Union took their members out on strike. The unions were particularly opposed to the employers’ proposals to scrap the piece rate pay system (through which employees are rewarded based on the speed of production) and impose an overall pay structure.

The situation became increasingly tense as the Swedish Construction Federation (BI) responded by calling for a lockout. Mediators said that the bargaining climate, particularly in the construction sector, had become ‘devastating for a fruitful negotiating cooperation’. Together with the Confederation of Swedish Enterprise (Svensk Näringsliv), LO put pressure on the conflicting parties to follow the agreement made by the industrial unions and, after six days of strike, an agreement on a 2.2% wage increase (in line with the Industrial Agreement) was concluded before the lock-out commenced.

In conclusion, while some LO unions are still bargaining, the Industrial Agreement has thus far continued to serve as a benchmark for other agreements. The main exception is Kommunal; after striking a deal with other LO unions, the union was able to demand a higher increase for its assistant nurse members.

Future role of the Industrial Agreement

In less than a year a new bargaining round will commence and LO President Karl-Petter Thorwaldsson is urging the unions to cooperate. He argues that to fight for better working conditions, unions need to stick together. But while Thorwaldsson wants to see a continued cooperation based on the Industrial Agreement, not all parties are convinced that the manufacturing industry’s agreement should continue to serve as a benchmark.

Several employers and employers’ associations have expressed dissatisfaction with this year’s bargaining round, particularly the Industrial Agreement negotiations in which employers argued for the need to recover lost competitiveness and suggested wage increases of 1%, while unions spoke of an economic boom and demanded 2.8%.

According to the employers’ associations, the biggest problem in bargaining is the lack of consensus on how to assess the economy; some say that there is no point in using the Industrial Agreement as a benchmark if the partners cannot agree on which variables to look at. Other employers’ association representatives have said that while they see no alternative to the benchmark system, there are reasons to think about reforming it if the next bargaining round also results in only a one-year agreement.

For the first time since the 1980s, Swedish blue-collar unions did not launch joint wage demands but bargained independently or in new constellations, with many wondering what this means for future bargaining and for the Industrial Agreement’s role as a benchmark to ensure Swedish competitiveness.

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