Controversial changes in Employment Security Act provide for more bargaining at company level

Will there be a shift towards more company-level bargaining in Sweden? That is the question raised since Parliament recently passed legislation that would promote local collective agreements on employment security matters. However, the trade unions are not all enthusiastic about the new provisions.

Late in 1996, Parliament passed legislation providing for changes in the Employment Security Act that aroused the anger of the trade unions. Although most of the new provisions apply from 1 January 1997, the most controversial modification, in Section 2 of the Act, will not come into force until 1 July. This will give trade unions and employers more time to adapt to the new rule in the legislation which deals with the level of central bargaining and collective agreements.

"First-in, last-out" under attack

The employers have called for changes in the Employment Security Act for years, especially Section 22, which regulates the order of priority of workers in cases of collective redundancies. It stipulates that if the employer wants to reduce the workforce, those employees who were most recently hired must be the first to be made redundant. However, according to Section 2 of the Act, the employer can obtain exemptions from this order of priority through a collective agreement concluded with a "central" trade union, or with a union branch at a lower level, provided that the central union gives its permission. Most of the employers want the whole of Section 22 to be repealed. They believe that there should be no legal regulations at all laying down rules about redundancy selection criteria.

The Swedish Government and Parliament would not go as far as employers wished, but they did change Section 2 so that it now authorises trade unions at any level to agree on exemptions, not only from the selection criteria in redundancy situations in Section 22, but also from the provisions that restrict the use of different kinds of temporary employment, and the rules setting out the rights for those employees who have been made redundant to be re-employed if the company needs to rehire people within nine months.

These changes were highly controversial and led to a severe crisis in the relations between the Social Democrat Government and the LO (Landsorganisationen i Sverige) - the confederation of blue-collar trade unions - which used to regard themselves as two branches of the same labour movement. For example, the chair of the Commercial Employees' Union, Kenth Pettersson, declared that his organisation would look for ways to make it difficult for the local unions to make agreements that allowed the employer to derogate from the Employment Security Act. Other union representatives were talking about withdrawing their financial support to the Social Democrat Party, and trade union members demonstrated outside the Parliament building.

Trade union fears and responses

Most trade unions have already, in their central collective agreements at industry level, given their regional or company branches the right to agree on derogations from Section 22, and many have given them an even wider authority. Why then were these modifications to the legislation so controversial?

One reason is that the central collective agreements often lay down certain conditions that must be fulfilled before the local parties are allowed to derogate from the law. The wording of the regulations of the Act, however, appears to give them carte blanche.

Secondly it is important for the unions that they alone and not legislation decides if their local branches should be authorised to conclude agreements of this kind. The Commercial Employees' Union, theElectricians' Union and other unions, along with many small local branches, are afraid that the employers will use the new provisions against those branches which might be too weak to resist what the unions would call pure blackmail, in situations where employees fear for their jobs.

So how will the trade unions respond? Many of them - for example, the Metalworkers' Union and the Union for Technical and Clerical Employees in Industry,- have central agreements that run until the beginning of 1998 or even longer, which contain provisions about the extent to which the local parties may make agreements on temporary employment, on exemptions from the order of priority in redundancies and so on. They claim that these provisions cover the whole field of employment security. Consequently, the new legal provisions are not, according to the unions, applicable before these agreements have expired, at the earliest.

In areas where the agreements have expired, the unions may attempt to convince the employers' organisations that the new agreements should contain some limitations to what the local parties may do. The Electricians' Union is an example. "But they will hardly succeed," says Kent Brorsson, head of the labour law department at theSAF (Svenska Arbetsgivareföreningen, Swedish Employers' Association): "SAF's policy is that all bargaining should take place at the workplace, preferably between the employer and the individual employee."

Some unions are therefore embarking on discussions to change their internal regulations before 1 July, in order to forbid local union branches from entering into agreements that derogate from the Employment Security Act.


The Government stated in its legislation that from now on the law would be "neutral" as to the level at which agreements about derogations from the Employment Security Act are concluded. The same expression was used by a parliamentary committee that recently presented a proposal for a new Act on Working Time, when it suggested that the parties at company level should have the same authority to derogate from the law as the central parties. However, it seems plausible that a formally neutral rule will actually promote the operation of local bargaining - that is, if trade unions are unable to prevent it. It will take some time before the outcomes become clear (Kerstin Ahlberg, Arbetslivsinstitutet).

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment