The 1997 bargaining round: smaller pay increases in central agreements

In Sweden's recently concluded bargaining round, the pay rises set by central industry-level agreements averaged around 2.5%-3%, which was less than expected. At the same time more and more central agreements now allow free scope for local bargaining to relate individual pay to performance. Unions and employers failed to achieve a consensus on the issue of working time. These are some of the main outcomes of the 1997 bargaining round, in which the mediators were busier than usual.

With the agreement of 30 May between the Building Workers' Union and the Employers' Federation of the Swedish Construction Industry, the last of 1997's major collective agreements was concluded. It gave 70,000 building workers an increase of SEK 2.50 per hour and, for the first time, payment during certain public holidays. According to the union, this represents an overall pay increase of 3.1%, while the employers estimate its value to be 2.6%. Irrespective of who is right, the agreement is very much in line with the 1997 average settlement.

Starting points

This year's bargaining round turned out to be rather different from what was expected when it commenced.

First of all there was reason to believe that the fresh modifications of the Act on Security of Employment would cause a great deal of conflict. When Parliament modified this Act at the end of 1996 to permit a new form of temporary employment and to authorise employers and union representatives at company-level to agree on derogations from the provisions of the Act, most of the unions were incensed, and said they would call for collective agreements which would prevent the employers from making use of the new legal provisions.

Secondly, since most sectors were already covered by earlier agreements of two or three years' duration that guaranteed the workers a pay increase of around 4%, unions in sectors where new agreements had to be made felt that their members were entitled to the same increase. As a result, this demand was reflected in the unions' initial pay claims.

Thirdly, everywhere unions called for reductions in annual working time. Many employers, on the other hand, sought to negotiate on more flexible rules about the way working time was organised.


In summarising the outcome of this year's bargaining round, the following main points may be noted.

Temporary employment

This did not turn out to be a very big issue in the negotiations. After some consideration, unions came to the conclusion that their old agreements already prevented the employers from applying the new provisions of the Act on Security of Employment. The employers, however, place a different interpretation on this. They believe that the law takes precedence over the agreements and that they are free to use the new form of temporary employment if they so wish. Thus, from a legal point of view this is not a matter that could be resolved through negotiations, but a legal dispute that should be settled in court. Several cases are already on their way to the Labour Court.

One of the very few unions to adopt another standpoint was theElectricians' Union. In order to be on the safe side it called for renegotiations on the agreed rules on temporary employment. The employers refused to change them at the present time, but did agree to form a joint working party to analyse if there was a need for any modifications later on.

Boycott and strike notices

These have been more frequent and the mediators have been more busy than usual. The first indication came when it appeared that even the Paper Workers' Union and the Employers' Federation of Forest Industries, with a tradition of many years of conflict-free negotiations behind them, needed help from mediators in order to reach an agreement (SE9702105N).

Pay increases

Increases averaged 2.5%-3% overall, which was less than expected. However after short strikes two categories of workers achieved more, namely cleaners (around 4%) and newspaper distributors (3.6% - SE9704113N).

Performance-related pay and merit pay for individuals

These forms of pay are more and more accepted, even by the blue-collar unions. In fact, a few agreements devolved bargaining to the parties at company-level from the very beginning, allowing them the freedom to bargain both on the total size of the "pot" as well as its allocation, providing they agreed with each other. In these cases the central industry agreements only prescribe by how much pay should be increased if they cannot come to a settlement. However most central agreements afford every worker a minimum increase in pay, but also set apart a certain percentage of the total paybill to be allocated by negotiations between employers and union representatives at company level. At this stage the local unions are bound by a peace obligation, but procedural rules aim to further real negotiations. A common solution is that they can turn to their central organisations if the talks break down, and ultimately to a special arbitration board, that will apply the optional minimum rules of the central agreements.

Working time reductions

The call by the trade unions for reductions in working time were strongly rejected by the employers. However, the employers' demand for a more flexible organisation of working time was rejected by their union counterparts. In some sectors though, the parties agreed to set up joint working groups to consider the issue further.


Setting up a working group with the task of analysing a controversial issue is a common means of putting the issue to one side, and thereby breaking a deadlock in the negotiations. It also often means that the issue in question is "buried" for ever. The trade unions' claims for a reduction of working time will, however, not be easily buried. This year's bargaining round and the current debate on the wage determination process (SE9704111F) has showed that the unions are ready to accept comparatively low nominal raises in pay. This moves the spotlight to other kinds of improvements in working conditions - such as shorter working time. Another example is arrangements that give employees new opportunities to retrain and develop their competence. There are many indications that claims of this kind will be put forward in 1998. (Kerstin Ahlberg, NIWL)

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