Workers at Scania accept temporary layoffs

The number of local agreements in Sweden has increased rapidly and temporary layoffs have become a popular way of restraining the effects of the economic recession and avoiding redundancies. Trade union views differ regarding whether temporary layoffs and pay cuts are good ways to meet the challenges of the current labour market situation. Many companies have applied the new national agreement on temporary layoffs, including the commercial vehicle manufacturer Scania.

Agreements on temporary layoffs at national and local levels

In March 2009, the Union of Metalworkers (IF Metall) reached a ‘crisis agreement’ – a historical national agreement on temporary layoffs – with the three national employer organisations within manufacturing (SE0903019I).

Since then, other trade unions have been under high pressure to reach similar central agreements (SE0904029I). Due to the national agreement and the financial and economic crisis, which has severely hit the Swedish manufacturing sector, many workplaces settled for agreements that allow temporary layoffs in order to save jobs.

Unionen, the trade union for professionals in the private sector, and the Swedish Association of Graduate Engineers (Sveriges Ingenjörer) have concluded that reductions in pay and working time can take place within the existing collective agreement’s framework. Therefore, they consider that there is no need to settle for a national agreement on temporary lay-offs as IF Metall has done with its counterparts. Many local trade unions have settled for such agreements during the past few months.

About 170 local agreements on temporary layoffs have been concluded since the general national collective agreement was reached at the beginning of this year. Among them, the employees of the commercial vehicle manufacturer Scania voted on the matter, the details of which are described below.

Scania employees vote on temporary layoffs

Due to a large reduction in orders, Scania put forward to the trade unions a 20% cut in working time with a 10% pay reduction. At first, IF Metall rejected the offer and suggested instead a reduction in dividends, encouraging shareholders to renounce a share of their dividends in order to save jobs. Following a negative response from the shareholders, Scania announced that it would have to start issuing notices to workers.

Meetings were arranged for the company’s trade union members in order to discuss the matter. At this meeting, the union representatives explained why they had rejected the company’s offer. Some of the members of IF Metall disagreed with the local trade union’s decision. Therefore, it was decided that the trade union members themselves – mainly members of IF Metall – should vote on whether to accept temporary layoffs.

Agreement reached on working time and pay

An election was arranged and the level of participation among IF Metall’s members was particularly high, with 88.5% of members voting. About 60% of the workers accepted temporary layoffs. The trade union then re-entered negotiations with Scania and an agreement was concluded. The agreement implicates a 20% cut in working time and a 10% decrease in pay, as well as cuts in holiday pay and a freeze on wage increases during 2009. The agreement is valid from 1 June 2009 until the end of the year. In exchange, Scania guarantees employment for its workers for the next six months. The agreement implicates that €27.5 million will be saved at Scania. Overall, some 6,000 members of IF Metall who are blue-collar workers and 6,000 white-collar workers are affected by the agreements on temporary layoffs at Scania, according to reports in the newspapers Länstidningen Södertälje and Affärsvärlden on 15 May 2009, as well as the European Social Fund (ESF) in Sweden.

Members of Unionen have also been able to vote on temporary layoffs and a similar agreement has been reached for its members at Scania – see reports in the newspapers Svenska Dagbladet and Barometern.

Scania has announced that it would like to keep its skilled workforce within the company and avoid dismissals in order to be able to react and increase production when the market improves again. Temporary layoffs constitute a good and quick alternative to dismissals in order to cut costs.

Training programme for Scania workers

In January 2009, Scania applied together with the county administrative board for funding from the ESF in order set up a training programme with the aim of increasing the key competences and the competitiveness of its workforce. In May, the European Commission accepted the application and €11 million was therefore allocated to investment in an education programme at Scania. It is expected that this investment will further improve employment protection for Scania workers. Scania will pay the employees’ salaries while they attend the education programme. About 6,000 employees will participate in the programme, according to ESF Sweden.

Karolin Lovén, Oxford Research

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