Industrial conflict avoided in the banking sector

In February 2011, negotiations between the major social partners in the Swedish banking sector broke down; the Financial Sector Union of Sweden (Finansförbundet) terminated the existing agreement on wages and working conditions and gave notice of conflict. Primarily, the disagreement concerned differences over wage negotiations and pay levels. However, industrial action was avoided as the parties managed to reach an agreement one day before the conflict was set to start.


For several months the two social partners in Sweden’s banking sector, the Financial Sector Union of Sweden (Finansförbundet) and the Employers’ Organisation of the Swedish Banking Institutions (BAO), negotiated over wages and employment conditions for about 30,000 members in 375 companies. The most recent agreement expired on 31 December 2010 and was due to be extended. However, negotiations broke down on 16 February 2011 because of a disagreement over whether wages should be negotiated at individual company level or centrally. The union terminated the existing agreement and gave notice of conflict; industrial action would begin if the parties did not conclude a new agreement before 5 March 2011. The action, which would apply to all members of the union, would be implemented in two steps. An overtime and new recruitment blockade would come into effect from 5 March, and from 11 March unions indicated that employees would stop taking foreign business trips. According to the union, the action would not affect any third parties. The National Mediation Office (MI) appointed three mediators who attended all negotiations. During the first week of negotiations, the mediators asked the union to postpone the notice of conflict by two days. The unions agreed that the overtime and recruitment blockade would be moved back two days to start on 7 March. On 6 March, however, the parties reached an agreement valid for four years.

Conflict over wage negotiations

The primary disagreement was over whether wages should be decided locally or centrally. The union demanded centrally determined pay increases that apply to all members. BAO wanted totally decentralised negotiations so that pay, working time and the minimum wage would all be decided locally. Since the financial crisis is over and Swedish banks made a profit in 2010 of over SEK 50 billion (about €5.5 billion as of 12 April 2011) , the union claimed that the industry could afford a guaranteed pay increase of 3% which would cost the employers approximately SEK 600 million (€66.7 million as of 12 April 2011) for all members. They also pointed out that high rates of pay are customary among chief executive officers (CEOs) and managers in the financial sector. Ulrika Boëthius, Financial Sector Negotiation Manager and Vice Chair of the Financial Sector Union, said: ‘We cannot accept the employers’ demand that wage guarantees and minimum wages will disappear, that the employer may unilaterally reduce an employee’s wages and that working hours could be planned entirely on the employer’s terms.’

However, BAO emphasises that collective agreements must be designed so that they do not damage the competiveness of the companies involved. Therefore, modern agreements need to be flexible; employers need to be able to adjust working time and pay in accordance with the needs of the company. In the 2010 bargaining round (SE1006019I), the pay rises were generally modest. BAO argues that pay rises in the banking sector need to be on the same level as those in the labour market in general, which means lower levels than the union suggests.

Last-minute agreement reached

The final agreement is valid from 1 January 2011 to 31 December 2014. During 2011, there is an individual pay increase of 1% or no less than SEK 300 (€33.34) and a collective guarantee of 1.8%. From 2012 to 2014, a pay adjustment guarantee will give all union members at least half of the overall pay rises in the banking sector in general. Minimum wages will remain centrally decided through the collective agreement, and special measures will be taken to eradicate wage differences between men and women. Both parties say they are satisfied with the agreement.


The disagreement between the parties of the banking sector was contentious and partly due to ideological differences; BAO views centrally negotiated agreements as inflexible whereas the union considers them to be essential. In the final agreement, pay rises are modest and minimum wages are decided centrally. Thus, both parties have made compromises. By international standards Sweden loses very few working days as a result of industrial action. This is primarily because the social partners work hard to reach agreements so that many notices of conflict do not result in industrial action.

Mats Kullander and David Björnberg, Oxford Research

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