New agreement to combat youth unemployment

The Swedish industrial workers trade union (IF Metall) signed an agreement in November 2010 with several employer organisations to create a ‘vocational introduction’ scheme for industry. The purpose is to reduce the high rate of Swedish youth unemployment, to help improve the skills of people aged under 25 years and to help them enter the labour market. Those on the scheme will have the right to receive at least 75% of any minimum wage agreed nationally plus tutoring and training.

Terms of agreement

The Swedish Union of Metalworkers (IF Metall) signed the agreement on 23 November 2010 with:

All those who signed the agreement feel that Swedish industry faces a demographic challenge which will significantly increase the demand for new workers. Furthermore, trade unions in the industry sector stress that the Swedish industry risks a growing shortage of skilled workers. The agreement is described as a measure that will promote recruitment, thereby maintaining the supply of labour and filling the long-term need for skills. The vocational introduction has to be combined with tutoring and an individual development plan including work tasks, training activities and introduction measures.

The so-called ‘youth agreement’ will be used to help people under the age of 25 years who lack relevant work experience to improve their skills and enter the labour market. However, special terms of agreement can be used in contracts with young people who have completed secondary education or who have participated in industry-oriented training at TeknikCollege (work-related advanced technical education).

The terms of the contract between the employer and trainee are flexible and the intention is to set the framework for individual contracts at the workplace. The length of the contract is at a maximum of 12 months but it can be extended by a further 12 months. If the employer does not wish to employ the trainee permanently, he or she must inform the person in question no later than one month before the end of the agreement.

A vocational introduction provides for a salary of at least 75% of the minimum wage agreed between the social partners. If there is no collective agreement establishing a minimum wage, the pay will be determined at the workplace.

The contract includes a penalty clause in order to prevent explicit and severe forms of abuse of the youth agreement, and to ensure the employer gives a proper introduction to the trade.

Views of the social partners

The agreement is controversial. Its opponents argue that it could lead to lower wages in the industry sector. Supporters, however, say that such contracts may give young people a chance to get manufacturing jobs and may reduce the high Swedish youth unemployment. IF Metall stresses in a press release (in Swedish) that the agreement is not about driving down the wages of young people but is intended to create a path for Swedish youths to access the labour market. The employer and the employee are expected to draw up individual contracts based on the assessment of how long the introduction needs to be and what education measures are necessary.

Anders Weihe, Head of Bargaining at Teknikföretagen, highlighted in a press article (in Swedish) that the agreement is a response to a mutual need and these measures can improve the businesses’ ability to employ and educate young people.

Commentary

The agreement is groundbreaking and timely, as the causes of high Swedish youth unemployment have been a matter of great national debate. The employer organisations argue that it is the lack of wage diversification that is hindering inexperienced people from accessing the labour market. The trade unions, on the other hand, argue that the high figures are caused by skill mismatches and lack of training. This is an agreement that may offer a constructive solution, but it remains to be seen how widely used it will be and how it will work out.

Mats Kullander and Caroline Holmgren, Oxford Research

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