Sweden: SMEs in the crisis: Employment, Industrial Relations and Local Partnership

  • Observatory: EurWORK
  • Topic:
  • Published on: 14 June 2011

Mats Kullander and Claes Bäckman

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

SMEs are a very important part of the Swedish economy, with 61% of the total employment. The sector most affected by the financial crisis was the automotive sector, where 22,000 notices were given 2008-2009. The government made several targeted measures that affect SMEs, including increased access to capital for SMEs and tax reductions for specific sectors. Approximately 50-60% of small Swedish companies state that they are part of a local partnership.


The accompanying questionnaire seeks information from national EIRO correspondents on a number of key themes, including:

  • general information on the presence and operation of SMEs
  • levels of employment in SMEs and any structural changes that have taken place since 2007
  • measures that the government has taken to help SMEs to withstand the crisis
  • interest representation in SMEs, including any social dialogue initiatives that have taken place, if these exist
  • successful cases of local partnership in terms of maintaining employment
  • views from the social partners

Block 1: Please provide general information about the evolution of SMEs in your country, focusing on:

Question 1.1: the number of SMEs operating, size class (1-9, 10-49 and 50-249) in absolute numbers and share in the national economy;

Number of SMEs operating, size class (1-9, 10-49 and 50-249) in absolute numbers and share in the national economy
Added companies with 0 employees as well, since that is how Statistics Sweden (SCB) have organised their data. No data for 2009 is available.
  2006 2007 2008 2009
  N % N % N % N %
0 632.507 73,0% 653.385 72,9% 666.579 72,7% n.a. n.a.
1-9 203.408 23,5% 210.197 23,5% 216.156 23,6% n.a. n.a.
10-49 25.914 3,0% 27.250 3,0% 28.221 3,1% n.a. n.a.
50-249 4.298 0,5% 4.532 0,5% 4.797 0,5% n.a. n.a.
250 plus 1716 0.2% 1761 0.2% 1828 0.2% n.a. n.a.

Question 1.2: their estimated share of employment by size class and economic activity (NACE 1 digit);

  2006 2007 2008 2009
  N % N % N % N %
1-9 530.581 23% 545.385 22% 563.601 22% n.a. n.a.
10-49 503.125 22% 530.337 22% 547.673 21% n.a. n.a.
50-249 421.375 18% 440.744 18% 462.579 18% n.a. n.a.
A: Agriculture, hunting and forestry
  2006 2007 2008 2009
  N % N % N % N %
1-9 23.465 65% 22.644 63% 24.088 62% n.a. n.a.
10-49 5.721 16% 5.958 17% 6.185 16% n.a. n.a.
50-249 3.023 8% 3.411 10% 3.325 9% n.a. n.a.
B: Fishing
  2006 2007 2008 2009
  N % N % N % N %
1-9 411 82% 404 82% 402 79% n.a. n.a.
10-49 92 18% 89 18% 110 21% n.a. n.a.
50-249 N/A   N/A   N/A   n.a. n.a.
C: Mining and quarrying
  2006 2007 2008 2009
  N % N % N % N %
1-9 847 11% 809 10% 828 10% n.a. n.a.
10-49 928 12% 1.007 13% 1.068 13% n.a. n.a.
50-249 N/A   N/A   N/A   n.a. n.a.
D: Manufacturing
  2006 2007 2008 2009
  N % N % N % N %
1-9 58.988 9% 58.172 9% 58.154 9% n.a. n.a.
10-49 108.230 17% 110.504 17% 110.765 17% n.a. n.a.
50-249 144.400 22% 147.705 22% 151.694 24% n.a. n.a.
E: Electricity, gas and water supply
  2006 2007 2008 2009
  N % N % N % N %
1-9 668 3% 720 3% 771 3% n.a. n.a.
10-49 3.637 14% 3.853 14% 3.820 14% n.a. n.a.
50-249 6.114 23% 5.895 22% 6.346 23% n.a. n.a.
F: Construction
  2006 2007 2008 2009
  N % N % N % N %
1-9 74.482 31% 70.330 31% 66.662 32% n.a. n.a.
10-49 75.627 31% 70.330 31% 62.835 30% n.a. n.a.
50-249 31.854 13% 31.944 14% 28.135 13% n.a. n.a.
G: Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household good
  2006 2007 2008 2009
  N % N % N % N %
1-9 132.158 30% 133.335 29% 133.096 29% n.a. n.a.
10-49 116.393 26% 117.844 26% 119.343 26% n.a. n.a.
50-249 74.394 17% 77.854 17% 79.836 17% n.a. n.a.
H: Hotels and restaurant
  2006 2007 2008 2009
  N % N % N % N %
1-9 34.548 42% 36.753 41% 39.524 41% n.a. n.a.
10-49 27.104 33% 30.259 34% 31.424 33% n.a. n.a.
50-249 9.583 12% 8.964 10% 12.188 13% n.a. n.a.
I: Transport, storage and communications
  2006 2007 2008 2009
  N % N % N % N %
1-9 38.701 16% 39.014 16% 40.416 16% n.a. n.a.
10-49 40.180 17% 41.919 17% 43.438 18% n.a. n.a.
50-249 33.301 14% 36.315 15% 36.657 15% n.a. n.a.
K: Real estate, renting and business activities
  2006 2007 2008 2009
  N % N % N % N %
1-9 124.354 29% 130.975 28% 136.294 26% n.a. n.a.
10-49 96.372 22% 104.183 22% 108.349 21% n.a. n.a.
50-249 83.701 19% 88.954 19% 96.977 19% n.a. n.a.
M: Education
  2006 2007 2008 2009
  N % N % N % N %
1-9 11.126 30% 11.575 29% 12.321 28% n.a. n.a.
10-49 12.559 34% 13.453 34% 14.985 35% n.a. n.a.
50-249 8.229 22% 9.138 23% 9.389 22% n.a. n.a.
N: Health and social work
  2006 2007 2008 2009
  N % N % N % N %
1-9 16.798 17% 17.360 16% 18.496 16% n.a. n.a.
10-49 16.779 17% 17.840 17% 18.985 16% n.a. n.a.
50-249 17.853 18% 17.668 17% 21.345 18% n.a. n.a.
O: Other community, social and personal service activities
  2006 2007 2008 2009
  N % N % N % N %
1-9 21.855 35% 23.294 35% 24.729 36% n.a. n.a.
10-49 12.295 19% 13.098 20% 13.574 20% n.a. n.a.
50-249 11.802 19% 12.126 18% 12.098 17% n.a. n.a.

Question 1.3: recent developments in SMEs in those sectors where they have been more affected by the crisis (major restructuring, new technologies, big job losses, etc.);

The sector most affected by the crisis in Sweden was the automotive sector, which is dominated by two large international companies: SAAB Automobile AB and Volvo Personvagnar AB. The lack of demand from the big customers and a liquidity draught in the financial sector created a very problematic situation for many SMEs in the automotive sector. The Public Employment Service (Arbetsförmedlingen) has statistics over notices in different sectors, which show that the automotive sector was much affected by the crisis, with 12,000 and 10,000 notices in 2008 and 2009 respectively. However, the crisis affected not only the automotive sector, but the entire manufacturing sector as well. Over 48,000 persons in the manufacturing sector were given notice in both 2008 (7% of total employment in the sector in 2008) and 2009. Half of the companies in this sector are SMEs.

Two other sectors that were much affected by the crisis are construction and wholesale & retail, where 75% and 71% are employed in SMEs respectively. In the construction sector 16,108 persons were given notice in 2008 and 2009, and the corresponding number for wholesale & retail is 17,630.

Question 1.4 types of contractual arrangements used for the workforce: for example, the ratio of standard (open-ended, full time contract) / atypical (long fixed-term, long part-time, temporary agency work) / very atypical (fixed-term contracts of under 6 months, part-time contracts of under 10 hours a week, on call working, work without a contract) per size of enterprises (1-9, 10-49 and 50-249);

No research on this specific subject has been found.

Question 1.5: the type of work organisation that is common in SMEs. This could include working patterns, shift work, flexible working, remote working, and could also look at whether subcontracting is a widespread practice. The information should be provided per size class and in comparison with companies having more than 249 employees. Differences between economic activities should be taken into account.

No research into these issues has been found in Sweden.

Questions 1.6: How far are SMEs involved in networks of enterprises? Please provide information by size of company and sector as far as possible.

A study by NUTEK from 2009 found that 64,6% of micro (5-9 employees) and 71,7% of the small (10-49) companies in Sweden had some kind of collaboration with at least one other company. Among the micro companies who had collaborations, 78% stated that they were local or regional, with the corresponding number among small companies were 73%. According to the survey 50-60% of small Swedish companies are involved in some kind of collaboration or network on a local level. In addition, 51% of the micro companies and 55% of the small companies state that they are part of a cluster.

Block 2: Has your government undertaken any targeted measures to help SMEs to weather the crisis?

If yes, which ones:

Financial measures (access to credit/loans, provision of direct subsidies/credits)

Additional capital for ALMI Företagspartner

During the financial crisis many Swedish companies, especially SMEs, experienced problems with liquidity. The banks stopped lending even to long time customers, and this led to an increased demand for loans provided by ALMI Företagspartner, which is a state-owned enterprise that provides loans to SMEs and for business start-ups.

In December 2008 the government decided to provide ALMI with EUR 180 million (SEK 2 billion) in additional capital. The purpose was to meet the increased demand for capital among SMEs and was accompanied by a rule change. Previously, a company who wanted a loan from ALMI had to provide 50% of the capital themselves, either through own funds or through a bank. The change meant that ALMI could finance up to 80% of the total loan, easing the capital demand put on the SMEs while simultaneously increasing the amount of available capital.

This measure was directly targeted at SMEs and not restricted to a specific sector or region. Since the increased demand for this service lead to the measure, it must also be considered as taken up by the SMEs.

  • commercial opportunities (help with finding new markets, help with exports)
  • support through the provision of consultants or other help
  • simplification of administrative processes (i.e.: cutting red tape, simplification of hiring and dismissal rules)
  • supporting job creation, (for instance, through reducing labour taxes)

Tax reduction for household services

In 2007 the government introduced a tax reduction for household services. The reduction amounts to 50% of the cost up to EUR 5,300 (SEK 50,000) per person and year. This sector largely consists of SMEs, although the exact number is difficult to assess. The Forum for Service Companies estimated that 11,500 jobs were created by the tax reduction. (RUT-avdraget mer populärt än någonsin).

This measure was not directly targeted at SMEs, but it has been beneficial for SMEs because most of the companies operating in this market are small companies.

Tax reduction for the construction sector

The employment in the construction sector in Sweden is concentrated mainly in SMEs, a sector that experienced a rapid decline during the financial crisis. The sector employed 242,000 employees in 2008, of which 75% worked in an SME (62% in a micro or small enterprise). In December 2008 the government launched an initiative to maintain employment in the sector, where the tax on restoration, construction and maintenance work on private houses was reduced. This permanent tax reduction (ROT-avdrag) amounts to 50% of the costs up to a maximum threshold of approximately € 9200 (SEK 100,000), which is equivalent to a maximum tax reduction worth approximately €4600 (SEK 50,000) for each individual in one year. (SE0907029Q) The Swedish Construction Federation (BI) estimated that the tax reduction has created 10,000 to 12,000 new jobs by using numbers from the National Tax Board (Skatteverket).

This measure is targeted at the construction sector only, but it is not targeted specifically to SMEs. As for the tax reduction for using household services, it is mainly small companies operating in this field (as stated above). Therefore, it has been an indirect measure to benefit SMEs.

  • enabling temporary reductions in staff levels or in the overall working time of the workforce (temporary short-time working), eg through financial subsidy
  • support for training
  • other measures targeted at SMEs

Block 3: Please provide information on recent developments of social dialogue in SMEs, taking into account the employee representation arrangements in SMEs in your country.

Question 3.1.Please detail the evolution / recent developments in social dialogue with regard to SMEs and their employees (new agreements, new interest organisations and employee representations, etc.). Also, specify the relevant social partners.

No employer association or trade union specifically covers SMEs or employees in SMEs with regard to collective bargaining. There is however one interest organisation which specifically targets SMEs called SAO. Membership in SAO is not connected with a collective agreement, and the organisation is not part of the collective bargaining. They can however provide assistance with local bargaining, if this is requested by a member company. They also provide various other services for both employer and employee, for example guidance in legal issues or advice for employees.

Since no specific employer association or trade union cover SMEs, it is difficult to detail recent developments in the social dialogue.

Question 3.2: Please list any particular actions or initiatives that social partners have taken to support SMEs in the crisis or initiatives coming from the social dialogue.

While not directly aimed at SMEs, the Union of Metalworkers (IF Metall), the Association of Swedish Engineering Industries (Teknikföretagen) the Swedish Industrial and Chemical Employers Association (Industri- och Kemigruppen) and the Metal Group (Metallgruppen) signed a central agreement in March 2009 to allow temporary layoffs, as an alternative to dismissals. This agreement covered the manufacturing sector, a sector which was hard hit by the financial crisis and where 50% of the total employment is in SMEs. During the temporary layoff an employee will keep their job, while receiving at least 80% of their normal wage. (SE0907029Q) Around 350-400 local agreements on temporary layoffs were after the central agreements were agreed, which saved 15,000 jobs in the manufacturing sector according to IF Metall. (Article in the paper LO-tidningen, 6 July 2010). It was somewhat less common among SMEs to use this agreement than among large companies, according to IF Metall. Close to 40 % of large companies used the agreement, but still around 30 % of the SMEs in the sector used the agreement, and there is a broad consensus among employees and employers alike that it saved jobs in the crisis.

Question 3.3 What proportion of SMEs are members of employers’ organisations, and has this proportion changed since 2006

No information regarding SMEs has been found, but the coverage in general is high in Sweden. A recent study found that 80% of all employees in the private sector worked in companies that were part of an employer association in 2008. This ratio was 74% in 2000 and from 77% in 2006.

Question 3.4 What is the level of union membership in SMEs, and how has this changed since 2006? And what are the sectors of relative union strength and weakness?

No specific information on SMEs has been found. However, trade union membership was 71% of all employees in 2008 (65% in the private sector and 84% in the public sector)

Question 3.5 Please report on the existence and type of employee representation at company level, broken down by firm size.

Incidence of different types of employee representation by firm-size in percent
Type of representation Size Yes No DK Total
Trade union 10 to 19 44 56 0 100
  20 to 49 66 33 1 100
  50 to 249 85 15 0 100
  250 plus 99 1 0 100
Health and Safety representative or committee 10 to 19 61 39 1 0
  20 to 49 68 32 0 0
  50 to 249 92 7 1 0
  250 plus 99 0 1 0

Source: European Company Survey, units of observation are single entities.

The Swedish trade union membership seems to follow the structure in other EU countries, where trade union representation increases with company size. Trade union representation in Swedish SMEs appears to be fairly high compared to other EU countries. The legislation in Sweden does not have any size restrictions for trade union representation; it is regarded as a right for all workers. Union membership in Sweden has historically been around 80%, although this number has decreased to around 70% in recent years.

Work councils are not applicable due to Swedish legislation that allows for only one structure for workers representation; trade union representative bodies.

Swedish legislation (Work Environment Act [AML]) states that a company with over 5 employees has to have a Health and Safety representative (skyddsombud), companies with over 10 employees have to have a written working conditions policy and companies with over 50 employees have to have a Health and Safety committee (skyddskommittee).

Block 4: Please provide general information on local partnership in your country and describe two cases of SME local partnerships with a social dialogue aspect aimed at maintaining employment levels or supporting job creation during the crisis. These could include cases of sectoral, regional or local networks with other SMEs, or partnerships with public institutions, research and development bodies and social partner organisations. Please note that the focus should be on the social dialogue aspects of local partnerships.

Question 4.1: Background information: Before describing the cases, please briefly provide information about the importance of local partnerships in your country: What are the main characteristics? Are they new developments because of the crisis? If so explain the goals and what the new patterns are. Are SMEs normally involved in local partnerships? And are social partners usually involved?

The study from NUTEK presented above states that around 50-60% of Swedish SMEs are involved in a local partnership with other companies, and around 50-55% state that they are part of a cluster of enterprises. These results indicate SMEs are regularly involved in local partnerships. Statistics from SCB show that 35% of all municipalities in Sweden are involved in a local public-private partnership.

The local partnerships are not new developments because of the crisis, although local partnerships have been used to a greater extent to lessen the effects of the crisis.

Trade union and employer association membership is generally high in Sweden, and the social partners are usually involved in issues relating to employment or redundancies. They are not involved to a large extent in local business development.

Question 4.2: Describe two case studies of SMEs local partnerships aimed at maintaining employment levels or job creation during the crisis, focusing on the social dialogue aspect and the involvement of the social partners.

The cases selected should include the involvement of social partners unilaterally or social dialogue. Please try to answer – where possible – each of the bullet points separately.

  • Type of measure – heading for the case
  • Region, sector, types of companies involved, company size.
  • Period of initial establishment of the partnership
  • Actors involved in the local partnership
  • What was the trigger for the specific action?
  • Which specific actions have been taken to maintain employment levels/support job creation during the crisis.
  • What was the role of the social partners or social dialogue?
  • To what extent has the initiative proven to be successful?
  • Which governmental/social partner support measures/general policies deemed to be successful and crucial for the outcome?
  • Add any other relevant information you find interesting for the success of the case

Case 1: the Swedish Karlskrona Employer Ring (Arbetsgivarringen i Karlskrona)

The Swedish Karlskrona Employer Ring (SKER) consists of a network of companies that help employees to overcome different adjustment processes. An employer ring operates in a local or regional context, and provides assistance for employees that require vocational rehabilitation or help finding new work. Through the network employees can switch between different work places and assignments in order to adapt to a new situation. This is a model in Sweden which has received increased attention in recent years, since it is a model which allows for flexibility and adaptation to local contexts. There are about 30 employer rings in Sweden today.

The partnership was first established in 1992 as a project financed by the Swedish Social Insurance Agency . The Swedish Karlskrona Employer ring was incorporated in 1996. SKER operates out of Karlskrona, and their domain covers Småland and Blekinge in the southeastern part of Sweden. There are 20 companies in the network, almost exclusively in manufacturing. 40% of them are SMEs. The network potentially involves all companies in the region, if they are affected by notices or redundancies. The Union of Metalworkers (IF Metall) and the Union of Service and Communication Employees (SEKO) are the unions involved in the partnership. A Job Security Council (trygghetsråd) called TSL is also involved in the partnership.

The partnership was established due to new legislation created in the 1990s, which meant that employer were now responsible for the rehabilitation of employees on sick absence. It is the employer who shall actively identify what the sick absent can start to work with, opportunities to adaptation after sick absence and transfer of employee coming back from sick leave.This combined with a greater focus on core competences created a new demand for partnerships with other companies and with companies specialising in outplacement and rehabilitation.

The employer ring model is built around cooperation between companies. An employee that is unfit for a certain job due to disabilities or wants a new job can find a new job within the employer ring. This also applies to redundancies, where a person given notice can be offered a job at another company. SKER supports employment levels by helping redundant workers find new jobs at another company. However, this does not have to be within the network, and employment can be found at another company as well.

In cases where no new job can be found, SKER provides education to improve the employability of the redundant workers. The trainings are designed together with the trade unions and member companies, to improve the workers knowledge in some specific area.

Together with the trade unions and member companies they created a course called “fitter of the future” (free translation: framtidens montör). This was a four week education covering a wide range of subjects, including business administration, computer skills and how to improve collaborations between white and blue collar workers. The social partners help with designing educations for redundant workers. SKER also stated that when a worker is given notice, they want him to stop working as soon as possible, because it makes it easier for the company to adapt to a new situation, and the employee can take part in an education or start searching for new jobs. The trade unions help with this part of the dialogue between employee and employer, which means that SKERs job is made easier. The trade union assistance concerns mainly finding the most suitable training programmes, as the trade unions have first hand expertise of which competences are needed at the labour market.

During the financial crisis, 75% of the redundant workers that SKER have helped found new jobs, within the employer ring or outside it. This number is down slightly from the historic average, which lies around 80-85%, but it is still higher than Arbetsförmedlingen. The employer ring has thanks to its range of support activities been very important during the crisis, and as social dialogue is built into the structure of the employer ring it is a vital instrument for social partners to support both companies and individual employees during times of economic hardship, or whenever restructuring is needed.

For further information about the SKER, please see the Eurofound case study.

Case 2: Västkraft

Västkraft is a Public Private Partnership in the southwestern part of Sweden, more specifically in the Gothenburg region, that offers training in order to improve the skills of employees and redundant workers in mainly the manufacturing sectors. In particular this involves workers within the automotive industry or sub-contractors to the automotive industry. However, the education and subsequent skills improvement among the workers is not exclusively targeted to match the needs of the automotive industry. Västkraft can also be sued as a way for workers to move to a different sector. The original aim of the project was to provide education for unemployed workers, but this aim shifted more towards improving employee skills and furthering innovation at the local companies.

The project was created in 2009 due to the adverse labour market situation in the region, and it is financed by the European Social Fund (ESF) with EUR 5.3 million (SEK 50 million). Västkraft's role is to organise the different educations, based on what the local companies and trade unions require. The providers of educations are found through a public procurement process. The Gothenburg municipality is the principal owner of the project, and they work with 9 collaboration partners. These include Arbetsförmedlingen, Business Region Göteborg and the main social partners within the sector.

The main aim of the project is to improve skills among workers and thereby improve the regions sustainable growth. The project also aims to promote increased strategic collaboration among the municipalities of the region within adult education, and to design an education which is founded in the demands and needs of the local businesses. Västkraft also aims to promote entrepreneurship within the region, and to promote increased collaboration amongst regional actors; companies, providers of education and adult educations. Thus far 1,500 persons have finished their education at Västkraft, with an additional 2,000 expected graduates in the autumn of 2010.

Although Västkraft has only been active for one and half year, 80 local companies have participated in the project, a large majority of them SMEs. The project is set to run for 2 years, something that the project manager objects too. He feels that this is not enough time, and that more could be done if they had more time. Today, due to increased brand awareness among local companies and help from the social partners, this obstacle is not as important as before. The social partners often act as door openers; they facilitate the contact with local companies. Arbetsförmedlingen has also played a vital role in Västkraft's work, by giving unemployment benefits to the individuals who studied at Västkraft.

Block 5: What are the main views of the social partners in your country regarding the functioning of SMEs in your country, the particular issues they face, the main employment and organisational trends in SMEs and the measures available to help them to weather the crisis

Please provide views from employer and employee representatives.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) is perhaps the social partner organisation that is most active in the debate about SMEs in Sweden. Their view is that the functioning of SMEs and especially the conditions for entrepreneurs should have a larger part of the public debate.

Regarding the issues that SMEs face, Svenskt Näringsliv feels that complex rules and administrative burdens are hindering SMEs today. The government has started several programmes to address these issues, but Svenskt Näringsliv would like to see more concrete results. Limited access to venture capital is another issue that SMEs in Sweden face, especially during the crisis. The situation varies in different parts of Sweden though, where SMEs in urban areas seems to have easier access to capital.

Commentary by national correspondents

Sweden has handled the financial crisis relatively well, without needing large government aid packages or any subsequent austerity programmes. The most affected sectors were manufacturing and construction; sectors with a large degree of employment in SMEs.

Local partnerships appear to be a good method for SMEs in the crisis, since it provides a framework for developing local strategies and responses. The local context should be very important for SMEs, since they often operate in a single location or market, and therefore face problems that concern only that part of the economy.





Anders Kjellberg, (2009) ”Det fackliga medlemsraset i Sverige under 2007 och 2008”, Arbetsmarknad & Arbetsliv, årg 15, nr 2.


  • Göran Norén, Head of Department for Economic Policy, Svenskt Näringsliv, 2010-07-13
  • Barbro Widerstedt, analyst at The Swedish Agency for Growth Policy Analysis (Tillväxtanalys), 2010-07-13.
  • Johan Åhman, Statistics Sweden. 2010-07-09
  • Dan Weinberger, Swedish Karlskrona Employer Ring, 2010-07-20
  • Magnus Kallenberg, Västkraft, 2010-08-11

Mats Kullander and Claes Bäckman, Oxford Research

[1]> SEK converted to € are approximates. Average exchange rate in April 2009 was €1= SEK 10,883.

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