Small companies resist collective agreements

In Sweden, 90% of workers in the private sector are covered by collective agreements. This high figure is partly explained by the fact that employers in general accept collective bargaining as a rational means of setting the terms of employment. Lately however, Sweden has seen examples of employers increasingly resisting trade unions' claims, as illustrated by two cases from late 1997 and early 1998.

Collective agreements are very important as instruments for the regulation of working life in Sweden, both with regard to their content and to their coverage.

  • Contents. Several matters which are regulated through legislation in other countries are exclusively regulated by collective agreements in Sweden. For example, there is no law providing for a minimum wage. Where there are legal rules, these are often superseded by provisions in collective agreements. Here, perhaps the Act on Working Time is the most marked example.
  • Coverage. Some 90% of workers in the private sector are covered by collective agreements (in the public sector, all employees are covered). A majority of private sector employers (75%) are bound by agreements through their membership of employers' organisations. Others, mostly small companies, conclude so called "substitute agreements" directly with the trade unions, which are normally identical with the sectoral agreements. Two factors contribute to these high figures: Employers in general have accepted collective bargaining as a rational means of setting terms and conditions of employment. On the other hand, the trade unions have very effective weapons should an employer object to entering into an agreement. By means of strikes and boycotts and supported by sympathy measures from other trade unions, they can effectively paralyse the employer's activities. Thus, sooner or later most employers give in.

Lately, however, Sweden has seen examples of employers resisting trade unions' claims to an increasing extent.

Trade union members resign

In late 1997, the Metalworkers' Union (Metall) gave notice of a boycott against the engineering company Ferrita Sweden AB, after years of fruitless efforts to convince the company to sign a substitute agreement for its employees, seven of whom were union members. The owner of the company declared that he would rather sell or move the production abroad than sign. According to him, the workers had better conditions than those stipulated in the sectoral collective agreement and besides, he added, not even the workers themselves wanted a collective agreement. The seven organised workers announced their resignation from the union - not, they said, because they cared for the employer, but out of loyalty to their 15 colleagues who did not want trade union involvement. The event created a sensation in the media, and Metall met heavy criticism in the liberal press. One of the tabloid newspapers asked the workers one by one if they wanted to have a collective agreement and published the answer of each of them under his or her picture. In January 1998, Metall withdrew its boycott notice and its demand for a collective agreement, as it had no members at Ferrita any more.

Company moves abroad

Another case concerns a dispute between the Industrial Union (Industrifacket) and the small textile company, Kurt Kellerman AB, where it had two members. In October 1997, the union gave notice of strike action and a boycott after the employer had declared that it would not sign a substitute agreement. The company sued the trade union before the Labour Court, claiming that the strike and boycott actions would be illegal, as they would violate the company's negative freedom of association which is protected by the European Convention for the Protection of Human Rights and Fundamental Freedoms. On 11 February 1998, the Labour Court, however, ruled in favour of the trade union (AD 1998/17). Referring to the judgment of the European Court of Human Rights (ECHR) in the case of Gustafsson v. Sweden (SE9710144F), the Court declared that the action planned by the trade union would not violate the employer's negative freedom of association, and that it aimed at pursuing legitimate interests consistent with the Convention.

During the legal process, the two trade union members had however been given notice of termination of employment on the grounds of scarcity of work. According to the owner, the company will move its production abroad. Industrifacket will nevertheless make another attempt to negotiate with the employer. If this fails, the boycott will commence. The company, on the other hand, states that it will appeal to the ECHR.

Moral support from the SAF

The Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) gives both of the employers in the abovementioned cases its moral support. The events have given it an opportunity to repeat its call for a change in the legal rules regarding industrial action. It is self-evident that trade unions should not be allowed to boycott companies where they have no members, or where their members do not want a collective agreement, SAF claims.

From the trade unions' point of view, the problem is more complex. Some of them call for agreements in companies where their members have shown very little interest, and in fact even where they have no members. One reason is that it may be difficult for a couple of union members to resist the pressure from managers and colleagues in a case such as the Ferrita example. As the unions see it, the point of trade union representation is that gives individual workers protection in dealing with their employers.


The events related above appear as signs of an attack against the fundamental principles of the Swedish industrial relations system, which has been exacerbated by the current high unemployment figures. In the Ferrita case in particular, it seemed that many of the workers involved were not hostile to the idea of trade union membership as such, but were afraid of losing their jobs. (Kerstin Ahlberg, National Institute for Working Life)

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