Personnel secondment creates new challenges to bargaining system

"Personnel secondment" - when persons under an employment contract with one firm are leased to work in another firm - has so far mainly affected office and business staff in Sweden. Lately, however, the secondment of other categories such as cleaning staff and truck drivers has also become common. At a seminar in November 1997, trade union representatives expressed concern over this development, which is problematic because it might lead to new groups of employees falling outside of the scope of collective agreements.

"Personnel secondment "(personaluthyrning) is the Swedish term for the situation whereby persons under an employment contract with one firm are leased to work in another firm. It covers arrangements known variously as hiring-out of labour or temporary agency work in other countries. The practice was deregulated in Sweden in 1991 and has since increased considerably. This led to the Social Democratic Government appointing a commission in July 1996 to evaluate and analyse the consequences of the 1993 Act on private employment agencies and secondment of personnel. The commission was headed by Björn Rosengren, former president of the white-collar workers trade union federation, TCO. The Act of 1993, which was designed by the then non-socialist government, removed the requirement that a firm had to have a licence to be allowed to lease workers. Previously such licences had been given to very few firms. The new Act contains only two restrictive provisions: that the employee must not be restrained from accepting employment in the client enterprise; and that a person who has left his or her employment to work for a leasing firm must not be leased to his or her previous employer until at least six months have passed.

The result of the study

The commission presented its final report in March 1997. It showed that the leasing companies expanded rapidly after the new law was passed. However, they still only employ 9,400 people, which is 0.2% of the labour force, and 20% of the 9,400 are self-employed without any employees, which makes it doubtful whether they should be included. The study also shows that there are no signs that the activities of the leasing firms would threaten ordinary jobs at the client enterprises.

According to the report the biggest problem is the situation of the employees themselves. Their income varies with the job. Parts of the sector are covered by collective agreements between a service employers' organisation, Tjänsteföretagens Arbetsgivarförbund, and HTF, a trade union organising white-collar workers in commerce, transport and services. Those covered by the agreement were guaranteed at least 50% of their salaries every month, even if they had not been leased for as many hours.

To solve the problems of the sector, the commission suggests that firms leasing their employees should be registered by a separate council consisting of representatives of the sector, unions and employer organisations and three independent legal experts. For a leasing firm to be registered, it must meet the conditions that: it has a satisfactory financial base for its activities; its bookkeeping and accountancy of taxes and other charges follow good practice; personnel who are regularly leased by the leasing firm should have permanent employment contracts; and the leasing firms in other respects should also follow the rules of the regulated labour market. In addition, the leasing firms in their promotion should follow good business ethics.

New conditions

After the commission reported, two new collective agreements for employees in leasing firms have been concluded between national trade unions and the employers. The first agreement was reached in May 1997 between the Transport Workers' Union (Transportarbetareförbundet) and the abovementioned Tjänsteföretagens Arbetsgivarförbund (SE9706128N). This agreement guarantees employees 50% of a monthly salary even if they were not leased at all during this period. The second agreement was reached in October 1997 when the same employers' organisation and HTF agreed on an increase of the guaranteed salary to 75% of the salary of a full-time employee in the sector.

The leasing of personnel is still dominated by the office and financial administration sector, which means that the agreement between HTF and the service employers' organisation has been sufficient to secure the employment conditions for the whole sector. At a seminar at National Institute for Working Life (Arbetslivsinstitutet) in November 1997, trade union representatives reported that leasing firms are now to an increasing extent also leasing blue-collar workers, a trend which was not observed by the commission. The HTF agreement does not cover this category and is not a good model for blue-collar jobs. Among-blue collar unions, only Transportarbetareförbundet has an agreement.

The strong growth in this sector is a result of current management strategies, ie that firms should concentrate on their core activity. Thus they have a narrow core of permanently employed staff, usually highly qualified, while they seek to "outsource" peripheral activities wherever possible, eg to personnel-leasing companies.

Another problem related to the system of collective agreements is that only one national union signs an agreement for all blue-collar workers in an enterprise, namely the union organising the workers employed in the central activities of the firm. A cleaner at a building site comes under the building workers' agreement, while cleaners in an engineering industry receive wages and working conditions which are regulated in the agreement for the engineering industry signed by Metal Workers' Union (Metallindustriarbetareförbundet) and the Association of Swedish Engineering Industries (Verkstadsföreningen). The almost total absence of collective agreements to cover the leasing of workers other than office and finance administration staff means that large groups of workers in the leasing field are either without a collective agreement, or covered by another collective agreement than the one covering the other workers in the client firm. In other words, people doing the same job at the same workplace can have very different wages and working conditions .

Problems could also arise when a leasing company, which typically does not have any real production of its own, leases personnel to enterprises covered by different collective agreements. Then the question would arise as to which trade union organisation should sign an agreement with the enterprise, when the individual employee could be leased to different firms under different collective agreements from day to day. A theoretical solution would be to follow the collective agreement covering each client workplace. However, such a solution is less likely since it would involve the change of collective agreement whenever the workplace is changed.

Commentary

The Ministry of Labour is now studying the positions adopted on the commission report by unions and employers and other organisations and authorities and plans to submit a bill to Parliament in May 1998. If the leasing firms continue to take an even larger share of the labour market and broaden their activities to new sectors of the economy, the blue-collar unions will be forced to decide how to bargain collectively for the new workers. The LO union confederation will not accept that an increasing number of workers are not covered by collective agreements, and is working on a solution for the whole area. It will still take some time before the unions have decided how to deal with the issue. (Jonas Bergström, NIWL)

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