JILPT Research Report No.179
Labor-Management Relations in Sweden - With Focus on Rules for Wages and Labor Mobility:
“Research Project on Directions for Collective Labor Relations in Connection with the Establishment of Norms” Swedish Case

May 29, 2015

Summary

Research Objective

In Japan today, collective agreements are positioned as legal norms that take precedence over rules of employment in labor legislation. In spite of this, they only have a weak presence, as company unions form the mainstream. Instead, rules of employment stipulated by employers occupy a central position in legal norms. In European countries, by contrast, collective agreements concluded at national or industry level regulate the labor society as important legal norms that mediate between national laws and the corporate level. Nevertheless, a decentralization of industrial relations towards agreements at work site and company level has been pointed out in recent years.

Therefore, with principal focus on European countries where industry-level collective agreements are the prevailing norm, empirical and comprehensive Research will be conducted on the nature of collective labor relations related to the establishment of norms in advanced nations. Topics covered will include collective bargaining at national and industrial level, collective agreements and the extension of their effects, and collective bargaining at company level. The findings will then be expected to be used as a basic material for macro-policy discussions on future directions for the Japanese labor society.

Within this Project Research, the following issues have been given particular attention and surveyed in this study.

  1. Clarifying the actual situation of labor relations in countries where collective bargaining at industry level is still practiced.
  2. In particular, clarifying the body of rules on wage determination and labor mobility which form the core in the Swedish model (see Fig).
Fig. Rules for Particular Attention and Specific Survey Topics
Swedish Model   Rules for Particular Attention Specific Survey Topics
Solidarity-based Wage Policy ●Wage rules
– How wages are determined
● Relationships between industry and companies
– Wage regulations in industry-level agreements
– Wage determination at company level
– Methods of determining variable elements
Active Labor Market Policy ●Labor mobility rules
– How employees leave their company
– How they look for and reach their new employer
● Laying off and matching function
– Methods of laying off
– Support of social partners for laid-off personnel
– Vocational training system (in particular, demand forecast / supply adjustment)

Research Method

Field survey, literature review, Research group meetings

Major Findings

  1. When the work site is organized by a “club” (company-level union), representatives of the employer and the club are the main actors in collective bargaining at company level. Conversely, when there is no club, “negotiators” from the local branch of the industrial union negotiate with the employer’s representatives on behalf of the union members working there.
  2. There is no provision for wage schedules by job title in industry agreements. Even IF-Metall (the machine- and metalworkers’ union) thinks it unnecessary to have detailed provisions in industry agreements.
  3. Consequently, companies create their own wage systems and use them to determine their workers’ pay. In a work site of V Company, where there is both a club and a qualified grade system, pay rises relating to portions of the monthly salary paid uniformly to all employees are determined through negotiation between the club and the employer’s representatives.
  4. Assessment has also been introduced for the monthly salaries of blue collar workers. The unions not only monitor the assessment but also maintain their own functions as negotiating parties. For maintenance workers at a V company’s work site, for example, union members’ evaluation scores and pay increases based on these scores are determined between the evaluation group for union members created for each division and the bosses of the division. Moreover, when deciding pay increases, attention is also given to correcting wage disparity between union members as part of the negotiations.
  5. For union members, this aspect of assessment has generally become a precious element in achieving pay rises. Nearly all of the production workers at the V company’s work site have received the maximum salary increase available. In the words of the union representative in A company’s B office, the salary increase element of this assessment acts as a “booster for increasing wages”.
  6. When there is no club, “negotiators” from the local branch in charge for the area visit the workplace for negotiations. The survey revealed that negotiations like this are often carried out in companies with a scale of between a few employees and a few dozen of employees.
  7. When there is no club, wages are often determined in one of the following three ways. The first is the method of multiplying an individual’s wage by an agreed rate of pay increase. The second is the method of applying the same amount of pay increase to all employees. And the third involves determining specific wage rise amounts through interviews between bosses and subordinates. In this case, if an individual union member who works there cannot agree with the bosses, a “negotiator” will take part in the decision process, and the wage rise amount will be determined. At the negotiation, the local branch negotiator will listen to explanations by both employer and union member, and then try to propose a wage that would be mutually acceptable to both parties.
  8. In recent years, there have been progressive moves towards “figureless agreements”, which set no specific provisions regarding wages. In the machine- and metalworking industry, an agreement of this kind has been concluded between the Swedish Association of Graduate Engineers and the Association of Swedish Engineering Industries. Under this agreement, basically, any rate of pay increase may be determined as long as it is agreed by both labor and management within a company. However, though not expressly stated in the text of the agreement, it also set a minimum rate of pay increase when no such consensus has been reached within individual companies. Moreover, cross-industry levels played a certain role in setting that minimum rate.
  9. On the selection of personnel for layoffs on economic grounds, whether there is a club or not (in other words, in all cases regardless of company scale), seniority rights under employment protection law are not automatically applied, and selection is based on negotiation. In doing so, the union strives to reach a consensus in a form that ensures the continuance of the company’s business, while the employer also does not forcibly push through its own claims.
  10. The reason why employers respond to this kind of negotiation is thought to be that agreement on the number and the selection of laid off personnel needs to be reached with the union for exemption from the provisions on seniority rights under employment protection law.
  11. Great part of blue collar workers laid off on economic grounds use TSL (Trygghetsfonden) to look for their next workplace. The TSL is one of the so-called Job Security Councils established voluntarily by labor unions and employer’s organizations, whose work aims at giving support to employees who have been given notice due to work shortage in their efforts to find new employment. TSL was established based on the agreement between LO -a major labor union- and SAF -an employer’s organization. From this point, it can be said that support for the unemployed is provided as a mixture of services both by public agencies and labor and management.
  12. The TSL system has three main characteristics. The first is that it uses private employment agencies. Private agencies are used because they have extensive networks as well as information on many employers seeking personnel. Their networks are used in an attempt to match unemployed workers with job openings as quickly as possible. The second characteristic is that, notwithstanding the above, the process is not wholly entrusted to the private sector. The unions are significantly involved in operating the system. For example, the unions are key players for evaluating the businesses (agency companies) that participate in the service, thus ensuring the quality of the service. And the third characteristic is that this service is actually provided before unemployment occurs. Workers are normally given a fixed period of notice before a layoff. Public services are not available during this period, but under the TSL system, the service can be started during the notice period. This helps to ensure that workers move to their next workplace without experiencing unemployment, even if actually laid off.

Policy Implications

  1. The role played by labor unions at company level (mainly work site or workplace) in maintaining the system of collective labor relations based on industry agreements is by no means small. This is thought to suggest that, even if a system of collective labor relations is created, it would not diminish the role of unions at company level.
  2. From the analysis of labor-management negotiations regarding layoffs on economic grounds, it became clear that the legal provision on seniority rights in fact promotes the sincerity of negotiations at work site level. It is an interesting finding that an express provision in law, together with a provision for exemption from it, helps to promote sincere negotiations between labor and management at company level, in terms of securing the effectiveness of representative bodies formed within companies.
  3. Another finding is that there exists one more level of safety net operated by labor and management between employment in individual companies and public unemployment support services. This could be regarded as the third (level 1.5) safety net by labor and management bodies, besides the first (level 1) concerning employment in companies and the second (level 2) representing public services. In this third safety net (level 1.5), support was developed using private employment agencies, but labor and management were also closely involved in operating this. This is also an interesting finding in the context of planning labor policies.

Policy Contribution

This Research is expected to be used as a basic material for various policy-making entities when studying initiatives on the macro policy issues of the nature of employment systems and systems of collective labor relations, based on the ILO rule of tripartite composition (government, labor unions and employers’ organizations).

Main Text (only available in Japanese)

Research Category

Project Research: “Survey Research on Systems for Deciding Working Conditions Centered on Labor Relations”
Subtheme: “Research Project on Directions for Collective Labor Relations in Connection with the Establishment of Norms”

Research Period

FY2012-FY2015

Author

Itaru NISHIMURA
Researcher, The Japan Institute for Labour Policy and Training

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