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13 December 2018

Sweden: is the labour market model based on consent resistant to political instability?

In a number of recent publications in Sweden, the future of a labour market model based on consent and dialogue has been questioned. A brief look back at 2018 shows that social dialogue remains intact. However, serious damage to the model may come from ideological differences between the centre-right and centre-left concerning employment rights and labour market policies.

In Sweden’s changing political landscape, labour market observers fear that the labour market model, based on social partner dialogue and negotiation on collective agreements, rather than state regulation, might soon be overtaken by political reality. Since the September 2018 elections ended in deadlock, the political system remains stuck. However, expectations are that, once the situation is resolved and a new government takes office, a range of labour market-related decisions will have to be taken. Among these issues, sensitive workers’ rights, ranging from employment protection to lower pay for entrance jobs and other measures that reduce the risks of precarity, are at stake. Trade union confederation LO has always stressed that it is the social partners who agree on salary levels, not politicians. LO views interference by the government as a direct threat to free bargaining where trade unions and employers decide wage levels through negotiations.  

So far, the country’s labour market model of consent remains functional. Reference can be made, for instance, to an agreement between trade unions, employers and the government on so-called etableringsjobb (entry jobs). In the spring of 2018, the social partners and the government formulated a new system of ‘entry agreements’ which have the aim of helping newly arrived migrants and the long-term unemployed to become established in the labour market and facilitates future skills provision for employers.

Shortly after the 2018 elections the social partners in the private sector demonstrated their will to cooperate when they decided to join forces in a fight for their common interests at the EU level. On 1 October 2018, the Confederation of Swedish Enterprise, the trade union confederation LO and PTK – the council for negotiation and cooperation for private sector salaried employees – established the Labour market council for EU affairs. The organisations intend to present joint standpoints in order to protect the position of collective bargaining and the Swedish model when legislative initiatives are taken on at EU level.

Trade Union Confederation LO published in November 2018 a new program that also refers to the model. The plan foresees measures to labour market participation at a high level, including for workers who have serious problems finding a job (because of old age, disabilities or other barriers). The union has formulated proposals for a redistribution program in five areas (in the field of taxation, regional differences, unemployment and health insurance, pensions and living conditions) with the aim of tackling the risks of growing inequality on the labour market. LO opposes using negative economic incentives to force more people into the labour market. Instead, an active and preparatory labour market policy that gives job-seekers the opportunity to meet the changing labour market requirements and take newly created jobs should be the model. During the 2016-congress, LO had once more confirmed its commitment to the Swedish model which plays, according to the union, a decisive role in the country’s economic success.


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