European Trade Union Institute, ETUI.

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Industrial relations in Sweden: background summary

  • Trade unions in Sweden have traditionally been strong and the trade union density is among the highest in the world. This is often explained by the so-called Ghent system: an insurance system with union-led unemployment schemes funded partly by (payroll) taxes and partly by fees paid by the members of unemployment funds. The fact that the trade unions manage the system brings them in contact with employees seeking jobs or ap­ply­ing for unemployment benefits, thus the high organisation level.
  • Another related variable of importance is the combination of strong encompassing central and local organisations. The centralis­a­tion prevents fragmentary union coverage, promotes bargaining power and facil­it­ates solidarity wage policies, while an extensive net­work of local union branches well integrated into national unions brings the unions closer to their rank-and-file members. The unions formally negotiate over remuneration and other issues with their employer counterparts also at firm level, in order to adapt the central agreements to the local environment, and there are no works councils in Sweden.
  • One crucial advantage of the system for the unions is that it helps maintain a high organisational density even in small and medium-sized companies (SMEs). The trade unions have local branches with good resources even in small companies, and also a strong central back-up that can bring pressure to bear on companies in agreement-related issues such as working hours, health and safety, vocational training, gender or ethnic discrimination issues and mini­mum wages. The provisions of collective agreements and the Co-determination Act concerning disputes between employer and employee also mean that the absolute majority of disputes are settled in negotiations between the social partners without them needing to go to court.
  • After a shift in government in September 2006, replacing the Social Democrats with a centre-right alliance, the government introduced new legislation regulating unemployment funds which caused the greatest drop in trade union membership in contemporary Swedish history.
  • The change in the rules for unemployment benefits led to an increase of the individual fund member’s fee by more than 200% for some trade unions and at the same time, the possibilities for tax reduction were abolished. Since the trade unions manage the unem­ploy­ment funds many members saw insurance coverage and union membership as two sides of the same coin. Consequently, although blue-collar trade unions were harder hit than professional associations, the overall trade union density declined from 77% to 73% from 1 January till 31 December 2007. As of August 2016, the time of writing of this report, the level seems to have stabilized around 70%. The public sector is somewhat higher, but there are not the same differences as in other EU countries. The coverage of collective agreement remains, however, around 90 per cent
  • Due to the long historical roots of centralised industrial relations, there were originally only two major social partners (besides the state) namely the Swedish Trade Union Confederation (LO) and the Swedish Employers’ Confederation (SAF). In 2001 the lat­ter changed its name to Confederation of Swedish Enterprise (Svenskt Närings­liv, SN), after a merger with the Swedish Industry Federation (Sveriges Industriförbund, SI). The large companies had always dominated SAF, and have maintained their position in the new organisation. Svenskt Närings­liv is probably the most powerful interest organisation in Swedish politics and society. It is not possible to give an exact figure on its organisational density, but the most important firms are all covered by Svenskt Näringsliv and the con­fed­er­a­tion uses to talk for Swedish business in general.
  • The LO only organizes blue-collar workers; it is a Scan­din­avian peculiarity to have separate, nation-wide trade union con­fed­er­a­tions for blue- and white-collar workers. The central confederation for salaried employees in Sweden is the Swedish Con­fed­er­ation of Professional Employees (TCO). Members of the Swedish Confederation of Profes­sion­al Associations (Saco) are university graduates and the affiliated unions represent a range of professions.
  • A difference between the three confederations is that while almost all LO affiliates are industry unions, Saco affiliates are based on occupations and TCO unions cover about 50% of each. Both TCO and Saco organize employees in the private as well as in the public sector. The differences in density between the two sectors for white-collar workers are, however, larger than for blue-collar workers.
  • Three unions are outstanding when it comes to the number of members. The largest one is Unionen (the Union) with 600,000 members. The second largest union is the Municipal Workers’ Union (Kommunal), affiliated to LO and organ­is­ing more than 514,000 employees, of whom about 80% are women. The oc­cup­­a­tion­al groups belonging to the union range over a great variety of jobs, such as health care and nursing, cleaners, garbage collectors, school janitors, real estate caretakers, meter maids, kinder­garten teachers, fire-fighters and many other services. In total, they make up one eighth of the Swedish labour force. The third largest union, IF Metall, has about 317,000 members, of whom 23% are women. They are active in sectors such as mechanical engineering and plastics industries, building materials industry, mining, ironworks, textile and garment industries, and automobile repair-shops. Needless to say, both of the recent mergers had the purpose of creating stronger bargaining units.
  • A complicating factor in the bargaining rounds is that even though the three trade union confederations organize workers in the private as well as in the public sector, this is not the case with the employers’ associations. In the private sector, the same association normally neg­otiates with affiliates of all three union confederations LO, TCO and Saco. Governmental bodies are represented by the National Agency for Government Employers (Arbetsgivarverket). The counties and municipalities are represented by SALAR (Swedish Association of Local Authorities and Regions; Svenska Kommun- och Landstings­förbundet). All employers in the public sector are affiliated directly with the confederations and there are no industry or branch associations as in the case of Svenskt Näringsliv. For decades there have been cross-sectoral, joint bargaining cartels for unions within TCO and Saco.
  • When SALAR was formed in January 2007, it introduced a bargaining cartel for employers’ organisations interested in entering into the collec­tive agreements in the municipality-owned sector, regardless of ownership. This cartel is called PACTA and even though it is dep­endent on SALAR, it can be seen as a separate organis­a­tion. At least it is of importance for the new companies that have evolved due to the liber­alisa­tion and privatisation process that took off in the early 1990s.
  • Another cartel, also a result of the liberalisation, is KFS (the Municipal Com­pa­ni­es’ Joint Organization; Kommu­nala Före­tagens Sam­orga­ni­sa­tion) that represents, in its own words, ‘municipality-close companies’ that is, unbundled or privatised firms. About three quarters of the companies in KFS are still publicly owned.