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The Swedish model entering a new era: more power to central organisations

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

It has been described as a victory for the Swedish model. Yet the employment act reform now being proposed by the Swedish government is in reality a structural shift where central labour market organisations will gain greater power at the expense of their affiiated unions. It also changes the division of responsibilities between the state and the social partners, on which the Swedish model is based.

As the Nordic Labour Journal has written before, the proposed legislation is built on an agreement in principle between the Confederation of Swedish Enterprise, the PTK Council for Negotiation and Cooperation (representing salaried employees in the private sector) and two of Swedish LO’s affiliated unions. The other twelve LO trade unions voted against the agreement and thus do not support it. Their main objection is that it would unacceptably weaken employment protection. 

So far, there has been less focus on the structural reform issue, but this is now being highlighted in a comment letter from the Faculty of Law at Stockholm University. The government defends its proposal by saying the Swedish labour law model is built on the fact that the social partners take much of the responsibility for regulating the labour market. 

However, the Faculty of Law points out, the model is built on collective agreements that bind the partners and their members (but nobody else). When it comes to legislation, the legislator has so far been the one to decide which rules are needed. When the government now proposes a solution where certain labour market organisations get a deciding voice over what should be legally binding even for stakeholders other than these organisations, the Swedish model enters a new era.     

  • Firstly, this means that the state surrenders its responsibility for making the legislation fit for purpose.
  • Secondly, it means the parties that have made the agreement will strengthen their role in the legislative process and in society, while the roles of other organisations/stakeholders are weakened.

Since the agreement between the Confederation of Swedish Enterprise, the Confederation of Professional Employees PTK and the two LO unions is considered to balance the opposing parties’ interests, it will be implemented in its entirety. This means it becomes more or less meaningless for critical consultation bodies to present their points of view, as the agreement cannot be questioned. 

Weaker employment protection

The shift in power is also mirrored in the legal provisions on the opportunity to make deviations from employment protection rules. Today’s legislation against unfair dismissal is mandatory to the benefit of the employee. It is not possible to make deviations to the rule that employers must have an objective reason to fire an employee. However, it is completely possible to agree on stronger employment protection, both through collective agreements and through the employment contract between employer and employee.

In the future, however, it will be permissible to arrive at a collective agreement containing deviations – detrimental to the employee – from the rule on “objective reasons”. In other words, it will be possible to agree on weaker employment protection than what the law stipulates.

This is, in other words, a step backwards by the state. At the same time, the opportunities that trade unions have today to negotiate stronger employment protection for their members will be restricted! Because only central organisations like the Confederation of Swedish Enterprise, LO and PTK will be able to reach such agreements in future – not their affiliate organisations.

Want to stop unruly unions

As the Faculty of Law concludes, the organisations behind the agreement want to hinder trade unions which they do not control (read: deviationists like the Swedish Dockworkers Union or unruly LO unions like Byggnads and the Transport Workers’ Union) from trying to dial back the employment protection to today’s level. 

But the question is whether this limitation is compatible with the ILO conventions on freedom of association and collective bargaining. In its continued work with the legislation, the government ought to keep in mind that organisations that are outside of the agreement could complain to the ILO Committee on Freedom of Association that their negotiation scope has been restroicted, writes the Faculty of Law.

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