STOCKHOLM - Forget Sweden's eternal winter nights. There are many reasons for trade unionists in the rest of the world to envy their counterparts here. Swedish unions boast an average 81 percent membership rate, and hold a number of impressive rights in and out of the workplace. Workers also enjoy nationally mandated benefits such as sick pay, one year's parental leave that covers 90 percent of the normal wage and five vacation weeks each year.
Seen from within Sweden, however, things could hardly look worse. A new coalition government, elected last October 1, clearly favors employers over labor. The leading Moderate Party has strong ties to the Swedish Employers Confederation (SAF), and has already initiated a number of significant changes in labor legislation based upon SAF position papers. In a move that holds uncertain consequences for unions, the government has also launched a drive to smash the public sector's monopoly on welfare services. For its part, after years of growing hostility to cooperation with labor, SAF has seized the opportunities opened by the new government to launch what looks like an all- out counterattack.
"I don't know why, but they [SAF] are trying to make life worse in Sweden," says Lars Nyberg, of the steering committee of the blue-collar Swedish Trade Union Confederation.
In the international arena, Sweden's decision to request membership in the European Community (EC) was broadly supported by the major trade union federations, although they have not taken a formal position. At the same time, the move has raised questions about the effects of EC membership on the country's unusually good labor laws.
All this is taking place at a time when the Swedish economy is deep in recession and unemployment is rising fast. Although it does not appear worrisome by international standards, the official rate of 4.1 percent unemployment is the highest here since World War II. And when the thousands of workers in retraining or education programs are counted in, unemployment rises to 7 percent - a shocking figure given that, until last year, 4 percent unemployment would have been considered a national disgrace.
Says Rolf Andersson, research director of the 640,000-strong Municipal Workers Union, "We will in a rather short time be a normal European country in terms of unemployment. That's a reason to be very pessimistic."
Sweden is in crisis, and labor is the hardest hit.
Down, but not out
Certainly, Sweden's unions are far from weak. More than half the country's approximately 8.5 million inhabitants are union members - even though the "closed shop" rule (requiring all workers to be union members in a workplace where the majority of employees supports union representation) does not apply to the vast majority of workplaces. Unlike women in almost every other country, women in Sweden tend to be active union members, although there are still relatively few at the top levels of the national unions.
There are three main trade union organizations. The largest, the Swedish Trade Union Confederation (Landsorganisation, or LO), represents about 90 percent of the blue- collar workforce, or 2.3 million people. The white-collar union, the Central Organization of Salaried Employees (Tjanstemannens centralorganisation, or TCO), with 1.1 million members, represents about 75 percent of eligible workers. Finally, professional workers and civil servants are represented by a joint confederation dubbed SACO (Centralorganisation), which has about 300,000 members.
Yet the great strength of unions in Sweden has always been not just their numbers, but a broader administrative, political and economic system which made labor an active participant in a wide range of policymaking processes. Now it appears that structural changes are taking place which could greatly diminish labor's power. And there are indications that the trade unionists are unprepared to respond to the challenges they face.
The fading, fabled Swedish model
Relations between labor and employers have been deteriorating more or less steadily since the mid-1980s. The biggest shock for labor was the Social Democrats' recent loss at the polls, which put the party in opposition for only the third time since 1932. A big - perhaps the main - reason for Swedish unions' strength has been their long alliance with the ruling party. The Social Democrats set up the LO in 1898, and the union and the party have maintained extremely close links ever since. The alliance was made possible in part by workers' willingness to cooperate with both employers and politicians on policies considered good for the country as a whole. To be sure, Sweden has seen many periods of sharp industrial disputes. But on the whole, the Social Democratic approach to labor relations has worked well.
The give-and-take between unions, employers and the government is evident in the broad economic principles, drawn up by two LO economists, that the country followed from the late 1950s until the 1970s. The policy had three main points. The first was a restrictive fiscal policy intended to keep inflation down. The second was the principle of equal wages for the same work, which applied across the board to workers in different companies and in different industries with the same job. This principle implied costs for both workers and employers at different times. On one hand, workers throughout the country were expected to exercise restraint in wage demands, and accept wage levels broadly negotiated by the LO and SAF. On the other hand, employers in failing industries could not cut wages to stay afloat. Those unable to afford the nationally negotiated wage standards should be allowed to go broke. This is where the third point of the program, a selective labor market policy, kicked in. New jobs for workers would be found by the country's labor market board, which would pay the costs of relocating and help with retraining, if necessary.
The fabled Swedish welfare state was built on the economic success that these principles helped to achieve. However, from the 1970s on, the "Swedish model" began to falter. There was growing opposition to the social costs of relocating workers. Sweden became more and more dependent on international trade, and companies increasingly turned outside the country to invest in new production. Spending on social welfare began to rise faster than revenues could support.
The 1980s ushered in a period of economic and political turmoil from which the country has still not recovered. The new prime minister, Moderate Party leader Carl Bildt, has declared the traditional Swedish model dead, and has vowed to set the country on a new course. Still, nobody in the labor movement imagined he would be able to move as quickly as he has.
The last time the Social Democrats lost power, from 1976 to 1982, the government was formed by the Center Party, the Liberals and the Moderates (then called Conservatives). But the Moderates were a minority partner, and the government made no real changes in the policies the Social Democrats had left in place.
This time, the Moderates are the biggest party in the government coalition. The others in government are the Center Party, the Liberals and a new parliamentary party, the conservative Christian Democrats.
Business on the offensive
There are many signs that, as part of the changes underway, confrontation will replace cooperation in relations among labor, capital and the state. "If this government goes on as it started," says Nyberg, "we will have much more conflict in Sweden, and the two sides [labor and capital] will be much more distinct - if they are foolish [enough] to go too far in their politics." Echoes TCO's Anders Forsman, who deals with public sector employees for the union, "We don't know what's going to happen in the next five or 10 years. If the right-wing forces retain power, there could be a much more concerted effort" against unions.
In many ways, however, the new government is only hastening a trend that began under the Social Democrats. Wage negotiations are one example. Although the centralized system of wage talks began splintering in the late 1970s under pressure from both unions and employers, the definitive blow came only in 1990, when SAF declared it was permanently withdrawing from central talks.
Some workers in certain industries may gain in the short run from negotiating directly with their employers, but in the long run labor seems sure to lose. At present, the two main federations are trying to preserve some solidarity by negotiating among their member unions before decentralized talks are held. But they are also under internal pressure, as the rift between blue-collar and white-collar workers and between the public and private sector employees grows.
In January 1991, SAF officially ended its tradition of cooperation with labor in another sphere. The employers' organization announced that it would no longer participate in the traditional system of national boards, which essentially administer laws covering a wide range of work-related activities. Among the most important of these are the National Labor Market Board, with responsibility for labor market practices, including employment offices, and the National Board of Occupational Safety and Health, which has significant power over the enforcement of work environment legislation. On both these boards, union and employer representatives had sat together and negotiated the regulations affecting work life. Employer representatives often dissented, and presented minority views. But the process kept workers and employers working together to hammer out acceptable rules.
Now that SAF has pulled off the boards, the government has decided to add a new system in which one civil servant will be authorized to convene investigations into specific issues, with representatives from both sides offered the opportunity to testify. While administration will remain in the hands of the boards, it is the new investigative commissions which will propose legislation to the government. Birger Viklund, of the Swedish Work Life Center and a former labor attache at the Swedish embassy in Washington, says this change is monumental. "The most typical Swedish administrative system has been done away with just like that. Swedish politics has been based on these boards." The fear, Viklund says, is that Sweden will shift to an "American-style" legislative lobbying system, in which those able to mount the best publicity campaign and exert the most pressure on government will win.
Unionists also fear that SAF has targeted Sweden's key labor relations laws, and will seek to use its sway with the Moderate Party to get them overturned. The laws regulate collective agreements, workers' influence in the workplace, union stewards' rights and the work environment. "If the Moderates can do what they want, they will take [the laws] away," contends Forsman. He holds out hope that the Center and Liberal parties will act as a buffer against the right-wing forces in and near government.
Still more changes are underway. Workers' contribution to the union-administered unemployment funds are slated to increase from 5 percent of paid-out benefits to 10 percent this year, and then to 30 percent in 1993. (The state pays the remainder.) Meanwhile, as of this year, trade union membership fees are no longer tax-deductible. The government has also appointed a new commission to investigate the possibility of taking unemployment funds away from the unions' administration. Studies from Norway, where this was done, suggest that this could cost unions 20 percent of their membership or more.
The removal of government subsidies for the educational and training activities of national unions has cut the national unions' budgets by one third. The withdrawal of government support has taken place within the context of spending cutbacks that the government hopes will contain Sweden's approximately $17 billion central government budget deficit, its largest ever.
Backpedaling labor
As if all the changes launched by SAF and the government were not enough, many unionists say the labor movement itself is foundering on weak leadership and an inability to adapt to shifts in the Swedish economic and political reality. The dilemma for unions, many analysts say, centers on the decentralization process that is taking place in many areas of Swedish life. On one hand, the unions recognize that decentralization allows for greater shop-floor democracy, and gives individual workers more say over their individual lives. On the other hand, this means less power for the central leadership, without which it is impossible to implement the wage policy of solidarity. The challenge is to find ways to maintain union organization without a stifling central bureaucracy.
Many also recognize that, to a large extent, the Bildt government and SAF are doing now what the Social Democrats and the LO did in the 1970s and early 1980s, when labor scored many legislative victories. "In the past, the Social Democrats acted on what the LO proposed," notes one labor analyst. Says TCO's Forsman, "The unions were too successful [in the 1970s] and are paying for that now. I think that if a Social Democratic government gets back in power, they have learned their lesson."
Indeed, many of the most impressive rights that Swedish trade unionists now hold were obtained not through the traditional system of direct negotiations with employers, but by legislative appeal to the government. "We had negotiations, and they didn't lead to the agreement we wanted, and then we could turn to the government of that time and say, æWe tried, now it's your turn,'" recalls Nyberg. That strength has now become a weakness, he says, noting that "there are really no links between us and the government now."
Some analysts even assert that the aggression coming from the employers' side is a defensive reaction to workers' gains of that time. Along with laws mandating such things as advance notification of dismissal (between one and six months, depending on age), workplace safety and rights to conduct trade-union activity on paid time, the then-Social- Democrat-controlled parliament approved legislation which significantly increased workers' influence in company decisions, both in the workplace and in the financial realm.
One act of the 1970s labor reforms, for example, grants local unions the right to appoint employee representatives to the board of directors of a private company with at least 25 employees. Another stipulates that employers must discuss major changes in policy with the local union, and, if the two sides cannot agree, the matter can be negotiated at the national level, although employers still have the final word.
Most bitterly attacked by employers, however, was a 1983 law mandating the creation of special funds to be used in the workers' interests and financed by a tax on company profits. The LO had been pressing for this kind of initiative since 1975. Under the law, 20 percent of company profits over SEK 500,000 (about $86,000) were to be placed each year from 1984 to 1990 in an account in the central bank, where they would sit without earning interest if workers and management could not agree on how it should be spent. No less than SEK 22 billion (about $3.8 billion) was accumulated in this way.
To the unions, the so-called wage earner funds were just the first step towards true economic democracy. But to SAF and the Conservative party, the initiative was reviled as an outright attack on the sanctity of the free market, since the funds represented a (small) socialization of profit.
It came as no surprise, then, when the new government moved quickly to announce that all but one of the funds would be disbanded. What will happen to the money collected is still unclear, but it will likely be distributed to employees in some way.
Confronting European integration
At the same time as they are confronting a wholly new situation inside Sweden, unions here are trying to understand the implications of Sweden's application for membership in the European Community. This request was made by the Social Democratic government in 1991. Recent opinion polls show the public split about evenly over the issue, with one third in favor, one third opposed and one third unsure. Swedish citizens will be asked to decide definitively in a 1994 referendum.
Unlike their counterparts in the United States and Canada, who oppose many aspects of the proposed U.S.- Canada-Mexico free trade agreement, Swedish trade union leaders have generally supported the application to the EC. The basic reason for the difference is simple: with about 35 percent of Sweden's trade taking place with EC countries, Swedish unions think EC membership will improve the national economy, and increase prospects for jobs. "It's easy to see how much we depend on Western Europe," says LO's Nyberg. "It's crucial for Sweden to belong to [the EC], to have our companies treated in the same way as the others. It's an overall question for the Swedish economy." Agrees TCO's Forsman, "We cannot isolate [ourselves]. That would be going backwards."
Indeed, Swedish firms have made it clear that they intend to integrate with the rest of Europe even if the rest of the country stays behind. Large Swedish companies such as Volvo, Saab- Scania, Asea Brown Boveri and Tetrapak began moving production into EC countries years ago, in order not to get shut out of the market. Acording to one analysis by sociologists Goran Ahrne and Wallace Clement, by 1986 Swedish firms already had more employees abroad than at home. "If Sweden becomes a member of the EC, then at least no [companies] will need to leave," Nyberg reasons.
But if Sweden's unions generally accept the necessity of economic integration with the EC, they still balk at the political merging that membership would imply. It is unclear how much scope individual EC countries will have to preserve their national laws on a wide range of issues, including those affecting labor relations and - of critical importance to Sweden's large public sector - tax policies.
According to Nyberg, it is uncertain how the EC will treat the numerous Swedish labor-employer industrial agreements, since the agreements are not laws. Even if they were, it is not certain how far legal integration will go in the EC. On the other hand, Nyberg says, under the current Swedish government, "We are moving in a direction where it could get so bad that the EC could become our partner" against industry, with EC-wide standards protecting Swedish workers from a further deterioration of working conditions. Agrees Forsman, "In the future, it may be that the trade union movement in Sweden relies on the EC to set its standards." And, he adds, even if Sweden joins the EC and maintains its generally higher industrial relations standards, "it will be very difficult for us to go ahead with [even] higher standards." He also notes the EC's labor laws tend to be based on individual workers' rights, rather than unions', as is the case in Sweden.
Certain sectors of Swedish industry are also likely to be hit by tough competition from the EC; in particular, Nyberg believes, transportation workers "are in danger." Municipal workers may be threatened if, as appears likely, Sweden brings its high individual taxes into line with the rest of the Community. That would mean drastic cuts in public spending, and more loss of public jobs. Public sector job losses began even under the Social Democrats, as they struggled to contain the budget deficit. But spending cuts are accelerating, many believe to pave the way for lowering tax rates.
The only real hope for the unions seems to be the re-election of the Social Democrats in 1994. So far, however, there is no sign that this any more likely than it was in 1991.