The strike by the trade union for industry and metal workers, IF Metall, has brought attention to the importance of understanding the Swedish labor market for businesses operating in Sweden. In this brief we will explain some of the basics of the Swedish labor market in these respects.
Industrial action such as strikes are fairly rare in Sweden. The strike in the automotive industry was initiated since the company rejected the trade union’s claim to enter into a collective bargaining agreement. Subsequently, so-called sympathy actions were taken by other unions in solidarity with IF Metall. In a similar manner, the trade union “Unionen” had notified about a strike to get a collective bargaining agreement in place with leading global payments and shopping service.
Collective bargaining agreements as a way of regulating terms and conditions
The Swedish labor market is structured in a decentralized way with a lower level of mandatory employment law statutes than in many other countries. Instead, more is left to the social parties, i.e., employers, employers’ organizations and trade unions. This means that employers and trade unions can negotiate their own agreements on employment terms and conditions. For example, there is no statutory minimum salary level under Swedish law; this is generally included in collective bargaining agreements. Negotiations occur on both company and industry level.
Trade unions play a significant role in the Swedish labor market, representing a big portion of employees in most industries. Approximately 70 percent of Swedish employees are members of a trade union and approximately 90 percent are covered by a collective bargaining agreement. When an employer is bound by a collective bargaining agreement, the terms and conditions should be applied to both employees that are members of the relevant trade union(s), and to those who are not members.
The trade unions negotiate collective bargaining agreements on behalf of their members, which can include aspects like minimum wages, holidays, sick leave, and working hours. It's important for businesses to be aware of the collective bargaining agreements that apply to their industry and to comply with relevant obligations under those agreements.
Low risk for strikes when a collective bargaining agreement is in place
During the term of a collective bargaining agreement, it is generally not possible for a trade union to initiate industrial action towards an employer who is bound by the agreement. This is referred to as a “no-strike obligation” (Sw: fredsplikt) for the parties to the agreement. The most common situations when industrial action can be initiated are either when a trade union is trying to make an employer that is currently not bound by a collective bargaining agreement to enter into one, or when a collective bargaining agreement lapses, and a re-negotiation takes place. A re-negotiation often refers to important terms of the agreement, such as the level of salary increases or other benefits.
The situation at two major companies in Sweden
In the case of the car manufacturer Swedish business, this American firm has declared themselves unwilling to enter into a collective bargaining agreement. The trade union IF Metall has therefore initiated a strike comprising workers who perform mechanic work at this manufacturers Swedish sites. Moreover, several other trade unions have initiated so-called sympathy measures, meaning that they let their members act in sympathy for the manufacturers workers. An industrial action may, under certain circumstances, be legal even for employees who are comprised by a collective bargaining agreement. Amongst others, port workers are currently refraining from unloading new cars in Swedish ports, cleaning staff are threatening to stop cleaning premises, and painters to stop performing painting jobs after repairing damaged cars. Accordingly, the employers of these employees are also being affected by industrial action even though they have agreed on a collective bargaining agreement.
In the case of the a Swedish fintech business company, the trade union “Unionen” notified for a strike after this firm had declared themselves unwilling to enter into a collective bargaining agreement. However, this fintech company ultimately agreed on a collective bargaining agreement with the trade union for employees of the financial business, Finansförbundet, just before the strike was about to commence. Since the company signed that collective bargaining agreement, Unionen could no longer claim that this firm should enter into an agreement with Unionen, nor could they proceed with any industrial action.
Actions in case of a potential strike and analyses to be made
If a business is facing a labor dispute or potential strike, mediation services are provided by the Swedish National Mediation Office (Sw: Medlingsinstitutet).
EY’s Labor and Employment Law experts have extensive knowledge of the Swedish labor market and regularly assist both Swedish and international clients in strategic labor and employment law questions. Please reach out to discuss any aspect of the Swedish labor market, including questions regarding collective bargaining agreements and industrial action.
