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The Swedish Labour Market

Sweden was in many ways a pioneering country in the sphere of labour relations in the 1950s and 1960s. During this time, one characteristic of the private labour market was that the labour market organisations sought to regulate their relationship and resolve problems by means of agreements, this was the so-called “Swedish model”.

Among the reasons for this cooperation was a shared wish to avoid government intervention, which the parties felt could easily result in depriving them of their freedom of action. In this spirit, a number of joint or collaboration agreements were signed, which exercised a considerable influence over both companies and employees.

The model, however, did not unaffected survive the 1970s` ideological stalemates and years of economic difficulties. In this decade, the majority of the labour laws that today regulate the labour market were made and this explosion of labour laws changed the tradition of regulating these matters between the parties. The new legislation was to a large extent introduced at the express wish of the influential major union organisations. However, since the collective agreement by tradition has had a larger impact than individual regulations, many of the issues that in other countries are regulated by law are in Sweden still stipulated through the collective agreement. For example there are no laws on minimum wage.

Sweden became closely associated with the European Union (then the European Communities) in 1994 through the EEA agreement and became a full member of the union on 1 January 1995. The membership has influenced the Swedish labour market through the introduction into Swedish legislation of the labour related legislation of the union. This has had effects inter alia on the Swedish legislation pertaining to discrimination, equal opportunities and pay for men and women and the effects of a transfer of a business etc. It has also opened the Swedish labour market to employees from the other member states.

Typical for the Swedish labour market today is in short the following:

  • 68 % of the blue collar and 73 % of the white collar labour force is a member of a union (2012) according to The Swedish Trade Union Confederation. The employers are very well organized too. This is a necessary condition for the option to regulate through collective agreements.
  • The labour market is relatively homogenous.
  • The right to negotiate is very wide and stipulated through law.
  • Unions with a collective agreement are privileged.
  • The right to industrial conflict is very wide and strongly centralized. The individual cannot decide to go on strike. That decision rests with the organizations.
  • The regulations are about the same for both the public and the private sector.
  • There are very few special regulations for smaller companies.