The Swedish labour market model

Publicerat 2022-10-13

In the Swedish labour market model, the social partners - trade unions and employers - regulate working conditions and wages by means of collective agreements. The model generates good working conditions for employees and safeguards the competitiveness of companies. This creates stability in the labour market and also adaptability and security at times of change. The model provides industrial peace, long-term sustainability, democratic participation in the workplace and has contributed to a high level of social trust throughout Sweden.

The ability to negotiate and reach such agreements requires room for maneuver and trust from politicians. Legislation by the EU or by the State at national level risks upsetting the balance between the legislator and the contracting social partners. At worst, legislation undermines both the model and the ability of the social partners to reach agreements determining working conditions in the labour market.

In collective agreements negotiated at both national and local levels, the social partners regulate wages, employment conditions, health and safety at work, transitions, occupational pensions, insurances and much more. In day-to-day life, we negotiate locally in the workplaces and resolve virtually all disputes this way. In fact, the social partners are obliged to try to resolve a dispute before going to court.

The ability to easily amend collective agreements allows the social partners to respond quickly to any challenges that may arise, be it working conditions during a pandemic or reforms to adapt to the changing world of work.

In order for the model to work, it is essential that the social partners and the State respect each other’s roles and interests.

Trade unions and employers often hold very different interests and consequently, negotiations can be both tough and complex. At the same time, the social partners have a common interest in both developing and stabilizing the labour market. Once we reach anaccord, we have achieved a balanced solution that best meets the needs of both employees and companies, without the State level controlling or interfering in the negotiations. When a collective agreement is in force, there is a duty to observe industrial peace (i.e. we must refrain from industrial action as according to Swedish labour law, a collective agreement also entails a peace obligation).

Through collective agreements, unions and employers achieve practical and operational solutions. To a large extent, the conditions laid down in collective agreements are also normative for the small section of the Swedish labour market that is not covered by collective agreements. Furthermore, the social safety net is robust for those individuals who do not have sufficient income from work.

The Swedish labour market model is sustainable, adaptable and provides security at times of change. It provides industrial peace, long-term sustainability, democratic participation in the workplace and has contributed to a high level of social trust throughout Sweden.

The model emerged already in the first half of the 20th century. Major conflicts between employers and employees led to the development of strong and well-established trade unions and employers’ associations. Once these parties developed mutual recognition and began to conclude collective agreements, a spirit of consensus emerged regarding the benefits of our market model. T here is a broad political consensus that unions and employers are best placed to create business-oriented solutions that are beneficial to both employees and companies.