Swedish wage-earner funds: An experiment in economic democracy

This article analyzes the performance of the "wage-earner funds" established in Sweden in 1983-collective share-holding funds financed by special payroll and profits taxes. The authors ' analysis indicates that although the wage-earner funds generally met the financial objectives set by the 1983 legislation, their significance in promoting "wage solidarity " (wage determination based on the work performed rather than on firm or industry profitability) and in providing workers with substantial influence over corporate decisions was limited by the size of their stockholdings and the seven-year (1984-90) restriction on the inflow of revenues into the funds. The authors conclude that the funds achieved little in terms of furthering economic democracy when compared to the effects of the network of industrial and economic democracy legislation enacted in the 1970s in Sweden. SWEDEN'S extensive and universalistic welfare state has long attracted the attention of foreign observers. More re-cently, Sweden has been invoked not only as a model of progressive social policy, but also as a model of industrial and economic democracy (see, for example, Milner 1989). This article explores the most distinctive feature of the Swedish ap-proach to industrial and economic democ-racy: the idea of collective share owner-ship as a means to enable employees and their unions to influence strategic eco-nomic decisions. In the mid-1970s, Sweden's powerful confederation of blue-collar unions (Lands-organisationen, or LO) endorsed a proposal whereby the government would require corporations to share their profits with their employees by issuing new equit