Self-regulation versus State Regulation in Swedish Industrial Relations

The Swedish model of industrial relations is distinguished by a high degree of self-regulation with roots around the turn of the century 1900. Under the threat of state regulation, the labour market parties in the 1930s, and again in the late 1990s, found they had a common interest in self-regulation. The 1938 Saltsjöbaden Agreement between the blue-collar confederation LO and the employer confederation SAF had its predecessors in the 1905 Engineering Agreement and the December Compromise LO-SAF. Two dimensions of Swedish industrial relations are highlighted: self-regulation (unilateral and bi-partite) versus state regulation and centralization versus decentralization. These can in turn be combined into a four-field table, which is extended to include bipartite regulation between state and unions (state-supported union-run unemployment funds) and tripartite regulation (the 1990-1993 Stabilization Agreements). Advantages and disadvantages of self-regulation are discussed on the basis of an article by Ann Numhauser-Henning, professor of Private Law at Lund University. The Swedish model of bipartite collective self-regulation (in Swedish also labelled partsreglering) is maintained by a high coverage of collective agreements, in turn promoted by the high density of employers’ associations and the internationally high union density. Up to the end of the 1930s the rate of unionization among Swedish white-collar workers was very low in many industries. The dominant attitude among private-sector employers was to consider working and employment conditions for white-collar workers as a matter reserved for unilateral employer control. Therefore, in 1931 eight white-collar unions founded Daco (the Confederation of Employees) in order to get the legislation considered necessary to change this situation. Two options were on the agenda as regards the form of legislation. Procedural legislation on the right of association and negotiation best conformed with the Swedish model of self-regulation, but at the same time was exceptional as the blue-collar workers had acquired these rights long ago through their own efforts. In 1936 the Law on Rights of Association and Negotiation was enacted with support from the social democratic government. Although this legislation deviates from the Swedish model of self-regulation, there is a world of difference between negotiated employment conditions (collective bargaining) and substantive legislation on employment conditions, which was the alternative option. In Denmark the turn of events followed a different path as a substantive law for white-collar workers, the funktionærloven, was introduced in 1938. In the absence of negotiation rights, younger Swedish public-sector professional employees in the 1930s and 1940s carried out unilateral actions in the form of mass layoffs and blockades of hiring of new staff combined with refusal to accept wages below a fixed minimum level. The centralization of LO in 1941 may be described as unilateral self-regulation and as a supplement to the Saltsjöbaden Agreement. In 1935 a government commission had recommended the LO to centralize, and the labour market parties to define rules of conduct safeguarding industrial peace. Union centralization in Sweden was quite different from the corresponding processes in Denmark and Norway. Although collective agreements distinguish all Nordic countries, Sweden is in a class of its own with respect to self-regulated wage formation and conflict resolution. A departure from the traditional Swedish model of industrial relations occurred with the series of labour laws introduced in the 1970s. One of the first was the 1971 law on employment protection for elderly employees. The 1997 Industry Agreement between the unions in manufacturing and corresponding SAF associations has clear parallels to the 1938 basic agreement with respect to origin (threat of state regulation), contents (negotiation procedure, conflict resolution) and the spirit of cooperation. The new reinforced National Mediation Office (2000) received, in addition to its mediation role in labour disputes, the task of promoting ‘an efficient wage formation process’ that meant the appearance of a new mix of self-regulation and state regulation