Sweden lands new landmark main agreement

This gives employers more flexibility in redundancy situations. In exchange, employees get improved practical and economical support to transition into new jobs, as well as some other improvements.  

The signing ceremony took place at Grand Hôtel Saltsjöbaden, where back in 1938 LO and the Swedish Employers’ Confederation reached the main agreement which has become a symbol of the Swedish model – The Saltsjöbad Agreement. The venue was, of course, chosen with care in order to highlight that the new basic agreement is of equal historic importance.

Part of a package

The substance of the new agreement was in place already late 2020. The reason it was not signed until 18 months later is that it is part of a package. A prerequisite for landing the agreement was that the Swedish legislators first agreed on major legal changes – changes whose content had also been negotiated between two of the parties to the basic agreement.

Not only did these organisations dictate the content of the new legislation in this manner, which is unique. The proposed legislation was supported solely by the Confederation of Swedish Enterprise and PTK, which represents private sector white-collar workers, plus two of LO’s affiliates. LO voted against. When certain labour market organisations get a deciding voice over what should be legally binding even for stakeholders other than these organisations, there is a structural shift in the Swedish model.

LO changed tack

When it became clear that the government would pass the proposed legislation, LO changed tack, and in November 2021 LO too threw its support behind the proposed basic agreement with the Confederation of Swedish Enterprise. The organisation’s main objection had been that the legislative changes would weaken employment protection in an unacceptable way. Now, when they would become enacted in any case, it would benefit members of the LO trade unions to be covered by the upcoming basic agreement.  

The new legislation came into force on 30 June. Besides changes to the law on employment protection, two entirely new laws were added. One means that people who have worked for at least eight years can get state study aid for up to two years when taking courses that strengthen their future position in the labour market. The second law established a “fundamental transition and skills support”, a state complementary to the transition organisations which the social partners have had for a long time. In this way, workers who are not covered by a collective agreement can get support in the form of advice and guidance when they need to develop their skills in order to be “employable”. 

More money for skills

So what do the new basic agreements signed on 22 June add? Well, employees can get more compensation during studying and other skills development than they get through the new state support. LO has also managed to introduce improved conditions for agency workers who are not offered permanent contracts with the client company. In return, the agreements give employers more room for making exceptions from the order of precedence in case of redundancies, compared to what the Employment Protection Act offers. 

The new agreements have jokingly been called the Saltsjöbad Agreement 2.0. But the 1938 agreement still stands – although it has been partly overshadowed because of new labour legislation over the years. The old Saltsjöbad Agreement’s rules on industrial action and on how the social partners should solve disputes through negotiations are still in place.