Analysis of the Management of the Employment Relationship in Sweden - Term Paper Example

Critically analyse the management of the employment relationship in Sweden Introduction In order to understand the structure and the management of employment relationship in a particular country it would be necessary to identify this country’s political and socio-cultural characteristics; these characteristics will indicate the level at which the specific country is able to respond to the needs of its citizens – including the employment – in accordance with the resources available for the support of the relevant initiatives. Usually, in countries with a strong economy the efforts of the citizens to access the job market have more chances to be successful – at least compared to developing countries. Current paper focuses on the examination and the analysis of the management of the employment relationship in Sweden. In accordance with Bamber et al. (2004, 370) ‘Sweden has a highly developed social welfare and unemployment insurance scheme’ which could be regarded as indicators of its government’s priorities but also of the country’s potentials in regard to the protection of its citizen’s rights. Like in all other countries, in Sweden employment is closely depended on the social and political trends of each particular era; in this way, current style of management of the employment relationship is different from that of the previous decades; the aspects and the effects of this differentiation will be examined in this paper trying to highlight the facts that led to the Sweden’s current model of employment and to predict – if possible – which is expected to be the performance of this model in the long term. The examination of Sweden’s existing model of employment has led to the assumption that this model’s various parts need to be aligned and appropriately customized to current market trends – referring not only the Swedish market but also to the global marketplace; otherwise, the viability of the Swedish employment model in the long term would be set under question. 2. The main features and characteristics of the Swedish system of employment relations. In general, the Swedish system of employment relations presents similarities with the relevant systems of other North European countries; this issue was set under examination by Barkbu et al. (2003); the above researchers compared a series of coordination indices for Norway and Sweden; it was revealed that ‘a considerable similarity exists between the two countries in terms of the estimated effects of macroeconomic variables on unemployment’ (Barkbu et al., 2003, p.37). The above finding indicates the dependency of employment on the geographic and financial characteristics of a particular region – taking into consideration the fact that the economies of the countries under examination, Norway and Sweden, are almost equally developed; in geographic terms also the two countries have many common characteristics. In Sweden the government has treated the management of employment relationship extremely carefully; this trend is reflected primarily to the public sector of Sweden, which ‘developed an almost worldwide reputation during the first three decades after the Second World War’ (Derlien et al., 2008, p.268); it is through the employment system in the country’s public sector that assumptions can be made for the governmental policies in Sweden in regard to employment in general – a practice common in most countries worldwide. In a relevant report of the OECD (2004) it is revealed that the employment ratios of Sweden present a contradictory result: the level of working population has remained the same through the decades but the level of the non-working population has been differentiated – probably because of the increase of the number of people that do not work full-time and also those who exit the workplace – either for their own reasons or after a relevant decision of the employer. Under these terms it is noted in the above report that taking into consideration the economic development of Sweden in the long term it could be assumed that this development would be mainly affected by the following three factors: ‘labour supply, productivity and dependency’ (OECD, 2004, p. 29) Through the decades the features and characteristics of employment relations in Sweden have been affected not only by the governmental choices and preferences but also by the changes in the country’s demographic and cultural characteristics – referring to the radical increase of immigration in Sweden especially after the Second World War; the current percentage of immigrants in the country is quite significant reaching the 20% of the population (OECD, 2010, p.13). It is in this context that the characteristics of employment relations in Sweden (as presented analytically in the sections that follow) would be evaluated. Today, employment relations in Sweden have a series of unique characteristics, which could be summarized as follows: a) immigrants enjoy equal benefits with the locals, b) the governmental policies on employment reflect the views of two different political parties: liberals and conservatives – the chances for fairness and equality in the workplace are increased, c) wages are decided through the collective bargaining – there are no specific legislative texts setting minimum level of wages in Sweden, d) the employment protection laws in Sweden remain quite strict, a fact that can be considered as an obstacle towards the improvement of the country’s existing employment model – which has certain weaknesses as explained below, e) the transition from the Rehn-Meiden employment model that the country adopted in 1950s to the current model of employment – being characterized by increased equality in the workplace is still in progress. Under these terms, it cannot be concluded whether the effectiveness of certain parts of the Swedish model of employment (for instance the collective bargaining) as applied today, will remain at the same level in the long term. 3. The role of the social partner in the Swedish system of employment relations. Social partners have a key role in the context of the Swedish employment model; in accordance with Blanpain et al. (2005, p.157) ‘the Swedish model portrays distinct elements of corporatism, with the social partners cooperating with the state and sharing social responsibility’; it is assumed from the above view that social partners have the power to define the terms of employment agreements and thus take similar initiatives with the state. The role of social partner is made clearer in the collective bargaining procedure but it can also be considered as having a wider context: when disputes on the terms of employment agreements are brought before the Labour Court, then the social partners have the power to influence the court’s ruling on the particular case. In this point of view, the social partners have an active presence in all phases of employment relations in Sweden. At the same time, the specific framework – i.e. the ‘social partnership’ – highlights another issue: the importance of cooperation for the achievement of employment agreements – since social partnership is a framework referring both to employees and employers (Spattini et al., 2008, p.60). 4. The role of the state in the Swedish system of employment relations. The state has a key role in the development of employment relations in Sweden. As noted above, in Sweden the net of safety provided to all citizens – including the immigrants – is extremely important for the country’s government. In this context, particular attention is paid on the protection of the employees’ rights – even if the rate of unemployment in the country has been increased because of the global financial crisis (OECD, 2010, p.13). On the other hand, the country’s government is based on two different political thoughts: the country is governed by ‘a coalition of liberal and conservative parties’ (OECD, 2010, p.13), a fact that leads to the assumption that the governmental policies are likely to be independent from specific political interests or beliefs. The role of the state in the development of the Swedish employment model can be characterized as crucial: the various governmental policies regarding the regulation of employment market in Sweden are just part of this effort. One of the most important initiatives of Swedish state towards the development of the country’s employment market has been the development of the Rehn-Meidner model (model of employment) in 1950s; this model was based ‘on egalitarian collective wage bargaining, full employment and active labour market policies’ (Giugni, 2009, p.45) and aimed to develop a well-trained workforce ready to enter the workplace when a position would appear; in this way, the rate of growth of the job market has been constant while the productivity has been also kept at high levels. Through the years, the role of the state in the development of employment in Sweden was further increased: under the pressure of the changes in the global market, the Swedish employment model had to be changed; again, the state had the key role in the success of this effort. Indeed, in 1970s the ‘reconciliation of employment and family life’ (Giugni, 2009, p.45) was set as a priority by the country’s government; the support of the state to the women has been constant up today – even if the limitation of poverty has been another key priority for the local government. On the other hand, the Swedish governments have not showed any clear intention to change the country’s employment protection laws – which have been characterized as too strict; in this way, foreign investors may avoid investing in the country’s industries, a fact the consequences of which would be clearer in the long term. Despite the above, the governmental policies on the country’s employment relations would be periodically reviewed as of their appropriateness. Through the research made by Bihagen et al. (2000) it has been proved that ‘gender differences in culture consumption are considerable and that they are stable independently of the effect of education, occupational class position, age, family status, urban status, and income’ (Bihagen et al., 2000, p.327); the above finding could lead to the assumption that the intervention of the government in regard to the equality in the workplace should be characterized mainly by flexibility: not similar practices would be developed for all industries in regard to the role of male and female workers in the particular firms: this role should be different being aligned each time with the industry’s characteristics and demands in the long term. Similar assumptions would be made on other aspects of employment relations in Sweden – for instance the presence of older workers in positions where the demands are high and staff should be regularly trained – referring to the case of workers who cannot participate in such programs due to their age and their physical condition. Another aspect of the role of state in the development of employment relations is presented in the study of De Baets (2003); in accordance with the above researcher ‘enforcing occupational health and safety standards, however, should not be considered as a merely technical matter; Administrative authorities appear to play an important role in this, because they provide the necessary impetus with regard to steering’ (De Baets, 2003, p.35); it is not made clear though whether the policies adopted by governments in regard to the application of the health and safety rules would be similar among states or whether specific criteria would be introduced for each country – or even for its industry within the same market. In this case, it would be expected that the effectiveness of these measures would be depended on the ability of each government to align its strategies with the existing market conditions – a target that would be easily achieved by the Swedish government if taking into consideration its performance in the employment sector – as analyzed above. 5. The role of collective bargaining in the Swedish system of employment relations. Collective bargaining has been extremely important for the development of Swedish employment model; as noted above, wages in Sweden are set through the collective bargaining and not through the legislation; this fact has the following results: a) differences exist across industries in Sweden in regard to the minimum wage (Freeman et al., 2010, p.117), b) differences exist across industries in the specific country in regard to their level of development – because of the different level of minimum wage a preference seems to be developed for those industries with higher minimum wage (Carlsson, 2002, p.58), c) certain aspects of the Swedish employment model has been kept intact even if their consequences on the country’s economic growth are significant: referring to the strict employment protection laws which protect older workers and discourage firms to change their personnel – even if this initiative is necessary for the development or even the survival of a specific business; in accordance with a relevant report of OECD ‘there is evidence that strict employment protection legislation reduces mobility and employment and participation rates’ (OECD, 2005, p.104). On the other hand, the development of collective bargaining in Sweden has led to the achievement of a series of targets, which are quite important for employees across the country; in this context, through the research made by Korpi et al. (2009) it has been proved that ‘there is no evidence that the rate of wage growth is higher among overeducated workers than others’ (Korpi et al., 2009, p.183); in other words, an equality in regard to the level of rewarding seems to exist in firms operating across Sweden. At the next level, the intervention of collective bargaining in the development of employment relations in Sweden results to the differentiation of traditional employment-related concepts, for instance the concept of diversity. This issue is highlighted in the study of Omanovic (2009) where it is noted that ‘in Sweden some original ideas about diversity and its management relocated and were partly reinterpreted, creating new ideas about diversity’ (Omanovic, 2009, 352); this differentiation in employment-related concepts and ideas is not necessarily negative; in fact, it can lead to the improvement of traditional employment relations leading to the increase of productivity – even in the long term. From another point of view, Blanpain et al. (2004) noted that the system of collective bargaining in Sweden is geographic – driven since it presents many similarities with the relevant systems of the other Nordic countries. In this context, the Swedish collective bargaining system has been developed in three – phases: ‘a) in 1906 a basic structure for collective bargaining was founded, b) in the next phase, the development of a completed framework of collective bargaining was combined with the establishment of the Swedish Labour Court – reflecting the beginning of the intervention of state in the development of the procedure, c) in 1936 the Act of the Right of Association led to the increase of the power of the state to control the collective bargaining in all industries across the country’ (Blanpain et al., 2004, p. 249); the above series of facts leads to the assumption that the creation and the development of collective bargaining in Sweden has been quite important for the country’s political authorities, a fact which is proved by the legislative texts and bodies that have been established in order for the control of the relevant procedure to be continuous and close – as possible. At this point, it would be necessary to refer to the main legal rules that govern employment relations in Sweden – and which also regulate the collective bargaining procedure in the specific country: ‘the Security Employment Act of 1984, the Act respecting the status of Trade Unions Representatives at Workplaces 1945, the Labour Disputes Act 1982 and the Act respecting co-Determination at work 1977’ (Davenport et al., 2000, p.317); other legislative texts would also apply on disputes where the rights of employees or employees are violated. 6. The extent of industrial democracy in the Swedish system of employment relations. In order to understand the level of industrial democracy in Sweden it would be necessary to refer primarily to the characteristics/ terms of this democracy; at the next level, the application of these terms or the existence of these characteristics should be examined. The term democracy in business can have many different explanations referring to either the individuals (equality in terms of gender, wage and so on) or the firm (equality in terms of the firm’s support by the state). The term ‘industrial democracy’ includes both the individuals’ and the firm’s rights; an indicative example is provided through the study of Moen (1989, p.5) where the industrial democracy is equalized with the provision of equal opportunities to married individual and singles, i.e. to the support of the family in the context of employment – an effort which has started in Sweden since the 1970s, as explained earlier. On the other hand, industrial democracy in Sweden can be identified in another aspect of the country’s employment relations framework: the collective bargaining procedure is offered for different agreements on various terms of employment (wages, working hours and so on); however, the procedure is appropriately monitored by the state – mostly through the Labour Court; moreover, its terms need to be within the framework set by the state – for instance the Employment Protection Legislation (Blanpain et al., 2004, p.249); in this way, it is made sure that both parties (employers and employees/ unions) have equal power regarding the development of employment agreements. 7. The role of unions in the Swedish system of employment relations. In Sweden, the power of unions to develop the terms of employment relations can be characterized as strong – even if ‘the union-busting seen in the USA is uncommon in Sweden’ (Bamber et al., 2004, p.60); on the other hand, their role in regard to the support of the employees’ interests is not always clear. For this reason, it is noted in the study of Swenson (1989) that ‘in Sweden, centralized unions and bargaining developed in part as a response to the mutual interests of unions and some employers in wage standards’ (Swenson, 1989, p.228); in other words, the increase of the power of unions in Sweden has been considered as being related – at least partially – with their ‘dual’ role – as supporters of the interests of the employees and the employers. The role of Swedish trade unions has been examined also by Lewin (1980); the above researcher notes that ‘almost from the very beginning, the Swedish trade unions were governed according to the principles of representative democracy’ (Lewin, 1980, p.29); however, the style of the unions’ governance does not prove the appropriateness of their decisions – the democratic governance cannot be considered as a proof that the unions’ decisions meet the terms of democracy; the above assumption is further supported by the fact that through the years, the consolidation in Swedish unions has been increased reaching, today, extremely high levels (Lewin, 1980, p.29). At the same time, the number of the unions’ members is increased leading to the further increase of the power of their leaders. Under these terms, the following assumptions can be made regarding the position and the role of unions in modern Sweden: a) union-membership has become important – the number of members of unions across Sweden has been increased, b) the power of the unions’ leader have been increased at such levels that the control of their decisions is difficult, c) because of the increase of the members of the unions the communication between the employees and the leaders of the unions has become extremely difficult – the interests of employees are not adequately supported while the intervention of the state has become difficult – due to the increase of the size of the unions and the following increase of the power of their leaders. The above phenomenon is also highlighted in the study of Andersen et al. (2000) where it is noted that ‘in Sweden, the corporatist ingredient of the administration of labour market policy has become less important for the unions’ (Andersen et al., 2000, p.168). 8. The role of the employers in the Swedish system of employment relations. As explained above, in Sweden, a wide range of the employment rights and obligations are set through the collective bargaining; employers have a key role in the relevant negotiations defining partially the terms of agreement – which are made enforceable in accordance with their acceptance or not by the other side, i.e. the employees or their representatives – the unions. The position of employers in the Swedish employment system has been extensively examined in the literature; in accordance with Tolliday et al. (1991, p.224) ‘in Sweden multi-employer bargaining within branches or industries is predominantly national in coverage’; this is a fact that may set limits in the relevant negotiations – referring to the ability to the state to intervene in case the terms set by the employers are in opposition with the country’s employment protection legislation. On the other hand, Bamber et al. (2004) – referring to employers in Sweden – note that ‘their prime objective was to deregulate Sweden and facilitate more market influences’ (Bamber et al., 2004, p.273); it is assumed that the state in Sweden had to increase its power against employers otherwise the country’s employment model would become powerless. The limitation of the power of employers to set terms during the collective bargaining can be also derived by the structure of the Swedish employment model; in the context of this model, employers are obliged to participate in associations – in accordance with the industry in which they activate; an indicative example is presented in the study of Fulcher (1991) where reference is made to the first association of employers in Sweden: ‘the Engineering Employers’ Association which was formed in 1896’ (Fulcher, 1991, p.74); the above association imposed a series of obligations to its members – employers; the violation of these obligations would result to the payment of a fine or even the expulsion of the violator (Fulcher, 1991, p.74). 9. Conclusion - The existence or otherwise of a Swedish model of employment relations. The effort of the Swedish governments to establish an employment model that would be able to respond to the country’s employment characteristics can be characterized as successful. The Rehn-Meidner model managed to respond to the demands of its creators; in accordance with Whyman (2003) the above model ‘each element of the model was intended to complement all other elements, so the strategy should be viewed as a holistic approach’ (Whyman, 2003, p.52); however, through the years the weaknesses of this model made clear. In 1990s the necessity for the update of the above model emerged. For this reason, the Swedish government established a new employment model which ‘takes the form of Regional Growth Agreements and Programmes, drawn up in regional partnerships’ (OECD, 2003, p.52); in fact, the above model managed to reduce the disputes between employers and employees so that agreements in collective bargaining are reached easier. Through the years, the above model has become known as the ‘Swedish Model’ (OECD, 2003, p.52). The examination of the various aspects of the management of employment relations in Sweden leads to the assumption that there are still points that need to be addressed; towards this direction, the development of the existing employment model would help to reduce inadequacies and increase the system’s efficiency – under the terms that the relevant effort would be supported by all interested parties. References/ Bibliography Andersen, G., Regini, M. (2000). Why deregulate labour markets? Oxford University Press Arndt, W. (1963). The economic lessons of the nineteen-thirties: a report. Routledge Bamber, G.J., Lansbury, R.D. & Wailes, N. (eds) 2004, International and comparative employment relations: Globalisation and the developed market economies, 4th edn, Allen & Unwin, Crows Nest. Barkbu, B., Nymoen, R., Roed, K. (2003). Wage coordination and unemployment dynamics in Norway and Sweden. 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