Union sanctions pay cuts to save jobs

One of Sweden’s largest manufacturing sector unions said on Monday that its members are willing to allow employers to cut wages in order to avoid more layoffs.

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The IF Metall union announced an agreement with the Association of Swedish Engineering Industries (Teknikföretagen) whereby workers could see their pay cut by up to 20 percent.

The exact wage reductions would be decided by companies and local union chapters, and would be combined with periods of furlough and additional training.

“This is no normal reshuffling within the industrial sector, this is an emergency situation,” said IF Metall head Stefan Löfven in a statement.

“We’re now waiting for the government to do its part.”

The union calls the agreement a state of emergency which will be in effect until further notice, but no later than March 31st, 2010.

The agreement also requires three months’ notice be given should the deal be nullified ahead of time.

“The Association of Swedish Engineering Industries and IF Metall are united in allowing local agreements to lower salary expenses and other compensation by up to 20 percent. During the corresponding time period, companies can arrange skills training. In cases where that isn't possible, workers will be released from their employment to a corresponding degree,” said the employers association in a statement.

“This is a way for us to try to reduce the need for layoffs and at the same time reduce costs for the companies,” said Anders Narvinger, head of Teknikföretagen.

“In this way, companies are also given the ability to quickly take the offensive when market conditions improve.”

“The intention is, in the same spirit of the agreement and layoff benefits, to make it easier for local parties to reach agreements to secure operations and avoid layoffs to the extent possible,” writes the engineering industry association.

“In order to strengthen the future competitiveness and competence of our fellow workers, we believe it’s desirable to have local parties, wherever possible, reach agreements about companies’ internal training or other activities which can take place during the time when no work is taking place,” writes Narvinger.

Other sectors such as the steel, mining, and metalworking branch support the agreement.

“Four employers’ associations which represent nearly 2,000 companies with 135,000 employees, have signed an agreement with IF Metall to allow member companies within the industrial sector to furlough workers with reduced pay,” write the Employers´ Association of Swedish Mine Owners (Gruvornas arbetsgivareförbund), the Trade and Employers´ Federation of Welding Engineering (Svemek), the Employers´ Association of the Steel and Metal Industry (Stål och Metall), and the Swedish Industrial and Chemical Employers Association (Industri- och Kemigruppen), in a joint statement.

But IF Metall’s agreement with employers didn't sit well with at least some union members.

“We are completely against all forms of wage reductions, as this agreement of course doesn’t apply to executives,” said Harry Rantakyrö, head of the local 12 chapter of the mining union in Kiruna in northern Sweden, to the TT news agency.

“I’m so angry. We have a central agreement and members must be able to discuss this agreement first,” he added.

“It’s minus ten degrees here in Kiruna and the wind is blowing hard. But I’m hot with bitterness when I hear things like this.”