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Employers concerned by union pay raise demands

Published: 02 Nov 2009 17:23 GMT+01:00
Updated: 02 Nov 2009 17:23 GMT+01:00

Sweden’s unions announced demands on Monday that workers in the manufacturing sector receive a 2.6 percent wage increase, much to the dismay of leading employers' groups.

In addition to the increase, which would put 620 kronor ($88) more a month in industrial workers’ pockets, unions are also demanding that workers across all sectors receive a raise of at least 430 kronor a month.

Sweden’s main trade union organization, the Swedish Federation of Trade Unions (LO) also threw its support behind the 2.6 percent wage hike, which it plans to include in its collective wage demands going into the 2010 negotiations with employers.

“The demands we’ve united around give our members real wage increases at the same time as giving us more responsibility for ensuring the economy continues to function. The crisis didn’t occur because wages in Sweden are too high, but because of a steep drop in demand. Wage increases which are too low lead to a reduction in consumption and a prolonged increase in unemployment,” said LO secretary Per Bardh in a statement.

LO also plans to stop employers from including clauses in the agreement that would allow for wages to be reduced.

“We’ve said that we’re going to stick together across the federation,” said Bardh.

But labour’s wishes have been greeted with scepticism from Swedish employers' groups, who claim that the manufacturing unions’ demands “abandon the founding principle of manufacturing collective wage agreements”, according to a joint statement from manufacturing employers.

Business representatives claim the wage-hikes demanded by the unions would hurt competitiveness, concerns shared by the Swedish Agency for Government Employers (Arbetsgivarverket), which handles negotiations with unions on pay and employment conditions for employees in the government sector.

“If sectors struggling to remain competitive sign an agreement at the levels demanded by LO, there is a risk that unemployment will increase not only within manufacturing, but also within the state sector,” writes the agency’s director general Göran Ekström in a statement.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) calls LO’s demands “deeply troubling”, saying they amount to a 4 percent raise for many low-wage trade unions.

“Manufacturing becomes a floor, where half of the labour market should have more,” said the confederation’s Christer Ågren at a press conference.

He added that the National Institute of Economic Research (Konjunkturinstitutet) has said previously that a 4 percent wage hike would be bad for employment and the economy.

“Is this a sign that we’ve lost our capacity to adjust wages to reality? This is like continuing as if nothing has happened,” said Ågren.

Instead, the Confederation of Swedish Enterprise wants to see a zero percent increase in central wages next year, while allowing for the possibility of increases in 2011 and 2012.

TT/The Local (news@thelocal.se)

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Your comments about this article

12:36 November 4, 2009 by Davey-jo
Employers delighted by workers' pay demands; now that really would be news!
16:32 November 4, 2009 by ladyontop
the union, doesn't seem to realized what's going on with the economy in the world and manufacture sector's situation, increase salary now will make them even less competitive and lose out market , eventually if a factory close down nobody gets paid, do they have common sense? or is there something I don't see yet?
20:57 November 4, 2009 by karex
@ladyontop

Unions have been living in La-La-Land for a long time now. I am convinced that they were the cause of quite a few job losses during the financial crisis. Job losses which may not have happened if they hadn't placed ridiculous demands on the hard-hit industries.
20:15 November 9, 2009 by Social Hypocrisy
Ladyontop. Ohhhhh baby I like you;) I could not have said it better myself.

How can we even compete as it it is when we have 1 exhausted employee producing what 4 are working on in China or India. Our goods are inferior, because our overheads are way too high.

We should be bringing down employment costs, and producing here in Europe. Stupid nationalists just dont get it.

Unions are destroying our future.
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