Employers concerned by union pay raise demands

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.

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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.