Union boss: Ericsson cuts could be ‘expensive mistake’

The head of the Swedish Trade Union Confederation (LO) has warned telecoms giant Ericsson's owners that they should rethink the decision to cut 3000 jobs in Sweden.

Union boss: Ericsson cuts could be 'expensive mistake'
Flags outside Ericsson's factory in Kumla. Photo: Pavel Koubek/TT

In an interview with Swedish newspaper Dagens Industri (DI), Karl-Petter Thorwaldsson argued that the cuts are a short-term solution which could cause greater damage to the company in the long term.

“Starving yourself out of the problem and taking away production jobs here in Sweden has a risk of becoming an expensive mistake,” the LO chairman told DI.

Thorwaldsson called the decision “short-sighted and poorly analyzed”, adding that it “feels like it was too quickly concocted by Ericsson”.

He believes that intense media attention on the company in the last year – which has included alleged corruption scandals and lower than expected profits – may have led to the telecoms company feeling compelled to try and show decisiveness.

Thorwaldsson called for Ericsson’s owners Investor and Industrivärden to reconsider the savings measures, and claimed that other nations are now working to bring manufacturing jobs back to a company's country of origin rather than the opposite, pointing to EU initiatives and themes in the campaigns for the forthcoming US presidential elections.

On Wednesday, Sweden’s enterprise and innovation minister Mikael Damberg hinted that the Swedish state could intervene to help the towns hit by Ericsson’s decision to let go almost a fifth of its workforce in Sweden, though he stopped short of specifying what action may be taken.