Explained: The labour law disagreement that could threaten to bring down Sweden’s government

Explained: The labour law disagreement that could threaten to bring down Sweden's government
Under discussion are a set of changes to Swedish rules around hiring and firing. Photo: Photo: Simon Paulin/imagebank.sweden.se
Negotiations are once again underway over a set of Swedish hiring and firing laws, with the government hoping that an agreement with trade unions will help avoid a political crisis.

What's happening?

Discussions are underway this week to try to break a deadlock in talks between trade unions and employer organisations relating to Swedish labour law.

If no agreement can be reached, the Swedish government risks collapsing, with both the Left Party and right-of-centre opposition parties having said they are prepared for a vote of no confidence.

Any changes made to labour law, whether through agreement between trade unions and employers or directly by the government if that is not possible, will also have an impact on people working in Sweden and their rights.

What's up for discussion?

The law under review is the Employment Protection Act, called Lagen om anställningsskydd in Swedish and usually referred to simply as LAS.

One of the key principles is 'last in, first out' when it comes to redundancies. In other words, if a company needs to restructure or cut jobs, they should work from the principle that the most recently hired person is the first to go. There are exceptions, such as if that employee performs a key role that can't easily be done by someone else.

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Photo: Melker Dahlstrand/imagebank.sweden.se

And why is it up for discussion?

After a very close election result in 2018, Sweden's Social Democrat-Green government had to make a deal (the January Agreement) with their former centre-right rivals the Centre and Liberal parties, in order to be able to govern.

This included an agreement to “modernise the Employment Protection Act to adapt to the present-day labour market while maintaining a basic balance between the actors in the labour market”.

As a result, the government ordered a review into the law, the results of which were shared in June. Two of the biggest proposed changes were that all companies would be allowed to exempt up to five employees from the 'last in, first out' rule during any round of layoffs, and it would not be possible for any dismissal from a small company (up to 15 employees) to be declared invalid.

The centre-right parties and organisations representing employers were largely satisfied with these proposals, while trade unions and left-of-centre parties, including the ruling Social Democrats, were critical.

What's happened since June?

Several rounds of talks, but no conclusive results after they have collapsed several times.

In October, the organisation PTK which represents white collar trade unions said it was satisfied with the proposals, but the blue collar union organisation LO remains unhappy with them. 

What happens next?

Under the terms of the January Agreement, if the different parties involved (mainly the trade unions and employers' organisations) are satisfied with the proposals, they will come into force from January 2021. If no agreement can be reached, it is down to the government to put forward proposals. 

Any changes to the labour law will affect the rights of people working in Sweden. There is also a lot at stake politically.

The Left Party is fiercely against the proposals in their current form, which it sees as a deterioration of worker protection. This is a core issue for the party, which has threatened a vote of no confidence in the government if it pushes ahead with the proposals. They would likely receive support from the right-of-centre opposition parties in any no-confidence vote, which would mean the government would have to resign or call a snap election.

However, the Left Party has traditionally sided with the Social Democrats, and will have a new leader by the end of October which may alter the stance it takes. 


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