A 'Swedish model' - centralized wage talks - crumbles on the edges
Stockholm — For almost 50 years, Sweden has been the envy of strife-ridden industrial nations for its almost trouble-free relations between unions and management. It has avoided crippling strikes, lockouts, and slowdowns through a system of national wage bargaining that came to be known as the ''Swedish model.''
Under the system - which sprang from an historic agreement between labor and industry in 1938 - the wage bargaining process was centralized. It meant compromises by both labor and industry, but it has also guaranteed relatively stable employment, economic growth, and labor peace.
But all that may be over - a victim of the long and unaccustomed recession.
The leader of the nation's trade union confederation (Landsorganizationen, or LO), which represents 24 unions and 2.2 million workers, has threatened to abandon the system of centralized talks.
Labor chief Stig Malm says that LO's opposite, the Swedish Employers Confederation (SAF), cannot negotiate a central wage agreement because it does not have a mandate from its members.
His threat reflects anger and frustration from last year's wage round, when the first omens of trouble appeared. After three years of recession, many employers inside SAF had to cut back on wages. SAF's initial wage offer was for a zero percent increase.
This severely limited Malm's negotiating scope and the spectrum of possible levels for agreement. It created internal problems for labor's national leadership. One of LO's richest and most powerful members, the Engineering Workers Union, broke ranks to conclude its own agreement outside the framework of the central agreement. There were indications it would do the same again.
Observers suggest Malm is bidding to salvage the clout of his organization and its policy of ''wage solidarity'' by escaping the crippling confines that led to the rift with his engineering workers last year.
Instead, he wants to oversee a series of individual contract talks between his member unions and their respective employers in different sectors of industry. A final decision will be taken by a meeting of LO delegates on Nov. 10 .
Both labor and industry admit that the new system could mean trouble. A bleak economic picture has already punctuated the tradition of labor peace with short but extensive conflicts, including a 1980 general strike.
For the SAF leadership, which has consistently faulted the centralized system for its inability to reflect a company's ability to pay wages according to corporate profits, the announcement from LO was welcome news.
However, it remains to be seen whether Malm will be able to control wage demands of his 24 unions. With a network of aging and state-supported industries , the gulf between the relatively lower-paid workers in Sweden and those on the cutting edge of industrial competitiveness is likely to grow.
There is also growing impatience over the economy. The official unemployment rate is at a record high and is likely to continue rising. Furthermore, Prime Minister Olof Palme's Social Democratic government has asked its labor allies to accept yet another moderate wage settlement to curb inflation.
This raises the prospect of a fourth year of declining income just as many Swedish companies are starting to report record profits.
It is unclear whether Malm's gambit to salvage the ''solidarity wage policy'' will succeed, or whether his sacrifice of the Swedish model will simply lead to a free-for-all of labor unrest.