By Isak Lefvert
The new van der Leyen EU Commission is in the midst of presenting its objectives for the years to come. One is to establish a common framework of minimum wages for workers across all Europe. However, whilst protecting workers in the internal market seems well in line with EU’s function, this particular idea provokes an immense resistance amongst some unusual rebel member states. Indeed, through wild protests, the Nordic countries have been promised an exception from the initiative. But what is it that they are so dearly trying to protect – why are these three EU members, all perceived as social paradises, against minimum wages?
The Swedish answer to those questions came to life on a December day in 1938 at the brink of the frozen Stockholm archipelago. In an elegant white chateau overlooking the icy harbour inlet, representatives of Swedish workers and employers came to a deal. The trade unions would give up all forms of striking, in exchange for agreements on salaries and duties for their workers.
This is a basic example of collective bargaining. From the workers’ perspective, with every member, the unions are mandated with power. That is the power to ensure or, to massive harm for the employers, disrupt peace at workplaces. From the employers’ perspective, as the unions grow stronger, the more pressured they will feel to make collective pledges on better wages and conditions in exchange for peace. Thus, this quid pro quo is the key mechanism in the self-regulation of the labour market, as well as the core in what has been labelled the “Swedish Model”. There is consequently no minimum wage in Sweden, because standard wages are being negotiated between unions on the worker and employer side. And whilst the effects of this can’t be measured in a staggering wage benefit for the workers – Swedish salaries are not high compared to similar countries – there are clear advantages with the system. Sweden ranks dead bottom in working days lost to strikes and see few conflicts between workers and employers, which not only is economically ideal but also indicates that Swedish labour relations are constructive.
But what makes the so-called “Swedish” Model special?
Firstly, it is clear that union participation is vital to securing the unions a powerful mandate toward the employers. Sweden is second in the EU in membership rate with a whopping 70 percent attached employees. Our Nordic neighbours Finland and Denmark are the only other countries in the same division. French unions, for a comparison, who when this is written are paralysing several means of transport in yet another grêve, do only represent 8 percent of employees, thus enjoying few other leverages than banging the big drum.
Secondly, the Swedish trade unions have been uniquely intertwined with the Social Democratic Party, which has been in government for 76 of the 100 years of Swedish democracy. The chairman of LO, which is the umbrella organisation for workers’ unions, is also a permanent member of the party board. Significatively for the relationship; until this was deemed an infraction on the negative freedom of association, all LO members automatically became party members! This tight relation has understandably contributed to a legal system heavily enfranchising union powers at the workplace.
Conclusively, as conversely displayed in our more conflict-prone neighbours, the Swedish Model has throughout the 20th century built a state of consensus on the labour market with ensuing vast efficiency wins. Things might, however, be about to change.
The unions are getting unattractive. While 70 percent in general membership is very high, LO could brag with almost 90 percent of workers attached as late as in 1995. Today, only 62 percent of workers are members, and among workers under 25 years of age, who sit on the most uncertain contracts and thus arguably are in most need of union aid, only 40 percent have found themselves a union.
The Swedish Social Democrats are not getting hotter either, and poll at record lows almost every week. After the last election, they also agreed upon a program with two small liberal parties, effectively neglecting all questions LO found urgent. So although Swedish PM Stefan Löfven trademarks himself as a man of the workers (he was recruited from the powerful metal workers union, has no further education than welder school, and stated that his preferred pastries are small, dry cookies), he has become a trojan horse for the unions. But as the unions will not support the liberals, nor the conservatives, they cannot not do anything but despair when their faltering member base is switching allegiance toward the Sweden Democrats, a right-wing populist party which now polls highest among worker voters.
It is against this backdrop EU interests play a vital part in the equation. As collective bargaining is based upon the idea of membership in the contracting party, any unattached employer is not bound by the collective agreement and can set their employees’ wages at preferred level. But since this also means that workers are not obligated to abstain from striking, the threat of devastating measures from the strong unions has forced most Swedish employers to stay in line. However, when a company uses the free movement of the EU to establish themselves in a high-wage country like Sweden and compete with the low wages of their foreign employees, several interests clash. Swedish unions have previously regarded such companies as any other unattached rebel employer. But in the 2005 landmark Laval case, the EU court ruled that even unions must respect the freedom of the market actors and then only take proportionate measures against employers who want to compete on a new market. In Laval, it was found that the blockade against a Latvian company was unproportionate and thereby unlawful. This has put a vital limit on the unions’ power in a globalising world.
Altogether, when understanding the resistance among Sweden and her neighbours to an EU minimum wage, one must recognise the historical essence of the Models the governments now are trying to save. It is also important to remember that, especially for the now-social-democratic governments of the Nordic EU members, the Models hold strong cultural values. So, as the very fundamentals of the Models are starting to crack up, although that is partly because of the legal repercussions of being part of the internal market, perhaps the major change is in what people feel. Perhaps the reasons behind decreasing enthusiasm in trade unions and social democrats, is a matter of workers and voters no longer finding the inherent conflict of the labour market as essential as before. And perhaps the eventual end of the era of the self-regulating labour markets, is a matter of time.
Illustration: Therese Lager
Isak Lefvert is a second-year law student, who spends most of his days hiding from the sun in the Ekonomikum basement. He adores athletics, pear flavour (in all shapes or forms), and discussing the Academy Award snubs.