The Minister of the Interior had informal meetings with the unions, but in practice, government employee wages were unilaterally decided by the ministry in charge.
When the social partners were given their mandate to negotiate wages in 1965, the pay scales were in focus. The employer side still had to pass all agreements by the Government for approval. During the 1970s and 1980s, the problems with central government wage formation grew. Trust in the system eroded since the Government of the time did not come through on its promises to regulate wages for central government employees, and to stop affect municipalities’ and the private sector’s wage formation. Industrial action increased, partly due to lack of structure for handling disagreements at the local level. Political decisions caused a double income imbalance to grow, meaning that higher officials had lower pay than in the private sector while lower officials had higher pay. This deteriorated competence supply. The pay scales were eroding from agreed market-based pay supplements, etc. During the late 1980s, with unstable finances, high inflation and considerable unrest in the labour market, especially across the central government, it became obvious that something had to be done.
In 1992, the Government appointed a committee chaired by a former director of the main private sector employers’ association. In 1994, following the proposals of the committee, the Swedish Agency for Government Employers (SAGE) was formed as a bottom-up employers’ organisation for the central government agencies. The introduction of framed appropriations made it impossible to raise wages much without laying off staff. National agreements on wages and working conditions for central government employees no longer had to be approved by the Government. At the same time, the central government as an employer was obliged not to exceed the wage increase level set in the industrial sector.
By tradition, the social partners in the Swedish labour market are relatively pragmatic and cooperate fairly well. The problems with the former arrangement for negotiations were well recognised by both the unions and the employers.
As a result of this, the social partners already had agreed on a strategy for abandoning pay scales in favour of individual and differentiated pay in 1989. In 1994, with the introduction of the Swedish Agency for Government Employers (SAGE) as an independent employers’ organisation, the social partners settled on a basic agreement setting up elementary rules for the new structure. Among other things, the agreement defined which social partners had the right to negotiate at the national level. This basic agreement has remained valid over time and is one of a very few where changes still have to be approved by the Government.
In the year 2000, the social partners reached another milestone when they concluded an agreement stating that they have to call for mediation before putting industrial action into force.
Since 1994, the role of the social partners has been strengthened as the Government no longer interferes in the social dialogue. The employers form their employer policies on local agency level and jointly through SAGE. Negotiations are held at national, local and sub-local levels. Many of the national agreements provide the framework for local agreements.
The Employment (Co-Determination in the Workplace) Act gives social partners across the Swedish labour market the right to negotiate and conclude agreements on wages and other working conditions.
For the central government administration, the basic agreement identifies who the social partners are and regulates that the social dialogue is kept within the range of conditions related to staff and human resources management. Political matters regarding the tasks of central government administration, economy and priorities between duties are neither included on a national nor local level.
There are national agreements regarding general working conditions, pay policy, work environment, transition and job security, pensions, cooperation between local social partners and more. Some of the national agreements, which provide the framework for agreements at the agency level, are mandatory (for example transition and job security and pensions) and others are discretionary (for example wages, working conditions, work environment) and provide the framework for local agreements. The right to take industrial action is closely coupled with the national agreement on wages. As soon as a national wages agreement is reached, peace between the concerned social partners is stipulated for the agreement period.
The ongoing movement towards agreements that are more adapted to local operational circumstances, individual employer needs and particular working conditions has transformed demands on the local social partners from both sides.
The Swedish Agency for Government Employers (SAGE) reaches national collective agreements on wages and other working conditions with each of the three Swedish trade unions in central government administration; Saco-S, Seko and OFR/S, P, O. The original agreements were almost identical, but are currently developing in diverse directions, with different scopes for the local agreements at the agency level. While Saco-S, like the employers, prefers national agreements with no stipulated wage increases, Seko wants to maintain a more traditional wage-setting approach with minimum wage increase levels. OFR/S, P, O has taken a position in between. Since wages for each employee is set locally, a single employer has to handle at least two of these national agreements that provide the framework for negotiations between the local social partners. Even though this system with different agreements is cumbersome for the employers, they have chosen this model in order to continue modernisation of wage formation.
Other local, non-wage related agreements are normally set jointly by all of the local social partners.
The social dialogue also includes national agreements about joint ventures between the social partners. Most importantly, there are three such joint ventures:
- The Mutual Society for Pensions for central government employees (KÅPAN Pensioner), where the return on agreed savings is yielded in the form of higher pensions. Read more here.
- The Job Security Foundation (Trygghetsstiftelsen), which has the role of helping redundant central government employees’ transition to other employment. Read more here.
- The Central Government Social Partners’ Council (Partsrådet), which is responsible for providing support to the local social partners’ implementation of core aspects of the collective agreements reached by the national social partners.