The Sweden Model? Unions Target High-Profile...

In Brief: The Swedish labor market is experiencing an unusual surge of activity as high-profile companies like Tesla, Klarna, and Spotify are being pressured to sign Collective Bargaining Agreements (CBAs) by the unions.

Why it matters: The expectation in Sweden is that all companies should sign a CBA, and having one provides advantages such as more favorable working conditions and the absence of a legal minimum wage. The unions' actions are based on the law on CBA from 1928 and its revisions, and they have the right to strike and take industrial action to push for a CBA even at companies where they have no members.

The conflict has escalated with strikes at Tesla service centers and sympathy measures by other unions, affecting various aspects of Tesla's operations in Sweden.

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The full paper:

The Sweden Model... Unions Target High-Profile Companies for CBAs

By: Mats Andersson 

Mats is a former BEERG colleague. Now retired, in Sweden, he remains a seasoned observer of the labour relations scene, having served in senior HR roles with major MNCs.

The Swedish labor market is normally rather calm and dull. But not right now. The issue concerns getting high profile companies from the new economy to sign old fashioned Collective Bargaining Agreements (CBAs). The unions have for several years tried to get CBAs in place and are now taking the fight to a new level. The companies are Tesla, Klarna and Spotify, all with high profile CEOs, each used to having things their way.

There is no Swedish legal requirement to sign a CBA. But the general perception - as well as the expectation from the legislator - is that all companies should sign a CBA in accordance with the so called ”Swedish model”. Or perhaps more correctly, that is the Swedish model. 

With the legislation as a starting point the social partners at sector level should negotiate and sign CBAs in accordance with the needs of their sector. From a company perspective the advantage of having a CBA is that you can find more favourable solutions than in legislation, working time is a good example. Furthermore, there is no legal minimum wage in Sweden. By joining a sector level employers’ organization, companies become bound by the applicable CBA. 

The 2022 annual report of Medlingsinsitutet, a governmental body, 59% of all blue-collar workers and 74% of all white-collar workers are union members. Some 87% of all companies belong to an employers’ organization. Small companies, start-ups and companies from the new economy  are the ones that you will find not having a CBAs. A positive result of the huge number of companies having a CBA is that industrial action is rare. Only 5240 days were lost due to industrial action in 2022 according to Medlingsinstitutet. 

From an insider as well as a political perspective the model is working very well. But if you for some reason want to stay outside and also are a high-profile company life will be challenging. The number of companies with a CBA is of great significance for the Swedish model. As 80%  - or more  - of all employees are covered by CBAs, Sweden is considered to have implemented the EU Directive on minimum wage.

The rather far-reaching actions that IF Metall and the other blue-collar unions are taking are based in the law on CBA from 1928 and its later revisions. The sympathy ”strike” are found in the basic agreement between the employers’ organization and the federation of blue-collar unions signed in 1938. Back then the employers were the driving force behind including sympathy measures as a tool. This was later confirmed in a revised basic agreement in 2018. The right to strike is also a constitutional right, a point the make frequently. All industrial actions so far are within the legal framework. The unions can even take industrial action for trying to get a CBA, even at companies where they have no members.

At Klarna, a financial services company, a CBA was signed in the evening of November 3. This was the finale of a process over several years where the unions have been negotiating with the purpose of reaching such an agreement. The notification that industrial action at the headquarters would start on November 7 and that additional companies in the group would be hit with industrial action a week later was decisive for Klarna. Going into the Black Friday without being able to deliver service to their customers would have created a lot of turmoil for the brand. The CEO of Klarna declared a victory for his employees when the CBA was presented.

The Spotify Workers Union, a local white-collar union, started at the beginning of 2023 after Spotify had notified some 100 people in a redundancy process that was nonorthodox. In an interview in Dagens industry (DI) with the union chairman he said their initial focus will be on some issues of great importance to their members and to build a local union structure that is sustainable over time. A CBA is not a short-term focus. However, the central union has for some time trying to negotiate a CBA but is now backing off for the time being.

Tesla has some 300 blue collar employees at 10 service centres across Sweden. Services are also delivered by 6 external providers.  They have an installed base of some 50,000 cars according to the car registration office to work with.

After many years of trying to negotiate a CBA with Tesla the blue-collar union IF Metall concluded that they need to put more pressure on Tesla, so they decided to take industrial action. As per October 27 all service centres are on strike. As per November 3 all third-party service centres handling Tesla cars are on strike even though they have a valid CBA including a peace obligation. From a union perspective this means that all work with Tesla cars in Sweden is blocked. 

On November 24 the conflict escalated when all workers in a component supplier (in the south of Sweden) to the Tesla factory in Germany, went on strike. This affects some 50 employees out of 600. Even this company has a valid CBA with IF Metall.

The conflict has expanded even further with nine other blue-collar unions giving notice that they will take sympathy measures in their sectors, i.e., all work with or handling of Tesla cars will be blockaded. Some examples of sympathy measures are:

• Unloading of Tesla cars in most harbours
• Cleaning of Tesla facilities
• Delivering mail and parcels to Tesla
• Repairing electrical components at Tesla facilities as well as repairing the Tesla grid of charging posts in Sweden
• All work in paint shops with Tesla cars at 56 companies all across Sweden.

The refusal to deliver mail is important as all registration plates are delivered by mail. As no plates will be delivered, no new cars will be available for customer. According to the rules by Transportstyrelsen plates can only be delivered by mail and with a pre-defined supplier. Elon Musk called this ”insane” on X. The legal battle over the delivery of registration plates is continuing, this time at the Court of Appeal.

There is probably more to come from the unions in support for IF Metall efforts to get a CBA with Tesla. Contacts with unions in Denmark, Finland, and Norway in the transportation sector to gain support is said to have taken place. The unions believe that Tesla is able to have cars coming into to Sweden through other ways. The union of Danish dockers have formally announced that they will call for sympathy measures starting on December 19.

In the primary conflict with Tesla IF Metall say that they want to ensure that their members at Tesla “have decent and safe working conditions in the same way as their members have at similar companies in the industry”. IF Metall has not made public any document that show the differences between the current working conditions at Tesla with the working conditions in a proposed CBA. 

Another argument is that without a CBA, wages can be reduced at the will of the employer. It is clear that IF Metall have members at Tesla but how many has not been stated but they say that they act on behalf of their members.

The media coverage is fairly extensive, and some comments are of interest.  

On November 1 the AMF pension fund, co-owned by IF Metall, made public that in March they had sent a letter to the Tesla Board of Directors requesting Tesla in Sweden to fulfil their obligations according to National Labor Relations Act, i.e., to sign a CBA. AMF own shares in Tesla valued at some 220 MUSD. According to an article in DI Tesla has not responded to the letter. 

On November 8 the Head of LO, the central blue collar union body, was interviewed in DI stating that the union are ”prepared to take industrial action as far as it takes even if that would mean that Tesla were to leave Sweden”. On the following day the Minister for Labor Market was also interviewed in DI saying that he has no opinion about strike itself but hope that the parties will find a solution. But it ”would be sad if Tesla were to leave Sweden”. 

The owner of a company with 70% of its turnover coming from Tesla said in an interview that he is getting very concerned about the situation and the future of his business. As his company has a CBA he believes that he is being treated unfairly and the same goes for many of his employees. 

As always when industrial action is taking place Medlingsinstitutet appoints a mediator with the purpose of finding a solution. On November 21 the mediator was interviewed in DI where he said that ”it seems as the local management does not have a mandate to negotiate and sign a CBA and that is an order from Elon Musk”.  In his 10 years as a mediator, he has never seen a conflict as blocked as this one. 

According to the car registration office some 960 Tesla cars have been delivered since the strike begun. So, Tesla is finding ways both to bring cars into Sweden and to get them to their customers. This is not appreciated by the unions. The unions are claiming that Tesla is using strike-breakers, which is not something you see happen in Swedish disputes.

The temperature in the conflict is rising, and so are the stakes. The consequences of the sympathy measures seem to have more widespread impact than the original action. How this will end is right now hard to predict but what we do know from the past is that the two parties are rather stubborn and want to have it their way. IF Metall has increased the strike benefits to 130% of the current wage and they have 15 billion Swedish SEK in their strike coffers. It is also worth noting that it is hard to see a compromise, because either you have a CBA, or you do not have one. There is nothing in between. 

At some point the conflict will come to an end and at that time. if it hasn’t already happened, then a discussion about the rules for sympathy measures - and if they are proportional - will need to take place. Another discussion that should take place, but is very unlikely to happen, is over the fact that there is no legal requirement for having a CBA in order to run a business in Sweden. 

But the unions have all the tools at their disposal to make a company sign a CBA, so why not make it mandatory? This discussion will most likely not happen… Why? Because almost everybody in Sweden embraces our ”Swedish model”.

December 1st, 2023

DISCLAIMER: The views and opinions expressed in this paper are solely representative of the author