01 May 2018
The Swedish Job Security Councils are one concrete, existing mechanism in ensuring smooth transitions from one job to another. In existence since the 1970s, they are now covering almost all economic sectors (except companies without collective agreements). This system is an example of how to ensure resilient labour markets with high levels of employment protection and collective bargaining[i].
In essence, the Councils are about employment security as they are helping workers to find a new job after economically motivated lay-offs. They are bi-partite social partner bodies in charge of transition agreements, career guidance and training services under strict criteria set in collective agreements[ii] on dismissal protection without any government involvement[iii]. As they intervene early in the restructuring process, their success rates are high as shown in the statistics of the TRR council that placed 88 per cent of laid-off workers in new employment in 2016[iv].
Trade unions are consulted on dismissals, which are based on provisions set out in the Employment Protection Act including that lay-offs need to be economically motivated and the selection of outgoing employees needs to follow the “last-in-first-out” principle – protecting workers who have been in a company longer. However, firm-level bargaining allows for deviations from the latter. The agreements that set up the two biggest job security councils, TRR Trygghetsrådet[v] and TSL Trygghetsfonden[vi], include annexes that direct employers and trade unions to, when negotiating redundancies, if necessary to deviate from the last-in-first-out-principle and take into consideration the company’s need to keep competent staff. There is thus a close connection between the Councils and the leverage given to trade unions through dismissal protection legislation. So rather than being an alternative to dismissal protection, the job security councils are built on it.
It is important to consider that based on eligibility criteria (duration, type of contract, age group) workers are entitled to financial compensation to complement unemployment benefits. To illustrate the wide reach and mandate of the Councils: The TSL’s insurance scheme and agreement cover over 100.000 companies, while the TRR is covering over 30.000 companies. Besides the services for laid-off workers, they are providing advice to firms on dismissals and training to trade union representatives. They also assist those who want to become self-entrepreneurs.
When considering exporting the Job Security Council model – be it in a bi- or tripartite set-up, it is important to consider systemic factors. Sweden is amongst the European countries with the highest collective bargaining coverage and 70% workers unionised[vii]. The Councils but also parameters of collective agreements are independent of the government and its budget. However, what this model clearly demonstrates and what can be encouraged elsewhere is a close and large-scale cooperation between the social partners in different sectors allowing them to build networks and sustainable joint funds. Also, when discussing the introduction of technologies at the firm level – this example shows that with social dialogue and trained worker representatives any type of transformation can be anticipated and managed.
[i] OECD (2017) Employment Outlook 2017, p. 12.
[iii] The financing is within the scope of wage increases, approximately 0.3% of the employer’s payroll.