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The Industrial Relations System In Sweden With Suggestions Concerning Itsrelevance To An African Nation, Ghana

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The Industrial Relations System In Sweden With Suggestions Concerning Itsrelevance To An African Nation, Ghana

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Content This dissertation has been
microfilmed exactly as received 7 0 - 3 7 2
YANKEY, David Beikwaw, 1936-
THE INDUSTRIAL RELATIONS SYSTEM
IN SWEDEN WITH SUGGESTIONS CONCERNING
ITS RELEVANCE TO AN AFRICAN NATION,
GHANA.
University of Southern California, Ph.D., 1969
Econom ics, com m erce-business
University Microfilms, Inc., Ann Arbor, Michigan
© C op yrigh t by
DAVID B E IK W A W XAHKEI
1970
THE INDUSTRIAL RELATIONS SYSTEM IN SW EDEN WITH
SUGGESTIONS CONCERNING ITS RELEVANCE
TO A N AFRICAN NATION, G H A N A
David Beikwaw Yankey
A D is s e r ta tio n P re se n te d to th e
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In P a r t i a l F u lfillm e n t o f th e
R equirem ents f o r th e Degree
DOCTOR OF PHILOSOPHY
(Economics)
June 1969
UNIVERSITY O F SOU TH ERN CALIFORNIA
THE GRADUATE SCH O O L
UNIVERSITY PARK
LOS ANGELES, CA LIFO RN IA SO 0O 7
This dissertation, written by
............._Bavid.BeiJwa.w_ Tarikejr................................
tinder the direction of h.Xs... Dissertation Com
mittee, and approved by all its members, has
been presented to and accepted by The Gradu
ate School, in partial fulfillment of require
ments of the degree of
D O C T O R OF P H I L O S O P H Y
JI Dean
Date JUNE. 1969
DISSERTATION COMMITTEE
TABLE OP CONTENTS
CHAPTER PAGE
I . INTRODUCTION .............................................................. 1
The p r o b l e m ......................................................... I
The o b j e c t i v e .................................................... 2
G eneral background o f Sweden ................... 3
The scope and o r g a n is a tio n o f t h i s
s t u d y .......................................... 5
I I . CENTRAL COLLECTIVE BARGAINING SYSTEM:
SUPER-UNIONS AND SUPER-ASSOCIATIONS . 9
In tro d u c tio n ......................................................... 9
The developm ent and o rg a n iz a tio n of
su p e r-u n io n s (LO) ................................. 11
Membership o f L O .................. 17
O ther su p e r-u n io n s: TO O and SACO . 18
The developm ent and o rg a n iz a tio n of
s u p e r - a s s o c ia tio n s : SAP .................... 18
O rg a n iz a tio n o f S A P ................................. 20
L egal s t a t u s o f th e a s s o c ia tio n s . . . 22
R ig h ts o f a s s o c ia tio n and c o l l e c t i v e
b a rg a in in g (1936) 23
M ediation A cts (1906 and 1920) . . . 24
The C o lle c tiv e C o n tra c ts and Labor
C ourt Acts ( 1 9 2 8 ) ................................. 25
i i
CHAPTER PAGE
The B a sic Agreement (1938) .................... 29
P r o v is io n s o f th e B a sic Agreem ent . 31
The b a r g a in in g p ro c e s s ................................... 33
I I I . FEMALE WORKERS AND WHITE-COLLAR WORKERS
IN SW EB EN ................................................................ 39
I n tr o d u c t i o n ............................................. 39
Women w o rk e rs in S w e d e n .............................. 40
Female em ploym ent: i t s developm ent 40
P r e - i n d u s t r i a l p e r io d
P e r io d o f i n d u s t r i a l i z a t i o n
and u r b a n iz a tio n
The fem ale la b o r f o r c e : i t s
s t r u c t u r e ...................................................... 45
Female w o rk e rs and u n io n s .................... 48
WageB and s a l a r i e s o f fem ale w o rk e rs 50
W h i t e - c o l l a r w o rk e rs ........................................ 57
I n t r o d u c t i o n ...................................................... 57
W h i t e - c o l l a r w o rk ers and u n io n ism . 58
C o l l e c t i v e b a r g a in in g and w h ite -
c o l l a r w o r k e r s ............................................. 61
S a la r y n e g o t i a t i o n ........................................ 64
Works C o u n c ils and w h i t e - c o l l a r
w o r k e r s ........................................................... 66
iii
CHAPTER PAGE
IV. JOINT CONSULTATION AT THE EACTORY LEVEL . 67
In tro d u c tio n ............................................................. 67
Works C ouncils Agreement (1946) . . . 68
J o in t c o n s u lta tio n on p e rso n n e l
and w e l f a r e .................................................... 71
J o in t c o n s u lta tio n on p ro d u ctio n . . . 73
J o in t c o n s u lta tio n on 30^ s e c u r ity • . 74
J o in t c o n s u lta tio n on w a g e s ................... 76
J o in t c o n s u lta tio n and th e foreman . . 80
J o in t c o n s u lta tio n : a c r i t i q u e . . . 82
V. W AGES AND IN FLA TIO N ................................................ 85
I n t r o d u c t i o n „ 85
M edieval " J u s t Wage" th e o ry ................... 86
S u b siste n c e th e o ry o f wages ................... 86
Wage fund th e o ry o f w a g e s ........................ 89
M arginal p r o d u c tiv ity th e o ry o f wages 90
The b a rg a in in g th e o ry o f wages . . . . 92
Wage d e te rm in a tio n In S w e d e n ........................ 97
LO-SAF wage n e g o tia tio n ............................. 97
Wage c r i t e r i a .................................................... 99
Swedish wage n e g o tia tio n s in h i s t o r i c a l
p e r s p e c t i v e ......................................................... 103
i v
CHAPTER PAGE
Wage p o lic y in S w e d e n ...................................... 105
The a i m s ........................................................ 105
The means o f a c h ie v in g the o b je c tiv e s 108
The r e s u l t s of wage p o l i c y ........................ 109
Wages and i n f l a t i o n ...................................... 113
VI. UNEM PLOYM ENT REDUCTION........................................... 119
I n t r o d u c t i o n .............................................................. 119
CauseB o f unemployment in Sweden . . . . 122
Unemployment r e d u c t i o n : g e n e ra l
p o l i c i e s .............................................................. 123
Unemployment r e d u c tio n : Swedish s ty l e 125
S easonal unemployment p o l i c i e s . . . . 138
A d m in istra tio n o f employment program . 140
R e s u lts o f employment p o lic ie s . . . . 142
V II. SCANDINAVIAN C O M M O N EM PLOYM ENT MARKET . . 145
T h e o r e tic a l a s p e c ts o f a common la b o r
m a r k e t ....................................................................... 147
The s t a t i c m o d e l ................................................ 147
Impediments to f re e la b o r m o b ility . . 149
C o n trib u tin g f a c to r s to th e N ordic
la b o r m arket . . . . . . . . ................... 151
G eo g rap h ical f a c t o r s ...................................... 151
P o l i t i c a l f a c t o r s ........................................... 154
CHAPTER PAGE
S o c ia l f a c t o r s .................................................... 156
Economic f a c t o r s ............................................... 159
Common employment m arket in
S c a n d i n a v i a ......................................................... 165
G e n e s i s .................................................................. 165
F u n ctio n s o f the employment s e rv ic e s . 169
S afeg u ard s to th e N ordic la b o r m arket 170
M utual s o c ia l b e n e f its ................................. 170
Exchange o f t r a in e e s ...................................... 172
A ctio n s o f c e n t r a l a u t h o r i t i e s . . . . 173
System o f com m unications ............................. 175
E v a l u a t i o n .................................................................. 176
V I I I . RELEVANCE OF THE SWEDISH M ODEL TO A N
AFRICAN NATION: G HA NA ...................................... 183
I n tr o d u c tio n ............................................................. 183
In tro d u c in g Ghana ................................................ 184
G eo g rap h ical in fo rm a tio n ............................. 184
H i s t o r i c a l and s o c ia l f a c to r s . . . . 185
The economy ........................................... 189
I n d u s t r i a l r e l a t i o n s in Ghana ................... 193
The growth o f tr a d e unionism in
c o l o n ia l Ghana ................................................ 193
Unionism a f t e r independence ................... 198
vi
CHAPTER PAGE
C o lle c tiv e b a rg a in in g in Ghana . . . 205
R elevance o f Jo in t labor-m anagem ent
c o n s u lta tio n a t th e f a c to ry l e v e l . . 220
Labor t u r n o v e r ............................................... 220
Labor p r o d u c tiv ity * ................................... 221
Communication .................................................... 227
R elevance o f Swedish employment
p o lic ie s to G h a n a ...................................... 227
P u b lic works and employment ................... 234-
Reform o f ed u catio n s y s t e m ..................... 235
A ctive Labor Market Board ......................... 236
IX. SU M M A RY A ND CONCLUSIONS...................................... 238
BIBLIOGRAPHY................................................................................ 249
v i i
LIST OP TABLES
TABLE PAGE
1* Female Membership o f L O ................. 49
2. R e la tiv e Hourly Wages o f Male and
Female in M an u factu rin g , 1955-1964 . . 51
5 . R e la tiv e Hourly Wages o f Male and
Female In A g r ic u ltu r e , 1955-1964 . . . 52
4 . Volume o f Labor D isp u tes In S e le c te d
C o u n trie s, 1955-1963 110
5. M en's and Women's E a rn in g s, 1957-1963 . 112
6 . Wage D r i f t in M ining and M anufacturing
(A dult M ales, 1956-1964) 116
7 . Wage D r i f t in V arious Economic S e c to rs 117
8 . R e la tiv e Trends in Unemployment (Sweden,
Horway, E ngland, and th e U nited S t a t e s ) ,
1955-1966 121
9 . G eographical and P o p u la tio n F e a tu re s . 153
10. P u rch asin g Power o f S candinavian
C o u n t r i e s .................................................. 162
11. R e la tiv e Humber and P ercen tag e o f
Unemployment, 1960-1965 ................................. 164
12. Im m igrants In to S w e d e n ............................ . 178
13. E conom ically A ctive Im m igrants In
Sweden, 1960-1965 ................................................ 179
14. R e la tiv e Hourly Wages in S c a n d in a v ia ,
1960-1965 .................................................................. 181
l g . E d u c a tio n a l Pyramid o f Ghana, 1964 . . 188
v i i l
TABLE PAGE
16. B alance o f Payments o f Ghana,
1948-1966 .................................................................. 191
IT . R e la tiv e R ates o f Unemployment,
1 9 5 6 -1 9 6 5 .................................................................. 192
18. R e la tiv e Wages in N o n -A g ric u ltu ra l
S e c to rs in S e le c te d A fric a n C o u n trie s ,
1957-1965 . . . . . ...................................... . 194
ix
LIST OF FIGURES
FIGURE PAGE
1, The Government o f Unions a t V arious
L e v e l s ....................................................................... 13
2. Labor Resource M axim ization ........................ 148
x
1
CHAPTER I
INTRODUCTION
The Problem
Economic developm ent i s a n e c e s s ity f o r th e newly
Independent c o u n trie s o f A fr ic a . I t i s th e only lo n g -
run s o lu tio n to th e d ism a lly low sta n d a rd o f l iv i n g on
th e A fric an c o n tin e n t. In i t s narrow s e n s e , economic
developm ent means i n d u s t r i a l i z a t i o n . I n d u s t r i a l i z a t i o n
r e q u ir e s i n t e r a l i a , a s u c c e s s fu l m arriage o f em ployers
and employees in r e a l i z i n g th e g o a ls o f th e e n t e r p r i s e .
In o th e r w ords, a r e l a t i v e degree o f i n d u s t r i a l peace i s
v i t a l l y n e c e s s a ry , la c k o f such peace could c re a te d i s
o rd e r In th e most m e ticu lo u s economic plan and, con
s e q u e n tly , Impede developm ent, because any employment
r e l a t i o n s h i p b rin g s com peting I n t e r e s t s in to c o n f l i c t .
L a b o r's d is c o n te n t over wages and working c o n d itio n s
could le a d to b o y c o tts and s t r i k e s ; em ployers' d i s
p le a s u re a t l a b o r 's unreaso n ab le claim s could r e s u l t in
a lo c k - o u t. At any r a t e , a c tio n by e i t h e r p a rty on an
a g g re g a te le v e l could b rin g th e economy to a h a l t . I t
becomes incum bent on th e emerging n a tio n s , a t th e t h r e s
h o ld o f i n d u s t r i a l i z a t i o n , to evolve a r e l a t i v e l y workable
model o f i n d u s t r i a l r e l a t i o n s which i s c o n s is te n t w ith
t h e i r environm ent. This 1b th e problem .
The O b je c tiv e
I t i s th e p rim ary o b j e c t i v e o f t h i s d i s s e r t a t i o n
to th o ro u g h ly s tu d y Sw edish i n d u s t r i a l r e l a t i o n s and
e v a lu a te th e p o s s i b i l i t y o f i t s a p p l i c a t i o n to a su b -
S ah aran n a tio n o f A f r ic a . Of c o u rs e , we a r e aw are o f th e
c o n s id e r a b le d i s s i m i l a r i t i e s e x i s t i n g betw een th e two
a r e a s . W e hope to a c q u a in t th e r e a d e r w ith th e s e f a c t s .
The c h o ic e o f Sweden I s n o t a c c i d e n t a l ; Sweden h a s
m a in ta in e d a r e l a t i v e l y p e a c e f u l I n d u s t r i a l r e l a t i o n s h i p
lo n g e r th a n any o th e r i n d u s t r i a l c o u n try In th e W estern
w o r ld .'1 '
H aving r e a l i z e d th e I m p r a c t i c a b i l i t y o f th e C l a s s i
c a l c o m p e titiv e model in th e e a r l y s t a g e s o f i n d u s t r i a l i
z a t i o n , th e Swedes se a rc h e d f o r th e more p ra g m a tic model
o f c o u n t e r v a i l i n g power. R a th e r th a n h a v in g m y riad s o f
u n io n s b a rg a in I n d i v i d u a l l y w ith a few p o w e rfu l and
p r i v i l e g e d e m p lo y e rs, th e Swedes d e c id e d to c r e a t e o l i g o
p o l i s t i c e n t i t l e s on b o th s id e s o f th e la b o r m a rk e t: a
s tr o n g c o n f e d e r a tio n o f w o rk e rs a g a i n s t an e q u a lly s tr o n g
c o n f e d e r a tio n o f e m p lo y e rs. In t h i s way th e power o f each
p a r t y i s n e u t r a l i z e d and h e l d in check by th e power o f th e
o t h e r .
^Sweden h a s en jo y ed u n i n t e r r u p t e d peace f o r over
150 y e a r s . See "Sw edish L abour Laws and P r a c t i c e s , "
L abour G a z e tte , V o l. LX VIII, Ho. 6 , J u n e , 1968, p . 326.
S e v e ra l advan tag es have emerged. F i r s t , such
c e n t r a l i z a t i o n has given to each p a rty a s t r a t e g i c b a rg a in
in g p o s itio n a t th e b a rg a in in g t a b l e . These c e n tr a liz e d
b o d ies have committed t h e i r agreem ents to w r itin g as the
b a s ic agreem ent between management and la b o r . Second, th e
p a r t i e s have widened t h e i r g o a ls to in c lu d e n o t only
h ig h e r p r o f i t s f o r em ployers and h ig h e r wages fo r w orkers
b u t a ls o such v a lu e s a s l i b e r t y , s e c u r i t y , J u s tic e and
e q u a lity f o r th e in d iv id u a l w orker and m anager. T h ird ,
th e re i s a s p i r i t o f fo rb e a ra n c e : pow erful c o n fe d e ra tio n s
do n o t o v e re x e rc is e t h e i r s tr e n g th so as to c r ip p le th e
economy. A s p i r i t o f c o lla b o r a tio n and compromise p e r
vades th e e n t ir e r e l a t i o n s h i p . The r i g h t to o rg an iz e and
b a rg a in c o l l e c t i v e l y i s re s p e c te d by b o th em ployers and
em ployees. There i s no r a c k e te e r in g and no la b o r spying.
G eneral Background o f Sweden
Sweden i s th e l a r g e s t co u n try in W estern Europe.
S itu a te d as i t i s , on th e e a s te r n p a r t o f the S candi
n avian p e n in s u la , Sweden has an a re a o f 173,423 sq .
m ile s , o f which 158,486 sq. m ile s a re la n d and 14.937 Bq.
m iles a re w a te r. The la n d i s p o p u lated by 7 .5 m illio n
people who a re homogeneous w ith r e s p e c t to r a c e , language
and r e lig io n * T his unique f a c t o r i s im p o rta n t, f o r i t
e x p la in s th e p e o p le s ' w illin g n e s s to c o lla b o r a te .
Sweden was once a m ajor European power (1648-1709).
Her a s p ir a tio n s to dom inate E a ste rn Europe were brought to
a h a l t when she was d e fe a te d a t P u lta v a by R u ssia In
2
1709. At th e end o f th e N apoleonic W ars, Sweden decided
n o t to tak e p a r t In any more European w ars.
P o l i t i c a l l y , Sweden enjoys a c o n s t i t u t i o n a l
monarchy. Both King and P arliam en t (R iksdag) e x e rc is e
l e g i s l a t i v e a u t h o r i t y . The r i g h t to ta x i s th e r i g h t of
th e R iksdag. There a re two Houses in P a rlia m e n t: Upper
and Lower. The Lower House has a l a r g e r body and i t s
members a re e le c te d d i r e c t l y f o r a term o f fo u r y e a rs .
Members o f th e Upper House a re chosen by p r o v in c ia l a s
sem blies and have e ig h t y e a r term s. S e v e ra l p o l i t i c a l
p a r t i e s e x i s t , w ith th e S o c ia l D em ocratic P a rty being
dom inant.
Sweden enjoys th e h ig h e s t sta n d a rd o f l i v i n g in
W estern E urope, w ith a p e r c a p ita income second only to
3
th e U nited S t a t e s . P riv a te in d u s try i s s tim u la te d by
th e government through a l i b e r a l d e p r e c ia tio n system and
an in v estm en t r e s e rv e program whereby a c o rp o ra tio n can
4
d educt 40 p e rc e n t o f i t s p re ta x income. F oreign tra d e
F re d e ric F le is h e r , The Hew Sweden. The C hallenge
o f a D is c ip lin e d Democracy (Hew York: David McKay Company,
I n c . , 1967), pp. 3 -7 .
3
S c a n d in a v ia : A Golden M arket (Stockholm : A. B.
O ttoson F ro d u k tlo n , 19&5) * p 7 8.
A
Norman F. K e ls e r , M acroeconomics. F is c a l P o lic y ,
and Economic Growth (New York: John Wiley & Sons. I n c . ,
19'64)', pp. 274-'?5.
5
com prises 20 p e rc e n t o f Gross N a tio n a l P roduct and i s very-
im p o rta n t in the economy.
The Scope and O rg a n iz a tio n o f t h i s Study
T his work i s p re se n te d in n in e c h a p te rs . Chapter
I I w ill examine th e developm ent and o r g a n iz a tio n , le g a l
s t a t u s and c o l le c tiv e b a rg a in in g system o f su p e r-u n io n s
and s u p e r - a s s o c ia tio n s such a s th e C o n fed eratio n o f Trade
Unions (LO), E m ployers' A s so c ia tio n s (SAP), Unions o f
S a la rie d Employees (TCO) and th e Swedish C o n fed eratio n o f
P ro f e s s io n a l A s so c ia tio n s (SACO). D e ta ile d e x p o s itio n o f
TCO and SACO i s d e fe rre d to C hapter IV. Some c e n tr a l
f e d e r a tio n s b arg ain f o r the e n t i r e n a tio n ; a "B asic
Agreement" p ro v id es th e framework f o r b a rg a in in g . G enesis,
p ro v is io n s and su c cess o f th e B asic Agreement w i l l be
an a ly ze d .
C hapter I I I d e a ls w ith women and w hite c o l l a r
w orkers in employment. The f i r s t p o rtio n o f th e c h a p te r
e x p la in s ( l ) th e tr e n d s in fem ale i n d u s t r i a l w o rk ers; (2)
equal rem u n eratio n f o r men and women w orkers Blnce 1900;
(3) r i g h t s o f women w orkers to u n io n iz e and b a rg a in c o l
l e c t i v e l y . The second p o rtio n o f th e c h a p te r probes more
in to th e problem s o f w hite c o l l a r w o rk ers, t h e i r two
dominant c o n fe d e ra tio n s , TCO and SACO, and t h e i r r o l e in
c o l l e c t i v e b a rg a in in g .
C hapter IV i s concerned w ith p a r t i c i p a t i o n o f em
ployees In th e work p ro cess and in o th e r fu n c tio n s a s - I
s o c ia te d w ith d a lly employment r e l a t i o n e . T his I n d u s t r i a l
democracy i s an a n tid o te to c o u n te ra c t th e d e p re ssin g
f e e l i n g o f employees who have h i t h e r t o been tr e a te d as
s o u ll e s s and a p a th e tic cogs in a m achine. Employees a re
provided w ith an i n s i g h t in to and knowledge o f th e e n t e r
p r i s e . An E n te r p r is e C ouncils (Works C o u n cils) Agreement
signed by th e C o n fed e ra tio n o f Trade Unions and Employers
A sso c ia tio n s c l e a r l y s t i p u l a t e s th e r u le s o f t h i s la b o r -
management c o n s u lta tio n a t th e f a c to r y l e v e l . G rievance
p ro ced u res a t th e f a c to r y l e v e l , r o le o f th e forem an, job
s e c u r i t y , and o th e r p e rso n n e l p o lic ie s which a re being used
to reduce la b o r tu rn o v e r a re d is c u s s e d .
D isp u tes o v er wages have accounted f o r tw o -th ird s
o f th e la b o r u n r e s t in th e W estern w o rld . To remedy t h i s
th o rn y is s u e in employment r e l a t i o n s h i p s , v a rio u s
th e o r i e s o f wages have ev olved. M edieval s c h o la rs f e l t
th e employee should be p aid th e j u s t wage. The B r i t i s h
C l a s s i c a l School espoused R ic a rd o 's s u b s is te n c e th e o ry o f
wages. K arl Marx, th e l a s t C la s s ic a l t h e o r i s t , con
cluded th a t s in c e la b o r was capable o f c r e a tin g s u rp lu s
v a lu e , th e w orker should be rem unerated in accordance w ith
th e v a lu e o f h is la b o r power. M a rg in a lis ts m ain tain ed
t h a t th e i d e a l p r ic e f o r la b o r i s t h a t which eq u a tes th e
wage w ith th e v a lu e o f th e m a rg in a l p ro d u c t. Sidney Webb
In England and John R. Commons in America su p p la n ted the
m a rg in a l p r o d u c tiv ity th e o ry w ith th e "b a rg a in in g th e o ry
o f w ages." Y et th e war o v er wages i s u n a b a te d . Sw eden's
r e l a t i v e i n d u s t r i a l peace c a l l s f o r an i n v e s t i g a t i o n o f
i t s wage p o lic y and d e te r m in a tio n . C h ap ter I I I s u p p lie s
us w ith t h i s in f o rm a tio n . I t a ls o a tte m p ts to i n v e s t i
g a te any re le v a n c e o f wages to i n f l a t i o n .
In C h ap ter VI we a re concerned w ith v a rio u s
m easures employed by th e Swedish governm ent to red u ce un
employment. Programs a re p a r t l y s e l e c t i v e and p a r t l y
g e n e r a l. S e le c ti v e program s a r e used to combat unemploy
ment in g iv e n a re a s and th e c o u n try a s a whole and any
ty p e o f unemployment such as s e a s o n a l, s t r u c t u r a l o r
c y c l i c a l . G en e ra l program s a re th e v a rio u s a id s and ta x
i n c e n ti v e s g ra n te d to em ployers to expand d u rin g th e
tro u g h o f th e b u s in e s s c y c le . The w i l l to in n o v a te and
ex p e rim en t a p p e a rs to pervade th e e n t i r e sy stem and hence
d e te rm in e s th e su c c e ss o f th e Sw edish unemployment
program s.
The problem o f unemployment l o g i c a l l y le a d s us to
a d is c u s s io n o f la b o r m ark ets where p ro s p e c tiv e w orkers
and em ployers a re b ro u g h t t o g e t h e r . C h ap ter VII e x p lo re s
th e common-employment m arket f o r th e S can d in av ia n coun
t r i e s . Denmark, Norway, F in la n d , Ic e la n d and Sweden have
had a lo n g h iB to ry o f econom ic, s o c i a l and c u l t u r a l co
o p e r a tio n , so t h a t a common employment m ark et i s n o t a
n o v e lty . The c h a p te r exam ines th e c o n t r ib u t in g f a c t o r s ,
o r g a n iz a tio n and o p e r a tio n o f t h i s i n t e g r a t i o n .
He th en tu rn to examine th e re le v a n c e o f th e model
to Ghana. A p p lic a tio n o f th e model to Ghana i s preceded
by a g e n e ra l background o f Ghana— i t s h i s t o r y , p e o p le,
geography and economy— and an e x p o s itio n o r d is c o u rs e on
e x is tin g i n d u s t r i a l r e l a t i o n s . S i m i l a r i t i e s and d i s
s i m i l a r i t i e s a re exam ined. An a tte m p t has been made to
determ ine th e p o s s i b i l i t y o f su c c e ss o f t h i s m odel.
The co n clu sio n b rin g s in to p e rs p e c tiv e c e r t a in
s a l i e n t p o in ts o f our a n a ly s is , a summary o f fin d in g s and
a p o lic y recom mendation re g a rd in g th e f e a s i b i l i t y o f th e
Swedish model in h e lp in g Ghana in h e r economic ta k e - o f f .
9
CHAPTER I I
CENTRAL COLLECTIVE BARGAINING SYSTEM:
SUPER-TJNIONS AND SUPER-ASSOCIATIONS
In tro d u c tio n
An unu su al p ro p e n s ity to co o p erate in every human
endeavor p ervades Swedish B o c iety . I t i s m aintained
i m p l i c i t l y o r e x p l i c i t l y th a t th e w e ll- te in g o f the
in d iv id u a l i s b e t t e r served through c o l le c tiv e means.
There a re th e p ro d u c e rs' c o o p e ra tiv e s , th e consum ers'
c o o p e ra tiv e s , s p o rts and r e l i g i o u s c o o p e ra tiv e s . The
la b o r m arket too has i t s own c o o p e ra tiv e s and a s s o c ia tio n s
whose main fu n c tio n i s to p r e s e n t a u n ite d f r o n t In t h e i r
d a y -to -d ay n e g o t ia t io n s . Two g ig a n tic B uper-unions
dom inate th e la b o r m a rk e t. On one sid e i s th e Lands-
o rg a n is a tlo n e n I S v e rig e —th e C o n fed eratio n o f Swedish
Trade U nions— (o r th e LO ).1 I t has th e l a r g e s t union
membership and embraces w orkers in d iv e rs e o c c u p a tio n s.
O ther l e s s Im portant c o n fe d e ra tio n s on th e la b o r sid e a r e :
(1) th e J.jastem annens C o n tra lo rg a n ls a tio n —C e n tra l O rgani
z a tio n o f S a la rie d Employees (TCO)—which I s com prised o f
forem en, o f f i c e em ployees, e t c . ; and (2) S v e rlg e s Akade-
"Swedish Labour Laws and P r a c t i c e s ," Labour
G az ette (D epartm ent o f Labour, Canada), V ol. LXVIII, No.
6, June, 1968, pp. 328-29.
10
m ikers C e n tr a lo r g a n ls a tio n (SACO)—Swedish C onfederation
o f P ro f e s s io n a l A s s o c ia tio n s , in c lu d in g such in d iv id u a ls
2
as e n g in e e rs , d e n t i s t s , and la w y e rs.
On th e o th e r s id e i s th e su p e r-e m p lo y e rs1 a s s o c ia
t i o n . T hreatened hy th e growing s tr e n g th o f la b o r , em
p lo y e rs p u t t h e i r heads to g e th e r and c o l l e c t i v i z e d in to
th e Swedish Em ployers' C o n fed e ra tio n —Svenska A rb e ts -
g lv a re fo re n ln g e n (SAP). A lthough formed l a t e (1902), SAP
q u ic k ly b u i l t a stro n g o rg a n iz a tio n w ith c o n s id e ra b le i n
flu e n c e on itB a s s o c ia tio n s and in d iv id u a l members. Em
p lo y e rs l o s t in d iv id u a l freedom b u t gained s tr e n g th and
s t a b i l i t y .
A s p i r i t o f democracy and c o lla b o r a tio n f i n a l l y
emerged in th e la b o r m arket b u t n o t w ith o u t s tr u g g le .
C onscious o f t h e i r s tr e n g th and power, th e Buper-unions
and a s s o c ia tio n s a tte m p te d , a t f i r s t , to dominate one
a n o th e r. B i t t e r d is p u te s and open c o n f l i c t s became
common in th e e a rly y e a r s . In 1909# f o r in s ta n c e , th e re
was a strik e ;" ^ lo c k -o u ts and b o y c o tts co n tin u ed in to the
1930s. As th e mammoth a s s o c ia tio n s m atured, they
r e a l iz e d t h a t a p e a c e fu l c o -e x is te n c e would be more
p r o f i t a b l e than open c o n f l i c t . A s te p p in g -s to n e to t h i s
2I b i d .
^P aul N orgren, The Swedish C o lle c tiv e B arg ain in g
System (Cam bridge, M a ssa c h u se tts: H arvard U n iv e rs ity
P re s s , 1941), p. 51•
f e e lin g o f c o -e x is te n c e and m utual r e s p e c t was made in an
agreem ent confirm ing th e employer*s r i g h t to h i r e o r d i s
m iss whomever he chose. O ther agreem ents and l e g i s l a t i o n
sa fe g u a rd in g t h e i r r e l a t i o n s h i p s were e n te re d in to or
e n a c te d . The M ediation A cts, the C o lle c tiv e C o n tra c ts
A ct, th e Labor C ourt A cts, and th e B asic Agreements d e-
4
fin e d the r u le s o f the game.
At th e b a rg a in in g t a b l e , su p e r-u n io n s and su p e r
a s s o c ia tio n s b arg ain f o r th e e n t i r e n a tio n . Of co u rse ,
enough room i s l e f t f o r in d iv id u a l in d u s try and company
a d ju stm e n ts and m o d ific a tio n s .
c
The Development and O rg a n iza tio n o f Super-U nions (LO)
The C o n fed eratio n o f Swedish Trade Unions (h e re
a f t e r a ls o r e f e r r e d to as th e LOX was bom in 1898. How
e v e r, i t s b i r t h was n o t sp o n tan eo u s. P r io r to LO, w orkers
had been making s e v e ra l e f f o r t s to a g i t a t e c o l l e c t i v e l y .
They knew t h a t a more c e n tr a liz e d n a t io n a l union would
b e t t e r p re s e n t th e w o rk e rs' need f o r common s ta n d a rd s o f
wages, w orking c o n d itio n s and a p p r e n tic e s h ip . Por ex
am ple, unions o f lo c a l h a n d ic r a f t w orkers were formed in
4
I b i d .
c
For d e t a il e d d e s c r ip tio n s o f growth o f tra d e u n io n
ism in Sweden up to th e Second World War, see M arquis W.
C h ild s, T his I s Democracy. C o lle c tiv e B a rg a in in g in
S can d in av ia (New Haven: Y ale U n iv e rs ity P re s s , 195#),
pp. 1-19.
1870 a f t e r th e a b o litio n , o f th e g u ild s and th e p a s sin g o f
th e Economic Freedom O rdinance. The T y p o g ra p h er's Union
d id s e t up a c e n t r a l o r g a n iz a tio n ; w h ile C a rp e n te rs '
Unions in Stockholm in v ite d a l l o th e r unions j-q Join them
f o r a u n ite d f r o n t . In 1897, th e S can d in av ian Labor
Congress c a lle d f o r a c e n t r a l n a t io n a l tr a d e union con-
£
fe d e r a tio n to co o rd in a te th e work o f n a tio n a l u n io n s.
O ther f a c t o r s c o n trib u te d to th e fo rm atio n o f the
LO. F i r s t , r u r a l people had been m ig ra tin g to towns in
se a rc h o f b e t t e r jobs and h ig h e r wages. Secondly, in d u s
t r i a l i z a t i o n had c re a te d d is e q u ilib riu m by d is r u p tin g th e
fo rm e rly s t a t i c t r a d i t i o n a l s o c ie ty . P re v io u s ly , the
g u ild law s had r e g u la te d th e r e l a t i o n s h i p s between th e
em ployer and w orker. Employers were o f te n ty r a n n ic a l and
a u t o c r a t i c w h ile w orkers were more s u b s e rv ie n t and l e s s
m o b ile. A fte r th e i n d u s t r i a l r e v o lu tio n , w orkers became
more m obile and more conscious o f t h e i r environm ent.
F in a lly , th e S o c ia l D em ocratic P a rty gave to th e working
c la s s ,c la B S s o l i d a r i t y , o r g a n iz a tio n and fin a n c ia l su p -
7
p o r t. Workers found in th e S o c ia l D em ocratic P a rty a
^Thomas L. Jo h n sto n , C o lle c tiv e B a rg a in in g in
Sweden: A Study o f the Labour M arket and I t s I n s t i t u t i o n s
(London: George A llen & Unwin, L t d ., 1962), pp. 23-29.
7
F re d e ric F le is h e r , The New Sweden. The C hallenge
o f a D is c ip lin e d Democracy (New T ork: David McKay Com
pany , I n c . , 1967), C hapter 4 .
13
stro n g p o l i t i c a l arm in t h e i r s tr u g g le f o r i n d u s t r i a l
i d e n t i t y . In 1897 th e p a rty ashed f o r c o lla b o r a tio n on
union m a tte r s . I t in v ite d th e p r e s id e n ts o f n a t io n a l
unions to a g e n e ra l co n fe re n c e . D uring t h i s co n fe re n c e ,
a plan f o r a c e n tr a l o rg a n iz a tio n which would have n a tio n
wide in flu e n c e was drawn up. Each lo c a l union and n a tio n a l
union was to send r e p r e s e n ta tiv e s to t h i s c e n t r a l o rg a n i
z a tio n . Out o f t h i s conference o f unions emerged th e
C o n fed eratio n o f Swedish Trade Unions (1 0 ).
The 10
N a tio n a l Unions N a tio n a l Unions
! I
B ranches Branches Branches Branches
F ig u re 1
THE GOVERNM ENT OF UNIONS AT VARIOUS 1EVE1S
F ig u re 1 shows th e o r g a n iz a tio n a l s tr u c t u r e o f the
LO and i t s l i n e s o f communication from th e 10 down to i t s
component tr a n c h e s . At th e lo w est stra tu m of th e u n io n s'
totem pole a re th e unions a t lo c a l l e v e l s . Each lo c a l
union branch c o n s is ts o f a l l union members employed in a
l o c a l i t y . The a c t i v i t i e s o f th e b ranch in c lu d e a g i t a t i o n
and o r g a n iz a tio n a l work a t th e fa c to ry l e v e l , c o lle c tio n
o f union dues, su p p o rt o f member n e g o tia tio n s and a g re e
ments on wages and term s o f employment. These a c t i v i t i e s
a re c a r r ie d on by a board o f f iv e members w ith a chairm an,
s e c r e ta r y and t r e a s u r e r . The e le c te d members meet every
month.
Next a re th e n a t io n a l u n io n s. They com prise a s
s o c ia tio n s o f a l l w orkers employed in an in d u s try o r
t r a d e , and th ey form th e main u n its o f th e o rg a n iz a tio n .
A n a t io n a l union has a t r i p a r t i t e o r g a n iz a tio n —a
co n g re ss, assem bly, and e x e c u tiv e b o ard . The n a t io n a l
union congress m eets once every th r e e to fiv e y e a r s . Each
d e le g a te in th e congress i s e n t i t l e d to one v o te .
A n a t io n a l union has th e r i g h t to be a member o f
th e LO provided i t (1) re c o g n iz e s th e LO's o b je c tiv e s and
r u l e s ; (2) i s w illin g to c o l l e c t and pay minimum dues
from i t s branch members; (3) p e rm its th e open shop
15
g
system ; (4) g r a n ts to I t s members th e r i g h t and o b lig a
t io n to t r a n s f e r t h e i r membership i f th e need a r i s e s ; and
(5) concedes to th e e x e c u tiv e c o u n c il o f th e union th e
r i g h t to te rm in a te c o l l e c t i v e c o n t r a c ts and v e to r i g h t s
in o th e r b a r g a in in g q u e s t i o n s .
There a r e d e f i n i t e r e l a t i o n s between th e members
and th e u n io n s. I n d iv id u a l members have r i g h t s and d u t i e s .
I t I s t h e i r d uty to (1) work f o r harmony and p ro g re s s o f
th e u n io n ; (2) to be o b e d ie n t to th e r u l e s and d e c is io n s
o f th e u n io n ; and (3) to su p p ly th e l a t t e r w ith Inform a
tio n on w ages, w orking c o n d itio n s , e t c . They have th e
r i g h t t o (1) subm it m otions to th e c o n g re s s , (2) be
e l i g i b l e to ru n f o r e l e c t i o n to th e c o n g re s s , (3) o b ta in
l e g a l a id and su p p o rt in c o n f l i c t s , and (4) to be a b le to
d is c o n tin u e t h e i r m em bership.
At th e to p o f th e totem p o le s i t s LO w ith i t s t r i
p a r t i t e s t r u c t u r e — a c o n g re s s , a c o u n c il o f r e p r e s e n t a
t i v e s and a S e c r e t a r i a t . The S e c r e t a r i a t c o n s i s t s o f
t h i r t e e n members o f a f f i l i a t e d u n io n s . The chairm an,
v ic e chairm an and th e s e c r e t a r y a r e f u l l tim e p a id o f
f i c i a l s ; w h ile th e re m a in in g te n a re on a p a r t tim e b a s i s .
8 ^
The LO frow ns on th e c lo se d shop system a s a n t i -
s o c i a l i s t and a n ti- d e m o c r a tic . B e s id e s , th e 1936 Act
p ro v id ed p r o te c tio n f o r w orkers “a g a i n s t p r e s s u r e from
u n io n s to o r g a n iz e ." SAF, on th e o th e r hand, r e s i s t s th e
u nion shop system . I b i d . , p. 52 f f .
16
T his "body m eets once a week and ta k e s care o f d a ily
r o u tin e d u tie s such, as th e a d m in is tra tio n o f 10 a s s e t s ,
prom otion o f i n t e r n a t i o n a l c o n tr a c ts , shaping LO's p o lic y
on l e g i s l a t i v e p ro p o s a ls , exam ination and s e ttle m e n t o f
i n t e r n a l d is p u te s , and a id in g a f f i l i a t e d unions in
n e g o tia tin g wages and p ro p er w orking c o n d itio n s . Member
unions a re supposed to provide in fo rm a tio n to th e S ecre
t a r i a t re g a rd in g wage is s u e s , d is p u te s and th e number o f
members a f f e c t e d .
The C ouncil o f R e p re s e n ta tiv e s i s th e LO's c h ie f
e x e c u tiv e body. I t com prises th e members o f th e S ecre
t a r i a t p lu s r e p r e s e n ta ti v e s from n a t io n a l unions in th e
fo llo w in g o r d e r: one r e p r e s e n ta ti v e f o r ev ery o rg a n iz a
t i o n w ith 0-10,000 members; two r e p r e s e n ta ti v e s fo r every
o rg a n iz a tio n w ith 10,000-20,000 members; and one r e p r e -
9
s e n ta ti v e f o r each a d d itio n a l 20,000 members. I t m eets
tw ice a y e a r —in th e s p rin g and in th e autumn.
LO's supreme d ecisio n -m ak in g body i s th e Congress
and i t meetB every f iv e y e a r s . The 300 d e le g a te s to th e
Congress a re composed o f th e e n t i r e membership o f both
th e S e c r e t a r i a t and C ouncil o f R e p re s e n ta tiv e s , p lu s
d e le g a te s ap p o in ted by th e unions in p ro p o rtio n to t h e i r
J x _
9
R. H. Johnson, C e n tr a liz a tio n in Swedish Labor-
Management R e la tio n s : The In te r-C o n fe d e ra tio n Agreements
\u n p u b lish ed M a s te r's t h e s i s , U n iv e rs ity of C a lif o r n ia
a t Los A ngeles, 1955)» P- 13.
membership.
The main fu n c tio n s o f LO a r e : (1) to e x e rc is e
c e n tr a l le a d e r s h ip in th e tra d e u n io n s' e f f o r t s ; (2) to
sa fe g u a rd th e i n t e r e s t s o f wage e a rn e rs in th e la b o r
m arket and in th e economy; and (3) to c o l l e c t and p ro c e ss
s t a t i s t i c a l in fo rm atio n in o rd e r to o b ta in a b e t t e r p ic
tu r e o f tr a d e union a c t i v i t y and g e n e ra l la b o r m arket
c o n d itio n s .
Revenues o f LO come m ainly from dues c o lle c te d from
i t s members. The a s s e ts o f th e unions to t a l e d 511 m illio n
crowns in I9 6 0 , w hile LO's n e t a s s e ts were 37*5 m illio n
crowns. LO's funds a re in v e s te d m ainly in government
bonds and o th e r f l x e d - i n t e r e s t s e c u r i t i e s . E x p en d itu res
a r e m ainly on p r e s s , a d m in is tra tio n and e d u c a tio n a l
c o s t s .'1 '0
Membership o f LO
At th e b eg in n in g , LO's membership grew slo w ly — In
1900 th e r e were only tw enty-one member unions and 44,000
members. L a te r , th e re waB a ste ad y in c re a s e in membership.
R e cen tly th e r e has been a growing in c re a s e in th e number
o f fem ale m em berships. Over 80 p e rc e n t o f th e women em
ployed in h o t e l s , r e s t a u r a n t s and th e garm ent i n d u s t r i e s
1 1
belong to LO. LO's membership in I960 stood a t 1,485»700
10Thomas L. Jo h n sto n , op. c i t . , pp. 36-37
1XI b l d . . pp. 44-45.
18
1 p
members, f o r t y - f o u r u n io n s , and 7*930 b ra n c h e s .
O th er S u per-U nions: TOO and SACO
B e sid e s th e LO th e r e a r e th e Unions o f S a la r ie d
Employees (TOO) and th e Swedish C o n fe d e ra tio n o f P r o f e s
s io n a l A s s o c ia tio n s (SACO). These a re more y o u th f u l
su p e r-u n io n s than th e LO. TOO was o rg a n iz e d In 194-4- and
has f o r t y - f i v e d i f f e r e n t member u n io n s . SACO c o n s is ts o f
u n io n s o f la w y e rs , d e n t i s t s and e n g in e e r s . More w i l l be
s a id ab o u t th e TO O and SACO in C h ap ter IV; i t s u f f i c e s us
h e re to i n d i c a t e t h a t b o th s u p e r-u n io n s b elo n g to th e
l a b o r s id e o f th e m a r k e t . ^
The Development and O rg a n iz a tio n o f S u p e r-A s s o c ia tio n s :
SAP
The a c t i v i t i e s o f la b o r unions s t i r r e d em ployers
from t h e i r slum ber. In 1902, u nder th e I n s t i g a t i o n o f th e
S o c ia l D em ocratic P a r ty , la b o r u n io n s s tr u c k In d e fen se o f
14
th e f r a n c h i s e . T h is p o l i t i c a l s t r i k e com pelled em
p lo y e rs to o rg a n iz e i n o rd e r to c o u n te rb a la n c e th e grow ing
s t r e n g t h o f la b o r u n io n s . However, i t would be u n f a ir to
12I b l d . , pp. 9 2 - 1 1 2 .
13
Labour G a z e tte , op. c l t . , pp. 328-29.
14
H e rb e rt T In g s te n , Den Svenka S o u ald e m o k ra tle n s I
D e n tv e c k lin g 1 , 78 (Stockholm : I 9 4 1 ) . T r a n s la te d hy
Thomas L. Jo h n sto n , p . 69. See a ls o Labour G a z e tte , op.
c l t . , p . 329.
19
give a l l the c r e d i t to the Btrike o f 1902. Attempts to
organize employers had been made prev io u sly bu t d i f f i
c u l t i e s had b e s e t and f o ile d these atte m p ts. The s t r i k e
m erely co n so lid ated and galvanized employers in to a c tio n —
and the Swedish Employers' Confederation (SAP) was formed.
Unlike LO which groped fo r workable o b je c tiv e s and
o rg a n iz a tio n a l s tr u c t u r e , SAP quickly became a h ig h ly
c e n tr a liz e d and coordinated body w ith d e f in it e purpose and
government. As th e la r g e s t spokesman fo r management, SAP
i s p rim arily concerned w ith dealing w ith la b o r unions and
la b o r market problems. SAP aims to a s s i s t employers in
i n d u s t r i a l r e l a t i o n s , and I n d u s t r i a l r e l a t i o n s alone,
". . . b y welding them and t h e i r o rg a n iz a tio n s in to one
J o in t body, f u rth e rin g good labor-management r e l a t i o n s ,
a s s i s t i n g a f f i l i a t e d employers in n e g o tia tio n s w ith
organized la b o r, and providing compensation to a f f i l i a t e d
employers fo r lo s s e s caused by la b o r d is p u te s .
Member a s s o c ia tio n s have to co n su lt the s t a f f
o f f i c e r s o f SAP before signing any c o lle c tiv e agreement.
Nonconformists a re s t r i c t l y p en a liz ed . I t is a lso msnda-
to r y th a t p a rtn e rs co n su lt SAP b efore the t h r e a t o f a
i s
-'Thomas L. Johnston, op. c i t . , pp. 70-71.
1 6
P a rtn e rs are in d iv id u a l companies or employers.
Members are a c o lle c tio n of p a rtn e rs w ith in an in d u stry .
20
s t r i k e o r a lo c k -o u t. Any lo c k -o u t approved by the
General Council I s binding on a l l member a s s o c ia tio n s and
p a r tn e r s . Members can re sig n or be asked to leave on s ix
m onth's n o tic e . C ontroversies between SAP and members or
p a rtn e rs a re s e t t l e d by th ree a r b i t r a t o r s appointed under
th e A r b itra tio n A ct . 17
O rganization of SAP
SAP i s organized along a t r i p a r t i t e s tr u c tu re
s im ila r to the LO. There are (1) the General Assembly
(STAMMA) . (2) the General Council (PULEMKTIGE) . and (3)
the Executive Board (STYRELSEN) .
As the organ of power, the General Assembly meets
once a y ear to form ulate plans and p o lic ie s f o r the
o rg a n iz a tio n . I t c o n s is ts o f r e p r e s e n ta tiv e s from con
s t i t u e n t a s s o c ia tio n s . Each member a s s o c ia tio n is en
t i t l e d to one r e p re s e n ta tiv e f o r every 3 ,0 0 0 employees i t
has. Voting i s weighed according to f in a n c ia l l i a b i l i t y .
The General Council which meets more o ften d eals
w ith c u rre n t problems o f the la b o r m arket. I t i s composed
of one r e p r e s e n ta tiv e f o r every member a s s o c ia tio n and an
a d d itio n a l r e p r e s e n ta tiv e fo r every 2 0 ,0 0 0 employees i t
h a s.
The Executive Board i s the r e a l ad m in isterin g
1 7I b l d . , pp. 7 1 -7 2
21
a u th o rity . I t handles such d e ta ile d fu n c tio n s as o rg a n iz
in g , su p e rv isin g members as w ell as deciding on d i r e c t
a c tio n fo r the SAP.
The f in a n c ia l s tre n g th of SAP emanates from annual
dues and mutual in su ran c e. Annual dues are le v ie d on
p a rtn e rs in proportion to t h e i r wage and s a la ry b i l l s of
the previous y e a r. The dues thus c o lle c te d are used to
defray o p eratin g expenses of the o rg an iz atio n and any
su rp lu s Is placed in the Insurance Pund. (This fund i s
used as a f i r s t lin e o f defense in la b o r c o n f l i c t s . ) In
H Q
1961, the Insurance Pund stood a t 165 m illio n crowns.
The Mutual Insurance Pund is s e t up to meet emergency
lo s s e s . Each p a rtn e r Is to supply 2 p ercen t o f I t s p re
vious wage and sa la ry b i l l each y e a r. This Pund Is kept
in a Guaranty Pund. In times o f emergency, such as lo c k
out or s t r i k e s , the General Council draws from the Guaranty
Pund to compensate fo r lo s s e s o f the firm s. The Pund had
19
amounted to 300 m illio n crowns by 1 9 6 1 .
SAP developed w ith much more speed than the LO.
I t s members quickly r e a liz e d the need f o r, and the b e n e fits
accruing from, a u n ite d f r o n t . In s tr u c tu r in g i t s o rg a n i
z a tio n , SAP aimed a t e f fic ie n c y and n o t a t dem ocratic
X8
Thomas L. Johns&on, op. c l t . , p. 74*
19
I b i d . . p. 74.
22
20
id e a ls . P a rtn e rs and members are t i g h t l y held to g eth er
so as to achieve s o l i d a r i t y in b arg ain in g . I t s l a r g e s t
members are the Metal Trades Employers* A sso ciatio n , the
General Group B uilding Employers' F ed eratio n , and the Iron
and S te e l Works A sso c iatio n . These a s s o c ia tio n s alone
account fo r 52 p ercen t of SAP's membership.
This concludes the in tro d u c tio n o f the g ia n t a s
s o c ia tio n s on both sid e s of the la b o r m arket. The next
se c tio n w i l l deal w ith re g u la to ry mechanisms which hold
the two combatants in balance.
21
Legal S ta tu s o f the A sso c iatio n s
Labor laws have been r e l a t i v e l y few in Sweden,
Besides the a c ts safeguarding the r i g h t s to organize and
bargain c o l l e c t i v e l y , the Mediation A cts, the C o llec tiv e
C ontracts Act and the Labor Court Act, and the Basic
Agreements are the only pieces o f l e g i s l a t i o n worthy of
m ention.
The p au c ity of la b o r l e g i s l a t i o n i s not due to the
indolence or in d iffe re n c e o f the Riksdag. On the con
t r a r y , the Riksdag has made se v e ra l attem p ts to pass laws
to r e s t r i c t economic a c tio n s o f the s u p e r-a s s o c ia tio n s .
20
F re d e ric F le ie h e r, op. c i t . , p. 56.
21
Axel A d le rc re u tz , "Some F eatures o f Swedish Col
l e c t i v e Labour Law," Modem Law Review (London), Vol. 10,
No. 2, 19^7, PP. 137 f f .
23
That the attem pts have been f u t i l e can be a t t r i b u t e d to
the follow ing causes. F i r s t , both LO and SAF have been
ab le to dem onstrate th a t they can re g u la te th e i r I n te r n a l
and e x te rn a l a f f a i r s w ithout a lie n a tin g s o c i e t y 's goodw ill.
I n te r n a l c o n s titu t io n a l arrangements have been devised,
and In 1907 LO disputed the need fo r le g a l in te rv e n tio n in
22
i t s r e l a t i o n s w ith employers. Secondly, the g ia n t a s
s o c ia tio n s found from hard experience th a t th e re was too
much delay In the J u d ic ia l process. For in s ta n c e , I t took
the co u rts s ix years ( 1 9 0 9- 1 9 1 5) to ren d er a d ecisio n on a
23
la b o r d is p u te .
Rights o f A ssociation and C o lle c tiv e Bargaining (1936)
The r i g h t to organize was f i r s t guaranteed by
24
Clause 16 o f the Economic Freedom Ordinance o f 1864.
Furtherm ore, LO and SAF recognized th a t i f they did not
re s p e c t each o th e r 's r i g h t s o f a s s o c ia tio n , the law would
in te rv e n e . Accordingly, In the December, 1906 Compromise,
they agreed to th is e f f e c t . However, the r i g h t o f a s
22
LO B e ra tte ls e fo r period A p ril 1906-Aprll 1907*
pp. 31-33.
23
Folke Schmidt and Henry Heineman, "Enforcement o f
C o lle c tiv e B argaining Agreements In Swedish Law," Univer
s i t y of Chicago Law Review. Vol. XIV, February, 1947* p. 3.
24
Thomas L. Jo h n sto n .on. c i t . . pp. 124-129.
24
so c ia tio n was le g a liz e d by the 1936 Act (No. 506). The
Act s tip u la te d th a t employers and employees should have
the r i g h t to Join a s s o c ia tio n s , f1. . . to enjoy membership,
to work fo r the form ation o f an a s s o c ia tio n , and to work
on b eh a lf o f the a s s o c i a t i o n .1 1 ^
Chapter 2 of the 1936 Act safeguarded the r i g h t to
bargain c o l le c tiv e ly or n e g o tia te in d iv id u a lly . I t also
made i t mandatory f o r in d iv id u a ls o r t h e i r r e p r e s e n ta
tiv e s to accept o f fe r s to n e g o tia te and to be prepared to
re s o lv e problems of c o n ten tio n .
Mediation Acts (1906 and 1920)
The M ediation Act was passed to re s o lv e non-
J u s t i f i a b l e problems. As i t s name im p lie s, the M ediation
Act created m ediation machinery. The government appointed
d i s t r i c t m ediators whose function i s to c o n c i l i a t e .
M ediators are c a lle d upon to enable the p a r t i e s to a r r iv e
a t a s e ttle m e n t. They can persuade the d is p u ta n ts to
a d j u s t, concede and re -e v a lu a te t h e i r cases so th a t an
accep tab le so lu tio n w i l l evolve, but they can n e i th e r make
awards nor dispense J u s tic e . They are appointed f o r a
s p e c if ic p erio d ; however, they can continue w ith t h e i r
d u tie s i n d e f i n i t e l y as long as the p a r t i e s are pleased
w ith t h e i r work. The a c t i v i t i e s o f the m ediators are
c o n tro lle d by the M ediation O ffice which i s under the
25
Department of S o cia l A ff a ir s .
The C o lle c tiv e C ontracts and Labor Court Acts (1928)
The C o lle c tiv e C ontracts and Labor Courts Acts
were intended to reso lv e j u s t i c i a b l e d is p u te s . The Col
le c ti v e C ontracts Act s t i p u la t e d t h a t both p a r t i e s (SAP
and LO) should n o t r e s o r t to force on disagreem ents over
th e a p p lic a tio n or i n t e r p r e t a t i o n o f a c o n tra c t, but
r a th e r to attem pt fu rth e r n e g o tia tio n s . The Act fu rth e r
provided t h a t :
1. C o lle c tiv e c o n tra c ts and n o tic e of term in atio n
o f c o n tra c ts should be in w ritin g .
2. A bundle of r i g h t s and o b lig a tio n s accompany
each c o n tra c t.
3. A Labor Court should be s e t up to p o lic e and
enforce c o lle c tiv e c o n tra c ts .
P rovision 1 o f the Act is ex p lan ato ry enough, but
the second and th ir d p ro v isio n s need e lu c id a tio n . The
second p rovision b rin g s in to c le a r focus th e r i g h t s and
o b lig a tio n s which accompany each c o n tra c t. I t perm its use
o f d i r e c t a c tio n and economic sa n ctio n s un less s p e c i f i c a l
l y s ti p u l a t e d . I t does n o t p r o h ib it the r i g h t to sympa-
26
J u s t i c i a b l e d isp u te s are d isp u te s which a r is e from;
p ro v isio n s o f a s t a t u t e o r c o n tra c t. N o n ju s tifia b le d i s
putes are disagreem ents over m a tte rs which are n o t reg u
la te d by a c o n tra c t or a s t a t u t e . U sually, th e outcome o f j
a n o n J u s tif ia b le Is determined by economic power such as j
supply of and demand f o r la b o r, co st o f l i v i n g , and demand ;
e l a s t i c i t y f o r the f i n a l products.
26
t h e t l c a c tio n such as lo ck -o u t and secondary bo y co tt.
A p a rty should help o th ers even where i t does not gain
anything i t s e l f . This device has been widely used by SAF
to b u ttr e s s and widen i t s f r o n t.
A c o lle c tiv e c o n tra c t i s binding on a l l the
p a r t i e s and t h e i r members, from the n a tio n a l fe d e ra tio n s
to in d iv id u a l employers and employees, ir r e s p e c tiv e of
whether the member Joined the a s s o c ia tio n before or a f t e r
th e c o n tra c t was signed. D iscontinuing membership in an
a s s o c ia tio n does n o t exonerate a member from the o b lig a
tio n s o f a c o lle c tiv e c o n tra c t. An a s s o c ia tio n or member
i s p ro h ib ite d from using or a s s i s t i n g a p a rty in using
economic san ctio n s w hile the a s s o c ia tio n or member i s
bound by a c o lle c tiv e agreement. Any a s s o c ia tio n which is
a d i r e c t p a rty to an agreement i s obliged to "prevent"
i t s members from indulging in any i l l e g a l d i r e c t a c tio n .
These o b lig a tio n s have been In co rp o rated w ith a view to
p ro h ib itin g unlawful stoppages and s tr ik e s as w ell as
promoting peace.
27
The peace i s enforced by a Labor Court which was
s e t up in 1928. With i t s h ead q u arters in Stockholm, the
Labor Court i s e n tru s te d w ith a d m in isterin g d isp u tes
which a r i s e out o f e x is tin g c o lle c tiv e c o n tra c ts a f t e r
i n i t i a l n e g o tia tio n s have f a i l e d . I t would be a m istake
27
F re d eric F le is h e r, op. c l t .. p. 55.
27
on our p a r t to re g a rd th e Labor Court as a c o u rt o f con
c i l i a t i o n . I t does n o t " a d ju s t d if f e r e n c e s o f o p in io n ,
o r compromise o r c o n c i l i a t e " ; r a t h e r , I t a d ju d ic a te s "on
what c o l l e c t i v e c o n t r a c ts mean in th e l i g h t o f th e Act
28
when d is p u te s about them a r i s e . " P r e c i s e l y s t a t e d , th e
Labor Court i s m ainly I n t e r e s t e d in s e e in g t h a t th e r i g h t s
o f th e p a r t i e s a r e n o t overlooked o r tampered w ith .
The Labor Court w i l l only tak e ca se s when the
p a r t i e s concerned have exhausted every p o s s ib le p r e lim in a ry
avenue o f r e c o n c i l i a t i o n . A d i s s a t i s f i e d p a rty b rin g s a
w r i t t e n summons a g a in s t th e d e fe n d a n t, s t a t i n g th e c i r
cum stances, i t s demands, and so on. The d efen d an t r e p l i e s
to th e a c c u s a tio n s In w r i t i n g and both com batants a re c a l l
ed to th e main h e a rin g o f the c o u r t. A f te r th e case i s
h ea rd and th e v e r d i c t pronounced, th e d e c is io n o f th e
c o u r t i s m ailed to th e p a r t i e s . D ecisio n s o f the c o u rt
a re f i n a l and t h e r e i s no a p p e a l. The g u i l t y p a r ty i s
l i a b l e f o r c i v i l damages and r e s t i t u t i o n . I n d iv id u a l em-
PQ
p lo y e e s cannot be f in e d more than 2 00 crowns, ^ b u t an
em ployer o r a f e d e r a t i o n can be fin e d more than 2 0 0 crowns.
The Labor Court i s a j u d i c i a r y body o f la w .e x p e rts
(two in number) and h as s p e c i a l i s t s in la b o r economics
28
Thomas L. J o h n s to n .op. c l t . . pp. 155-159-
28
( s ix in number). The chairman, vice-chairm an and a th ir d
independent member are appointed f o r s p e c if ic periods by
30
the government. Of the remaining f iv e members, two are
appointed by LO, two by SAF and one, a " s p e c ia l member,"
by TOO. 31
An a p p r a is a l o f the c o u rt shows evidence o f im
p a r t i a l i t y and balanced judgments. Labor has found the
co u rt a v alu ab le co n trib u tio n to the promotion o f indus
t r i a l peace and has h e a v ily r e l i e d on i t .- 3^ The s i g n i f i
cant r o le of the co u rt has been s u c c in c tly expressed by
E. D. K a r rf e ld t, tr e a s u r e r o f the B uilding Workers' Union:
"The Labour Court has been accepted and has gained a su r
p r is in g amount o f goodwill i f one r e c a l l s the o p p o sitio n
then. I t has worked p e r f e c t ly from th e s t a r t and no voice
i s now ra is e d in favour o f i t s a b o l itio n . I t s judgments
are re sp e c te d , although the lo s in g sid e n a t u r a lly
33
grum bles."
A major c r iti c is m o f th e Labor Court i s i t s exces-
30
Labour G a z e tte , o p. c l t . . pp. 327-330.
31
The th i r d Independent member i s n o t a lawyer or
re p r e s e n ta tiv e of employers and employees' i n t e r e s t s .
32
P e rsp ec tiv e on Labour Conditions in Sweden by
Svenska A rbetB givareforeningen (2nd e d .) , 1962, p . 54.
33
I t was rep o rte d In Morgontldningen, June 24,
1953, and reproduced in Thomas L. Johnston, op. c l t . .
pp. 1 6 2- 1 6 3 .
29
sive r e lia n c e on p rece d en ts. "Once the Labour Court has
taken up a p o s itio n , i t i s d i f f i c u l t to b rin g about
changes.
The Basic Agreement (1938)
Unlike th e above P arliam entary Acts, th e Basic
Agreement was the product of la b o r and management. The
Basic Agreement between SAP and LO made i t unnecessary fo r
f u r th e r government in te rv e n tio n in la b o r r e l a t i o n s . I t
provided o p p o rtu n itie s f o r the two lead in g o rg an iz a tio n s
to meet fo r to p -le v e l c o n s u lta tio n s ; and i t created a
machinery fo r re s o lv in g J u s t i f i a b l e and n o n J u s tifia b le
d isp u te s w ithout r e s o r tin g to open c o n f l i c t s .
The B asic Agreement did n o t evolve w ithout s t r i f e .
By the t h i r t i e s , the ^strengths o f LO and SAP had grown
enormously; and concomitant w ith t h i s phenomenal growth
were lab o r c o n f lic ts and c o n tro v e rs ie s . S tr i k e s , boy
c o tts and lo c k -o u ts were becoming r i f e . S o cia l le a d e rs
were clamoring fo r government In te rv e n tio n . N eutral
p a r t i e s th a t were no t d i r e c t l y Involved In d isp u tes were
being coerced. The Riksdag was f e a r f u l th a t SAP and LO
would crush so c ie ty between the S c y lla of plutocracy and
th e Oharybdis o f the p r o l e t a r i a t . To a v e rt such a c a ta
stro p h e, the Nothin Commission was appointed in 1934 to
in v e s tig a te the s i t u a t i o n . In i t s r e p o r t, the Nothin Com-
p 247 ^ F o l k e Schmidt, T J a n s te a v ta le t (Stockholm, 1959),
m ission suggested a v o lu n tary c o lla b o ra tin g agreement be
tween the d is p u ta n ts ; such agreement would be s im ila r to
the Norwegian Basic Agreement. This suggestion was warmly
welcomed by LO and SAB f o r se v e ra l reaso n s. F i r s t , they
d is lik e d l e g i s l a t i o n and p re fe rre d more f le x ib l e mutual
agreem ents. Secondly, the S o cial Democratic Government had
a lre a d y intim ated to LO th a t i t had a choice of government
l e g i s l a t i o n and s e l f government. T h ird ly , the depression
of the t h i r t i e s had in d ic a te d t h a t i t was high time the
combatants buried t h e i r spears and s e t t l e d f o r peaceful
c o lla b o r a tio n .
In the spring o f 1936, LO took the i n i t i a t i v e by
i n v i t i n g SAF to a d isc u ssio n . "We made a t l e a s t one
se rio u s atte m p t," said LO, "to take up the problem o f
r e l a t i o n s between the two sid es and t h e i r methods In the
many asp e c ts of labour r e l a t i o n s , so th a t the wishes and
«35
views o f both s id e s can be c r y s t a l l i z e d ." Out of th is
d isc u ssio n came th e "Salts.lobaden Agreements. " or commonly
36
known as the Basic Agreement. W e s h a ll f i r s t o u tlin e
the b asic p ro v isio n s, and then d isc u ss them f u l l y .
35
LO k o n g r e s B - p r o t o k o ll, 1936, p p .'305-306. Also
tr a n s l a te d in Thomas L. Joimston. op. c i t . , p. 173.
36
S altsjo b ad en i s the r e s o r t a re a where th e d is
cussions took p lace.
31
37
P rovisions o f the Basic Agreement
The Basic Agreement provided fo r
1. The estab lish m e n t of a Labor Market Council to
consider questions on la b o r agreements.
2. An o b lig a to ry n e g o tia tio n between SAP and LO.
3. R e s tr ic tio n s on coercive a c tio n .
4. P ro h ib itio n of a c tio n a g a in s t t h ir d p a r t i e s .
5. R egulations reg ard in g l a y - o f f o f w orkers.
6 . Machinery fo r s e t t l i n g d isp u te s which th re a te n
e s s e n t i a l public s e rv ic e .
The Labor Market Council which was crea ted as a
r e s u l t of the Basic Agreement handles gen eral questions
re g ard in g la b o r, such as the term ination o f c o n tra c ts ,
l a y - o f f s , h ir in g , e t c . , and c o n f lic ts which th re a te n public
s e rv ic e s . The Council serves as an a r b i t r a t i o n board con
s i s t i n g o f s ix im p a rtia l judges appointed by SAP and LO
fo r a period o f th re e y e a rs . D ecisions which are rendered
by the a r b i t r a t i o n board are no t b in d in g . The Council has
no power o f i t s own except th a t of moral persuasion be
cause th e u ltim a te a c tio n r e s t s w ith LO and SAP.
The Basic Agreement makes n e g o tia tio n s between LO
and SAP o b lig a to ry . I t a lso provides procedures fo r
37
Most o f t h i s d isc u ssio n on B asic Agreements is
drawn from B e r t i l Kugelberg, "The S altsjobaden Agreements
Between the F ederation o f Swedish Employers and the Con
fe d e ra tio n of Swedish Trade Unions," Skandlnaviska Banken
Q uarterly Review (Stockholm), Vol. XXVII, No. 4, October,
1953, p. 9^ f f .
carry in g out the n e g o tia tio n s . R e s tr ic tio n s are placed on
the use o f d i r e c t a c tio n , such as lo c k -o u t, "blockades, or
s t r i k e s . ^ R e ta lia tio n a f t e r se ttle m en t of a d isp u te is
"banned by Chapter 4 of the agreement. N e u tra l p a r tie s or
r e lig i o u s and p o l i t i c a l p a r tie s which give testim ony in a
la b o r d isp u te are p ro te c te d . The Agreement gives complete
p ro te c tio n to small businessmen who h ir e members o f t h e i r
own fam ily.
Third p a r t i e s who are n o t d i r e c t l y involved in a
d isp u te are p ro te c te d from coercive a c tio n s . D isputants
are expected to r e f r a i n from using economic sa n ctio n s
a g a in s t n e u t r a l p a r t i e s which remain n e u t r a l during a
la b o r c o n f l i c t .
The em ployers 1 p re ro g a tiv e over h i r in g and f i r i n g
38
o f workers was recognized by la b o r in 1906. N everthe
l e s s , in e x e rc isin g t h i s r i g h t , employers are expected to
show r e s p o n s i b i l i t y . The B asic Agreement makes i t manda
to ry th a t any in te n tio n to l a y - o f f or f i r e an employee
must be relay ed to a lo c a l union two weeks in advance,
provided the employee in qu estio n has been with th e com
pany f o r a t l e a s t nine months. Unions can r e f e r such
cases to n a tio n a l fe d e ra tio n s or to the Labor Market
‘ 'Council.
Paul H. Norgren, The Swedish C o lle c tiv e Bargain
ing System (Cambridge, M assachusetts”: Harvard U n iv ersity
P re ss, 19^1), pp. 88-89.
33
D isp u te s which seem to th r e a te n e s s e n t i a l p u b lic
i n t e r e s t s are to r e c e iv e imm ediate a t t e n t i o n by LO, SAP
and th e Labor Market C o u n c il, I t i s th e r e s p o n s i b i l i t y
o f th e Labor M arket C ouncil to a tte m p t to fin d a s o lu
tio n o r persuade th e p a r t i e s to ag ree on a s o l u t i o n .
Thus th e B asic Agreement and P u b lic Acts provided
a framework f o r labor-m anagem ent n e g o t i a t i o n . F u r th e r
more, th e y gave d e t a i l e d p ro ced u res f o r b a r g a in in g .
S ince LO and SAP p r e f e r n e g o t i a t i o n s to expensive l i t i
g a t i o n s , th e y found in th e above p u b lic and p r i v a t e a r
rangem ents a m achinery f o r s e t t l i n g d is p u te s as w e ll as
prom oting la b o r peace.
The B a rg a in in g P ro cess
C o lle c tiv e b a rg a in in g I s conducted on a n a t i o n -
39
wide b a s i s . The c o n t r a c ts so made a re broad enough
f o r in d iv i d u a l companies to make a d ju stm e n ts and m odi
f i c a t i o n s . Labor c o n t r a c ts e x p ire around January o r In
th e s p r in g . I f th e p a r t i e s a re s a t i s f i e d w ith th e e x i s t
ing c o n t r a c t s , they w i l l a u to m a tic a lly adopt th e con-
39
B e r t i l K ugelberg, " C e n tr a lis e d o r D e c e n tra lis e d
Wage N e g o t i a t i o n s ," S k an d in av lsk a Banken Q u a rte rly Review.
Vol. XXXII, No. 4 , O c to b e r,"1951, pp. 94-95.
34
t r a c t s fo r the next period. However, i f th e re i s d i s
s a t i s f a c t i o n from one p a rty , a new c o n tra c t w i l l he
n e g o tia te d .
This i s the bargaining p ro cess. P rio r to the
e x p ira tio n o f the c o n tra c ts , u su a lly th re e months b efo re,
union and management w ill hold c o n tra c t conferences. In
the u n io n 's camp are d e leg a tes from the branches, the
n a tio n a l unions, and r e p r e s e n ta tiv e s of 1 0 ; in manage
m ent's camp can be seen r e p r e s e n ta tiv e s o f SAP, the
Member A sso ciatio n s and the P a r tn e r s . la b o r d isc u sse s
e x is tin g c o n tra c ts and, upon t h i s d isc u ssio n , draws i t s
new demands. The new demands a re presented to manage
ment. The l a t t e r holds d isc u ssio n s on l a b o r 's new
demands and any new ideas th a t i t s members may lik e to
p re s e n t. Prom th ese d isc u ssio n s , management prepares
i t s b r ie f s fo r the coming n e g o tia tio n . Unlike 10, SAP
tends to have stro n g e r co n tro l over c o n tra c ts concluded
by i t s members; i t also empowers i t s d e le g a te s to
40
bargain w ithout any re fe re n ce back to the P a rtn e rs .
lu r in g the f i r s t se ssio n , r e p r e s e n ta tiv e s from
4o
Paul H. Norgren, op. c l t . , Chapter IX; also
Richard A. l e s t e r , "R eflec tio n s on C o lle c tiv e B argain
ing in B r ita in and Sweden," I n d u s t r i a l and la b o r R ela
tio n s Review, Vol. 10, No. 3, A p ril, 1957» PP* 400-401.
35
both sid es of the la b o r market in tro d u ce t h e i r demands
in an atmosphere of mutual r e s p e c t. D iscussions also
touch on the general economy of the country and the
r e l a t i v e stre n g th s o f demand fo r i n d u s t r i a l products.
The f a c t i s th a t both lab o r and management have recog
nized th a t hig h er gains are a d i r e c t fu n ctio n of in
creased production and a healthy economy.
A fter the f i r s t se ssio n , the n e g o tia tio n assumes
a d i f f e r e n t shape. B argaining becomes i n d i r e c t and only
small d eleg atio n s of spokesmen from each side meet. The
rem aining d eleg ates adjourn to se p arate rooms. I t is
p o ssib le th a t a d ir e c t agreement may be reached a t th is
sta g e , thus ending the n e g o tia tio n . I f no agreement is
reached, the p a r tie s may ask an im p a rtia l chairman to
lead the n e g o tia tio n s . (The chairman i s n o t an o f
f i c i a l m ediator created through the m ediation machinery;
in s te a d , he i s somebody c a lle d upon by D O and SAP to
a c t as a c a t a l y s t . )
A th ir d session i s convened when th e re i s a dead
lo ck in the n e g o tia tio n . I t is a t th is stage th a t one of
th e e ig h t o f f i c i a l d i s t r i c t m ed iato rs, whom we discussed
41
above, Is c a lle d in to a s s i s t . The m ediator t r i e s to
^ S e e page 24 under Mediation Acts.
speed the pace of the n e g o tia tio n by c o n fe rrin g now with
one le a d e r , now w ith a second, and now w ith both. The
n e g o tia tio n may l a s t throughout the n ig h t and in to the
follow ing day. Through the process of concessions and
c o lla b o ra tio n s , an acceptable c o n tra c t w i l l be con
cluded. Both sid e s w ill then t e l l the m ediator o f t h e i r
agreement, while th e employers' d eleg atio n appends i t s
sig n a tu re to the c o n tra c t.
Recently LO and SAP have been ab le to conclude
A p
c o n tra c ts w ithout the aid o f a m ediator. Whenever
th ere i s a deadlock, small committees w i l l be asked to
fu rth e r in v e s tig a te the bone o f c o n te n tio n . The b a rg ain
ing system is s t i l l evolving and the p a r tic ip a n t s are
co n sta n tly developing new procedures f o r n e g o tia tio n s .
Once n e g o tia tio n s have been concluded, recom
mendations w ill be sent to the n a tio n a l and lo c a l
branches of LO, w hile SAP r e la y s the same to ItB p a rtn e rs
and member a s s o c ia tio n s . I t i s o b lig a to ry for SAP and
Svenska A rg etsg iv arefo ren in g en , op. c i t . ,
P. 5 0 .
37
LO to watch th a t the recommendations are followed by
t h e i r members as w ell as by o u ts id e rs such as TOO and
SACO. Thus, i t i s safe to d escrib e the n e g o tia tio n
process as economy-wide b arg ain in g .
I t i s p o ssib le t h a t n e g o tia tio n s w i l l f a i l des
p i t e the se v e ra l attem pts o f a m ediator to re so lv e the
d if fe re n c e s . In such c a se s, a m ediator w i l l d ec lare the
n e g o tia tio n s deadlocked and leave m a tte rs to run t h e i r
own n a tu ra l co u rse. LO or SAP w ill give a t l e a s t a
week's n o tic e of d i r e c t a c tio n . Frequent use o f d ir e c t
a c tio n has been r a r e due to the awareness of the e x i s t
ence of equally powerful forces on the o th e r side o f
the lab o r m arket. This forebearance has g r e a tly c o n t r i
buted to the maintenance of an enviable record of lab o r
43
peace sin ce 1934. I f open c o n f lic ts should occur,
th e re would be no breach of law and order by workers
n o r use o f s tr ik e -b r e a k e r s by employers. The Basic
43
I b i d . . p. 52. Open c o n f lic ts f la re d up in 19^5
and 1953 in the m etal and food products in d u s t r ie s ,
r e s p e c tiv e ly .
Agreement makes la b o r continue to perform e s s e n ti a l
44
work, thus safeguarding p la n t and m a te r ia ls .
44
I b id .
39
CHAPTER I I I
FEM ALE W ORKERS AND WHITE-COLLAR W ORKERS IN SW EDEN
Introduction
The chapter deals w ith two larg e se cto rs of the
labor market: women and w h ite -c o lla r workers. The f i r s t
portion w ill d iscu ss women workers and the second portion
w ill deal with w h ite -c o lla r workers. Women workers are
the w orld's la r g e s t m inority group which, lik e many a
m inority group, tends to be discrim inated a g a in st. Women
are keenly sought a f t e r in Industry during the upswing of
the business cycle when demand for i n d u s t r ia l output is
high, but are la id o ff In la rg e numbers during the down
tu rn o f the c y c le .^ At work, women are no t on a par with
men, being rele g ated by s o c ia l and psychological fa c to rs
to the lower paid jobs.
Let us bear in mind th a t female servitude In
western s o c ie tie s i s voluntary because women have con
scio u sly or unconsciously acquiesced and collaborated in
t h e i r own e x p lo ita tio n . I f they re s e n t th is serv itu d e
they can, through democratic means, vote a g a in st i t , and
no s o c ia l b a r r ie r can prevent them from achieving e q u a lity
■^During the 1930 mass unemployment in Sweden, women
were compelled to turn over t h e i r jobs to unemployed men.
w ith men. The cold t r u t h Is th a t they work because they
have t o , and Swedish women do n o t d i f f e r In t h i s ana
c h r o n is tic image of womanliness.
Sweden has t r i e d to change t h i s . A ccordingly, we
s h a ll attem pt an ex p o sitio n of t h i s change by analyzing
the evolution of female employees, t h e i r r e l a t i v e p o s i
tio n s and wages, as w ell as th e se v e ra l programs adopted
by the government to u p l i f t female workers from economic
re p re s s io n .
Women Workers in Sweden
Female Employment: I t s Development
P r e - I n d u s tr ia l Period
Before the dawn of i n d u s t r i a l i z a t i o n in Sweden when
economic development was a t a s t a n d s t i l l , the number of
g a in fu lly employed females was very sm all. This low
percentage o f women in the la b o r fo rce was brought about
m ostly by s o c ia l and economic f a c t o r s . The p re v a ilin g
mores and customs ta u g h t th a t the primary function o f
women in a s o c ie ty was the production o f contented men and
2
h e a lth y b a b ie s. In childhood, g i r l s were prepared mainly
f o r m arriage and r a i s i n g c h ild re n . Few g i r l s had an
2
F re d eric F le is h e r , The Hew Sweden: The Challenge
of a D isc ip lin e d Democracy (New York: DavlcTHcKay com
pany, I n c ., 19&7J* pp. 240-42.
. J
elem entary education and s t i l l fewer g i r l s went on to
h ig h e r education or took s p e c ia l and v o c a tio n a l tr a in i n g .
A few fo rtu n a te g i r l s , u su a lly c h ild re n o f upper c la ss
fa m ilie s , stu d ied t r a d i t i o n a l courses such as nursing and
te a c h in g . G irls who came from the lower c la s s e s were
forced by economic and s o c ia l n e c e s s ity to t o i l alongside
w ith the men in the f i e l d s .
As e a rly as 1864, a law was passed making i t pos
s ib le fo r Swedish women to go in to a b u sin ess of t h e i r own
3
and to earn a l i v i n g . One would expect t h a t t h i s law
would have encouraged women to go in to more lu c r a tiv e oc
cu p atio n s. This was no t the case, however. Since a g r i
c u ltu re was the predominant in d u stry in such t r a d i t i o n a l
s o c i e t i e s , a g r e a te r percentage o f the women stayed in the
r u r a l area s and worked on the farm s. At th e same tim e,
th e le v e l o f economic development forced many women to
spend a g r e a te r p ro p o rtio n of th e day a t home e i t h e r caring
fo r the s ic k , sewing garm ents, tak in g care of c h ild re n , or
4
doing o rd in ary housework. Domestic occupations thus ab
sorbed the remaining p o rtio n of th e working women. Those
who took advantage o f th e 1864 law s t i l l stayed in the
t r a d i t i o n a l occu p atio n s. Even in a l a t e r period when o th er
3
"The S ta tu s o f Women in Sweden," Labour G a z e tte ,
Department o f Labour, Canada, Vol. LXVIII, June, 1968, Eo.
6 , p. 338.
42
l e g i s l a t i o n perm itted th e i r employment in d e n tis tr y and
therapy, many women stayed away, having learn ed t h a t sub-
m issiveness, modesty and a subordinate ro u tin e work
e l i c i t e d a higher reward in th e long run than com petition
w ith men in a world in which men were the m asters. How
ever, t h i s s t a t i c so c ie ty was f a s t coming to an end be
cause the I n d u s t r i a l Revolution was sweeping the European
c o n tin e n t.
Period of I n d u s tr ia li z a t io n and U rbanization
The t r a n q u i l , s t a t i c , t r a d i t i o n a l so c iety was d i s
rupted by the Swedish I n d u s t r i a l R evolution. A c o n sid e r
able s o c ia l and economic change took place in the n in e
te e n th century, and t h i s forced women to Join the la b o r
fo rc e . I n d u s t r i a l i z a t i o n a ls o brought changes in to female
occupational a c t i v i t i e s . F i r s t , the proportion of female
farm workers and domestic workers decreased as the r u r a l
population m igrated to the c i t i e s . More women were placed
in f a c t o r ie s and more found them selves in r e t a i l tra d e and
w h ite -c o lla r Jobs. By 1920 th e re were 143,000 female
i n d u s t r i a l workers. As i n d u s t r i a l i z a t i o n took i t s ra p id
s t r i d e s , so did the siz e of the female la b o r fo rce; in
c
1950 the number had Jumped to 196,000.
But t h i s i s not a l l . Twentieth century Sweden has
^Agda R ossel, "The Employment of Women in Sweden,"
I n te r n a tio n a l Labour Review. Vol. LXXI, Mo. 3, March,
1955, P. 274.
been experiencing a f u l l - and o v e r - f u ll employment
economy. Such economic condition has created a t i g h t
la b o r market, thus compelling employers to seek non-
t r a d l t i o n a l sources o f la b o r supply ( i . e . , fo re ig n em
ployees and female w orkers). Many s o c ia l groups, among
them the " e m a n c ip a tio n ists ," have been looking to women
as a p o te n tia l la b o r r e s e r v e . 8 A fte r 1959* many employers
began to experiment w ith women workers in new occupations.
A n o ta b le example of t h i s was the AB Svesnska S a lp e te r-
verken f e r t i l i z e r p la n t,^ lo c ated in Koping, where t h i r t y
female workers were employed in 1964. Analyzing the main
reason fo r the d eparture from normal p r a c tic e , Business
Week gave us t h i s answer:
. . . Feminism, however, was f a r from the company's
mind when i t decided to r e c r u i t the 3 0-woman o p e ra t
ing crew. I t had simply run out o f men.®
Thus, we can conclude th a t the demand fo r female workers
in the Post Second World War era was mainly economic.
However, an a n a ly s is o f the supply sid e does not
*
give us such a simple answer. The f a c to rs which m otivate
women to look f o r a job are psychological and so c io -
8The acu te la b o r shortage has convinced young g i r l s
to take p ro fe s s io n a l tr a in i n g and m arried women to take
jo b s. See F re d e ric F le is h e r , op. c i t . , p. 246.
< 7
"Women CraBh Another F ie ld ," Business Week,
August 22, 1964, p. 120.
8Ib id .
l o g i c a l . The m ajor economic re a s o n s u n d e rly in g women's
d e s ir e f o r a Job a re th e h ig h e r sta n d ard o f l i v i n g and
h ig h e r c o s ts o f ed u catio n i t p ro v id e s . Many women f e l t
th a t th e r i s i n g s ta n d a rd o f l i v i n g which accompanies
economic p ro g re ss and the need to supplem ent th e fam ily
g
income n e c e s s i t a t e d fem ale s e a rc h fo r employment. Women
who r e a l i z e the s i g n i f i c a n c e o f h ig h e r e d u c a tio n t r y to
work to p u t t h e i r c h ild r e n th ro u g h c o lle g e . As a c o r o l
l a r y , many educated women f e e l t h a t g a i n f u l employment Is
one o f th e u lti m a t e aims o f e d u c a tio n .
P s y c h o lo g ic a lly , women f e e l a void in t h e i r l i v e s .
M echanization has reduced household d u t i e s to a minimum
and c o n tr ib u te d to th e in c r e a s in g l i f e span o f women. To
women, household d u tie s a re monotonous and c a rry l i t t l e
p r e s t i g e . The ornam ental r o l e o f th e nonworking w ife as
a l i v i n g te stim o n y o f h e r h u sb a n d 's su c ce ss i s f a s t d i s
a p p e a r in g . 1 0 The r e s u l t i s a r e l a t i v e degree o f em pti
ness which needs to be f i l l e d . Employment seems to f u l
f i l l t h i s need.
S o c io lo g i c a l f a c t o r s have In flu e n c e d Swedish
fem ales in t h e i r q u e s t f o r employment. Norms re g a rd in g
women as th e w eaker sex are l e s s a c c e p te d . Modern r e s e a r c h
g
Evelyn H a rris o n , "The Working Woman: B a r r ie r s
in Employment," P u b lic A d m in is tra tio n Review, Vol. XXIV,
No. 2, June, 19647 PP* 78-85.
1 0 I b id .
45
has dem onstrated th a t women are no weaker nor any le s s
I n t e l l i g e n t than men. Society i s changing i t s t r a d i t i o n a l
views to in c o rp o rate female e q u a lity in every human
1 1
f i e l d . These f a c to rs taken to g e th e r supply most of the
reasons which m otivate women to seek employment.
The Female Labor Force: I t s S tru c tu re
In 1966, the number of Swedish females in the la b o r
fo rc e t o t a l l e d 1.4 m illio n , which was approxim ately 33
percent o f the e n tir e Swedish la b o r fo rc e . This con
s i s t s o f m arried, unm arried, widows and teenagers over 15
y e a rs . O ccupationally, they are d is t r ib u t e d in a g r i
c u ltu re and domestic and n o n a g rlc u ltu ra l s e c to rs of the
economy. The number o f the d o m estically employed has de
creased considerably from 191*000 (1920) to 95*000
12
(1950). Comparatively, th ere are more women in w h ite-
1 ^ 5
c o l l a r Jobs than the b lu e - c o lla r Jobs. J Since 1920,
female teach ers in h ig h e r education and n u rsin g have i n
creased. In the l i b e r a l p ro fe s s io n s , such as law,
11 - —
F re d eric F le is h e r , The Hew Sweden: The Challenge
o f a D isc ip lin e d Democracy (New York: David McKay Com-
pany, I n c ., I9t>7), PP- 224-253.
IP
The co n sid erab le decrease in domestic servants
has been due to change in family l i f e , consumers' h a b it ,
and women's employment o u tsid e the home.
• ^ s t a t i s t i c a l A b strac t o f Sweden, published by the
C en tral Bureau of S t a t i s t i c s , Stockholm, 1966* pp. 30-33*
46
d e n t i s t r y , m edicine, pharmacy, a r c h i te c tu r e , en g in eerin g ,
e t c . , the number o f women has increased but a t a f a i r l y
slow r a t e . The d is t r ib u t io n o f female workers in in d u s
t r i e s , c r a f t s and tra d e s is r e l a t i v e l y along p re
i n d u s t r i a l le v e ls , w ith t h e i r ma;Jor co n cen tratio n s t i l l In
t r a d i t i o n a l ;Jobs.
Sweden i s one o f the few western c o u n trie s which
has broken through the t r a d i t i o n a l facade o f s o c ia l con
ven tio n s b a rrin g m arried women and mothers from g a in fu l
14
employment. The Swedish Parliam ent passed a law in 1923
l e g a li z in g the employment of m arried women. Another law
(1939) forbade the d ism issa l o f women from employment on
grounds of matrimony o r c h i ld b ir th . Since th a t tim e, em
ployment of married women has surged upwards. The
percentage of m arried women in the la b o r fo rc e in 1945
15
stood a t 14 percent and 19 p ercen t in 1950* Of co u rse,
o th e r f a c to r s did co n trib u te toward in c re a se in employment
of m arried women; im portant among these are economic and
1
s o c ia l f a c t o r s . Economically, the shortage of lab o r
in Sweden gave employers no choice but to tap t h i s hidden
la b o r re s e rv e . S o c io lo g ic a lly , the f a l l i n g o f the b i r t h
^ F r e d e r i c F le is h e r, op. c i t . , p. 224.
15
Agda R ossel, op. c i t . . p. 286.
“Women Crash Another F ie ld ," Business Week,
August 22, 1964, p. 120.
4 7
r a t e and o f th e average age o f m a rriag e c o n tr ib u te d g r e a t
l y to t h i s upsurge o f fem ale employment.
N e v e r th e le s s , m a rried "women employment does c re a te
some problem s, e s p e c i a l l y when they a re m o th e rs. Sweden
has evolved s o lu t io n s to th e problem s. The S ta te has
s e v e r a l program s— from m a te r n ity in s u ra n c e to n u rs e ry
sc h o o ls and la u n d ry c e n te r s . A ccording to s t a t e l e g i s l a
t i o n a p re g n a n t woman i s e n t i t l e d to a s i x months v a c a tio n .
M a te rn ity In su ra n c e L e g is la t io n p ro v id e s cash b e n e f i t s to
e x p e c ta n ts d u rin g confinem ent. M others who have g a i n f u l
employment can earn 65 to 70 p e rc e n t o f t h e i r r e g u l a r i n -
1 7
comes d u rin g confinem ent. ' Moreover, th e S t a t e has
e s t a b l i s h e d day n u r s e r i e s , a fte rn o o n homes, and k in d e r
g a r te n s f o r b a b ie s and sch o o l c h i ld r e n . There has been a
r e c e n t tre n d tow ard c o l l e c t i v e f a c i l i t i e s , such as la u n d ry
c e n te r s and h o u sin g u n its to a id working m arried women.
A lthough th e average age o f m a rria g e has been
low ered, n e v e r t h e le s s th e r e I s s t i l l a h ig h p ro p o rtio n o f
unm arried women in Sweden. Most o f th e unm arried women
who a re between th e ages o f 14 and 64 have g a i n f u l employ
ment. The p e rio d from 1947 to i 9 6 0 saw th e p r o p o rtio n o f
unm arried women in th e la b o r fo rc e r i s e .
U n t i l 1940 th e r e was a h ig h p e rc e n ta g e o f female
^ A g d a E o s s e l, op. c i t . . p. 286.
48
employers in the la b o r market. T heir p roportion has de
creased since the f i f t i e s from 17 p ercen t to 13 percent.^*®
The decrease was p rim a rily experienced in the garment and
m il ita r y tr a d e s . P re s e n tly , female employers are c lu s te re d
in such occupations as r e t a i l tr a d e , b a k e rie s , m il lin e r ie s
and modiste shops, r e s ta u r a n ts , h o te ls and c a fe s.
Pemale Workers and Unions
D iscrim ination a g a in s t women employees has compelled
them to seek so lu tio n to t h i s problem through u n io n iz a tio n .
The a c t i v i t i e s of Swedish unions has convinced women th a t
a stro n g e r b arg ain in g p o sitio n could be achieved i f a l l
women employees banded to g e th e r. In a d d itio n , the various
Swedish women's o rg an iz a tio n s and o th e r emancipation
groups persuaded female employees th a t t h e i r working
co n d itio n s would be improved and t h e i r economic needs would
be s a t i s f i e d i f they organized them selves. One would have
expected an e n t i r e l y new union w ith-fem ale membership only.
This was no t the case. In s te a d , female b lu e - c o lla r
workers a f f i l i a t e d them selves w ith the e x is tin g Swedish
Confederation o f Trade Unions (LO) and the female w hite-
c o l l a r workers w ith th e C en tral O rganization o f S a la rie d
Employees (TOO).
Table 1 i l l u s t r a t e s the tren d o f female membership
18Ib ld
TABIE I
FEMALE MEMBERSHIP OF LO
Tear Men P ercentage Women Percentage T otal
1900 42,500 97.6 1,000 2 .4 43,500
1910 79,500
93.3
5,700
6.7
85,200
1920 247,200 88.3 32,800
11.7
280,000
1930 495,700 89.6 57,800 10.4 553,500
1940 813,200 83.8 157,900 16.2 971,100
1950 1,038,000 81.2 240,400 18.8 1,278,400
I960 1,150,900 78.0 334,800 22.0 1,485,700
Source: Thomas I . Johnston, C o lle c tiv e B argaining In Sweden: A Study of the Labour
Market and I t s I n s t i t u t i o n s (London: George A llen & Unwin, L td ., 1962),
p. 30.
V O
50
in th e LO s in c e 1900. At th a t y e a r fem ale membership
stood a t 1,000 (b a re ly 2 .4 p e rc e n t of LO m em bership). In
th e s i x t i e s , membership in c re a se d to 334,800, i . e . , 22.0
p e rc e n t. Since most fem ales a re w h ite - c o lla r w orkers, i t
i s n o t s u r p r is in g t h a t th e membership in TOO i s c o n s id e r
ab ly l a r g e r (ap p ro x im ately 33 p e rc e n t o f th e t o t a l in
1 9 5 5 ).19
D esp ite t h e i r growing numbers In u n io n s, fem ale
d e le g a tio n s and r e p r e s e n ta ti v e s on the boards o f unions
a re very sm a ll. To In c re a s e fem ale r e p r e s e n ta ti o n ,
v a rio u s s te p s have been taken such as th e p ro v is io n o f
s p e c ia l co u rses f o r women in th e tr a d e union sc h o o ls.
Wages and Salaries of Female Workers
The wages and s a l a r i e s o f Swedish fem ale employees
a re r e l a t i v e l y low er than th o se o f t h e i r male c o u n te r
p a r t s . In 1939* fem ale t o t a l h o u rly wages in a l l manu
f a c tu r in g were 63 p e rc e n t o f male wages; th e p e rc e n ta g e i n
cre a se d to 73 p e rc e n t by 1964. (See Table 2 .) Table 3
r e v e a ls th a t in a g r i c u l t u r e , in th e p e rio d from 1955 to
1963, women's h o u rly wages averaged 75 p e rc e n t o f m en 's.
The t e x t i l e in d u s tr y employs 69 p e rc e n t women w orkers, but
t h e i r wages a re only 70 p e rc e n t o f m en's wages. Hor do
■^In 1965 t h e i r membership has in c re a s e d to 40 p e r
c e n t. See F re d e ric F le is h e r , op. c i t . . p. 249.
51
TABLE 2
RELATIVE HOURLY W AGES OP MALE AND FEMALE
IN MANUFACTURING 1955-1964 (In k r o n o rs )
Year Male Female
Percent
of Female
to Male
1955
4 .6 4 3 .2 1
69
1956 5 .0 4
3 .4 9 67
1957
5 .3 4 3 .7 0
69
1958
5 .6 7 3 .9 1 69
1959 5 .9 3
4 .0 8
69
I9 6 0 6 .3 2
4 .3 5
60
1961 6 .8 2
4 .7 1 68
1962
7 .3 9
5 .2 1 70
1963 7 .9 1 5 .7 1 72
1964 7 .6 3
5-62
73
Source: Yearbook of Labour Statistics, ILO, Geneva, 1966,
P . 488.
!
i
52
TABLE 3
RELATIVE HOURLY W AGES OP MALE AND FEMALE
IE AGRICULTURE 1955-1964 (In k r o n o r s )
Y ear Male Female
P e rc e n t
o f Female
to Male
1955 3 .1 0 2 .0 8
67
1956
3 .2 5 2 .3 3 72
1957
3 .5 4
2.69 76
1958
3 .6 5
2 .7 8 76
1959
3 .7 6 3 .0 0 80
I9 6 0 4 .1 6 5 .3 2
79
1961 4 .5 8 3 .5 8 77
1962 5 .0 0
3 .9 9
80
1963
5 .5 2 4 .0 5
74
S o u rc e : Y earbook o f L abour S t a t i s t i c s , ILO, G eneva, 1966,
p . 5 0 6 .
53
fem ale foremen in in d u s t r i e s f a r e any b e t t e r . Between
1956 and i 960 fem ale foremen had 27 p e rc e n t wage In c re a s e s
as compared w ith 33 p e rc e n t in c re a s e s f o r male forem en.
In th e c i v i l s e r v ic e , fem ale employees are w ith in th e
lowest s a la r y group. However, th e wage gap between th e
sexes has been c lo s in g sin c e 1930.
S e v e ra l g ro u p s, b o th p u b lic and p r i v a t e , have a t
tem pted to so lv e th e wage in e q u ity . The slogan "eq u al
pay f o r equal work" has been and s t i l l i s preached w ith
alm ost r e l i g i o u s f e r v o r , b u t l i t t l e has a c t u a l l y been done
20
to Improve th e s i t u a t i o n . As e a r ly as 1853* a Royal
Decree had proclaim ed t h a t fem ale te a c h e rs in m u n icip al
elem entary sc h o o ls should be given th e same r i g h t s ( i n
c lu d in g wages) as male te a c h e r s . A Royal Commission r e
commended th a t "The s t a t e a u t h o r i t i e s can and should by
s u c c e s s iv e m easures in th e d ir e c tio n o f t h i s g o a l work
f o r . . . th e e q u a liz a tio n o f th e s a l a r i e s o f men and
i(21
women. 1 1
In la b o r o r g a n iz a tio n , th e p r in c ip le o f eq u al pay
f o r eq u a l work a ls o has been a c c e p te d . The Swedish Con
f e d e r a tio n o f Trade Unions fo rm u lated a p o lic y o f e q u a li
z a tio n o f women's and m en's wages in 1946, and in 1954 I t s
20
F re d e ric F l e i s h e r , on. c i t . . p. 248.
21
Agda R o s se l, op. c i t . . p. 280.
54
com mittee re s o lv e d to "bring to th e approaching c o l le c tiv e
b a rg a in in g th e is s u e o f women*s wages. In t h a t same y e a r,
SAF urged t h a t ". . . a g r e a t e r advance i s d e s ira b le in
f i e l d s where th e wage le v e l o f s a l a r i e d employees i s un
s a t i s f a c t o r y in com parison w ith o th e r employment f i e l d s .
The same is true of women's salaries, which should be given
22
s p e c ia l a t t e n t i o n . " Thus, i t ap p ears w ith o u t any doubt
t h a t th e p r in c ip le o f e q u a lity i s accep ted in every
Swedish sp h ere of l i f e , e s p e c ia lly on t h e o r e t i c a l grounds;
however, on p r a c t i c a l grounds l i t t l e h as been done.
In p r a c t i c e , Swedish women s t i l l earn low er wages
and th e p r i n c i p l e o f eq u a l pay f o r equal work has come to
mean h ig h e r women's e a rn in g s b u t n o t as h ig h as th o se o f
23
men. In th e b l u e - c o l l a r jo b s , women's wages a re 75 p e r
c e n t th a t o f m en's; in w h ite - c o lla r employment women earn
ap p ro x im ately 85 p e rc e n t th a t o f men. (Equal pay f o r equal
work had been in e x is te n c e in th e c i v i l s e rv ic e sin c e
1 9 2 0 .) I t i s I r o n i c a l th a t th e Swedish la b o r o rg a n iz a
t io n s did n o t r a t i f y th e 100th ILO Convention on e q u a l pay.
From the em ployers s id e , th e re h as been a n e g a tiv e a t t i
tu d e toward th e a p p lic a tio n o f an equal pay p r i n c i p l e , in
t h a t th e q u a l ity o f women's work I s below s a t i s f a c t o r y
l e v e l s . In banking, women's wages a re c o n s id e ra b ly low er.
2gI b l d .
23I b i d .
55
The Swedish government and TCO have been q u ite i n s t r u
m ental in im proving th e c o n d itio n o f low er p aid fem ale
w orkers by r e c l a s s i f y i n g t h e i r ;)obs o rd e r to upgrade
24
them.
Why do women earn r e l a t i v e l y low wages? One answer
i s th e p r e v a ilin g n o tio n t h a t women work to supplem ent th e
fa m ily income. T his being th e ca se , t h e i r employment i s
tem porary. A lso, sin c e they a re n o t th e r e a l breadw inners
o f th e fa m ily , eq u al rem u n eratio n f o r t h e i r work i s t a n t a -
2*5
mount to s u p e r f l u i t y . A second f a c to r which m i l i t a t e s
a g a in s t fem ale employees i s t h e i r la c k o f s k i l l . Equal
pay f o r eq u al work r e q u ir e s , among o th e r th in g s , h ig h e r
q u a l i f i c a t i o n s . As lo n g as t h e i r p r o d u c tiv ity i s low and
as they a re in m a rg in a l o c c u p a tio n s, women*s wages w i l l be
co n seq u en tly low.
Sweden has come to th e same c o n c lu s io n : t h a t
women's e d u c a tio n a l and p r o f e s s io n a l h an d icap s l i e a t th e
r o o t o f I n e q u itie s in wages. Many programs have been s e t
up to a id women to so lv e th e problem . Of th e s e v e r a l
program s, d i v e r s i f i e d e d u c atio n and c r e a tio n o f new in d u s
t r i e s seem most p ro m isin g . The Swedish government i s
s tim u la tin g g i r l s to go on f o r h ig h e r e d u c a tio n . The
24
H a r r ie t H o lte r , "Women's O ccu p atio n al S itu a tio n
in S c a n d in a v ia ," I n te r n a t i o n a l Labour Review, Vol. 95,
Ho. 4 , A p ril, 1966, pp. 383-400.
25
■'Evelyn H a rris o n , op. c i t .
N a tio n a l Labour M arket Board has s e t up s p e c ia l e d u c a tio n
a l programs to a id t h i s tra n s fo rm a tio n . T ra in in g co u rses
in c lu d e h u m a n itie s and te ch n o lo g y , such as watchmaking,
g o ld sm ith , te l e v i s i o n r e p a i r , motor m echanics and m e ta l
lu rg y . A s t r i k i n g tre n d in th e s h i f t to n o n t r a d it io n a l
f i e l d s i s d is c e rn a b le from th e fo llo w in g i l l u s t r a t i o n . In
th e p e rio d from 1953 to 1961, t o t a l fem ale s tu d e n ts in th e
sch o o ls o f m edicine in c re a se d from 469 to 810 (an in c re a s e
o f 72 p e r c e n t) , d e n t i s t r y s tu d e n ts from 205 to 391 (an
in c re a s e o f 90 p e r c e n t) , and technology s tu d e n ts from 61
26
to 238 (an in c re a s e o f 290 p e r c e n t) .
The government is* a ls o p lan n in g f o r new in d u s t r ie s
in l e s s developed a re a s o f Sweden. Such i n d u s t r i e s w i l l
be m ainly n o n t r a d it io n a l where sex d i f f e r e n t i a t i o n i s p o s
s i b l e . The a u th o r f e e l s t h a t a change in a t t i t u d e o f em
p lo y e rs and fem ale employees w i l l go a lo n g way toward th e
e r a d ic a tio n o f wage d i f f e r e n t i a l s and sex d is c r im in a tio n .
Employers w i l l have to t r e a t women r e l a t i v e l y th e same way
as men; and women w i l l have to sto p p la y in g th e subm issive
r o le which t r a d i t i o n , custom s, and p r e v a ilin g norms have
fo rced them to .
2^Labour G a z e tte , op. c i t . , p. 338.
57
W h ite - C o lla r W orkers
I n tr o d u c tio n
W e s h a l l d e f in e a w h i t e - c o l l a r w o rk e r a s any p e rso n
who i s engaged in r o u tin e work f o r w hich p a r t i c u l a r
s c h o l a s t i c q u a l i f i c a t i o n s a r e n e c e s s a r y . I t I s b e lie v e d
t h a t a w h i t e - c o l l a r w orker d i f f e r s from a m anual w o rk er In
t h a t th e fo rm e r h a s r e l a t i v e l y g r e a t e r o p p o r t u n i t i e s f o r
p rom otion th a n th e l a t t e r . U n t i l r e c e n t l y , th e w h ite -
c o l l a r w o rk er was th e d e c is io n -m a k e r in th e f irm . H is
d u t i e s w ere v a r io u s b u t c o n s id e r a b ly Im p o rta n t to manage
m ent. G ra d u a lly , t h i s p r i v i l e g e d p o s i t i o n began to f a d e .
Two f a c t o r s — demand f o r and su p p ly o f w h i t e - c o l l a r w o rk e rs —
c o n s p ire d to underm ine h i s p o s i t i o n . From th e su p p ly s i d e ,
th e r e was an in c r e a s e In t h e i r r e p r o d u c tio n g r e a t e r th a n
th e r a t e o f t h e i r demand. The e x c e ss su p p ly se rv e d to
re d u c e t h e i r s i g n i f i c a n c e . From th e demand s i d e , l a r g e -
s c a le o r g a n i z a t i o n s m i l i t a t e d a d v e r s e ly a g a i n s t th e
p r i v i l e g e d p o s i t i o n o f th e w h i t e - c o l l a r w o rk e r.
P r e s e n t l y , th e r e a r e o v e r a m i l l i o n w h i t e - c o l l a r
o r s a l a r i e d w o rk e rs in Sweden; th e s e a r e s c a t t e r e d
th ro u g h o u t ev ery s e c t o r o f th e economy. We s h a l l a n a ly z e
t h e i r a c t i v i t i e s w ith r e g a r d to u n io n ism and th e b a r g a in
in g sy stem .
White-Collar Workers and Unionism
58
Swedish white-collar workers, like any other white-
collar in the industrialized world, were slow in organiz
ing.2^ Their indifference toward unionization was due in
part to the absence of a spirit of solidarity and a lack
of economic pressure. Traditionally, whlte»collar workers
had looked upon themselves as individuals with diverse
28
alms and problems. As the years passed and they felt
the pinch of economic pressure, they realized that some-
29
thing had to be done to retrieve their lost status.
They found out that countervailing power could only be
achieved through unionization. This gave rise to white-
collar workers' unions.
However, the annals of Swedish unionism indicate
that salaried workers* unions such as the Marine Engineers'
Union and the National Union of Bank Employees were in
30
existence as early as 1864. An important characteristic
27
'V a l t e r Aman, "O rg a n iz in g W h ite - C o lla r W o rk ers,"
American P e d e r a t i o n l s t . V ol. 61, J a n u a ry , 1954, p. 27.
2®R. M. Blackburn and K. Prandy, "White-Collar
Unionization: a Conceptual Pramework," British Journal
of Sociology, Vol. XVI, No. 2, June, 1965* pp. 111-121.
29Ibid.
"50
Thomas L. Johnston, Collective Bargaining in
Sweden: A Study of the Labour Market and Its Institu
tions (London: George Allen & Unwin, Ltd., 1962), pp.
9 6 -9 7 .
59
o f th e s a la r ie d unions i s a la c k o f group co h esiv en ess and
n o n p o l i t i c a l a f f i l i a t i o n . A lthough s a l a r i e d employees be
lie v e in th e adv an tag es which unions p ro v id e , they are
r e l u c t a n t to y ie ld t h e i r i n d i v i d u a l i t y . In a move toward
s o l i d a r i t y , a c o n fe d e ra tio n o f e x i s tin g unions of s a la r ie d
31
employees was formed in 1931. The new union was known
as th e S a la rie d Employees C e n tra l O rg a n iza tio n (DCO). S ix
y e a rs l a t e r , th e C e n tra l O rg a n iza tio n o f S a la rie d Em
p lo y e es (TOO), c o n s is tin g p rim a rily o f p u b lic s a la r ie d
em ployees, was formed w ith a membership o f 4 0 ,0 0 0 .32 In
1944, DACO and TOO c o n s o lid a te d to form th e new C e n tral
O rg a n iz a tio n o f S a la r ie d Employees (TOO)with 180,000 mem-
33
b e r s . ^
At p re s e n t TO O c o n s is ts o f forem en, te a c h e rs ,
n u rs e s and w a rra n t o f f i c e r s . I t s o b je c tiv e i s to e x e rc is e
c e n t r a l le a d e r s h ip o f th e movement and to safeguard com
mon economic I n t e r e s t . U nlike th e LO, TOO i s n o n p o litic a l
u n io n . But s im ila r to th e LO, i t i s o rg an ized along a
t r i p a r t i t e s t r u c t u r e , w ith a C ongress, G eneral C ouncil and
a B oard. I t d i f f e r s from th e LO and SAP In i t s c e n tr a l
c o n tr o l over I t s n a t io n a l u n io n s. The h e te ro g e n e ity o f
3^A dolf S tu rm th al ( e d .) , W h ite -C o lla r Trade Unions
(U rbana, I l l i n o i s : U n iv e rs ity o f I l l i n o i s P re s s , 1966),
pp. 261-304.
32I b id .
33Ib id .
6 0
membership makes stro n g c e n tr a l c o n tro l o f TOO im p o ssib le .
F in a n c ia lly , TOO i s n o t as Btrong as th e LO, and in i 960
*34
rev en u es from dues amounted to th r e e m illio n crowns. As
a r u l e , th e unions have s tr o n g e r f i n a n c i a l s ta n d in g than
TOO. I t i s re q u ire d by TO O t h a t each member o rg a n iz a tio n
should p r a c tic e the open shop system , obey th e r u l e s o f
TO O and g ra n t membership to in d iv id u a l members who have
been t r a n s f e r r e d to t h e i r l o c a l i t i e s .
The Swedish C o n fed e ra tio n of P r o f e s s io n a l A sso c ia
t i o n s , w ith i t s membership o f 57,000 in I9 6 0 , i s th e
second l a r g e s t c e n tr a l o rg a n iz a tio n o f s a l a r i e d w orkers.
O rganized in 1947, th e Swedish C o n fed eratio n o f P ro fe s
s io n a l A s s o c ia tio n s , commonly known as SACO, c o n s is ts o f
p r o f e s s io n a l men a t th e u n iv e r s i ty l e v e l who a re employed
m ainly by th e c e n tr a l and l o c a l g o v e rn m e n ts .^ I t i s th e
aim o f SACO to (1) sa fe g u a rd th e economic i n t e r e s t s o f i t s
members and (2) promote p r o f e s s io n a l e x c e lle n c e . A unique
f e a tu r e o f SACO i s i t s h o r iz o n ta l o rg a n iz a tio n in s te a d of
th e u su a l v e r t i c a l s t r u c t u r e which i s common in many
o r g a n iz a tio n s . SACO m a in ta in s th a t th e i n t e r e s t s o f I t s
34
T his I s TCP, a pam phlet is s u e d by th e C e n tra l
O rg a n iz a tio n o r s a l a r i e d Employees, Stockholm , 1964.
^ I n 1947 SACO had 15,000 members. I b i d . For f u r
t h e r d e s c r ip tio n o f SACO's o r g a n iz a tio n , see Swedish P ro
f e s s i o n a l A s s o c ia tio n s as Trade Unions (T re lle b o rg :
Swedish C o n fed eratio n o f P ro f e s s io n a l A s s o c ia tio n s , 1959).
Also see ILR, V ol. LXXX, Ho. 4, O ctober, 1959, pp. 318-20.
61
d is tin g u is h e d p r o f e s s io n s can "b e tter be se rv e d by a
h o r i z o n t a l s t r u c t u r e . I t i s b e lie v e d t h a t a h o r iz o n ta l
o r g a n iz a tio n s t r u c t u r e w i l l c r e a te d e c e n t r a l i z a t i o n and
promote e f f i c i e n t com m unication, th e re b y re d u c in g b o t t l e
necks in d e c isio n -m a k in g . SACO i s f i n a n c i a l l y weak, w ith
" 5 6
annual membership dues o f 20 crowns p e r member. R e a liz in g
th e d is a d v a n ta g e s i n b a rg a in in g which a weak f i n a n c i a l
p o s itio n b r in g s , SACO, In I9 6 0 , decid ed to s e t up a
G uaranty Fund. However, i t s f i n a n c i a l s i t u a t i o n has n o t
Im proved.
A t h i r d c e n t r a l o r g a n iz a tio n o f s a l a r i e d em ployees
in Sweden i s th e N a tio n a l F e d e ra tio n o f C iv il S e rv a n ts
(SR). W ith 16,000 members In I9 6 0 , SR i s composed o f
s a l a r i e d w orkers In th e c i v i l s e r v i c e . I t c a t e r s m ostly
to s e n io r c i v i l s e r v a n ts and h as th e same t r i p a r t i t e
o r g a n iz a tio n a l s t r u c t u r e as LO, SAF and TOO.
C o lle c tiv e B a rg a in in g and W h ite -C o lla r W orkers
J u s t as t h e r e a re p u b lic and p r iv a te arran g em en ts
d e l i n e a t i n g p a ra m e te rs o f c o l l e c t i v e b a rg a in in g a c t i v i t i e s
o f b l u e - c o l l a r u n io n s and e m p lo y e rs1 c o n f e d e r a tio n s , so
a ls o a r e th e re fram eworks f o r r e g u la tin g w h i t e - c o l l a r
unions and em ployers. We n o te d above t h a t l e g i s l a t i o n In
1936, 1937 and 1940 p ro v id ed th e r i g h t s o f a s s o c ia tio n and
-^Thomas L. Jo h n sto n , on. c i t . . p. 108.
62
c o l le c tiv e b a rg a in in g f o r b l u e - c o l l a r as w e ll as w h ite -
c o l l a r w orkers. C hapter 3 o f th e 1936 A ct, f o r In s ta n c e ,
s e t f o r t h p ro ced u res f o r n e g o tia tio n and subm ission o f
d i f f i c u l t ca ses to an independent chairman ap p o in ted by
37
th e S o c ia l W elfare Board.
In th e p r iv a te s e c to r , two im p o rta n t agreem ents
formed the b a s is fo r c o l l e c t i v e b a rg a in in g . The f i r s t was
th e B asic Agreement o f 1957 between SAF and th e Union o f
C l e r ic a l and T ec h n ical Employees in In d u s try ; th e second
was w ith the Forem en's and S u p e rv is o r s ' Union in 1959*
These two Agreements e s ta b lis h e d a - la b o r m arket committee
o f equal r e p r e s e n ta tio n f o r to p l e v e l n e g o tia tio n s and a
m achinery f o r s e t t l i n g d is p u te s . J u s t i f i a b l e d is p u te s a re
by consent f i r s t r e f e r r e d to lo c a l unions fo r n e g o t ia t io n s ,
and then to th e n a t io n a l l e v e l . I f th e re i s no s e ttle m e n t
w ith in th re e w eeks, th e m a tte r i s r e f e r r e d to th e Trade
C o u n c il. From t h i s l e v e l , any d i s s a t i s f i e d p a rty can
a p p e a l the case to th e C ourt o f Law. N o n ju s tif ia b le d i s
p u te s may pass through l o c a l n e g o tia tio n , th e n a tio n a l
l e v e l , Trade C ouncil and, f i n a l l y , th e Labour M arket
C o u n c il. The Labour M arket C ouncil u s u a lly p u b lis h e s i t s
recom m endation, u n le s s one o f th e p a r t i e s e x p resses d l s -
37
The same Act was in s tru m e n ta l in th e growth o f
s a l a r i e d employees o r g a n iz a tio n s . The Foremen Unions made
e x te n s iv e use o f th e p ro v is io n a t one tim e.
63
a g re e m e n t.
Most o f th e d is p u t e s re v o lv e on s a l a r i e s ; and many
d i s p u t e s a r e s e t t l e d a t th e l o c a l u n io n l e v e l . The B a sic
A greem ents s t i p u l a t e d t h a t n o tic e o f em ployee te r m in a tio n
m ust be g iv e n t o l o c a l u n io n s and c o u ld a ls o be r e f e r r e d to
30
th e S a l a r i e d Employees C o u n c il. An im p o rta n t d if f e r e n c e
betw een th e two A greem ents i s t h a t th e F o rem en 's B a sic
A greem ent c o n ta in s a p r o v is io n w hich d e f in e s t h e p o s i t i o n
o f a forem an a s a r e p r e s e n t a t i v e o f management and s e t s
f o r t h h i s o b l i g a t i o n s d u r in g a la b o r d iB p u te .
L e g i s l a t i o n d e f in e s th e fram ew ork o f em ployee-
em ployer r e l a t i o n s h i p s in th e p u b lic s e c t o r . Due to th e
d i s t i n c t i v e n a t u r e o f p u b lic s e r v ic e and th e r e l a t i v e Job
s e o u r i t y o f th e c i v i l s e r v i c e , p u b lic s e r v a n ts do n o t have
th e same freedom o f a c t i o n a s p r i v a t e em ployees. P r i v a t e
s e r v a n ts a r e e x p e c te d by governm ent and th e p u b lic to p r o
v id e e s s e n t i a l p u b lic s e r v i c e s w ith o u t i n t e r r u p t i o n . As a
q u id pro quo th e y have more Job s e c u r i t y . The A ct o f 1936
p re c lu d e d p u b lic s e r v a n ts in r e s p o n s i b l e p o s i t i o n s from
in d u lg in g i n s t r i k e s and l o c k - o u t s , and p e n a l codes make i t
^ T h i s d i f f e r s from th e p r a c t i c e o f th e SAFrfLO
L ab o r M arket C o u n c il, w here no p u b l i c a t i o n o f recommenda
t i o n s i s p e r m it te d .
■ ^ S a la rie d w o rk e rs have r e l a t i v e l y more s e c u r i t y
th a n m anual w o rk e rs . The fo rm e r h av e one to s i x months
o f n o t i c e o f te r m in a tio n a s compared to th e l a t t e r ' s seven
to f o u r te e n d ay s n o t i c e .
64
a c rim in a l o ffe n se f o r c i v i l s e rv a n ts to w ithdraw t h e i r
s e r v ic e s . A 1937 A ct gave th e heads o f governm ental u n its
th e r i g h t to make d e c is io n s on b a rg a in in g , w h ile th e se
f a c t o r s c o n trib u te d to weaken th e b a rg a in in g p o s itio n o f
p u b lic s e rv a n ts .
L a te r developm ents in unionism and th e in c re a s in g
a ccep tan ce o f c e n tr a liz e d b a rg a in in g as a p ro p er way o f
n e g o tia tio n ren d ered th e 1937 Act o b s o le te . The outcome
was c e n tr a l n e g o t ia t io n , s im ila r to LO-SAF b a rg a in in g , be
tween p u b lic s e rv a n ts and th e M in istry o f C iv il S e rv ic e
A f f a i r s .
I t I s n o t p o s s ib le f o r c i v i l s e rv a n ts to r e s o r t to
economic s a n c tio n s in o rd e r to o b ta in t h e i r g o a ls , as i s
tr u e f o r o th e r la b o r groups. Economic s a n c tio n s have been
l e s s fre q u e n t among s a la r ie d employees as compared w ith
wage e a rn e rs .
S a la ry N e g o tia tio n
S a la rie d employees n e g o tia te w ith t h e i r em ployers
in th e same way as manual w o rk ers. However, t h e i r n e g o tia
tio n s beg in a f t e r SAF-LO wage b a rg a in in g has been con
d u cted . This pro ced u re i s adopted because unions o f
s a la r ie d employees use wage In c re a s e s o f manual w orkers as
65
4-0
a b a s is f o r t h e i r s a la ry d e te rm in a tio n . Like manual
w orkers, the d e te rm in a tio n o f s a l a r i e s depends upon age,
e x p e rie n c e , q u a l i f i c a t i o n and g e o g ra p h ic a l lo c a tio n .
In th e p r iv a te s e c t o r , s a la ry n e g o tia tio n i s i n d i v i
d u a lly c a r r ie d on a t th e l o c a l l e v e l . This may give a
f a l s e im p ressio n th a t s a l a r i e s a re a u to m a tic a lly determ ined.
That i s not th e case because TCO and SACO p u b lis h i n d i v i
d u a l s a l a r i e s and Job d e s c r ip tio n s so t h a t members can
compare and c o n tr a s t s a l a r i e s . In banking and in s u ra n c e ,
b a s ic s a la ry s c a le s have been p re -e sta b liB h e d f o r em
p lo y e es who have com pleted t h e i r a p p r e n tic e s h ip . The
f i n a n c i a l i n s t i t u t i o n s p ro v id e a 4 p e rc e n t b a s ic geo
g r a p h ic a l d i f f e r e n t i a l . The p u b lic s e c to r a ls o has an
e s ta b lis h e d s a la r y s c a le f o r i t s em ployees.
How do s a la r ie d w orkers f a r e under th e wage d r i f t ?
Wage d r i f t i s th e d if fe re n c e between c o n tr a c tu a l and
a c tu a l e a rn in g s . The d if f e r e n c e a r i s e s because most b lu e -
c o l l a r w orkers a re on a p ie c e - r a t e b a s is w hich, in tu r n ,
i s a s s o c ia te d w ith o u tp u t. S a la rie d w orkers a re n o t on
p ie c e - r a te b a s i s , hence th e re i s no d if fe re n c e between
t h e i r c o n tr a c tu a l and a c tu a l e a rn in g s . This b ein g th e
c a se , s a la r ie d w orkers a re a t a d isad v an tag e w ith re g a rd
^°Jean Mouly, "Wages Policy in Sweden II,H Interna
tional Labour Review, Vol. 95, No. 3 , March, 1967, PP.
166-191. Also Bee"Hilary Barnes, "War on Wage Drift,"
Statist.. Vol. 191, No. 4639, February 17, 1967, pp.
283-64.
to wage d r i f t . To compensate f o r t h i s , annual s a la r y I n
c re a se s a re h ig h e r f o r s a la r ie d w orkers than b l u e - c o l l a r
41
w orkers.
42
Works C ouncils and W h ite-C o llar Workers
Due to la c k o f i n t e r e s t , s a la r ie d w orkers form erly
occupied m inor p o s itio n s in Works C o u n c ils. They were
allow ed to p a r t i c i p a t e in a jo i n t c o n s u lta tio n where SAF
and LO had a lre a d y e s ta b lis h e d one. L a te r on as th e
number of s a la r ie d employees in c re a s e d , they were a b le to
have Works C ouncils e s ta b lis h e d in u n d e rta k in g s where LO
and SAF had n o t p re v io u s ly founded a Works C o u n cil. A
s p e c ia l arrangem ent between SAF and TCO provided th a t a
Works C ouncil should be composed o f seven r e p r e s e n ta tiv e s
o f wage e a rn e rs and fo u r o f s a la r ie d employees in any firm
43
which had more than 200 manual w orkers.
Thomas L. Jo h n sto n , op. c l t . . pp. 327-29.
42
D orothea de S ch w ein itz, Labor-Management C o n su lta
t io n in th e F a c to ry : The E xperience o f Sweden. England and
th e F ed eral R epublic o f Germany (H onolulu: U n iv e rs ity o f
Hawaii I n d u s t r i a l R e la tio n s C en ter, O ccasio n al P u b lic a tio n s ,
1966), pp. 49-56.
43Ib id .
67
CHAPTER IV
JOINT CONSULTATION AT THE FACTORY LEVEL
I n tr o d u c tio n
B a rg a in in g a t th e a g g re g a te l e v e l h as been d e a l t
w ith above. C o n s u lta tio n a t the p la n t l e v e l i s th e sub
j e c t o f d is c u s s io n in t h i s c h a p te r . T his f a c to r y l e v e l
c o n s u lta tio n was made p o s s ib le th ro u g h th e v o lu n ta ry a g re e
ment between th e C o n fe d e ra tio n o f Trade Ufiions and Em
p lo y e rs C o n fe d e ra tio n .'1 ' The Works C o u n c ils A greem ent, as
i t i s c a l l e d , I n i t i a t e d an " i n d u s t r i a l democracy" by which
em ployers and w orkers m eet to d is c u s s m u tu al problem s in
th e f a c t o r y . A J o i n t c o n s u lta tio n o f la b o r and management
does n o t r e p la c e b a rg a in in g ; i t supplem ents i t .
The aim o f J o in t c o n s u lta tio n i s to (1) e s t a b l i s h a
two-way com m unication th ro u g h o u t an i n d u s t r i a l u n i t , and
(2) to improve and m a in ta in h e a l t h , s a f e t y and w e lf a r e o f
em ployees. I t i s m a in ta in e d t h a t f u l f i l l m e n t o f th e above
o b je c ti v e s w i l l in d u ce w orkers to produce and s u s t a in
q u a l i t y p erfo rm a n ce , re d u c in g th e amount o f w aste and th e
number o f r e j e c t s and a c c id e n ts .
To th e w o rk er, a J o in t c o n s u lta tio n o f f e r s r e l i e f
■^Svehska A rb e ts g iv a re fo re n in g e n , P e r s p e c tiv e on
L abour C o n d itio n s in Sweden (Stockholm , 1 9 6 2 ), p . 21.
68
from r e p e t i t i v e and m onotonous t a s k s . The age o f c r a f t s
m anship gave to c ra fts m e n p r id e and s e l f - e x p r e s s i o n in
t h e i r w ork; th e age o f i n d u s t r i a l i z a t i o n dehum anized
w o rk ers and made them mere t o o l s i n th e p ro d u c tio n p r o c e s s .
A j o i n t c o n s u l t a t i o n i s an a tte m p t to r e s t o r e in th e w orker
a se n se o f r e s p o n s i b i l i t y and p r i d e .
In d is c u s s in g j o i n t c o n s u l t a t i o n a t th e f a c t o r y
l e v e l , we s h a l l f i r s t t r a c e th e e v o l u tio n , p r o v is io n s and
s i g n i f i c a n c e o f th e LO-SAF Works C o u n c ils A greem ent w hich
s e t th e fram ew ork f o r i n d u s t r i a l dem ocracy. Thence we
s h a l l d is c u s s a c t i v i t i e s o f th e Works C o u n c ils w ith r e s p e c t
to p e rs o n n e l and w e lf a r e , p r o d u c tio n , job s e c u r i t y , wages
and th e forem an.
Works C o u n c ils A greem ent (1946)
At th e f a c t o r y l e v e l , labor-m anagem ent c o n s u l t a t i o n
m a t e r i a l i z e d w ith th e a d o p tio n o f th e Works C o u n c ils
A greem ent in 1946. B e fo re t h a t tim e , th e S o c ia l D em ocratic
P a r ty had I n tim a te d to la b o r u n io n s th e a d v a n ta g e s a c c r u
in g from i n d u s t r i a l dem ocracy. P o l i t i c a l dem ocracy had
worked s u c c e s s f u l l y in Sweden; i n d u s t r i a l dem ocracy would
h in d th e w o rk er c l o s e r t o , r a t h e r th a n a l i e n a t e him from ,
p r o d u c tio n . L abor had found th e Id e a v e ry a p p e a lin g ;
69
2
management saw In i n d u s t r i a l dem ocracy an encroachm ent
upon i t s i n a l i e n a b l e r i g h t s , a t h r e a t to th e v e ry p r e
r o g a t i v e s w hich i t had h ig h ly v a lu e d . A ll th e same, em
p lo y e r s w ere aw are o f th e p o l i t i c a l s t r e n g t h o f la b o r and
knew t h a t a r e f u s a l to a g re e would mean f u r t h e r g o v e rn
m e n ta l l e g i s l a t i o n In i n d u s t r i a l r e l a t i o n s . Government
i n t e r f e r e n c e was th e l a s t th in g th e y would t o l e r a t e . P e r
h a p s by g r a n tin g a few c o n c e s s io n s to l a b o r , th e y m ig h t be
a b le to win new g ro u n d . Thus In A u g u st, 19^6, th e LO and
SAP v o l u n t a r i l y and w i l l i n g l y s ig n e d th e Works C o u n c ils
3
A greem ent.
The A greem ent c a l l e d f o r e s ta b lis h m e n t o f Works
C o u n c ils o r E n t e r p r i s e C o u n c ils in ev ery e n t e r p r i s e w ith
tw e n ty - f iv e w o rk e rs o r more in c lu d in g men, women and
j u v e n i l e s . Foremen and s a l a r i e d em ployees w ere a t f i r s t
e x c lu d e d , b u t a l a t e r r e v i s i o n o f th e Agreem ent (1958)
in c lu d e d them . H enceforw ard, a Works C o u n c il came to be
composed o f wage e a r n e r s , s a l a r i e d em ployees, forem en, and
c l e r i c a l and t e c h n i c a l s t a f f . I t m eets e v e ry fo u r m onths
e x c e p t in an em ergency. The c o s ts o f th e Works C o u n c ils
2
I n d u s t r i a l dem ocracy i s used h e re to c o v e r an em
p l o y e e 's i n s i g h t I n to and know ledge o f th e e n t e r p r i s e , h i s
s e c u r i t y , h i s w e ll- b e in g and h i s w orking en v iro n m e n t.
■^Charles A. M yers, I n d u s t r i a l R e la tio n s in Sweden:
Some C om parisons w ith A m erioan~E xperlence {Cam bridge, Mass^
The T echnology P r e s s , 1 9 5 1 ), pp. 55-72.
To
a re "borne by I n d iv id u a l em ployers; th ey a re a ls o re s p o n s
i b l e f o r a p p o in tin g th e p r e s id in g chairm an o f th e Works
C o u n c ils.
I t i s th e f u n c tio n o f a Works C o u n cil to :
1. M a in tain c o o p e ra tio n between em ployer and em
p lo y e e s so as to a c h ie v e p o s s ib le :p r o d u c tio n s ta n d a r d s .
2. Give em ployees i n s i g h t in to th e economic and
t e c h n ic a l c o n d itio n s o f o p e ra tio n and i n to th e f i n a n c i a l
p o s it io n o f th e e n t e r p r i s e .
3. Promote s e c u r ity o f employment f o r th e w o rk e rs,
s a f e ty and s a t i s f a c t i o n in th e work environm ent.
4. Encourage v o c a tio n a l t r a i n i n g w ith in th e e n t e r
p r i s e .
L et us p o in t o u t th a t Works C o u n cils a r e m erely
a d v is o ry b o d ie s o n ly ; t h e i r r u l i n g s a re n o t b in d in g on em
ployers.*^
In th e Works C o u n c il, r e p r e s e n t a t i v e s o f management
and la b o r d is c u s s p ro d u c tio n pro b lem s, job s e c u r i t y , p e r
so n n e l and w e lf a r e a c t i v i t i e s , wage a d ju stm e n t d is p u te s
and g e n e ra l b u s in e s s c o n d itio n s . Employers su p p ly w orkers
w ith such in fo rm a tio n a s p ro d u c tio n surveyB , a n t ic i p a te d
new p ro d u c ts , w orking c o n d itio n s , th e f i r m 's r e l a t i v e
^Ralph H. Jo h n so n , C e n tr a li z a t io n In Swedish L abor-
Management R e la t io n s : The I n te r -C o n fe d e r a tio n Agreements
(u n p u b lish e d M a s te r 's t h e s i s , U n iv e r s ity o f C a l i f o r n i a a t
Los A n g eles, 1955)» P- 88.
71
economic p o s itio n and f i n a n c i a l r e p o r t s . The fo llo w in g
s e c tio n s w i l l f u l l y d isc u ss such a c t i v i t i e s .
J o in t C o n s u lta tio n on P erso n n el and W elfare
Management has d isc o v ered th a t p a r t i c i p a t i o n of
w orkers in p o lic y form ation has a fa v o ra b le in flu e n c e on
th e s u c c e s s fu l im plem entation o f p o lic y . C ognizant o f
t h i s , management d is c u s s e s p e rso n n e l and w e lfa re problem s
w ith la b o r r e p r e s e n ta tiv e s a t th e Works C o u n cil. Labor
tu rn o v e r, a b se n te e ism , c a f e t e r i a s ( c a n te e n s ), t o i l e t
rooms, h o u sin g , v a c a tio n lodgeB and B enevolent Funds con
s t i t u t e th e ma^or p erso n n el and w e lfa re to p ic s o f d i s
c u s s io n .
D isc u ssio n s on c a f e t e r i a s c e n te r on t h e i r c l e a n l i
n e s s , n u t r i t i o n and th e q u a l ity o f fo o d . Subcommittees
in v e s tig a te problem s o f la b o r tu rn o v e r, ab sen teeism and
s a n ita r y c o n d itio n s o f the t o i l e t rooms. U su ally sub
com m ittees ap p o in ted to in v e s tig a te a l le g a tio n s o f i r r e g u
l a r i t i e s in la b o r tu rn o v e r and ab sen teeism atte m p t to fin d
th e r o o ts o f such i n d u s t r i a l problems and o f f e r su g g e stio n s
as to t h e i r c u re .
I t i s a common o ccu rren ce in Sweden f o r em ployers
to compete f o r w orkers by im proving t h e i r w e lfa re program s.
Firms ten d to b u ild houses or fin a n c e th e b u ild in g o f new
houses f o r t h e i r em ployees. (A p ro s p e c tiv e employee
u s u a lly ta k e s t h i s f a c t in to c o n s id e r a tio n .) V acation
lodges a re a ls o p rovided "by firm s , and s in c e th e demand
f o r housing and v a c a tio n lodges exceed t h e i r su p p ly ,
problem s o f u n f a ir p lay do a r i s e . Subcom m ittees d is c u s s
th e f a i r n e s s of t h e i r d i s t r i b u t i o n . O ther w e lfa re a c t i v i
t i e s in c lu d e p ro v is io n o f a B enevolent Fund f o r a id in g
workers* f a m ilie s in tim es o f d e a th o r s ic k n e s s . Problem s
re g a rd in g th e sums f o r such em ergencies a re h andled by a
B enevolent Fund Committee. A Workers C ouncil may b rin g to
m anagem ent's n o tic e any t r a n s p o r ta tio n problem s t h a t
w orkers fa c e and th ro u g h j o i n t c o n s u lta tio n a means w i l l
be d evised f o r s o lv in g t h i s problem .
Problems o f em ployees' s a f e ty a re f a i r l y d is c u s s e d .
A Workers P ro te c tio n Agreement (1942, r e v is e d In 1951) be
tween th e Employers C o n fed e ra tio n and th e C o n fed e ra tio n o f
Trade Unions s e t up a j o i n t s a f e ty com m ittee o f a d o c to r,
a s a fe ty e n g in e e r, a p e rso n n e l o f f i c e r and w o rk e rs' r e p r e
s e n t a t i v e s . I t s duty i s " , . . t o pay s p e c ia l a t t e n t i o n to
v io la tio n o f s a f e ty r u le s and work p la c e r e g u l a t i o n s , and
to cases where s a f e ty d e v ic e s have e i t h e r been p u t out o f
fu n c tio n o r a re n o t u s e d ." ^ The com m ittee in s p e c ts work
p la c e s ev ery s ix months and in s u re s B afety c o n d itio n s .
^D orothea de S c h w e in itz , Labor Management C o n su lta
tio n in th e F a c to ry ; The E xperience o f Sweden, England and
th e F e d e ra l R ep u b lic o f Germany (H onolulu; U n iv e rs ity o f
Hawaii i n d u s t r i a l R e la tio n s C e n ter, O cc asio n a l P u b lic a tio n s ,
1966), p. 51.
Joint Consultation on Production
73
C ooperation o f w orkers and management w ith a view
to e f f e c t in g economies and improvements in p ro d u ctio n has
had l i t t l e su c c e ss. Form erly, management e n te r ta in e d th e
n o tio n t h a t e f f ic ie n c y problems could p ro p e rly be solved
by management and not la b o r . . . 1 have a whole s t a f f
o f tr a in e d en g in eers whose Job c o n s is ts in d is c o v e rin g new
and b e t t e r ways o f doing th in g s ," rem arked one fa c to ry
e x e c u tiv e . " I f a w orker does g e t an id e a , th e chances
a re th a t some e n g in eer has a lre a d y th o u g h t o f i t long be
f o r e . 1 1 ^
Recent re s e a rc h in m o tiv a tio n and p r o d u c tiv ity has
brought f o r th th e id e a th a t p r o d u c tiv ity i s g r e a t ly en
hanced by m o tiv atio n o f w o rk ers. From th e H arvard
S tu d ie s , we le a rn t h a t th e w o rk e rs' need f o r co o p e ra tio n
and com radeship makes them " . . . c l u s t e r to g e th e r in to
in fo rm a l g roups. These in fo rm a l groups could e x e rt a f a r
s tr o n g e r p u ll on th e w o rk e rs1 m o tiv a tio n th a n th e combined
s tr e n g th o f money, d i s c i p l i n e and even Job s e c u r ity i t
s e l f . " 7
P aul H. N orgren, Swedish C o lle c tiv e B arg ain in g
System (Cambridge, M ass.: Harvard" u n iv e r s ity P re s s , 1941),
p . 205-
7Saul W. G ellerm an, M o tiv atio n and P r o d u c tiv ity
(New York: American Management A s s o c ia tio n , V a il-B a lio u
P re s s , 1963), p. 19.
In th e s e in fo rm a l g ro u p s, men o f d i f f e r e n t occupa
ti o n s and e x p e rie n c e a re brought to g e th e r and they le a r n
from one a n o th e r th e i n t e r r e l a t i o n s h i p s o f t h e i r Jobs ^°
o th e r Jobs in th e p l a n t . Swedish em ployers have r e a liz e d
t h i s and have encouraged w orkers to speak t h e i r minds
f r e e l y . F u rth erm o re, th e su g g e stio n box system i s becom
in g common in Sweden. (A su g g e stio n box system i s in te n d
ed to ta p th e l a t e n t e x p e rie n c e and a b i l i t i e s o f w o rk e rs.)
A w orker w ith a suggesV.on which may reduce p ro d u ctio n
c o s ts o r in c re a s e p r o d u c tiv ity drops a w r i tte n n o te in th e
su g g e stio n box. A su g g e stio n com m ittee d is c u s s e s th e sug
g e s tio n s and d e c id e s on th e award f o r th e ac ce p ted sug-
g
g e s tio n . The f i n a n c i a l rew ard may be sm all b u t th e
p sy ch ic re m u n e ra tio n , f o r bein g th e f i r s t among h is p ee rs
to be s in g le d o u t f o r a p r iz e , g r e a t l y u p l i f t s th e w in n e r's
m o rale.
J o i n t C o n s u lta tio n on Job S e c u rity
That a p e r s o n 's Job d e c id e s , among o th e r th in g s ,
where he w i l l l i v e , what e d u c a tio n a l i n s t i t u t i o n s h is
c h ild re n w i l l a t te n d , and h i s s o c i a l s t a t u s i s cause f o r
an employee to a t ta c h much s ig n if ic a n c e to Job s e c u r ity .
Under Job s e c u r ity we s h a ll m ention problem s o f h i r i n g ,
Q
U su ally th e award i s 20 p e rc e n t o f e stim a te d f i r s t
y e a r 's n e t s a v in g s . See C harles A. Myers, op. c l t . , p.
6 0.
75
r e c r u i t i n g , l a y o f f s , d is m is s a ls and r e h i r i n g .
A r t ic le 23 (now 32) o f th e r u l e s o f SAP s u c c in c tly
ex p ressed m anagem ent's r i g h t to h i r e . I t s t i p u l a t e d th a t
management would have th e f u l l freedom to :
(a) S e le c t h is la b o r fo rc e by q u a lity , n o t by the
c r i t e r i o n o f th e union in which th e w orkers
o rg a n iz e ;
(b) R e a llo c a te h is la b o r fo rc e in accordance w ith
th e re q u ire m e n ts o f p ro d u c tio n ;
(c) Make any m a rg in al a d ju stm e n ts in th e s iz e o f
th e la b o r fo rc e in th e l i g h t o f p ro d u c t m arkets
and r e l a t i v e f a c to ry p r ic e s .
O rganized la b o r i s n o t p e rtu rb e d o ver th e em ployers' r i g h t
to h i r e sin c e ". . . em ployers do n o t o r d in a r ily e x e rc ise
t h e i r power to h ir e f o r th e purpose o f f ig h tin g unionism
b u t r a t h e r , in many c a s e s , p r e f e r t h a t t h e i r w orkers be
long to an o r g a n iz a tio n ." ^
However, on th e q u e stio n o f f i r i n g , l a y o f f s , and
d is m is s a ls th e em ployers' freedom h as been r e s t r i c t e d by
th e u n io n s' d e s ire f o r p a r t i c i p a t i o n . The B asic Agreement
and Works C ouncils Agreement (1946) d id s t i p u l a t e th a t an
em p lo y er's I n te n tio n to f i r e o r l a y o f f should be communi
c a te d to th e Works C ouncil ap p ro x im ately two weeks In ad
v ance. (T his i s r e q u ir e d where an employee h a s been w ith
^P au l H. N orgren, op. c i t . . p. 199.
76
th e firm f o r a t l e a s t n in e m onthB .) Upon r e c e i p t o f t h i s
in f o r m a tio n , th e C o u n c il w i l l a tte m p t n e g o t i a t i o n by c a l l
in g a c o n fe re n c e in w hich r e p r e s e n t a t i v e s o f management and
th e l o c a l u n io n w i l l a sk th e d is c h a rg e d w orker to t e s t i f y
on h i s own b e h a l f . I f n e g o t i a t i o n f a i l s a t t h i s l e v e l ,
th e m a tte r w i l l be r e f e r r e d to th e n a t i o n a l u n io n , and
th e n c e to th e L abor M arket B oard, The L abor M arket Board
w i l l make i t s recom m endations by c o n s id e r in g f a o t o r s such
a s th e n ee d s o f th e e n t e r p r i s e , s k i l l , s e n i o r i t y , and th e
fa m ily r e s p o n s i b i l i t y o f th e w o rk e r. The LO and SAF a r e
e x p e c te d to h e lp In s e c u r in g com pliance w ith th e C o u r t’s
reco m m en d a tio n s•
An em ployer h a s th e f u l l r i g h t to d is m is s a w orker
w henever th e l a t t e r * s Job i s ta k e n o v er by la b o r - s a v i n g
d e v ic e . A Sw edish em ployer a tte m p ts to f in d work f o r th e
t e c h n o l o g i c a l l y d is p la c e d w o r k e r.10
J o i n t C o n s u lta tio n on Wages
In n e g o t i a t i n g th e n a tio n w id e re m u n e ra tio n s f o r
wage e a r n e r s , th e Sw edish C o n fe d e ra tio n o f T rade U nions and
t h e E m p lo y e r's C o n fe d e ra tio n m e re ly s e t th e g e n e r a l r a t e s
by o c c u p a tio n , a g e , d e g re e o f s k i l l and by g e o g ra p h ic a r e a .
I t I s l e f t to i n d i v i d u a l firm s and l o c a l u n io n s to
n e g o t i a t e t h e i r r e s p e c t i v e wages in a c c o rd a n c e w ith t h e i r
10I b id .
77
s p e c i f i c c o n d itio n s . L ocal union r e p r e s e n ta ti v e s meet
r e p r e s e n ta ti v e s o f the firm on s e v e r a l o ccasio n s to
n e g o tia te wages o r to a d ju s t wages to p a r t i c u l a r lo c a l
c o n d itio n s . I n v a r ia b ly , wage a d ju stm e n ts c r e a te d is p u te s
between w orkers on one sid e and em ployers on th e o th e r a t
the f a c to ry l e v e l . Three ty p e s o f wage ad ju stm e n ts can be
d is c e rn e d : (1) e x tr a com pensation d is p u t e s , (2) tim e r a t e
d is p u te s , and (3) p iece r a t e d is p u te s .
E x tra com pensation d is p u te s a r i s e from d if f e r e n c e s
o f c l a s s i f y i n g a job as o vertim e or norm al tim e work. I f
i t i s overtim e work, what base r a t e should be used?
A nother source o f d is p u te s come from v a c a tio n compensa
t i o n . For exam ple, w orkers who have been employed i r
r e g u la r ly or who have stopped w orking f o r a few months be
fo re v a c a tio n p e rio d s may ask f o r v a c a tio n com pensation.
Time r a t e problems a r i s e when w orkers demand d i f
f e r e n t wage g ra d e s than s u p e rv is o rs th in k i s a p p r o p r ia te .
For in s ta n c e , a group o f w orkers who have perform ed a
p a r t i c u l a r ta s k may w ish to be c l a s s i f i e d a s s e m is k ille d
w orkers.
P iece r a t e d is p u te s a re more numerous than th o se
about r a t e s o r e x tr a com pensation because a g r e a t e r p ro
p o rtio n o f f a c t o r y w orkers p r e f e r payment on a p ie c e r a t e
b a s i s . I t w i l l n o t be out o f p lace a t t h i s s ta g e to ex
p la in th e e v o lu tio n o f th e p ie c e r a t e system . As e a rly as
1637, a Swedish law s ta te d t h a t "... any hammersmith who
78
co u ld fo rg e more th a n 18 skeppund o f Iro n p e r week sh o u ld
he p a id 8 o r e f o r ea ch e x t r a skeppund p ro d u c e d ." '1 '1 Em
p lo y e r s fo u n d In t h i s p r o d u c t i v i t y wage sy stem a good to o l
f o r e x p l o i t i n g w orkers d u rin g th e e a r l y p e rio d o f In d u s
t r i a l i z a t i o n , much, o f c o u r s e , to th e d i s p l e a s u r e and
h a tr e d o f w o rk e rs . A lm ost to a man, th e y condemned p ie c e
work an d , a s th e y o rg a n iz e d , th e y s t r o n g l y a g i t a t e d f o r
i t s a b o l i t i o n . In condem ning th e sy ste m ,
. . . th e y co n ten d ed t h a t by d r i v i n g th e i n t e n s i t y
o f th e w o r k e r 's e f f o r t s up to an u n n a tu r a l p i t c h , i t
b ro u g h t a b o u t a r e d u c t io n i n th e q u a l i t y o f th e w ork,
I n ju r y t o th e w o r k e r 's h e a l t h , and a r i s e in th e number
o f a c c i d e n t s ; and t h a t by g iv in g th e more a v a r i c io u s
I n d i v i d u a l s an in c e n ti v e to work lo n g h o u r s , i t r e -
s u it e d i n m a l - d i s t r i b u t i o n o f Jobs and unem ploym ent.
E m ployers a rg u e d t h a t w o rk e rs have a n a t u r a l p r o c l i v i t y to
s h i r k work u n le s s t h e i r re m u n e ra tio n I s made a p o s i t i v e
fu n c tio n o f t h e i r o u tp u t. I t became n e c e s s a r y f o r l a b o r
and management to compromise and th e r e s u l t i n g agreem ent
stipulated that
The piece work price shall be determined wherever
possible by agreement between the worker and his
superior, before the work is started; it shall be so
calculated as to give the worker an 'overage' of at
least 25 percent above the wage he would receive if
he were on time work. Piece rates shall on no con
dition be set lower than the level which corresponds
to the worker's time rate earnings.13
11
I b i d . , p. 126
12I b i d . , p . 128
13I b i d . , p . 129
79
T his agreem ent helped to change l a b o r 's h o s t i l e
a t t i t u d e tow ards p ie c e work; h e n c e fo rth p iece r a t e s e t t i n g
was s u b je c t to J o in t n e g o tia tio n between la b o r and manage
m ent, and th e g u a ra n te e f e a tu re gave to la b o r the in c e n
t iv e to work h a r d e r. Labor and management found advantages
in p ie c e work. To la b o r , p ie ce work was a means to h ig h e r
14
e a rn in g s and freedom o f s u p e rv is io n ; to management, i t
was a way o f a c h ie v in g h ig h e r o u tp u t and le s s a d m in is tra
t i v e c o s t. S ince 1910, every c o l l e c t i v e agreem ent h as had
a c la u se th a t p ie c e work s h a l l be a p p lie d w herever pos
s i b l e .
Two methods f o r s e t t i n g p ie c e work a re (1) the
s t r a i g h t p ie c e work, and (2) th e m odified in c e n tiv e method.
The s t r a i g h t p ie c e work r a t e i s determ ined in the same way
as in o th e r i n d u s t r i a l i z e d c o u n tr ie s . For example, a
la b o r e r i s paid so much f o r a u n i t of work done; an iro n
m iner may earn so much per m eter o f c lo th he weaves. A
v a r ia n t o f th is method i s th e group p ie ce work scheme. For
in s ta n c e , a group o f lu m b erjack s may be p aid fo r so many
p ie c e s o f lumber sawn; sin c e th e rem uneration belongs to
th e e n t i r e group, i t i s l e f t to th e in d iv id u a ls in th e
group to d iv id e th e sum In accordance w ith a predeterm ined
14
The h ig h e r e a rn in g s helped keep w orkers s a t i s
f ie d , e s p e c i a lly d u rin g th e p erio d o f wage fre e z e (1940-
1950).
80
p e rc e n ta g e ; t h i s p e rc e n ta g e i s a fu n c tio n o f s k i l l and
r e s p o n s i b i l i t y .
The second m ethod, th e m o d ified in c e n tiv e method,
i s a co m bination o f tim e work and p ie c e work. I t was
f i r s t in tro d u c e d w ith a view to e lim in a tin g th e d e f e c ts o f
th e o r d in a ry pure p ie c e w ork. I t I s v e ry d e b a ta b le
w h eth er th e m o d ified in c e n tiv e method does perform t h i s
f u n c tio n . I t i s a ls o o f I n t e r e s t to n o te t h a t th e modi
f i e d in c e n ti v e method h a s been used s p a r in g ly s in c e th e
in tr o d u c t io n o f tim e and m otion s t u d i e s .
Time and m otion s tu d i e s have proved an In d is p e n s a b le
te c h n iq u e f o r s e t t i n g p ie c e r a t e s . L abor and management
have warmly a c c e p te d t h i s e n g in e e rin g p r a c t i c e , and t h e i r
view s a r e e l i c i t e d d u rin g th e tim e and m otion s tu d i e s by
th e e x p e r t s . D isp u te s o f te n a r i s e from a d ju s tm e n ts of
p ie c e r a t e s to s u i t p a r t i c u l a r Jobs in a p l a n t . Through
th e p ro c e s s o f J o in t c o n s u lta t io n th e s e d i f f e r e n c e s are
Iro n e d o u t. Any th o rn y problem i s r e f e r r e d to th e c e n t r a l
em ployer and union a s s o c i a t i o n s f o r f u r t h e r d e l i b e r a t i o n .
J o i n t C o n s u lta tio n and th e Foreman
D isc u ssio n o f J o in t c o n s u lta tio n a t th e f a c to r y
l e v e l would be Incom plete w ith o u t m ention o f th e forem an.
As f i r s t l i n e s u p e r v is o r , th e foreman p la y s a d u a l r o l e in
th e p l a n t . In th e w o rk e rs ' h ie r a r c h y , th e forem an s i t s a t
th e to p o f th e totem p o le a s an employee who h as d i s -
81
tin g u ls h e d h im s e lf by h is te c h n ic a l com petence; in manage
m e n t's , he i s r e le g a te d to th e bottom and not c o n sid ered a
member o f th e m a n ag eria l h o u seh o ld . E conom ically, th e
foreman i s n o t w e ll o f f . He may work overtim e w ith h is
people b u t he i s n o t rew arded f o r h i s e x tra h o u rs aB a re
h i s s u b o rd in a te s . He i s d ep riv ed o f th e honor and r e s p e c t
which accompany management sin c e he i s u s u a lly n o t a c o l
le g e g ra d u a te . Management ex p ects him to communicate i t s
f e e l in g s and id e a s to w o rk ers; w orkers look to him as th e
spokesman f o r t h e i r g rie v a n c e s . Regarded by la b o r as a
t r a i t o r or a d o u b le - ta lk e r and by management as a r e n e
gade, he sta n d s v ic tim , n o t monarch, o f a l l t h a t he
s u rv e y s •
Swedish foremen have not met a b e t t e r f a t e than
t h e i r E n g lish o r American c o u n te r p a r ts . "... The f o r e
men have been p u t a s id e by th e d i r e c t c o n ta c ts between top
management and union o f f i c i a l s . " 1^ In th e f a c to r y he i s
bypassed by th e tim e stu d y departm ent when p ie c e r a t e s a re
s e t . Alone and u n re sp e c te d , th e foreman has been d riv en
to seek s h e l t e r in u n io n iz a tio n . A pproxim ately 90 p e rc e n t
o f foremen belong to th e Forem en's Union which i s a f
f i l i a t e d w ith th e C e n tra l O rg a n iz a tio n o f th e S a la r ie d Em
p lo y e es (TOO).1 ^ Members o f th e Forem en's Union a re a d -
]e
C h arles A. M yers, op. c l t . , p . 174
1 6 I b i d . , p p . 8 4 - 8 5 .
82
v is e d to a tte n d foremen*s t r a i n i n g sch o o ls in Stockholm
and to a tte n d th e fo rem en 's co n feren ces where top manage
ment o f f i c i a l s d is c u s s company p o l i c i e s , problem s and
17
p la n s . R ecent a c t i v i t i e s have c o n trib u te d much toward
sa lv a g in g some o f the fo rem en 's o ld a u t h o r it y .
Nor i s th iB a l l . The foreman i s re p re s e n te d in the
Works C o u n cil, where he a c t i v e l y p a r t i c i p a t e s and r e tu r n s
to h i s group to r e p o r t p ro cee d in g s o r the d is c u s s io n s .
Thus, i t i s a common p r a c tic e in Sweden f o r foremen to
le a r n o f m anagem ent's p la n s p r io r to h is em ployees.
J o in t C o n s u lta tio n : A C ritiq u e
The Works C ouncils have h elp ed to c r e a te b e t t e r
labor-m anagem ent r e l a t i o n s a t th e fa c to ry l e v e l . At t h e i r
In c e p tio n , unions and em ployers had t h e i r f e a r s : em
p lo y e rs were a f r a id t h a t worker p a r t i c i p a t i o n would u su rp
t h e i r r i g h t s in d ecisio n -m ak in g ; unions f e l t i t would win
away em ployees' lo y a lty to th e union and e v e n tu a lly u n d e r
mine u n io n s' b a rg a in in g power. Such fe a r s have been d i s
c a rd e d . Employers have found w o rk e rs' p a r t i c i p a t i o n a
v a lu a b le a s s e t in p la n n in g because they a re a b le to
h a rn e s s d iv e rs e knowledge, d i f f e r e n t v ie w p o in ts, and
com plem entary B k llls .
17
D orothea de S c h w e in itz , op. c i t . . pp. 52-55*
83
Unions have found ;)oInt c o n s u lta t io n e x t r a o r d i n a r i
ly u s e f u l b ecause i t h a s made l o c a l u n io n s th e w atchdogs
o f union c o n t r a c ts and w e lfa re program s a t th e l o c a l
l e v e l , w h ile any c o n f l i c t i n g is s u e s a re alw ays r e f e r r e d
to th e to p l e v e l s . J o i n t c o n s u lta tio n o f f e r s wage e a r n e r s
and l o c a l union p r e s id e n ts th e s a t i s f a c t i o n o f m eetin g
w ith management a s ’'e q u a ls " in a d e m o c ra tic m anner. I t
f a c i l i t a t e s th e developm ent o f m u tu al c o n fid e n c e and
u n d e rs ta n d in g w ith in th e f ir m s . I t p ro v id e s one avenue
f o r d e c e n t r a l i z a t i o n , and i t en co u rag es th e s o lu tio n o f
problem s on th e l o c a l l e v e l .
J o i n t c o n s u lta t io n h as n o t made much headway in
p e rs o n n e l a d m in is tr a tio n and two-way com m unication. P e r
so n n e l a d m in is tr a tio n in Sweden does n o t e x h i b it th e same
m a tu rity a s In o th e r advanced c o u n t r i e s . New methods o f
r e c r u itm e n t, s e l e c t i o n and p la cem en t, employee in d u c tio n
and t r a i n i n g a re f a i r l y new in Sweden. Two-way communica
t i o n w ith in e n t e r p r i s e s n eed s some im provem ents. I n t e r n a l
com m unication i s v i t a l l y im p o rta n t s in c e i t i s th e e s s e n
t i a l chan n el w hich c o n n e cts i t s members to g e th e r and p e r
m its them to sh a re in th e i d e a l s , i d e a s , g o a ls and m issio n
18
o f th e o r g a n iz a tio n . But com m unication ta k e s p la c e b e -
1 8
W illiam H. Newman and C h a rle s E. Summer, J r . , The
P ro c e ss o f Management: C oncepts, B e h a v io r, and P r a c tic e
^Englewood c l i r f s , flew J e r s e y : P r e n t l c e - H a l i , i n c . , xyE2),
pp. 512-529.
84
tween two o r more persons only when th e r e c e iv e r u n d er
s ta n d s what th e sender le t r y in g to convey.
The norm al te ch n iq u e s and d e v ic e s used In th e
f a c t o r i e s a re p o s te rs , c h a r ts and annual r e p o r t s ; hut
th e s e a re n o t e f f e c tiv e enough because th e language i s too
te c h n ic a l f o r most w orkers to u n d e rsta n d . Thus, i t i s a
common s ig h t to see w orkers walk by p o s te r s o r b ru sh a s id e
company r e p o r t s . To be e f f e c t i v e , management w i l l have to
d e v ise a common language which w orkers u n d ersta n d and t a l k
o f th in g s t h a t a re o f Immediate concern to w orkers.
I t i s q u ite e a rly to a p p ra is e th e e f f e c t s o f 3oint
c o n s u lta tio n on Swedish i n d u s t r i e s . D if fe re n t firm s have
had d i f f e r e n t e x p e rien ce s and v a rio u s employees have had
v a ry in g o p in io n s .
85
CHAPTER V
W AGES AND INFLATION
In tro d u c tio n
The r e l a t i v e l y few la b o r d is p u te s In Swedish Indus
t r i a l r e l a t i o n s c a l l f o r an exam ination o f wage d e t e r
m in a tio n in Sweden. T his c h a p te r w i l l examine p a s t and
c u rr e n t th e o r ie s o f wage d e te rm in a tio n as p re se n te d in
economic th e o ry , t h e i r shortcom ings and v a lu e s , and an
a n a ly s is o f wage d e te rm in a tio n as i t i s c a r r ie d on in the
Swedish la b o r m ark et.
Of th e numerous wage th e o r ie s , m ention w i l l be made
o f (1) th e m edieval " j u s t w age," (2) th e c l a s s i c a l sub
s is te n c e wage th e o ry , (5) th e wage fund th e o ry , and (4)
th e b a rg a in in g th e o ry .
The c e n tr a liz e d wage n e g o tia tio n between th e
Swedish C o n fed eratio n o f Trade Unions and th e Em ployers1
C o n fed eratio n w i l l be an aly zed a g a in s t th e economic
th e o r ie s o f wage d e te rm in a tio n , where a p p lic a b le . The
wage p o lic y in Sweden w i l l be analyzed by e v a lu a tio n of
th e r e s u l t s achieved a g a in s t th e aim s.
Wage T h e o rie s — P a s t and P re s e n t
86
M edieval 1 1 J u s t Wage1 1 Theory
M edieval s c h o la r s p h ilo s o p h iz e d t h a t a " J u s t p r ic e "
sh o u ld p r e v a i l in h o th re s o u rc e and commodity m a rk e ts . The
la b o r m a rk e t, a " J u s t w age," was d e fin e d a s any wage t h a t
would e n a b le th e w orker to m a in ta in h i s accustom ed way o f
l i v i n g . I t seems q u ite e v id e n t t h a t th e J u s t - p r i c e hypo
t h e s i s was p r e j u d i c i a l l y s e t so t h a t th e s t a t u s quo o f th e
s t a t i c s o c ie ty would be m a in ta in e d , s in c e i f such a " p r ic e "
was u n i v e r s a l l y a c c e p te d a p e a s a n t would n o t be p a id
enough to a llo w him to Jump o v e r th e c l a s s l i n e . At th e
same tim e , i t c o n ta in s an Im p o rta n t modern c o n c e p t, i . e . ,
th e a d ju stm e n t o f wages to changes in th e c o s t o f l i v i n g .
S u b s is te n c e Theory o f Wages
The C l a s s i c a l econom ists th e o r iz e d t h a t wages in
th e lo n g run would g r a v i t a t e to th e l e v e l which was a d e
q u a te to s u s t a in a f a m ily . Of c o u r s e , th e r e would be
changes in wages in th e s h o r t ru n ; wages h ig h e r th a n th e
s u b s is te n c e l e v e l would cause I n c r e a s e s in th e p o p u la tio n
and th e co n co m itan t In c re a s e in th e la b o r f o rc e would
d e p re s s w ages; wages w hich were below s u b s is te n c e l e v e l s
would c r e a te s t a r v a t i o n , i n f a n t m o r t a l i t y , and p o stp o n e
ment o f m a rria g e s which would e v e n tu a lly red u ce th e la b o r
f o r c e , th u s pu sh in g wages up to t h e i r norm al s u b s is te n c e
87
i
l e v e l . In t h i s sim p le a n a l y s i s , th e su p p ly cu rv e o f
l a b o r was assumed to be p e r f e c t l y e l a s t i c , hence changes
in th e demand sc h e d u le would n o t e l i c i t any perm anent
changes in w ages.
Adam Sm ith p o in te d o u t t h a t th e lo n g ru n t r e n d o f
wages would be i n c r e a s i n g l y upward due to economic p r o
g r e s s . R icard o b e lie v e d t h a t w ith econom ic p r o g r e s s , t o t a l
wages would r i s e , b u t n o t n e c e s s a r i l y i n d i v i d u a l w ages.
K a rl Marx f e l t t h a t w h ile r e n t w ould r i s e in th e lo n g ru n ,
th e grow th o f m o n o p o lies and r e c u r r e n c e o f econom ic c r i s e s
w hich w ere in h e r e n t in c a p i t a l i s m would c o n t r i b u t e to d i s
m a lly low wages and th e m is e r a tio n o f th e w orking man.
C l a s s i c a l w r i t e r s a ls o showed th e p r e v a le n c e o f wage
d i f f e r e n t i a l s in th e la b o r m a rk e t. As an o b s e rv e r o f
r e a l i t y , S m ith rem arked t h a t wage d i f f e r e n t i a l s e x i s t e d
and he a t t r i b u t e d them to d i f f e r e n c e s in le n g th s o f t r a i n
in g , d e x t e r i t y , p le a s a n tn e s s and u n p le a s a n tn e s s o f a
p a r t i c u l a r 3ob. R ic a rd o and Marx p o in te d o u t t h a t a
s k i l l e d l a b o r e r e a rn e d more th a n an u n s k i l l e d w o rk e r.
M althus showed t h a t a r t i s t s p o s s e s s e d monopoly pow ers; and
J . S. M i l l , in h i s P r i n c i p l e s , o b se rv e d t h a t wage d i f
f e r e n t i a l s e x i s t e d b ec au se o f econom ic and s o c i a l im p e d i
m ents w hich p re v e n te d p e o p le from e n t e r i n g th e p r o f e s s io n s
^D avld R ic a r d o , P r i n c i p l e s o f P o l i t i c a l Economy and
T a x a tio n (London: J . M. Dent & S ons, L t d . , 1 8 2 1 ), 1 s t
e d i t i o n , p . 235*
88
and o th e r good paying ;Jobs.
An im p o rta n t c o n trib u tio n to wage th e o ry was made
by Adam Smith when he dem onstrated th e im portance o f
b a rg a in in g in wage d e te rm in a tio n . He showed t h a t the
"Wages o f la b o r depend everywhere upon th e c o n tr a c t u s u a l
ly made between th e se two p a r t i e s ( i . e . , employee and em
p lo y e r) whose i n t e r e s t s a re by no means th e sam e."2 This
c o n tr a c t had been a r r iv e d a t through th e b a rg a in in g
s tr e n g th s o f th e p a r t i e s . Having re c a n te d th e d o c trin e
o f th e wage fund, J . S. M ill l a t e r ad v ised w orkers to
u n io n iz e and to a s s a i l th e im pregnable b a rg a in in g p o s i
ti o n s o f em ployers.
Three w eaknesses can be d is c e rn e d . The main weak
n e s s in th e s u b s is te n c e th e o ry o f wages i s th e n e g le c t of
s h o r t run w ages. The s u b s is te n c e th e o ry of wages was
m ainly a lo n g run h y p o th e s is .
S econdly, th e re was some vagueness in th e th e o ry .
S u b siste n c e was u n d ersto o d to mean n o t only b are n e c e s
s i t i e s o f l i f e b u t a ls o c e r t a in minimum lu x u r ie s . In th e
words o f T o rre n s, a s u b s is te n c e l i v i n g in c lu d e s th e '
minimum s ta n d a rd o f l i v i n g in a p a r t i c u l a r c o u n try .
Hence, i f th e l i v i n g s ta n d a rd r o s e , th e s u b s is te n c e wage
2
Adam Sm ith, An In q u iry in to th e N ature and Pauses
o f th e W ealth o f N atio n s (v o l. I , 6 th e d itio n ) (London:
Methuen and C o., L td ., 1950), p. 68.
89
would be h ig h e r . T h e re fo re , a fix e d h o r iz o n ta l sub
s is te n c e curve as p o rtra y e d by th e C la s s ic a l econom ists
seems in c o n s is te n t. In h is P o l i t i c a l Economy. M althus
p o in te d o u t th e v a r ia b le n a tu re o f th e " h a b itu a l1 ' sta n d a rd
o f l iv i n g which determ ined n a t u r a l wages.
T h ird ly , th e s u b s is te n c e th e o ry o f wages emphasized
th e supply sid e o f w ages. With th e supply schedule a l
most p e r f e c t ly e l a s t i c , changes in demand could n o t e l i c i t
any changes in w ages. A lthough th e w r i t e r s observed
s i t u a t i o n s where th e m arket wage would d iv erg e from th e
n a t u r a l wage, t h i s was only tem porary.
Wage Fund Theory o f Wages
The weakness o f th e s u b s is te n c e wage th e o ry b rought
f o r t h a new th e o ry —wage fund. The wage fund th e o ry o f
wages d id n o t r e a l l y re p la c e the s u b s is te n c e th e o ry , but
r a t h e r supplem ented i t .
In a n u t s h e l l , th e wage fund th e o ry made wages
s o le ly dependent upon th e s iz e o f th e la b o r fo rc e and th e
wage fund a v a i l a b l e . The wage fund was a c e r t a in p ro p o r
tio n o f s o c i e t y 's c a p i t a l which em ployers advanced to em
p loyees a t th e b eg in n in g of th e p ro d u c tio n p ro c e s s . I t s
p r in c ip a l weakness l i e s in th e f a c t t h a t i t conceived o f
the p ro d u c tio n p ro c e ss as a s to c k , r a t h e r than a flo w .
A nother d i f f i c u l t y o f th e th e o ry i s t h a t i t does n o t ex
p la in f a c t o r s u b s t i t u t i o n by th e em ployer, i . e . , th e p ro
p o rtio n s by which la b o r and c a p i t a l a r e s u b s t itu te d f o r
9 0
3
each o t h e r . However, p r o t a g o n i s t s o f wage fund con
c lu d ed t h a t th e a v e ra g e wage r a t e ca n n o t r i s e u n le s s th e
c a p i t a l s to c k d o e s . Modern e c o n o m ists, i t i s i n t e r e s t i n g
to n o t e , have re a c h e d th e same c o n c lu s io n b u t in a d i f
f e r e n t way, i . e . , r i s i n g wages r e q u i r e i n c r e a s i n g c a p i t a l ,
b u t th e r i s i n g wages r e s u l t n o t from i n c r e a s i n g th e wage
fund b u t from I n c r e a s in g m a rg in a l p r o d u c t i v i t y .
I t seems t h a t th e s u b s i s te n c e wage th e o ry and wage
fund th e o ry d id a p p ly t o e a r l y n i n e t e e n t h c e n tu ry B r i t a i n
and can a p p ly to l e s s e r d ev elo p ed c o u n t r ie s o f to d a y , i f
a l l th in g s a re e q u a l. In l e s s e r d ev elo p ed c o u n t r i e s ,
wages w i l l n o t o n ly depend on c a p i t a l b u t a l s o on w h eth er
c a p i t a l 1 b u t i l i z e d p r o d u c tiv e ly o r u n p r o d u c tiv e ly , and
how i n t e n s i v e l y i t i s u s e d . The wage fund th e o ry l o s t I t s
a p p e a l when i t was r e c o g n iz e d t h a t i t d id n o t f i x a r i g i d
l e v e l f o r w ages.
M a rg in a l P r o d u c t i v i t y Theory o f Wages
As i n d u s t r i a l i z a t i o n made i t s phenom enal s t r i d e s ,
p o l i t i c a l e c o n o m ists g ro p ed f o r an e x p la n a tio n o f how
wages co u ld be d e te rm in e d from a p u re ly f u n c t i o n a l p o in t
o f v iew . A more p e n e t r a t i n g a n a l y s i s was s u p p lie d by von
^The f a c t o r s u b s t i t u t i o n 1 b a f u n c tio n o f th e r e l a
t i v e m a rg in a l c o s t o f l a b o r and c a p i t a l a s w e ll a s th e
v a lu e o f t h e i r m a rg in a l p r o d u c ts . We c a n n o t e x p la in why
th e p r o p o r tio n s o f c i r c u l a t i n g c a p i t a l and f ix e d c a p i t a l
change w ith o u t th e m a rg in a l c o n c e p ts , p r o d u c t i v i t y and
f a c t o r s u b s t i t u t i o n .
91
• i
Thunen. He concluded t h a t firm s should sto p employing
f a c t o r s a t a p o in t where the l a s t f a c t o r 's c o s t e x a c tly
e q u a ls th e value o f th e added p ro d u c t, and th a t wages (o r
th e r e tu r n s to th e human f a c t o r ) should be determ ined by
th e p r o d u c tiv ity o f th e l a s t u n it employed. H is a n a ly s is
4
ushered in th e m a rg in al p r o d u c tiv ity th e o ry o f wages.
M arginal p r o d u c tiv ity th e o ry a s s e r t s t h a t given
la r g e numbers o f buyers and s e l l e r s , endowed w ith p e r f e c t
knowledge o f m arket c o n d itio n s , buying o r s e l l i n g a homo
geneous s e r v ic e , w ith f r e e e n tra n c e to and e x i t from th e
m ark et, m o b ility o f f a c t o r s and w ith f l e x i b l e p r ic e s , an
employee w i l l be p aid a wage eq u al to th e v a lu e o f th e
in c re m e n ta l a d d itio n to p ro d u c tio n . Any d iv e rs io n from
t h i s co m p e titiv e wage w i l l e l i c i t fo rc e s which w ill
o p e ra te to b rin g th e wage back to i t s form er e q u ilib riu m
5
p o s it io n . In th e long ru n , th e m a rg in a l p r o d u c tiv ity
th e o ry m a in ta in s t h a t th e le v e l o f wages w i l l be d e t e r
mined by the c a p i t a l - l a b o r r a t i o . This long run concept
i s prem ised on th e f a c t th a t l a b o r 's p r o d u c tiv ity i s a
d i r e c t p o s itiv e fu n c tio n o f c a p i t a l . Hence, a high l e v e l
o f c a p i t a l r e l a t i v e to th e q u a n tity o f la b o r employed w i l l ,
4
P h i l l i p 0 . Newman, A rth u r D. G ayer, and M ilton H.
S pen cer, Source R eadings in Economic Thought (New York:
tf. W. N orton & Company, I n c ., 1954), pp. 320, 327-330.
5
This occu rs only d u rin g th e s h o r t ru n .
9 2
c e t e r i s p a r i b u s , g iv e a h ig h l e v e l o f w ages; th e r e v e r s e
i s a ls o t r u e . An em ployer w i l l t r y to e q u a liz e th e r a t e
o f m a rg in a l s u b s t i t u t i o n in a l l th e f a c t o r m a rk e ts . I f th e
la b o r p r ic e i s h ig h r e l a t i v e to c a p i t a l , he w i l l s u b s t i t u t e
c a p i t a l f o r l a b o r ; i f c a p i t a l i s h ig h , he w i l l s u b s t i t u t e
la b o r f o r c a p i t a l .
D is a p p o in tin g ly , th e m a rg in a l p r o d u c t i v i t y th e o ry o f
wages does n o t g iv e us a co m p lete e x p la n a tio n o f wage
d e te r m in a tio n . I t e x p la in s o n ly one a s p e c t — th e demand
s id e o f th e l a b o r m a rk e t— and n e g l e c t s o r ta k e s f o r g ra n te d
t h e su p p ly s id e o f th e la b o r m a rk e t. L ik e th e above
t h e o r i e s , i t workB sm oothly o n ly under s p e c i a l a s s u m p tio n s —
p e r f e c t c o m p e titio n . I t i s q u i t e d iv o rc e d from th e
r e a l i t i e s o f l i f e and I t n e g l e c t s th e b a r g a in in g a d v a n ta g e s
and th e s o c i o l o g i c a l and i n s t i t u t i o n a l a s p e c t s o f th e wage
p ro b lem .
The B a rg a in in g T heory o f Wages
D i s s a t i s f a c t i o n w ith th e above t h e o r i e s and th e
em ergence o f la b o r u n io n s c a l l e d f o r a more r e a l i s t i c wage
th e o r y . The c l a s s i c a l t h e o r i e s had been o n e - s id e d and t h i s
o n e - s id e d n e s s h a s been m o tiv a te d by an a r d e n t d e s i r e to
p r e s e r v e a n e a t t h e o r e t i c a l s t r u c t u r e u n a llo y e d by d i s -
e q u i l i b r a t i n g f o r c e s such a s unemployment and b a r g a in in g .
T h is was co u p led w ith th e e t h n o c e n t r i c l t y o f w r i t e r s to
d e fe n d c a p i t a l i s m a g a i n s t th e c a u s t i c c r i t i c i s m s o f
93
s o c i a l i s t w r i te r s who were in c r e a s in g in number a t th a t
tim e . T his incom plete th e o ry o f wages was bequeathed to
th e tw e n tie th c e n tu ry . N e ith e r th e o ry s tr e s s e d b a rg a in in g
because i t was reg ard ed a s u to p ia n .
The 1930*s saw b a rg a in in g ta k in g i t s s e a t w ith in
th e framework o f c u r r e n t economic th e o ry because p e r f e c t
c o m p etitio n was found to be an e x c e p tio n a l m arket form .
The d isc o m fo rtin g t r u t h dawned upon econom ists t h a t p ric e
and wage th e o ry should be widened to In c lu d e b a rg a in in g .
The q u e s tio n o f w hether th e la b o r m arket i s com
p e t i t i v e o r a d m in iste re d to o k th e f o r e f r o n t . In o th e r
w ords, i s th e p r ic e p aid to a w orker determ ined by th e
su p p ly and demand fu n c tio n s o r i s i t a d m in iste re d w ith o u t
any re g a rd to q u a n t i t i e s demanded and q u a n t i t i e s su p p lied ?
E m p iric a l evidence s u b s t a n t i a t e s th e id e a th a t th e la b o r
m arket i s s t r u c t u r e d , i . e . , th e m arket i s c o n tr o lle d
th ro u g h s p e c ia l m arket mechanisms such as la b o r law and
union c o n t r a c t s . “These m arket mechanisms la y down th e
r u l e s f o r th e re c ru itm e n t and h i r i n g o f w orkers, the
a d m in is tra tio n o f wages and s a l a r i e s , o p p o r tu n itie s f o r
advancement to o th e r jobs in h ig h e r la b o r g ra d e s , Job
r i g h t s d u rin g l a y - o f f and r e c a l l , and th e te n u re o f
9 4
em ploym ent." I f th e m a rk et I s s t r u c t u r e d , th e n th e wage
r a t e n e g o t i a t e d i s n o t th e same t h i n g as a p r i c e f ix e d
th ro u g h c o m p e titiv e b id d in g . H ence, a r e l e v a n t th e o ry o f
wages m ust in c lu d e a t l e a s t " . . . a p r im it iv e m odel o f
th e b a r g a in in g p ro c e s s and o f th e i n s t i t u t i o n a l , p o l i t i c a l
and econom ic f o r c e s w hich i t r e f l e c t s . '
The c h a lle n g e was ta k e n up by th e Webbs. In t h e i r
c h a p te r on "The H ig g lin g o f th e M a rk e t," th e y d e m o n stra te d
th e c l a s s i c a l s ta te m e n t ( o f Adam S m ith) o f t h e h e l p l e s s
n e s s o f an i n s i g n i f i c a n t w orker b e f o r e a r e l a t i v e l y w e ll
in fo rm ed o l l g o p s o n l s t i c em ployer and th e y s u g g e s te d t h a t
8
w o rk e rs m ust u n io n iz e . John Maynard Keynes gave t h e o r e t i -
9
c a l s u p p o rt f o r th e b a r g a in in g t h e s i s . In i t s modern
v e r s i o n , th e b a r g a in in g th e o ry assum es th e p re s e n c e o f two
p a r t i e s w ith o p p o sin g i n t e r e s t . The union ( I . e . , th e mono
p o l i s t ) a tte m p ts to o b ta in a s h ig h a wage as I t can ; th e
60 . W. P h e lp s , "A S t r u c t u r a l Model o f t h e U. S.
L abor M a rk e t," I n d u s t r i a l and L abor R e la t io n s R eview . V ol.
1 0 , Ho. 3, A p r i l , Iyt>7* P- 402.
*^Otto E c k s te in and Thomas A. W ilso n , "The D e te r
m in a tio n o f Money Wages In Am erican I n d u s t r y ," Q u a r te rly
J o u r n a l o f E conom ics, V o l. LXXVI, Ho. 3, A u g u st, xyfay, ip.
5b t:
Q
S id n ey and B e a tr ic e Webb, I n d u s t r i a l Democracy
(Hew Y ork: Longmans S re en & C o ., IncT.T 1911)» p p . 6 5 4 -7 1 .
9
John Maynard K eynes, The G e n e ra l Theory o f Employ
m e n t. I n t e r e s t and Money (Hew Y ork: H a rc o u rt, B race and
W orld, I n c . , 1964, 1 s t H a rb in g e r E d i t i o n ) , p p . 262-264.
95
em ployer (th e m onopsonist) I s t r y i n g to buy s e r v ic e s a t
th e lo w e s t p o s s ib le p r i c e . S in ce th e u n io n 's g a in s a r e th e
e m p lo y e r's l o s s e s , each p a r ty a tte m p ts to brow beat th e
o th e r in y i e l d i n g to i t s demands. The p a r t i e s a re
m o tiv a te d to r e l i n q u i s h o nly when th e p a in s o f r e l i n q u i s h
ment a re e q u a l t o , o r l e s s th a n , th e re w a rd . T h e re fo re ,
we have u t i l i t y and d i s u t i l i t y fu n c tio n s and, as th e
p a r t i e s le a r n more from each o th e r d u rin g th e b a rg a in in g
p ro c e s s , th e s e f u n c tio n s undergo change. There i s a
c o n s id e ra b le d eg ree o f u n c e r t a in ty r e g a r d in g th e a p p ro
p r i a t e demand and su p p ly f u n c tio n s o f a b a rg a in in g
p a r t y . U n d e r t h i s c o n d itio n o f u n c e r t a in ty , i t i s q u ite
a p p r o p r ia te t h a t th e demand f o r la b o r should be r e p r e s e n te d
by a band o f l i n e s and n o t a s in g le l i n e , and t h a t th e sub
se q u e n t i n t e r s e c t i o n o f th e fu n c tio n s must be a zone and
n o t a p o i n t . C o n seq u en tly , th e a c t u a l r a t e s and number o f
w orkers employed must come a c c i d e n t l y , th ro u g h th e b a r g a in
in g s k i l l o f th e p a r t i e s . The b a r g a in in g th e o ry o f wages
u ses th e m a rg in a l a n a ly s is b u t i t does n o t r e l y on th e
same c o m p e titiv e mechanism w hich p r e v a i l s in th e New York
S tock E xchange.
A b a rg a in in g th e o ry o f wages h as c e r t a i n a d v a n ta g e s.
F i r s t , i t r e v e a ls b a rg a in in g p ro c e d u re s and s e ttle m e n t in
1 0
B evars Dupre Mabry, "The P ure Theory o f B a rg a in
in g ," I n d u s t r i a l and Labor R e la tio n s R eview , V ol. 18, No.
4 , J u l y , 1965, PP. 479-502.
96
th e wage d e te rm in a tio n . Secondly, i t has an advantage
over b i l a t e r a l monopoly because i t p ro v id es a d e term in ate
s o lu tio n to th e term s o f the b a rg a in , whereas b i l a t e r a l
1 1
monopoly g iv e s an in d e te rm in a te s o lu tio n . T h ird ly , i t
i s s u p e rio r to m a rg in a l p r o d u c tiv ity in e x p la in in g wage
d e te rm in a tio n in th e s h o r t ru n . " I f th e b a rg a in in g -
power th e o ry was c o r r e c t as a lo n g run wage e x p la n a tio n ,
on the o th e r hand, r e a l wage improvement o f th e 'w orking
c l a s s ' would have had to w a it upon th e developm ent o f a
r e l a t i v e l y pow erful tra d e -u n io n movement. But t h i s was
12
sim ply n o t th e h i s t o r i c a l o rd e r o f e v e n ts ."
As an economic th e o ry , th e b a rg a in in g th e o ry o f
wages h as l i m i t a t i o n s . I t i s d i f f i c u l t to q u a n tify th e
v a r i a b l e s , such as n e t y ie ld s o r g ain s and im pact o f
s t r a t e g i e s ad o p ted . An Im p o rtan t shortcom ing o f th e
b a rg a in in g th e o ry i s i t s e x c lu siv e emphasis on th e
b a r g a in in g power In wage d e te rm in a tio n . I f b a rg a in in g
power i s th e only f a c t o r In wage d e te rm in a tio n , a pow erful
union w i l l have no upper l i m i t s in s e t t i n g wages w ith a
weaker em ployer. S ince t h i s i s n o t th e c a se , I t fo llo w s
t h a t o th e r f a c t o r s , such as "m arg in al p r o d u c tiv ity " or the
•^W illiam E e lln e r uses b i l a t e r a l monopoly th e o ry in
a n a ly z in g wage d e te rm in a tio n . " P ric e s and Wages Under B i
l a t e r a l M onopoly," Q u a rte rly J o u rn a l o f Econom ics. Vol.
LXI, No. 4 , A ugust, ±y4r, pp.
12
Abraham L. G itlo w , Labor Economics and I n d u s t r i a l
R e la tio n s (Homewood, I l l i n o i s 's R ichard D. Irw in , I n c .,
1957), p . 5^0.
v a lu e p ro d u ced , do come I n to p la y in wage d e te r m in a tio n .
So f a r we have a tte m p te d an a n a l y s i s o f p a s t and
c u r r e n t t h e o r i e s o f wage d e te r m in a tio n . L e t us now tu r n
to how wages a re a c t u a l l y s e t in th e S w edish la b o r m a rk e t.
Wage D e te rm in a tio n in Sweden
LO-SAF Wage N e g o tia tio n
Wages a re d e te rm in e d in Sweden th ro u g h n e g o t i a t i o n
betw een th e LO and th e SAF. C o n tra ry to w hat c l a s s i c a l
su p p ly and demand f o r c e s le a d us to e x p e c t, wage d e t e r
m in a tio n i s in f lu e n c e d g e n e r a lly by econom ic, p o l i t i c a l
and s o c i a l f o r c e s a s w e ll as th e b a r g a in in g a b i l i t y o f
l a b o r u n io n s and m anagem ent. A p e c u l i a r f e a t u r e in
Sw edish wage n e g o t i a t i o n i s a com plete ab sen ce o f g o v e rn
m e n ta l i n t e r v e n t i o n . The governm ent may have an in fo rm a l
t a l k w ith th e u n io n s and th e N a tio n a l I n s t i t u t e f o r
Economic R e se a rc h may a tte m p t to g iv e th e econom ic p i c t u r e
o f wage p ro b lem s, d evelopm ents and f u t u r e p r o s p e c ts ; b u t
th e s e a r e m e re ly c a s u a l s u g g e s tio n s .
P r i o r to n e g o t i a t i o n s , th e Sw edish Trade U n io n s'
A s s o c ia tio n i s b r i e f e d by i t s R e se a rc h D epartm ent on wage
s t a t i s t i c s , c la im s o f d i f f e r e n t groups o f w o rk e rs and r e
s u l t s o f p a s t a g re e m e n ts. D uring th e p r e p a r a to r y B ta g e s,
th e LO and SAF may in f o r m a lly m eet to d is c u s s w h eth e r
wage n e g o t i a t i o n w i l l be co n d u cted a t n a t i o n a l u n ion
l e v e l s o r a t th e to p l e v e l . At LO-SAF l e v e l s th e wage
98
agreem ents th u s n e g o tia te d a re m erely "fram e ag reem en ts,"
in the sense t h a t only wage in c re a s e s which a re to be
in c lu d e d in in d iv id u a l in d u s tr y wage agreem ents a r e recom
mended.^*^
In o rd e r th a t th e fram e agreem ents w i l l be accep ted
by t h e i r c o n s titu e n c ie s , LO and SAF g iv e much a t t e n t i o n to
th e p o s itio n s o f each in d u s tr y . S p e c ia l in d u s t r i e s which
a r e in u n fav o rab le s i t u a t i o n s a re g ra n te d "e x c e p tio n s"
to th e g e n e ra l r u l e . F u rth erm o re, sin c e LO and SAF have
c o n tro l of th e p u rse , th ey a r e l i k e l y to deny members who
seek wages h ig h e r than th e frame agreem ent p ro v id e s. I t
i s a ls o th e p o lic y o f th e c e n t r a l b o d ie s to have t h e i r
r e p r e s e n ta ti v e s a t th e c o l l e c t i v e b a rg a in in g ta b le o f th e
lo c a l b ran ch es.
I t i s i n t e r e s t i n g to n o te t h a t LO-SAF frame a g re e
ments a re v ery i n f l u e n t i a l on th e e n t i r e w age-earning
p o p u la tio n , even though t h e i r members o r p a r tn e rs con
s t i t u t e ro u g h ly 25 p e rc e n t o f th e a c tiv e w age-earning
14
group. T his unusual in f lu e n c e r e s u l t s from th e f a c t
t h a t frame agreem ents do n o t d is c rim in a te a g a in s t members
o r nonmembers and the frame agreem ents se rv e as a model
■ *"^L 0 and SAF make wage in c re a s e s upon the R eport o f
th e M in istry o f Finance w hich I n d ic a te s how much o f an i n
c re a se in income th e economy can s u p p o rt.
14
Jean Mouly, "Wages P o lic y in Sweden I I , " I n t e r
n a t io n a l Labour Review. V ol. 95» No. 3» March, 196 Y» P«
173.
99
f o r o th e r employees and employers* F or in s ta n c e , "The
f ix in g o f a g r i c u l t u r a l p r ic e s has f o r some y e a rs p a s t been
lin k e d w ith th e movement o f wages provided f o r in th e
frame agreem ents; in 1959 an agreem ent v a l id f o r s i x y e a rs
was signed by th e government and th e a g r i c u l t u r a l p r o
d u c e rs , and i t took th e income o f w orkers in in d u s tr y as a
r e fe re n c e b a s is f o r d eterm in in g th e Incomes o f th e
f a r m e r s . " ^
Wage C r i t e r i a
F orm erly, th e c r i t e r i a f o r s e t t i n g wages were age
and e x p e rie n c e , o c c u p a tio n , sex, c o s t o f l i v i n g , and
p r o d u c tiv ity . R egarding th e sex c r i t e r i o n , th e n a t io n a l
agreem ents had s e p a ra te r a t e sch ed u les f o r women, which in
most c a ses were much low er than th o se f o r men. The age
and ex p e rien ce c r i t e r i o n re q u ire d t h a t a l l w orkers under
th e age o f 21 should be p la c e d in th e low er c la s s and those
above 21 in th e upper c l a s s . The term "e x p erien c e" r e
f e r re d to th e le n g th o f tim e an employee " . . . had spent
on a p a r t i c u l a r tra d e or o c c u p a tio n ." '1 '^ Those w orkers who
had sp e n t more tim e on a tr a d e n a t u r a l l y were p aid h ig h e r
r a t e s . The degree o f s k i l l re q u ire d in an o ccu p atio n o r
tr a d e c o n s titu t e d a n o th e r common c r i t e r i o n f o r s e t t i n g
1 5 I b l d .
16
P aul H. N orgren, on. c l t . , pp. 103-115.
100
wage r a t e s . O c c u p a tio n a l s k i l l p la y e d an Im p o rta n t r o l e
in th e m ass p r o d u c tio n i n d u s t r i e s such a s wood p u lp , p a p e r
and lu m b e r. In su c h i n d u s t r i e s , th e a g e -e x p e rie n c e
c r i t e r i o n p la y ed a sm a ll r o l e in wage d e te r m in a tio n .
A n o th er im p o rta n t c r i t e r i o n was th e c o s t o f l i v i n g
in d e x by w hich wages were a d ju s te d to changes i n l i v i n g
c o s t s , a s m easured by an In d ex o f th e p r i c e s p a id f o r
goods and s e r v i c e s . The b a s i s f o r t h i s c r i t e r i o n was t h a t
d u rin g p e r io d s o f r i s i n g p r i c e s , wages te n d ed to l a g b e
h in d p r i c e s . T h is la g o c c u rre d b ec a u se wages a r e more
" s t i c k y " th a n p r i c e s . M oreover, s in c e th e c o s t o f l i v i n g
was h ig h e r in some l o c a t i o n s th a n in o th e rB , w o rk ers who
l i v e d in h ig h e r c o s t l o c a l i t i e s had to be rem u n e ra te d a c
c o r d in g ly . The c o s t o f l i v i n g c r i t e r i o n was f i r s t i n t r o
duced i n t o th e p r i n t i n g i n d u s t r y whence i t s p re a d I n to th e
r e s t o f Sw edish o c c u p a t i o n s . ^ D uring W orld War I I , p a r t l y
due to r i s i n g p r i c e s and p a r t l y due to a p o lic y o f p r e v e n t
in g governm ent I n t e r v e n t i o n , LO and SAF made th e c o s t o f
l i v i n g c r i t e r i o n th e main d e te rm in in g f a c t o r i n wage
d e te r m in a tio n . "The in d e x ag reem en ts f o r 1940-1944 to o k
th e form t h a t w ages were to be a d j u s te d to changes in th e
c o s t o f l i v i n g , b u t (a ) r e t r o s p e c t i v e l y , and u s u a l l y a t
17I b i d . , p . 117.
18
"Wage N e g o tia tio n s and Wage P o l i c i e s i n Sweden I , "
I n t e r n a t i o n a l L abour R eview . V ol. LXXX, No. 4 , O c to b e r,
1959» p . 327.
101
s i x m onthly i n t e r v a l s ( f o r 194-0 in every q u a r t e r ) , and (h)
w ith o u t g iv in g f u l l com pensation f o r r i s i n g l iv i n g
c o s ts .
As a b y -p ro d u ct o f th e in d ex ag reem en ts, g e o g ra p h i
c a l wage r a t e d i f f e r e n t i a l s developed in Sweden. This was
c a lle d "co ld re g io n com pensation" (k a l l o r t s t l l l a g g ) . I t
p re v a ile d m ostly in th e state-o w n ed p u b lic u t i l i t i e s — th e
p o s ta l, te le g r a p h , te le p h o n e , e l e c t r i c power, and ra ilw a y
system s. By t h i s d ev ice w orkers who liv e d in th e a r c t i c
and s u b - a r c ti c re g io n s o f Sweden got com pensation f o r th e
in convenience and c lim a tic r i g o r s which th ey had to f a c e .
P r iv a te i n d u s t r i e s adopted t h i s system , a lth o u g h w ith
20
m o d ific a tio n s to s u i t each p a r t i c u l a r in d u s tr y .
S e v e ra l shortcom ings a re d is c e r a a b le In the c o s t
o f l i v i n g in d ex a s a wage c r i t e r i o n . F i r s t , many s t a t i s
t i c a l p i t f a l l s a re embodied in th e c o n s tru c tio n o f th e
19
^Thomas L. Jo h n sto n , C o lle c tiv e B a rg a in in g in
Sweden: A Study o f th e Labour M arket and I t s I n s t i t u t i o n s
ILondon: George A llen & Unwin, L td ., 1962), p . 279.
Sweden does n o t have minimum wage l e g i s l a t i o n f o r
f e a r t h a t i t would ten d to become a maximum wage and would
b rin g ab o u t u n d e s ira b le wage r i g i d i t y in wage s t r u c t u r e .
20
An a d ju n c t to th e c o s t o f l iv i n g c r i t e r i o n was
th e "fa m ily a llo w a n c e ," by which people w ith f a m ilie s
were p aid a c e r t a in sum p e r month f o r each dependent in
a d d itio n to t h e i r r e g u la r w ages.
c o s t o f l i v i n g in d e x . In a d d itio n , th e re i s a tim e la g
Involved in th e o cc u rren c e o f a c o s t o f l i v i n g change, th e
c o l le c tio n and p ro c e s s in g o f d a ta , and th e p u b lic a tio n o f
th e in d ex . S econdly, th e c o s t o f l i v i n g c r i t e r i o n r e
q u ir e s th a t wage a d ju stm e n ts must be made upward when th e
c o s t o f l i v i n g goes up, and a downward wage ad ju stm en t
when the c o e to f l i v i n g goes down. T his i s v ery d i f f i c u l t
to do s in c e la b o r te n d s to r e s i s t th e downward wage a d j u s t
m ent. T h ird ly , sin c e th e c o s t o f l i v i n g c r i t e r i o n c a l l s
f o r an au to m atic form ula f o r wages, i t may th r e a te n the
u n io n 's f u n c tio n s . What i s th e s ig n if ic a n c e o f unions and
c o l l e c t i v e b a rg a in in g , w ith a l l i t s r i t u a l s , to w orkers i f
wages can a u to m a tic a lly be a d ju s te d ? F o u rth ly , a n a t io n a l
c o s t o f l i v i n g in d ex i s n o t a p p ro p r ia te to a p a r t i c u l a r
f i r m 's wage payments because i t ig n o re s s i g n i f i c a n t
v a r ia b le f a c t o r s as p r o d u c tiv ity , a b i l i t y to pay, e t c .
F in a ll y , i t i s a rg u a b le t h a t an a u to m a tic , economy-wide
t i e between c o s t o f l i v i n g and wages would c r e a te a stro n g
elem ent of a u to m a tic ity in to th e b u s in e s s c y c le , th u s
21
in t e n s i f y i n g i n f l a t i o n a r y and d e f la tio n a r y movements.
The economic drawbacks o f th e c o s t o f l i v i n g
c r i t e r i o n a re overw helm ingly reco g n ized by la b o r and
management. However, t h i s c r i t e r i o n e n te r s in to wage
^ 0 . Oanby B a ld e rs to n , "B alance in Wage S e tti n g ,"
H arvard B u sin ess Review, V ol. XXIV, No. 1 , Autumn, 194-5*
p . ""5b.
10?
n e g o tia tio n e x p l i c i t l y o r i m p l i c i t l y . For in s ta n c e , in
th e 1952 n e g o t ia t io n , th e LO asked f o r com pensation f o r any
wage la g behind th e c o s t o f l i v i n g in 1951 and in e a r l i e r
y e a r s , and i t e m p h a tic a lly re q u e s te d t h a t a c o s t o f l i v i n g
c la u s e be in c lu d e d in o rd e r to p r o te c t r e a l wages a g a in s t
p ric e r i s e s . I t i s becoming e v id e n t th a t th e LO i s r e l a x
in g i t s u se o f the c o s t o f l i v i n g c r i t e r i o n in c e n tr a l
22
agreem ents.
P r e s e n tly Im p o rtan t wage c r i t e r i a a re s k i l l , t r a i n
in g and d eg ree of d i f f i c u l t y o f th e jo b , perform ance o f
th e worker ( i . e . , h is o u tp u t) , and th e c o s t o f l i v i n g . 2-^
These c r i t e r i a cause wage d i f f e r e n t i a t i o n .
Swedish Wage N e g o tia tio n s in
Oh.
H i s t o r i c a l P e rsp e c tiv e
Wage n e g o tia tio n s have undergone two d i s t i n c t
p h ases. In the f i r s t ph ase, wage n e g o tia tio n s were c a r r ie d
on by in d iv id u a l unions B ubject to recom mendations o f th e
LO. In th e p e rio d s from 194-5-48 and 1953-55, in d iv id u a l
22
Thomas L. Jo h n sto n , op. c i t . , pp. 281, 291.
23
Anthony D. Smith ( e d . ) , Labour Market and I n f l a -
tio n (New York: The M acmillan Company, I9btsj, pp. 110-113.
24.
L en n a rt Lohse, " C e n tr a liz a tio n o f B a rg a in in g in
Sweden S in ce 1939," Monthly Labor Review. Vol. 81, No. 11,
November, 1958, pp. 1230- 1233.
104
LO unions b arg ain ed w ith em ployers f o r wage a d ju stm e n ts.
C ontrary to LO's recommendation o f " r e s t r a i n t s , " th e
n a t io n a l unions ashed f o r and o b ta in e d la r g e claim s which
c re a te d c h a o tic wage movements. To avoid government
in te r v e n tio n and b r in g about an o rd e rly wage n e g o tia tio n ,
th e c e n tr a l powers, LO and SAP, decided to n e g o tia te f o r
th e e n t i r e economy a f t e r 1 9 5 5 (In 1952, LO and SAP had
a c e n t r a l wage n e g o tia tio n , b u t b oth p a t t i e s looked upon i t
a s e x c e p t i o n a l .)
S ince 1956, th e tre n d h a s been toward re g u la r
c e n t r a l b a rg a in in g . T his tre n d h a s come about because o f
s p e c ia l is s u e s such a s re d u c tio n in the work week from 48
to 45 h o u rs , th e su p e ra n n u atio n scheme and a tu rn o v e r ta x ,
which demanded a c o o rd in a te d e f f o r t . M oreover, th e p e r
s i s t e n t i n f l a t i o n a r y p re ssu re which i s d is tu r b in g postw ar
Sweden c a l l s f o r s p e c ia l m easures such a s c e n tr a lly
n e g o tia te d c o n tra c ts to e lim in a te wage c o m p etitio n between
d i f f e r e n t n a t io n a l u n io n s.
"Wage N e g o tia tio n s and Wage P o l i c i e s in Sweden
I , " I n t e r n a t i o n a l Labour Review, V ol. LXXX, No. 4, O ctober,
1959, p . 327.
105
26
Wage P o lic y In Sweden
The Alms
What a re th e adopted co u rse s o f b e h a v io r by th e
s e l l e r s and buyers o f la b o r s e rv ic e In wage d e te rm in a tio n ?
What a re t h e i r o b je c ti v e s , t h e i r means o f a c h ie v in g them
and th e r e s u l t s o f t h e i r a c tio n s ? These q u e s tio n s w ill be
answered in t h i s s e c tio n . The b a rg a in in g p a r t i e s in
i n d u s t r i a l r e l a t i o n s have c e r t a in s t i p u l a t e d p o lic ie s
which te n d to guide t h e i r b e h a v io r in wage n e g o tia tio n . A
wage p o lic y has been in e x is te n c e in Sweden f o r q u ite some
tim e and as e a rly as 1931 LO had persuaded SAP to adopt a
wage p o lic y which would c u t down th e c o s t o f la b o r in f iv e
27
main e x p o rt i n d u s t r i e s . 1 U nlike many an i n d u s t r i a l i z e d
n a tio n where wage p o lic y has been th e concern o f the
governm ent, in Sweden i t i s th e concern o f la b o r unions
and em ployers.
The o b je c tiv e s o f wage p o lic y a r e : (1) to avoid
government in te r v e n tio n in i n d u s t r i a l r e l a t i o n s ; (2) to
avoid i n f l a t i o n ; (3) to pursue the p r in c ip l e o f s o l i d a r i t y ,
2^Thomas H. Jo h n sto n , "WageB P o lic y in Sweden,"
Economica, V ol. 25, No. 92, A ugust, 1958, p . 217.
27
During th a t y e a r LO was a b le to convince itB
members to ac ce p t a 5 p e rc e n t re d u c tio n in w ages. How
e v e r, f a l l i n g p r ic e s in t h a t y e a r dwarfed th e wage re d u c
tio n .
1 0 6
oQ
and (4) to pursue and m a in ta in f u l l employment. W e sa^r
in th e e a r l i e r a n a ly s is how la h o r and management have come
to th e u n d e rsta n d in g t h a t t h e i r i n t e r e s t s could b e t t e r be
served by t h e i r own independent a c tio n . They f e e l th a t
th e " h ig g lin g and b a rg a in in g " in wage d e te rm in a tio n should
be c a r r ie d on by th e p a r t i e s . W ith t h i s in mind, they
In tro d u c ed a "B asic Agreement" a t S a lts jo b a d e n , in 1936,
to e s t a b l i s h a m achinery which would s e t t l e la b o r d is p u te s
in v o lv in g them selves o r th ir d p a r t i e s .
R e a liz in g th e u n to ld m is e r ie s which i n f l a t i o n has
caused and can s t i l l cau se, la b o r unions and em ployers1
a s s o c ia tio n s make i t a p o in t t h a t t h e i r wage p o lic y does
n o t s t a r t an I n f l a t i o n a r y B p ira l. S ince World War I I ,
s o c ia l s c i e n t i s t s have sq u a re ly p la c e d the blame f o r c o s t -
push i n f l a t i o n on th e la b o r m arket i n s t i t u t i o n . I t i s the
aim o f c e n t r a l b o d ies to c re a te an o rd e rly m arket where
i t w i l l be im p o ssib le f o r in d iv id u a l unions to ask f o r ,
and in d iv id u a l em ployers to g r a n t, more and more In c re a s e s
in wages. The LO and SAP wage p o lic y i s in te n d e d to
c o n trib u te toward th e a tta in m e n t o f f u l l employment. A
f u l l employment of r e s o u r c e s , e s p e c i a lly human r e s o u rc e s ,
i s a p r e r e q u i s i t e to p o l i t i c a l s t a b i l i t y . A h ig h e r le v e l
o f unemployment i s l i k e l y to c a l l f o r s t a t e in te r v e n tio n .
p Q ~
Swedish C o n fed eratio n o f Trade U nions, Trade
Unions and P u ll Employment (Stockholm , 1953), pp. 50-92.
107
A very im p o rta n t aim o f wage p o lic y i s p u r s u it o f
th e p r in c ip l e o f s o l i d a r i t y . A ccording to G osta Rehn, a
s o l i d a r i t y p r in c ip le c a l l s f o r " . . . e lim in a tio n o f un
j u s t i f i e d wage d if fe re n c e s as between v a rio u s jo b s,
29
s e c to r s o f a c t i v i t y and branches o f in d u s tr y ." I t a ls o
means eq u al pay f o r eq u al work. The p r in c ip l e o f s o l i d -
"50
a r i t y h as th re e main f e a t u r e s . (1) Employees who can
o b ta in h ig h e r wages should r e f r a i n from doing t h i s so th a t
t h e i r l e s s f o r tu n a te " b re th re n " w i l l be a b le to ca tch up;
(2) low er p aid groups should be helped th ro u g h s t r i k e
s u p p o rts , and (3) use o f s o c ia l p o lic y m easures ( e . g . ,
f i s c a l p o lic y and s u b s id ie s to a g r i c u l t u r e and housing) to
h e lp low er paid w o rk ers. A p r in c ip l e o f s o l i d a r i t y c a l l s
f o r th e d isa p p ea ra n ce o f m arg in al firm s which a re unable
to b ea r "norm al" wage burdens and th e c r e a tio n o f manpower
p o l i c i e s which can h e lp th e d is p la c e d w orkers to fin d new
31
jo b s. As a c o r o lla r y to t h i s p r i n c i p l e , sex d is c rim in a
tio n in wage d e te rm in a tio n should be e lim in a te d . The
p r in c ip le o f s o l i d a r i t y te n d s to c a s tig a te th e p r ic in g
mechanism by e lim in a tin g th e supply and demand r o le in
29 * *
G osta Rehn, Swedish Wages and Wage P o l i c i e s ,"
Annals o f th e American Academy o f P o l i t i c a l and S o c ia l
S c ie n c e , Vol. 310, March, 1957» p . 106.
■^°Thomas L. Jo h n sto n , op. c i t . , pp. 276-78.
31
The theme o f s o l i d a r i t y was o f f i c i a l l y adopted by
LO in 19^1» but th e r e i s evidence th a t i t e x is te d as f a r
back as 1922. I b i d . , p. 276.
10 8
wage d e te r m in a tio n .
The Means o f A ch ie v in g th e O b je c tiv e s
A wage p o lic y i s o p e r a te d , b r o a d ly s p e a k in g , w ith in
th e econom ic fram ew ork o f Sweden. As a p r i v a t e m a rk e t
economy, i n d i v i d u a l p a r t i e s have a c o n s id e r a b le d e g re e o f
c o n t r o l o v e r th e d e c is io n s o f p r o d u c tio n and d i s t r i b u t i o n ,
s u b j e c t t o th e p r i c i n g m echanism . However, th e f r e q u e n t
breakdow ns and h i t c h e s w hich accompany th e p r i v a t e e n t e r
p r i s e system h ave made i t m andatory f o r th e governm ent to
3 ta n d re a d y and mend. In p u rsu a n c e o f t h i s p o l i c y , th e
I n s t i t u t e o f Economic R e se a rc h a tte m p ts to su p p ly th e
l a b o r m ark et a s s o c i a t i o n s w ith f o r e c a s t s o f f u t u r e
econom ic c o n d i t i o n s . But f r e q u e n t l y , LO and SAE may r e
fu s e to a b id e by th e p r e d i c t i o n s b e c a u se th e y f e e l t h a t
t h e f o r m e r 's f o r e c a s t i n g t o o l s a r e I n a d e q u a te . T h is
c r e a t e s la c k o f s y n c h ro n iz a tio n o f p o l i c i e s . " In 1959»
f o r exam ple, th e LO 's e c o n o m is ts ' view o f th e econom y's
p r o s p e c ts waB more o p t i m i s t i c th a n th o s e o f th e N a tio n a l
B udget and th e I n s t i t u t e - - a n d in r e t r o s p e c t L O 's a s s e s s -
«32
m ent proved to have been more r e a l i s t i c .
An Im p o rta n t m a ch in ery th ro u g h w hich wage p o lic y I s
p r a c t i c e d i s th e fram e a g re e m e n ts. We found above t h a t
th e fram e ag ree m en ts s e t a v e ra g e r a t e s o f in c r e a s e f o r
w o rk e rs on p i e c e - r a t e and p e rc e n ta g e I n c r e a s e s f o r h o u rly
3 2 I b l d . , p . 3 3 7
109
wage e a r n e r s . B eing o n ly "av erag e r a t e s , " much l a t i t u d e
i s g ra n te d to w orkers and em ployers to t a i l o r wages to
I n d iv id u a l n eed s and l o c a l i t i e s . The LO and SAF have v ery
lim ite d power in f o r c in g t h e i r economic d i s c i p l e s to a c
c e p t t h e i r recom m endations. H ence, th ey r e l y m o stly on
m oral su a sio n in g e t t i n g w orkers and em ployers to be
o b e d ie n t to t h e i r w i l l . W ith m o ral s u a s io n , LO s e e s to i t
t h a t la r g e wage d i f f e r e n t i a l s between w orkers w i l l n o t
e x i s t . SAF w atches t h a t em ployers do n o t p e rm it a b i l i t y
to pay to come up a s an iB sue in wage d e te r m in a tio n .
The R e s u lts o f Wage P o lic y
An ex a m in a tio n o f th e b a la n c e s h e e t f o r th e la b o r
m arket g iv e s us a ro u g h p ic tu r e o f th e r e s u l t s o f wage
p o lic y . The f i r s t o b je c tiv e in wage p o lic y i s th e a v o id
ance o f s t a t e i n t e r v e n t i o n . A governm ent in a p r i v a t e
e n t e r p r i s e economy w i l l in te r v e n e in a la b o r m arket o n ly
when i t i s deemed n e c e s s a r y . So f a r th e s t a t e has n o t
in te r v e n e d . The LO and SAF have been a b le to c r e a te a
r e l a t i v e l y h ig h d eg ree o f s o c i a l p e a c e . L abor d is p u te s
have been k e p t a t a minimum. (See T able 4 w hich i n d i c a t e s
la b o r d is p u te s among th r e e i n d u s t r i a l c o u n t r i e s .) The
re c o r d in Sweden i s more e n v ia b le th an any o f th e t h r e e
c o u n tr ie s re g a r d in g la b o r d i s p u t e s . A lso , few er w orkers
a re a f f e c t e d w henever th e r e i s a la b o r d is p u t e . M oreover,
th e le n g th o f tim e l o s t in la b o r d is p u te s in Sweden i s
c o m p a ra tiv e ly s h o r t e r . I t i s th u s s a fe to conclude t h a t
TABLE 4
VOLUM E OF LABOR DISPUTES IN SELECTED COUNTRIES, 1955-1963
Sweden = 100. The f ig u r e s are w eighted according
to th e la b o r fo rc e in each co u n try .
Year
Number o f D isputes Number o f Workers Involved Number o f Days Lost
Sweden U. S. U. K. Sweden U. S. U. K. Sweden U. S. U. S.
1955
100 1,070 1,820 100 3,150 2,360 100 760 322
1956 100 1,420 3 ,0 0 0 100 5,400 4,380 100 37,000 7,000
1957
100 960 1,800 100 3,830 11,400 100 1,380 2,150
1958 100 1,640 3,580 100 110,000 84,500 100 7,100 3,130
1959
100 980 1,660 100 8 ,3 0 0 7,150 100 1 2 ,9 0 0 3,000
I960 100 480 1,240 100 3,950 7,600 100 4,600 2,230
1961 100 1,580 3,040 100 46,000 75,000 100 34,900 19,600
1962 100 1,620 3 ,6 0 0 100 1,560 17,000 100 16,600 15,800
1963
100
625
1,170 100 1,480 2,830 100 3,650 960
Source: I n te r n a ti o n a l Labour Review and Yearbook of Labor S t a t i s t i c s , 1964, Table 28.
H
H
o
Ill
wage p o lic y o f la b o r and management h as been s u c c e s s f u l In
k eep in g governm ent removed from wage d e te rm in a tio n .
Has wage p o lic y been s u c c e s s f u l in i t s p u r s u i t o f
s o l i d a r i t y ? I f s o l i d a r i t y means th e c lo s in g o f wage d i f
f e r e n t i a l s between male and fem ale o r among low er p a id
g ro u p s, we conclude t h a t s o l i d a r i t y h as been s u c c e s s f u l in
Sweden. A lo o k a t T able 5 shows t h a t wage d i f f e r e n t i a l s
have been c lo s in g s in c e 1939* However, th e p r i n c i p l e o f
s o l i d a r i t y h as a n o th e r m eaning. A ccording to R. M eidner,
s o l i d a r i t y means n o t o n ly o rd in a r y r e d i s t r i b u t i o n o f i n
come on an e q u ity b a s i s , b u t a ls o an income r e d i s t r i b u t i o n
on th e b a s i s o f Job e v a lu a tio n . In t h i s c o n te x t, i t i s
d e b a ta b le w hether s o l i d a r i t y i s r e s p o n s ib le f o r th e
n a rro w in g o f i n t e r - i n d u s t r y d i f f e r e n t i a l s , g e o g ra p h ic a l
d i f f e r e n t i a l s , o r th e i n t e r - a g r i c u l t u r a l d i f f e r e n t i a l . I t
can be argued t h a t t h i s narro w in g o f wage d i f f e r e n t i a l s
h a s been b ro u g h t ab o u t by supply and demand. However,
s t a t i s t i c a l d a ta a re so p o o rly p u t to g e th e r t h a t a d e f i n i t e
c o n c lu sio n i s d i f f i c u l t to s t a t e . B e s id e s , th e whole p ic
t u r e i s b lu r r e d by th e p re se n c e o f "wage d r i f t " w hich has
p lag u ed th e economy. M eidner, in 1955» w rote t h a t , " I t i s
no e x a g g e ra tio n to s t a t e t h a t th e ta s k o f e s t a b l i s h i n g J u s t
and re a s o n a b le r e l a t i v e wages betw een d i f f e r e n t groups i s
33 " „
R. M eidner, F a c k f o re n ln g s r o re ls e n (Stockholm :
L a n d so rg a n lsa tlo n e n 1 S v e rig e , 1957)* p . 128.
112
TABLE 5
KEN'S AND WOMEN'S EARNINGS, 1957-1963
W orkers
1957
1958
1959 i 960 1961 1962
1963
Wage E arners
in M ining and
M anufacturing
Male
Female
90
90
95
96
100
100
107
107
115
_ 115__
125
128
133
140
S a la r ie d Employees
in M ining and
M anufacturing
Male
91 96 100 106
119 127 135
Female
9 2
96 100 105 116 126 134
S a la r ie d Employees
in W holesale and
R e t a i l Commerce
Male 90 95
100 108
117 125
Female 92 97 100 106
113 125
S a le s S ta f f in
W holesale and
R e t a i l Commerce
Male
95 97
100
109 117
128
Female
93
96 100 106
113 132
Wage E arners
in P u b lic S e c to r
Male 90 96 100 108
117
128 138
Female
91 97
100
107 115 125
140
1959 = 100.
S o u rce: I n te r n a t i o n a l Labour Review, V ol. 95, No. 3,
March, 1967* p. 199-
113
3 4
s t i l l in th e main u n re so lv e d ."
R egarding m aintenance o f f u l l employment, th e e v i
dence i s q u ite co n c lu siv e t h a t wage p o lic y h a s been
s u c c e s s f u l. S t a t i s t i c a l d a ta a re prom inent in p o in tin g o u t
t h a t wages have been r i s i n g to very h ig h l e v e l s . Economic
th e o ry claim s t h a t w ith in c r e a s in g wages, th e volume o f
employment should drop, sin c e wages are n e g a tiv e f u n c tio n s
of employment, c e t e r i s p a r ib u s . The h ig h e r wages do n o t
have any n e g a tiv e e f f e c t on th e volume o f employment. In
f a c t , th e number o f unemployed i s very s m a l l . T h e r e i s ,
th e r e f o r e , no t h e o r e t i c a l j u s t i f i c a t i o n s u p p o rtin g the
r i s e o f wages and th e le v e l o f employment.
Wages and I n f l a t i o n
S ince th e Second World War, many i n d u s t r i a l
econom ies have been e x p e rie n c in g a stead y r i s e in g e n e ra l
p r i c e s . The ca u ses of t h i s h ig h r i s e in p r i c e s have been
diagnosed as "demand p u ll" and "c o st push" i n f l a t i o n .
Under t h i s d ia g n o s is , demand p u l l i n f l a t i o n i s brought
about by a r i s e in th e a g g re g a te demand f u n c tio n a f t e r th e
p o in t a t which f a c t o r s u p p lie s (o r the a g g re g a te supply
fu n c tio n ) become i n e l a s t i c . C ost push i n f l a t i o n has been
caused by an autonomous r i s e in f a c to r p r i c e s . The v i l l a i n
in c o s t push i n f l a t i o n has been th e la b o r i n s t i t u t i o n .
54I b i d . , p . 516.
35
-'-'It i s below 2 p e r c e n t. See Yearbook o f Labor
S t a t i s t i c s . I n t e r n a t i o n a l L abor O ffic e , j.yoo, p. y o .
114
However, th e re i s no consensus as to w hether i n f l a t i o n i s
caused e x c lu s iv e ly by c o s t push o r demand p u ll f o r c e s .
A lso , th e c a se i s b ein g debated as to w hether h ig h wages
36
a r e th e i n i t i a l cause o r m erely th e r e s u l t o f i n f l a t i o n .
We s h a ll examine to what e x te n t wage p o lic y has caused or
p ro p e lle d I n f l a t i o n in Sweden.
I t i s a common co n c lu sio n t h a t postw ar Sweden is
hav in g a s tr o n g i n f l a t i o n a r y p re s s u re caused p re
dom inantly by a r i s e in money wages r e l a t i v e to p ro d u c t
i v i t y . The In c re a s e s In money wages have been brought
about by wage d r i f t , a phenomenon which i s d efin e d as t h a t
p ro p o rtio n o f th e t o t a l an n u al grow th in e a rn in g s th a t
cannot be a s c r ib e d to c o n tr a c tu a l I n c r e a s e s . In o th e r
w ords, wage d r i f t i s t h a t p a r t o f e a rn in g s which Is n o t
a t t r i b u t a b l e to n e g o t ia t io n . I t i s computed by fin d in g th e
d if f e r e n c e between th e c o n tr a c tu a l in c re a s e in e a rn in g s and
th e observed growth in e a rn in g s .
Wage d r i f t i s caused by i n s t i t u t i o n a l and m arket
f a c t o r s . The c l a s s i c a l supply and demand f a c t o r s p lay a
s i g n i f i c a n t r o le in c a u sin g wage d r i f t , e s p e c ia lly in a
t i g h t la b o r m arket when la b o r has a s tro n g b a rg a in in g
p o s itio n . T his I n te r a c tio n o f supply and demand i s a lso
In flu e n c e d by la b o r m arket s i t u a t i o n s . Wage d r i f t i s a ls o
^ A n th o n y D. Sm ith, op. c i t . , pp. 139-177* 179-240
115
a s s o c ia te d w ith th e p i e c e - r a t e system s In Sweden. S ince
p i e c e - r a te methods a re j u s t i f i e d on the grounds t h a t h ig h e r
p r o d u c tiv ity must he rew arded w ith h ig h e r e a rn in g s , th e
r e s u l t i n g e a rn in g s w i l l show v a r i a t i o n s .
Table 6 shows th e tre n d o f wage d r i f t from 1956 to
1964. Wage d r i f t was v ery h ig h in 1964, and f o r t h i s
reaso n i t has come to occupy an im p o rta n t p o s itio n in th e
37
wage n e g o tia tio n s o f LO and SAP. Table 7 p o in ts out th e
uneven d i s t r i b u t i o n o f wage d r i f t among w orkers o f d i f
f e r e n t o c c u p a tio n s. Wage d r i f t seems h ig h e r among men
w orkers th a n women w orkers and h ig h e r in dom estic in d u s
t r i e s ( e s p e c ia lly b u ild in g and c o n s tr u c tio n ) th an ex p o rt
i n d u s t r i e s . S ince th e ex p o rt i n d u s t r i e s have no c o n tr o l
o v er th e p r ic e s o f t h e i r p ro d u c ts in th e f o re ig n m arket,
th e y a re n o t a b le to pay as h ig h in c re a s e s in wages as th e
dom estic in d u s t r i e s can.
So f a r a s wage d r i f t i s concerned, wage p o lic y has
f a i l e d . But i t i s v ery d o u b tfu l t h a t in c r e a s e s in wages
have been th e predom inant f a c t o r in Swedish i n f l a t i o n .
Jean Mouly adm its t h a t th e re have been in c re a s e s in wage
■^"War on Wage D r i f t , " S t a t i s t . , V ol. 191, No. 4639*
F ebruary 17, 1967, pp. 283-84.
Also see Anthony D. Sm ith (ed.), Labour M arket and
I n f l a t i o n , op. c i t . , pp. 102-114.
TABLE 6
W A G E DRIFT IN MINING AND MANUFACTURING,
ADULT MALES, 1956-1964
(P e rc e n ta g e s )
. 1956 1957
1958
1959
I960 1961 1962 1963 1964
A ctual
In c re a se
in H ourly
E arnings
8 .5 5.7 6 .0
4 .3 6.9 8.1 8 .1 6 .8 6.8
C o n tra c t
u a l
In c re a se 4 .1
2 .5 2 .7 1 .7 _3,_6 3 .4 4 .0 2 .7 1.6
Wage
D r if t 4 .4 3 .2 3 .3
2.6 3.3 4 .7
4 .1 4 .1 5 .2
S ource: . Anthony D. Smith and R. W. Cox, The Labour M arket and I n f l a t i o n (The Macmillan
Company, 1968), pp. 104-106.
H
H
o %
117
TABLE 7
W AGE DRIFT IN VARIOUS ECONOMIC SECTORS
I960 1961 1962
1963 1964
1965
E xport
In d u s tr y 3 .1 4 .4 4 .7 3 .3 5 .3 5 .7
Dom estic
In d u s tr y 4 .7 5 .7 _
5 .0 3 .3 6 .0 5.6
B u ild in g
and
C o n s tru c tio n
I n d u s tr y 5 .4
6 .3 5 .7 3 .5
7 .0 5 .6
S o u rce: Anthony D. Smith and R. W. Cox, The Labour M arket
and I n f l a t i o n (New Y ork: The M acm illan Company,
1 9 6 8 ), pp. 104-106.
c o s ts , but t h a t th e s e in c r e a s e s d i r e c t l y account f o r
38
. . only a f r a c t i o n o f th e r i s e in p r i c e s . '
7 0
Jean Mouly, "WageB P o lic y in Sweden," op. c i t . ,
119
CHAPTER VI
UNEM PLOYM ENT REDUCTION
In tro d u c tio n
Many a tools: h as been w r i tte n , and many a p o l i t i c a l
pronouncem ent made, t h a t any a d d i tio n a l d isc o u rse would be
tantam ount to redundancy. T h e re fo re , i t i s th e aim o f the
a u th o r to p a i n t w ith broad brushes th e n a tu re o f unemploy
m ent, i t s tr e n d , and th e v a rio u s p o lic y p r e s c r ip t io n s fo r
s o lv in g unemployment in Sweden.
Economic th e o ry i s v e rd a n t w ith many a panacea fo r
a tta c k in g unemployment. The c l a s s i c a l school to o k unem
ploym ent f o r g ran te d b ecause they th e o riz e d th a t th e r e was
an au to m atic mechanism in h e re n t in th e c a p i t a l i s t economy
which alw ays pushed th e economy tow ard a f u l l employment
e q u ilib riu m . The G reat D epression o f th e t h i r t i e s con
v in c ed econom ists th a t " . . . c a p ita lis m had no b u i l t - i n
tendency to r e s t o r e i t s own e q u ilib riu m a t or n e a r f u l l
employment when d e p re s sio n a f f l i c t e d i t . " 1 K eynesian
economics su g g ested th e u se of f i s c a l p o lic y to s tim u la te
1
S pencer D. P o l l a r d , How C a p ita lism Can Succeed
(H a rris b u rg , P a .: The S tac k p o le Company, 1 9 6 6) , p . 54.
120
2
e f f e c tiv e a g g reg a te demand.
S in ce th e n in e te e n th century governm ents have tak en
a keen i n t e r e s t in unemployment. In th e U nited S t a t e s ,
f o r in s ta n c e , th e Employment Act o f 1946 expressed th e
F ed eral G overnm ent's avowed p o licy o f a c h ie v in g f u l l em
ploym ent. In Sweden, th e p r e v a ilin g I d e a o f more Jobs than
men has ta k en deep r o o t s .
Sweden has ac h iev ed a r e l a t i v e l y low er r a t e o f un
employment th an e i t h e r th e United S t a t e s or England. In
1955» Sw eden's r a t e o f unemployment was as high as 2 .5 p e r
c e n t. (E n g la n d 's was 1 .1 p ercen t and th e U nited S t a t e s '
was 4 .2 p e r c e n t.) This r a t e sh arp ly d e c lin e d to an en
v ia b le re c o rd r a t e o f 1 p e rc e n t in 1961, w hile th e U nited
S ta te s and England re c o rd e d 6.7 p e rc e n t and 1 .2 p e r c e n t,
r e s p e c t i v e l y . (See T able 8 .) During th e 1958-59 r e c e s
s io n , Sweden reco rd ed unemployment r a t e s o f 2.5 p e r c e n t,
England 2 .2 p e rc e n t, Norway 2.3 p e r c e n t, and th e U nited
S ta te s 6 .8 p e rc e n t. M oreover, Sweden h a s been e x p e rie n c
ing a la b o r sh o rtag e in r e c e n t y ea rs to th e e x te n t t h a t i t
has been im p o rtin g f o re ig n la b o r.
What a r e the c a u se s o f unemployment in Sweden and
what are th e v a rio u s p o l i c i e s toward i t s so lu tio n ?
2
I . M. Rima, Development of Economic A nalysis
(Homewood, I l l i n o i s : R ic h a rd D. Irw in , I n c . , 1967)* pp.
559-349.
12 1
TABLE 8
RELATIVE TRENDS IN UNEMPLOYMENT ( SWEDEN, NORWAY,
ENGLAND, AND THE UNITED STATES), 1955-1966
(In P e rc e n ta g e s )
Y ear E ngland Norway Sweden
U n ite d
S t a t e s
1955
1*1 1 .2
2 .5
4 .2
1956
1 .3
1 .4
1 .5
4 .4
1957 1 .6 1 .4 1 .9 4 .3
1958 2 .2 2 .3 2 .5
6 .8
1959 2 .3
2 .2 2 .0
5 .5
I9 6 0 1 .6
1 .7
1 .4
5 .5
1961
1 .5
1 .2 1 .2
6 .7
1962 2 .0 1 .4
1 .3 5 .5
1963
2 .4
1 .7
1 .4
5 .7
1964 1 .8 1 .4 1 .1 5 -2
1965
1 .5
1 .2 1 .1
4 .5
1966
1 .5
1 .1 1 .4 3 .8
S o u rc e : U. N. S t a t i s t i c a l Y earbook (New Y ork: U n ite d
N a tio n s , 1967)» p p . 108-110.
Causes o f Unemployment in Sweden
122
T ec h n o lo g ic a l unemployment, i . e . , th e d isp lacem en t
o f human w orkers by m achines, i s common in Sweden due to
th e g overnm ent's p o lic y o f s t r u c t u r a l r a t i o n a l i z a t i o n .
S tr u c t u r a l r a t i o n a l i z a t i o n i s a p o lic y fo rm u lated so as to
make Sweden more c o m p e titiv e in fo re ig n t r a d e . As a r e
s u l t , Sweden h as been speeding up th e r a t e o f au to m atio n .
The country now ran k s second a f t e r th e U nited S ta te s in
p e r c a p ita i n s t a l l a t i o n o f com puters. The in e v ita b le r e
s u l t o f t h i s p o lic y i s d isp lacem en t o f human w orkers by
4
machine s .
S t r u c t u r a l unemployment i s a ls o common in Sweden.
I t i s more common in t e x t i l e s , f o r e s t r y , and c lo th in g
e ;
i n d u s t r i e s .
Sweden has s u b s t a n t i a l p ro p o rtio n s o f s e a s o n a lly
unemployed w o rk e rs. They e x i s t in a g r i c u l t u r e , f is h in g ,
■^"Swedes Face U n c e rta in ty ," I n t e r n a t i o n a l Commerce,
F ebruary 19» 1968, p . 24.
4
R udolf M eidner, C h ief Econom ist o f LO, d id r e
se a rc h on th e e f f e c t s o f te c h n o lo g ic a l change upon
w o rk ers. He found t h a t te c h n o lo g ic a l e f f e c t s on w orkers
were s e r io u s and c h ro n ic , and urged th e government to do
som ething f o r th e w orkers.
See Arne G e ije r , "S eventh Congress o f Swedish
Trade U n io n s," I n t e r n a t i o n a l Labour Review. V ol. 94, Ho.
6, December, 1966, pp. 592-93.
^M artin S c h n itz e r , "Economic P o lic i e s and P ra c
t i c e s , " M a te r ia ls p rep ared f o r th e J o i n t Economic Committee
Congress o f th e U n ited S ta te s (W ashington, D. C-: U. S.
Government P r in t in g O ffic e , 1964), pp. 44-48.
1 2 3
food p r o c e s s in g , and 'b u ild in g c o n s tru c tio n . S easonal
unemployment ran g es from over 1 .5 p e rc e n t p e r y e a r, and In
n o rth e rn Sweden, e s p e c ia lly in th e p ro v in c e s o f Nor-
b o tte n s and V a s te rb o tte n s , an unemployment r a t e of 6 .3
g
p e rc e n t h as been re c o rd e d .
P e r io d ic f lu c tu a tio n s in p r i c e s , p ro d u ctio n and
income o fte n give r i s e to c y c l i c a l unemployment. S t a t i s
t i c s re g a r d in g the number o f w orkers which a r e a f f e c te d
by t h i s b u s in e s s cy cle a re not a v a ila b le . However, i t s
p rese n ce in Swedish economy as one o f th e c a u se s of un
employment h as been n o te d .
Unemployment R ed u ctio n : G eneral P o lic ie s
In conform ity w ith K eynesian econom ics, th e re i s a
consensus t h a t unemployment i s due to la c k o f e f f e c t iv e
demand. W herever th e ag g re g a te demand sch ed u le i n t e r s e c t s
ag g re g a te su p p ly sch ed u le a t l e s s than f u l l employment
e q u ilib r iu m , unemployment o f re s o u rc e s p r e v a i l s . To cure
t h i s problem ag g re g a te demand w i l l have to be s h if te d u p
ward so as to i n t e r s e c t ag g re g a te supply curve a t the
a p p r o p r ia te p o in t o f i n t e r s e c t i o n . E ffective-dem and i s
g e n e ra te d th ro u g h In c re a s in g (1) consum ption e x p e n d itu re ,
(2) in v estm en t e x p e n d itu re , or (3) government e x p e n d itu re —
th e th re e components o f ag g re g a te demand.
6I b i d .
124
Consumption ex p e n d itu re i s In c re a s e d through an
In c re a s e of unemployment b e n e f its and o th e r t r a n s f e r pay
m ents, low er ta x e s and s tim u la tiv e c r e d i t m easures. B usi
n e s s in v estm en t e x p e n d itu re i s s tim u la te d through l i b e r a l
d e p r e c ia tio n allo w a n c e s, low er c o rp o ra te ta x e s , c a r r y
forw ard and carry-backw ard lo s s e s and in c re a se d l i q u i d i t y
w ith in the economy. Monetary p o lic y i s re s p o n s ib le fo r
pumping l i q u i d i t y in to th e economy by v a r ia tio n o f th e
r e s e rv e req u irem en t r a t e , open m arket o p e ra tio n s , d isc o u n t
r a t e and m argin re q u ire m e n ts. I f th e ex cess e x p e n d itu re
from th e above m easures i s in ad eq u ate to g e n e ra te enough
ag g re g a te demand, government may (1) in c re a s e i t s p u r
c h a se s , t r a n s f e r s and s u b s i d i e s ; (2) low er i t s ta x e s , or
(3) p u t in to e f f e c t a s e r i e s o f p u b lic works program s.^
By means o f m onetary and f i s c a l p o l i c i e s , w orkers
a re put back to work and unemployment i s so lv e d . This
p r e s c r ip tio n i s r e p l e t e w ith sh o rtco m in g s. A m ajor s h o r t
coming i s i t s g e n e r a l i t y . I t Is hoped th a t once a g g reg a te
demand Is B h ifte d , unemployment w i l l be so lv e d . However,
in th e p ro c e s s, p o ck ets o f unemployment a re l e f t un-
7
The use o f p u b lic works as an a n ti- d e p r e s s io n
m easure i s q u ite o ld , and d a te s as f a r back as th e Second
French R e p u b lic . The I n i t i a l im pact o f p u b lic works is
p ro v id in g jobs f o r the unemployed. The w orkers so em
ployed w ill spend t h e i r Income, th u s c r e a tin g o th e r jobs
and, through th e m u l t i p l i e r e f f e c t , employment f o r w orkers
s e v e r a l tim es th e number o f i n i t i a l w orkers i s g e n e ra te d .
125
to u ch ed . M oreover, th e g e n e ra l p r e s c r ip t io n does n o t cure
th e causes o f unemployment. R a th e r, i t t r i e s to e lim in a te
unemployment in an I n d i r e c t way. Sweden, on th e o th e r
hand, has a d i f f e r e n t form ula and to t h i s we s h a ll now
tu r n .
Unemployment R ed u ctio n : Swedish S ty le
The Swedish s p e c ia l form ula f o r p r o s p e r ity g iv e s
Q
p r i o r i t y to the m aintenance o f f u l l employment. In th e
f i f t i e s , Swedish em ployers, la h o r u n io n s, and econom ists
came to th e co n c lu sio n th a t th e p r e v a ilin g economic to o l s
f o r so lv in g unemployment were n o t e f f e c t iv e a l l the tim e .
M onetary and f i s c a l p o lic y could provide jobs f o r the
"average" w orker and in c e r t a in a r e a s , but th ey l e f t th e
"un-average" w orker untouched. At th e same tim e, the
9
p o l i c i e s g e n e ra te d i n f l a t i o n .
G osta Rehn, a n o te d la b o r econom ist, opposed th e
f a m il ia r m onetary and f i s c a l p o l i c i e s f o r re d u cin g unem
ploym ent. He advocated an a c tiv e la b o r-m a rk e t p o lic y , th e
o b je c tiv e o f which was to e r a d ic a te unemployment a t th e
so u rc e . He urged unions to adopt th e p r in c ip l e o f s o l i d a r -
Swedes d e fin e f u l l employment n o t a s a g u aran tee
o f th e same job f o r l i f e but as a g u aran tee o f work in
d i f f e r e n t i n d u s t r i e s .
^"Newest in Sweden," The E conom ist. V ol. CCXXV, Ho.
6479» s u p p l., O ctober 28, 1967* pp. x x ix - x x x iii .
1 2 6
l t y w hereby wages would be s e t a t such a h ig h l e v e l t h a t
o nly th e l u c r a t i v e i n d u s t r i e s co u ld a f f o r d them . He a ls o
ad v o c ate d t h a t governm ent use r e s t r i c t i v e f i s c a l p o lic y
( i . e . , i n d i r e c t ta x e s ) to squeeze p r o f i t s . The h ig h wages
and h ig h I n d i r e c t ta x e s would m it ig a t e i n f l a t i o n a r y
p r e s s u r e s b u t th e y w ould a ls o m i l i t a t e a d v e rs e ly a g a in s t
em ployment. There w ould be shut-dow ns o f many firm s , l a y
o f f s and unem ployment. However, th ro u g h an a c tiv e la b o r
m arket p o l i c y , th e unemployed co u ld be e n t ic e d , th ro u g h
paym ents and s u b s i d i z a t i o n , to move in to o th e r a re a s where
t h e i r employment w ould be g a i n f u l l y n ee d ed . The p o lic y
would g iv e f u l l employment and p r i c e s t a b i l i t y , speed r e
a l l o c a t i o n o f r e s o u r c e s and p ro v id e economic e f f i c i e n c y and
d e s ir a b le economic g ro w th .3 " 0
The n e x t s e c tio n w i l l a n a ly z e how th e Swedes a tte m p t
to s o lv e each type o f unemployment. The a n a ly s is w i l l
fo llo w t h i s fo rm a t: (1 ) p o l i c i e s f o r re d u c in g te c h n o lo g i
c a l and f r i c t i o n a l unemployment, (2) p o l i c i e s f o r s o lv in g
g e n e ra l and c y c l i c a l unem ployment, (3 ) p o l i c i e s f o r com bat-
10 ,
Rehn s id e a s w ere v ig o ro u s ly c r i t i c i z e d by E rik
Lundberg and Bent Hansen who em phasized m onetary p o lic y
r a t h e r th a n f i s c a l p o lic y f o r s o lv in g unemployment. How
e v e r, many o f R eh n 's id e a s have formed th e backbone o f th e
Swedish g o v ern m e n t's employment p o lic y s in c e th e n . Eor d e
t a i l o f th e d is c o u r s e , see A ssar L in d b eck , "T h e o rie s and
Problem s in Swedish Economic P o lic y in th e P ostw ar P e r io d ,"
American Economic R eview , s u p p l., Ju n e , 1968, V ol. L V III,
Ho. 3 , P a r t 2 , pp. 1 0 -2 7 .
127
ing se a so n a l unemployment, (4) a d m in is tra tio n o f th e em
ployment program, and (5) r e s u l t s o f employment p o l i c i e s .
T ec h n o lo g ica l and F r ic t i o n a l Unemployment P o l i c i e s . —
To combat s t r u c t u r a l unemployment, p o lic ie s aim to stim u
l a t e la b o r and o c c u p a tio n a l m o b ility in Sweden. By moving
la b o r from dep ressed a r e a s where in d u s t r i e s a re d e c lin in g
to a re a s where they a r e needed o r by r e t r a i n i n g th e worker
in a new f i e l d , s t r u c t u r a l unemployment i s m inim ized.
Labor m o b ility i s stim u la te d through s p e c ia l r e
lo c a tio n a s s is ta n c e . Although la b o r m o b ility i s a th e o re
t i c a l s o lu tio n fo r an econom ically depressed a r e a , th e re
a re v ery p r a c t i c a l problem s In v o lv e d . U su ally w orkers
f e e l r e l u c t a n t to u p ro o t them selves from a re a s where they
have been brought up. Thus, r e l o c a t i o n i s a p t to be r e
s i s t e d . Sweden a tte m p ts to m itig a te th ese p sy c h o lo g ic a l
and s o c io lo g ic a l impediments to la b o r m o b ility by r e
lo c a tio n a s s is ta n c e .
The r e lo c a tio n a s s is ta n c e c o n s is ts o f p ro v id in g
in c e n tiv e s to th e w orker through ( a ) t r a v e l allo w a n c e , (b)
fam ily allo w an ce, (c) s t a r t i n g allo w an ce , and (d ) s e t t l e
ment allo w an ce.
A t r a v e l allo w an ce i s g ra n te d to a person as a loan
or g i f t , s u b je c t to c e r t a in c r i t e r i a . I t c o n s is ts o f a
t r a v e l expense, s u b s is te n c e allo w an ce and rem oval expenses.
A t r a v e l expense i s g ra n te d (1) i f a worker i s tr a v e l i n g to
g e t a new jo b , (2) i f he has to commute to h is new job
128
u n t i l a housing accommodation i s o b ta in e d , and (3) i f he
has to r e tu r n home because th e Job he was prom ised never
came th ro u g h . During th e p e rio d when th e unemployed person
i s lo o k in g f o r a jo b , he i s p aid f o r h is boarding and lo d g
in g exp en ses. I f he i s m arried o r has c h ild re n o f 4 to 18
y e a rs o f ag e, th e se dependents a re given a s u b s is te n c e
allo w an ce. A fte r he has found a jo b , he i s g ra n te d an
allow ance to cover h i s expenses in moving h is p e rso n a l
b elo n g in g s from h is form er lo c a tio n to th e new one.
Suppose a w orker fin d s i t im p o ssib le to tr a n s p o r t
h i s fam ily im m ediately to th e p la c e o f hiB new employment
and he i s com pelled to m a in ta in two homes; th e Labor
M arket Board may supply him w ith a fam ily allow ance d uring
11
th e f i r s t n in e m onths. This allow ance i s te rm in a te d as
soon as he i s a b le to fin d h o u sin g f o r h is fam ily .
A s t a r t i n g allow ance 1b p rovided so th a t th e worker
w i l l be a b le to d e fra y h is l i v i n g c o s ts u n t i l he r e c e iv e s
h is f i r s t pay check. The s t a r t i n g allow ance i s a d m in is te r
ed by th e c o u n ty 's la b o r m arket board in which he i s ta k in g
th e new jo b . I f th e w orker q u its h is Job w ith o u t any
re a s o n a b le excuse, he i s h eld l i a b l e f o r th e amount he has
The fam ily allow ance i s g ra d u a te d . For th e f i r s t
th r e e months a w ife and c h ild re n under 16 months may r e
ceiv e a supplem entary fam ily allow ance o f $6 0 0 .0 0 per
month. In th e second th r e e months th e y w i l l re c e iv e two
t h i r d s o f th e o r i g i n a l sum, i . e . , $400.00; and in th e l a s t
th r e e months they w i l l re c e iv e o n e - th ir d o f th e o r i g i n a l
sum, i . e . , $200.00.
129
re c e iv e d . A ccordingly, th e la b o r m arket board in th e p la c e
o f employment has to keep s u r v e illa n c e over him every 30 -
days f o r th r e e c o n secu tiv e months.
The s e ttle m e n t allow ance i s a s p e c ia l r e lo c a tio n a l
lowance s e t up s p e c i f i c a l l y fo r people in n o rth e rn Sweden
12
who a re p rep ared to a c c e p t r e l o c a t i o n . Unaccustomed to
c i t y and i n d u s t r i a l l i f e , such people I f u n a s s is te d may
f in d i t v ery d i f f i c u l t to a d j u s t . W ith th e allo w an ce, they
a re given h e lp in t h e i r ad ju stm e n t from co u n try l i f e to
c i t y l i f e . A common re a so n f o r p e o p le 's r e s is ta n c e to
m o b ility i s t h e i r homes. At c e r t a i n p o in ts in th e b u sin e ss
cy cle home owners may f in d i t d isad v an tag eo u s to s e l l ,
sin c e th e v a lu e s o f t h e i r p r o p e r tie s have d e p re c ia te d .
Under such c o n d itio n s th e y may be r e l u c t a n t to respond
p o s i t i v e l y to la b o r m o b ility p o lic y . ThiB d e te r r in g f a c t o r
has been reco g n ized and p ro p o sa ls have been subm itted to
th e R iksdag c a lli n g f o r com pensation f o r any l o s s e s . I f
such l e g i s l a t i o n i s approved, i t i s b e lie v e d t h a t i t w i l l
g r e a t ly f a c i l i t a t e la b o r m o b ility , e s p e c ia lly in th e most
d ep ressed a re a s o f th e n o r th .
O ccu p atio n al m o b ility i s a n o th e r p o lic y designed to
13
so lv e s t r u c t u r a l and te c h n o lo g ic a l unemployment. I t i s a
IP
The n o rth e rn p a r t o f Sweden h as very h ig h unem
ploym ent and underemployment. I t i s m ainly r u r a l^
^ " N e w e s t in Sweden," on. c i t . . pp. x x x - x x x iii.
130
p o lic y Intended to a s s i s t employees whose s k i l l i s n o t in
g re a t demand to s h i f t in to a n o th e r where demand i s g r e a t e r .
I t r e q u ir e s r e t r a i n i n g . W ith th e c o o p e ra tio n o f th e C e n tra l
Board f o r V o ca tio n al T ra in in g , th e Labor M arket Board has
s e t up v o c a tio n a l c e n te rs where th e unemployed and people
e n te r in g the la b o r fo rc e w ith o u t adequate p re p a ra tio n can
a c q u ire the n e c e s s a ry s k i l l s . Courses have In c re a se d
s in c e 1957 ra n g in g from c a r e l e c t r i c i a n s to X-ray te c h n i
c ia n s and encompass e ig h ty d i f f e r e n t o c c u p a tio n s. The
le n g th o f t r a i n i n g v a r ie s between one month to two y e a r s .
Workers who a re r e c e iv in g t r a i n i n g re c e iv e " t r a i n
ing allow ances" f o r them selves and t h e i r wives where t h e i r
w ives l i v e in d i f f e r e n t p la c e s . The t r a i n i n g allow ances
a re t a x f r e e . Handicapped w orkers g e t s p e c ia l in d iv id u a l
allo w an ces and t r a i n i n g which i s c o n s is te n t w ith t h e i r
in d iv id u a l s i t u a t i o n s . A fte r t r a i n i n g , th e w orkers r e
ce iv e "rem oval allo w an ces" and a r e tr a n s p o r te d to t h e i r
r e s p e c tiv e Job lo c a t i o n s . Handicapped tr a in e d w o rk ers,
who f in d i t d i f f i c u l t to g e t employment, a re u s u a lly em
ployed in th e n a t io n a l a rc h iv e s and th e l i b r a r i e s .
P o lic ie s f o r G eneral and C y c lic a l Unemployment. —
P o l i c i e s f o r f i g h t i n g g e n e ra l and c y c l i c a l unemployment
in c lu d e f i s c a l and m onetary p o l i c i e s on a very s e le c tiv e
b a s i s , w ith more em phasis on th e fo rm er. The s e le c tiv e
f i s c a l p o l i c i e s c o n s is t o f (1) p u b lic w orks, (2) lo a n s fo r
i n d u s t r i a l b u ild in g s , (3) government o rd e rs to in d u s tr y ,
131
(4) emergency b u d g e ts, (5) Investm ent r e s e r v e s , and (6)
d e p re c ia tio n a llo w a n c e s.
P u b lic Works. —P u b lic works a re used to combat
se a so n a l and c y c l i c a l unemployment. Employees fo r p u b lic
works a re n o rm ally th o se from th e a g r i c u l t u r e , f o r e s t r y ,
b u ild in g and c o n s tru c tio n i n d u s t r i e s . For a p r o je c t to be
d e s ig n a te d p u b lic work i t must be (a) work t h a t can be i n
crea sed in w in te r and decreased in summer m onths, (b)
capable o f employing w orkers who o th e rw ise cannot be em
ployed elsew h ere, (c ) a p r o je c t which can be s ta r t e d
q u ic k ly and c u r t a i l e d q u ic k ly , and (d) in v e r s e ly p ro p o r
t i o n a l to th e economic a c t i v i t y , i . e . , th e number o f works
must in c re a s e d u rin g th e re c e s s io n b u t d e c re a se in a boom.
P u b lic works a re v a rio u s and in c lu d e h a rb o r c o n s tr u c tio n ,
p u b lic ro a d s and b r id g e s . In th e re c e s s io n o f 1958-1959,
ap p ro x im ately 15,500 p erso n s were employed on p u b lic
14
works.
Loans f o r I n d u s t r i a l B u ild in g s . —As an in c e n tiv e to
i n d u s t r i a l i z a t i o n , a program was adopted in 1963 whereby
an in d u s tr y which i s w illi n g to move In to a new lo c a le but
needs some b u ild in g s b e fo re i t can move could be f i n a n c l a l -
14
M artin S c h n itz e r , "Economic P o lic i e s and
P r a c t i c e s ," M a te ria ls p rep ared f o r th e J o in t Economic Com
m itte e C ongress o f th e U nited S t a t e s , op. c l t . . p. 46.
132
ly su p p o rted up to 50 p e rc e n t of th e c o s t o f c o n s tru c tin g
th e b u ild in g . However, th e Labor M arket Board must ap
prove o f th e in d u s try b efo re th e community can o b ta in th e
lo a n . The in d u s try h as to , among o th e r th in g s , be lo c a te d
in a re a s of much need o r i t must re p la c e a m ajor in d u s try
which has been d is c o n tin u e d . The community i s expected to
g u a ra n te e th a t th e in d u s try w ill a t l e a s t su rv iv e f o r a
p e rio d of f iv e y e a r s .
Government O rders to I n d u s tr y . —L ocal and n a tio n a l
governm ents a re empowered to p la c e o rd e rs f o r purchases
from I n d u s tr ie s d u rin g re c e s s io n . The o rd e rs s tim u la te
i n d u s t r i a l p ro d u c tio n . S ince employment i s a p o s itiv e
fu n c tio n o f p ro d u c tio n , as the volume o f o u tp u t in c r e a s e s ,
o th e r th in g s being e q u a l, th e employment l e v e l r i s e s . The
Labor M arket Board may supply th e funds d i r e c t l y or the
funds may come i n d i r e c t l y from th e governm ental u n i t s .
This em ploym ent-creating device i s used m ainly to a s s i s t an
in d u s tr y whose demand f o r itB p ro d u c t has d e c lin e d d r a s t i
c a l l y . In th e 1958 r e c e s s io n , government p laced o rd e rs
w ith a Navy sh ip y a rd and as a r e s u l t an e stim a te d 2,000
IK
Jobs were c r e a te d . J
G eneral Emergency B udget. —Sweden h as an e x te n siv e
p re p a ra tio n f o r c r e a tin g employment in a g e n e ra l r e c e s s io n .
1 5 I b i d . , p . 48
133
S in ce such e x te n s iv e programs re q u ire funds f o r t h e i r
e x e c u tio n , the R iksdag (th e Swedish P a rlia m e n t) a n n u a lly
a p p r o p ria te s fu n d s which can be used f o r t h i s purpose.
The Labor M arket Board is e n tru s te d w ith and empowered to
use such funds when the need a r i s e s . H ence, th e Labor
M arket Board p o s s e s s e s p u b lic investm ent r e s e r v e s which
a re b lu e p r in ts o f p u b lic p r o j e c t s to be undertaken when
e v e r unemployment th r e a te n s . P ro je c ts in c lu d e road b u ild
in g and f o r e s t r y . Most o f th e p r o je c ts have n o t been p u t
in t o o p e ra tio n n o r has the emergency budget been drawn
upon; however, i t iB th e p o lic y o f th e government to be
p rep ared f o r any emergency.
Investm ent R e s e r v e s ^ — The burden o f red u cin g un
employment does n o t only f a l l upon th e sh o u ld e rs of th e
governm ent. P r iv a te c a p i t a l i s a lso e n l i s t e d . This i s
done through th e u se of an in v estm en t r e s e r v e . Any firm
i s p e rm itte d to s e t asid e 40 p e rc e n t o f i t s p r e -ta x i n
come; 46 p e rc e n t o f th i s sum i s d ep o sited in the C e n tra l
Bank (Riksbank) in n o n - i n t e r e s t b earin g s e c u r i t i e s w h ile
th e rem aining 54 p e rc e n t i s in th e company1 s working
c a p i t a l . The L abor Market Board is empowered to e x e rc is e
■^Norman P. K e lse r, M acroeconom ics. F is c a l P o lic y
and Economic Growth (Hew Y ork: John W iley & Sons, I n c . ,
1 9 6 4 ), pp. 274-75.
c o n tr o l over th e use o f t h i s r e s e r v e . To I l l u s t r a t e ,
suppose a c o rp o ra tio n has n e t Income b e fo re ta x e s o f
$100,000. I t s e t s a s id e 40 p e rc e n t o f $100,000 ( t h a t i s ,
$40,000) f o r th e re s e rv e ; $18,400 i s in n o n - i n t e r e s t b e a r
in g s e c u r i t i e s in th e bank and $21,600 ( i . e . , 54 p e rc e n t
o f $40,000) as w orking c a p i t a l f o r th e c o rp o r a tio n . When
a p r o p itio u s tim e comes, th e M in is try o f Finance c o n ta c ts
th e Labor M arket Board f o r th e r e le a s e o f the r e s e r v e s .
When th e re s e rv e i s r e le a s e d , a firm can use a l l i t s r e
se rv e f o r the p u rch ase o f equipm ent, th u s in c re a s in g
in v e stm e n t e x p e n d itu re in th e p r iv a te s e c to r . A re s e rv e
w hich has been p ro p e rly used f o r p e rm is s ib le p urposes i s
n o t s u b je c t to ta x a tio n ; a l s o , th e a s s e t which i s used to
pu rchase i s n o t s u b je c t to d e p r e c ia tio n allo w an ce. Any
company which u se s th e r e s e rv e w ith o u t p erm issio n i s
l i a b l e to pay ta x e s on th e t o t a l r e s e rv e p lu s a p e n a lty o f
10 p e rc e n t. A f u r t h e r stim u lu s i s p rovided f o r th e program
by g iv in g p a r t i c i p a n t s an e x t r a 10 p e rc e n t of th e f ir m 's
r e s e r v e to be deducted from p r e - ta x incom e. To i l l u s t r a t e ,
suppose a firm h as $100,000 In r e s e r v e s , th e program r e
q u ir e s t h a t i t d ed u ct $10,000 from I t s Income b e fo re com
p u tin g I t s annual ta x . The firm i s , on th e w hole, d ed u ct
in g 110 p e rc e n t o f I t s fund in r e s e r v e .
However, th e r e i s a tim e l im it to th e r e s e r v e s . I f
a f t e r f iv e y e a rs th e Labor M arket Board has n o t a u th o riz e d
th e use of th e r e s e r v e s , th e n th e c o rp o ra tio n can w ithdraw
1 3 5
30 p e r c e n t o f th e r e s e r v e i r r e s p e c t i v e o f th e b u s in e s s
c y c l e . The c o r p o r a tio n w i l l n o t be e n t i t l e d to th e e x t r a
10 p e r c e n t d e d u c tib le m en tio n ed a b o v e .
The boom in I960 r e q u ir e d an a d d i t i o n a l t w i s t to
th e program . I t was r e p o r te d t h a t any company w hich c o u ld
d e p o s it an a d d i t i o n a l amount e q u iv a le n t to 100 p e r c e n t o f
17
i t s r e s e r v e c o u ld o b ta in a t a x r e b a t e . 1
In v e stm e n t r e s e r v e s have been s u c c e s s f u l l y u t i l i z e d
in 1958-1959 and 1 9 6 2 - 1 9 6 3 . (The in v e s tm e n t r e s e r v e s
program was begun in 1938 b u t c o m p lic a tio n s in i t s im p le
m e n ta tio n f o r e s t a l l e d th e p ro g ra m .) In v e stm e n t r e s e r v e s
w ere r e l e a s e d in th e r e c e s s i o n in 1958-1959 to s ti m u la te
in v e s tm e n t e x p e n d itu r e s i n i n d u s t r i e s w hich w ere e x p e r ie n c
in g a h ig h r a t e o f unem ploym ent. To s ti m u la te employment
in th e n o r th e r n p ro v in c e s o f Sweden w hich were e x p e r ie n c
in g s t r u c t u r a l unem ploym ent, th e L abor M arket Board
a u th o r iz e d th e r e l e a s e o f in v e s tm e n t r e s e r v e s in 1962-1963.
The fu n d s were u t i l i z e d m a in ly f o r th e p ro cu rem en t o f
m ach in ery and equipm ent o r f o r p l a n t e x p a n sio n .
Many an oppo n en t to th e in v e s tm e n t r e s e r v e s program
m a in ta in s t h a t th e u se o f In v e stm e n t r e s e r v e s f o r prom ot
in g l o c a l i n d u s t r y i n t e r f e r e s w ith f r e e c o m p e titio n . A
^ T h e t a x r e b a t e was 12 p e r c e n t o f i t s r e s e r v e i f
th e amount was d e p o s ite d w ith th e R ik sb an k b e f o r e A ugust 1 ,
I9 6 0 ; and 8 p e r c e n t i f d e p o s ite d betw een A ugust and Novem
b e r 1 , i 9 6 0 . "Economic P o l i c i e s and P r a c t i c e s , " op. c i t . .
p. 32.
136
more Im p o rta n t c r i t i c i s m o f th e program I s th e tim in g o f
th e r e l e a s e . F r e q u e n tly , th e r e s e r v e s a r e r e le a s e d some
months a f t e r th e n eed f o r s t i m u la tio n i s p a s s e d . T h is
f a u l t y tim in g i s a b y -p ro d u c t o f in a c c u r a t e f o r e c a s t i n g
and econom ic a n a l y s i s . I t i s r e p o r te d t h a t th e r e l e a s e o f
r e s e r v e s d u rin g th e 1958-1959 r e c e s s i o n was made 15 m onths
T O
a f t e r th e r e c e s s io n had ended.
S e v e r a l a d v a n ta g e s em anate from th e in v e s tm e n t r e
s e rv e s program a s a c o u n t e r c y c l i c a l t o o l . F i r s t , i t h e lp s
t o dampen a boom and to c u sh io n a r e c e s s i o n . P r i v a t e i n
v e stm e n t e x p e n d itu r e s were 11 p e r c e n t g r e a t e r in 1 9 5 8 and
6 p e r c e n t h ig h e r in 1959* S e c o n d ly , th e in v e s tm e n t r e
s e rv e s program h a s a h ig h employment e f f e c t . The u s e o f
in v e s tm e n t r e s e r v e fu n d s c r e a te d employment f o r 2 ,0 0 0
w o rk ers i n 1959 and 6 ,3 0 0 w o rk e rs in 1 9 6 3 Finally, th e
in v e s tm e n t r e s e r v e s can be used f o r l o c a l i z a t i o n p u rp o s e s
and f o r a p a r t i c u l a r b ra n c h o f i n d u s t r y .
D e p r e c ia tio n A llo w an ce. — Sweden h a s s u c c e s s f u l l y
in tro d u c e d v a r io u s m ethods o f in v e n to r y v a l u a ti o n and ra p id
d e p r e c ia t io n a llo w a n c e s to f i g h t unem ploym ent. B oth th e
s t r a i g h t l i n e and d e c l i n i n g b a la n c e m ethods a r e used and
ta x p a y e r s a r e e x p e c te d to: be c o n s i s t e n t w ith t h e i r m ethods.
• ^ I b l d . , p . 3 6 .
19I b i d .
137
For in s ta n c e , a firm cannot use th e d e c lin in g balance
method f o r one item and s t r a i g h t l i n e method f o r an o th e r
w ith in th e same y e a r . A firm i s p e rm itte d to w rite o f f in
one y e a r a 30 p e rc e n t d e p r e c ia tio n allow ance in th e f i r s t
y e a r i f i t i s u sin g a d e c lin in g b a la n c e method, an o th er 30
p e rc e n t in th e second y e a r and f o r up to f iv e y e a rs , by
which tim e th e c o s t o f th e equipm ent i s co m p letely w r itte n
off. When u sin g a s t r a i g h t l i n e method, a firm can deduct
20 p e rc e n t o f th e e n t i r e c o s t o f equipm ent or m achinery
every y e a r f o r f iv e y e a rs u n t i l th e e n t ir e c o s t i s w r itte n
off. Sometimes, a t th e peak o f unemployment, th e govern
ment may g ra n t an e x tr a 30 p e rc e n t d e p r e c ia tio n allow ance
f o r any b u sin e ss firm s which p u rchase m achinery d uring a
s t i p u l a t e d p e r io d . By such m easures th e Swedish Govern
ment i s a b le to combat unemployment.
B esides l i b e r a l d e p r e c ia tio n a llo w an ce s, Sweden
p erm its c a rry -fo rw a rd and carry-backw ard o f l o s s e s . These
m easures allo w lo s s e s o f some y e a rs to be deducted from,
p r o f i t s o f good y e a rs when c o rp o ra te income ta x e s are b e
ing computed. Such a system may have a low er ta x y ie ld In
p ro sp ero u s y e a rs b u t a s a lu ta r y e f f e c t on demand, produc
tio n and employment, p a r t i c u l a r l y in th o se ty p e s o f b u s i-
20
n e s s e s th a t have w id ely f lu c t u a t i n g incom es. W ithout th e
system a c o rp o ra tio n would pay h ig h ta x e s in p ro sp ero u s
20M artin S c h n itz e r , op. c i t ., pp. 38-40.
138
y e a rs "but "bear a l l th e l o s s e s In slump y e a r s . In 1953»
S w eden's ta x law p e rm itte d c a r r y - o v e r o f lo s s e s f o r a
p e rio d o f s i x y e a r s .
S e a s o n a l Unemployment P o l i c i e s
P o l i c i e s f o r a l l e v i a t i n g s e v e r i t y o f s e a s o n a l un
employment in c lu d e h o u sin g and road c o n s tr u c tio n , p u b lic
r e l i e f works and easy c r e d i t . The s e a s o n a lly unemployed
a re m ain ly employed in b u ild in g c o n s tr u c tio n and f o r e s t r y
21
where c l im a tic c o n d itio n s m i l i t a t e a g a in s t them.
W ithin th e p o r t f o l i o s o f th e p u b lic In v estm en t r e
s e rv e s a re s h o r t- r u n p u b lic p r o j e c t s w hich can be s t a r t e d
and com pleted in a v ery s h o r t p e r io d . The Swedish P a r l i a
ment h a s a p p r o p r ia te d fu n d s a lre a d y and th e s e a re a t th e
d is p o s a l o f th e L abor M arket B oard. The fu n d s can be used
to s u b s id iz e o r fin a n c e p u b lic works d u rin g s e a s o n a l un
employment. Where s e a s o n a l unemployment i s h ig h , a d d i
t i o n a l funds can be s u p p lie d a t th e r e q u e s t o f th e Labor
M arket B oard. The p r o j e c t s c o n s is t o f ro a d b u ild in g and
f o r e s t r y .
H ousing c o n s tr u c tio n i s a ls o used as a cu re f o r
s e a s o n a l unem ployment. S in ce th e Sw edish Government
f in a n c e s a p p ro x im a te ly 90 p e r c e n t o f a l l h o u sin g c o n s tru c
t i o n , m onetary p o lic y forms a m ajor c o u n t e r c y c l ic a l
^ Y e a rb o o k o f Labour S t a t i s t i c s , I n t e r n a t i o n a l
L abour O rg a n iz a tio n , Geneva, 1966, p . 401.
139
measure in t h i s s e c to r . The l e v e l o f employment may
d i c t a t e the governm ent's easy or t i g h t money p o lic y . At
high le v e ls of unemployment c r e d i t i s made more a c c e s s ib le
to the i>ublic for housing c o n s tru c tio n . The number o f
b u ild in g perm its i s a ls o increased by the Labor Market
Board. U sually b u ild in g permits a re lim ite d to 25 p e rce n t
o f the t o t a l during th e f i r s t s i x months o f the year and
in c rease s u b s t a n t i a l l y during th e w inter months. In 1 9 6 7,
an easy c r e d i t policy was adopted and as a r e s u l t th e d i s
count r a t e was lowered. The commercial i n t e r e s t r a t e s con
sequently f e l l . The easy c r e d it p o lic y c o n trib u ted to an
in c rease o f I n d u s t r i a l c o n s tru c tio n and new housing Jumped
from 89,000 to 100,000 u n its ; h o s p it a l c o n stru c tio n in -
22
creased 25 percent over the previous y e a r. The reco rd s
In d ic a te th a t easy c r e d i t ^ and a n t i c y c l i c a l reserv e funds
supplied 10,000 Jobs in b u ild in g c o n stru c tio n in 1962-63,
24
and 7,000 w in te r Jobs in 1958-59.
To combat seaso n al unemployment during 1967-68, the
N atio n al Labor Market Board has announced the fo llo w
ing program: (1 ) th a t firm s may use accumulated ta x -
fre e re s e rv e s to b u ild up in v e n to rie s ; ( 2 ) th a t muni
c ip a l and c e r ta in o th er co n s tru c tio n work amounting
22
I n te r n a ti o n a l Commerce, November 20, 1967, pp.
26-28.
23
^The use of easy c r e d it as an em ploym ent-creating
device i s becoming lim ite d due to in f la t io n a r y p re ssu re s .
Discount r a t e has been raiBed to 6 percent (in 1966) and
lowered to 5 .5 p erce n t ( 1968) as an a n t i - i n f l a t i o n a r y
measure.
24
M artin S c h n itz e r. Economic P o lic ie s and P ra c tic e s ,
op. c i t . , p. 48. — —— — — — — —— —
140
to 9*7 m illio n d o l l a r s w ill be exempt from th e 25 p er
cent investm ent le v y ; (3) th a t c o n stru c tio n s t a r t s for
1,000 governm ent-financed apartm ents and 500 otherB
which were scheduled fo r 1968 w ill be s e t ahead; (4)
work on e x is tin g government p r o je c ts w i l l be stepped
up and funds w i l l be requested fo r the s t a r t of
o th e rs , in clu d in g h o s p ita l and school c o n s tru c tio n ;
and (5) th a t P arliam ent w ill be asked to provide an
a d d itio n a l 31 m illio n d o lla rs fo r in c re ase d r e l i e f
w ork.2-*
A dm inistration of Employment Program
The a d m in is tra tio n of the e n t ir e employment program
i s e n tru s te d to th e Labor Market Board of Sweden. The
Labor Market Board i s an autonomous o rg a n iz a tio n w ithin the
M inistry o f I n t e r i o r A ffa irs and has r e p r e s e n ta tiv e s from
la b o r, management and government. I t s p o licy Is (1) to
elim in ate imbalances in the la b o r m arket, (2) make the
economy more e f f i c i e n t and more c o m p etitiv e, and (3) to
minimize d iso rd e rs w ith in the economic s e c to r.
I t i s the fu n c tio n of the Labor Market Board to (1)
m aintain a nationw ide placement s e r v ic e , (2) Implement the
governm ent's em ployment-creating m easures, (3) manage the
Investm ent reserv e fu n d s, (4) promote geographical and
o ccu p atio n al m o b ility , (5) supply th e p u b lic w ith informa
tio n on changes in employment, job v ac an c ies, and advanced
^"Government Make2 Plan to Combat Unemployment
During W inter 1967- 6 8 ," Labor Developments Abroad, Vol.
13* January, 1968, p. 15*
141
26
l a y o f f s , and (6) a s s i s t companies to l o c a t e new ln d u s -
27
t r i e s in o t h e r p a r ts o f th e c o u n try , 1
For c a rry in g o u t such am b itio u s programs th e Labor
Market Board i s a n n u a lly g ra n te d funds by th e R iksdag. I t s
budget f o r th e p erio d 1955-56 amounted to 24 m il lio n
d o l l a r s ; in 1960-61 i t had In c re a s e d to 104 m illio n d o l-
p Q
l a r s ; in 1967-68 i t amounted to 240 m i l l i o n d o l l a r s .
A secondary f u n c tio n o f th e Board i s i t s s u p p o rt o f
th e governm ent's P o lic y o f S t r u c t u r a l R a t i o n a l i z a t i o n .
S t r u c t u r a l R a t i o n a l i z a t i o n i s a p o lic y o f c r e a tin g e f
f ic ie n c y In th e Swedish economy th ro u g h m erging, autom a
t i o n and d e s t r u c t i o n o f m a rg in a l firm s by f re e i n t e r p l a y
o f m arket f o r c e s , so t h a t la b o r and c a p i t a l can be r e
le a s e d f o r p r o f i t a b l e u s e . I t I s th e u lti m a t e aim o f
S t r u c t u r a l R a t i o n a l i z a t i o n to compete s u c c e s s f u l ly i n world
26
I t i s a common p r a c t i c e in Sweden f o r em ployers to
g iv e advance n o tic e o f l a y - o f f s , th e number o f w orkers i n
volved, when th e l a y - o f f w i l l tak e p l a c e , th e d u r a tio n o f
th e l a y - o f f , and the re a s o n s fo r the l a y - o f f s . L ocal
branches o f th e Labor M arket Board su p p ly s t a t i s t i c a l I n
form ation r e g a r d in g job v a c a n c ie s and job f i l l i n g s to th e
c e n t r a l Labor Market B oard, h e a d q u a rte re d In Stockholm .
27
'L o c a tio n and R esearch D iv is io n o f the Board i s
r e s p o n s ib le f o r a d v is in g companies which are I n t e r e s t e d in
e s t a b l i s h i n g new I n d u s t r i e s by s u g g e s tin g a r e a s where such
I n d u s t r i e s w i l l be n e e d e d . I t does n o t supply any
f i n a n c i a l Inducem ents.
2®"How Sweden Keeps Them W orking," B usiness Week,
J u ly 15, 1967, pp. 100-102.
142
tra d e and re se c u re fo r the Swedish export se c to r i t s
p Q
former grounds. 7 The Labor Market Board serves as a
weapon f o r t h i s p o lic y .
R esu lts o f Employment P o lic ie s
Swedish employment p o lic ie s have produced fav o rab le
r e s u l t s . The r e s u l t s can be examined in th e l i g h t o f ob
je c t i v e s . W e saw above th a t the aim of th e p o lic ie s is to
(1) m aintain f u l l employment, (2) re c o n c ile f u l l employment
w ith s ta b le p r ic e s , (3) minimize in e f f ic ie n c y in the
economy, and (4) r e a l i z e a ra p id r a t e of growth.
The balance sh eet shows th a t Sweden has r e a liz e d
f u l l employment to the ex ten t o f having o v e r - f u ll employ
ment. U n til r e c e n tly th e re was la b o r shortage In Sweden.
I f we make allowance fo r seasonal v a r i a t i o n s , the Swedish
record o f unemployment has v a rie d from 1 .2 -1 .6 p erce n t.
(In 1967* the unemployment r a t e averaged 1 .6 percent; in
1968, i t was 1.2 p e rc e n t. During p erio d s o f re c e ssio n when
o th e r European c o u n trie s were experiencing heavy unemploy
ment, Sweden's was very l i g h t . In periods of rece ssio n un
employment r a t e s have been 2 -2 .5 p ercen t; in boom months
the r a t e s averaged 1-1.5 p e rc e n t.
2 9
At p re s e n t, Sweden i s experiencing keen com peti
tio n in world tra d e from o th e r c o u n trie s , n o tab ly Japan.
Moreover, th e c u rre n t d ev a lu atio n s of B r ita in and Denmark
p r e d ic t a gloomy fu tu re fo r Sweden in i t s fo reig n tr a d e .
143
Sweden's p o licy of r e c o n c ilin g p ric e s t a b i l i t y w ith
f u l l employment has been q u ite u n su c c essfu l. The country
has no t been immuned from the g en e ra l postwar i n f l a t i o n .
P ric e s have been r i s i n g s te a d il y . The causes o f th is
g e n e ra l p ric e r i s e have been i d e n t i f i e d , i n t e r a l i a , as
high aggregate demand r e l a t i v e to aggregate supply and
long-run r i s i n g wage c o s ts r e l a t i v e to p r o d u c tiv ity . Dis
posable incomes have been in c re a s in g , and w ith s h o rte r work
ing hours the t o t a l volume o f spending has d ra m a tic a lly i n
creased . Consumer demand is re p o tte d to have in creased in
1968 by 2 .5 p e rc e n t; government ex p en d itu res went up by 6
p e rc e n t; d isp o sab le income showed an in c re a se o f 5 .8 p er-
3 0
cent in the same y e a r. The consumer p ric e index went up
4.3 p ercen t in 1 9 6 8 ; 9 .5 percent in 1967; 5*5 percent
in 1 9 6 6 .31
A second major f a c t o r c o n trib u tin g to in f la t io n a r y
p ressu res i s the wage c o s t. Wages in Sweden have been
q u ite high, averaging a 10 p ercen t in c re a se per y e a r. This
high wage i s p a r tly due to the p r in c ip le of s o l i d a r i t y of
th e unions and th e wage d r i f t . For in s ta n c e , th e new con
t r a c t to boost wages fo r the th ree p erio d s provided wage
"Swedes Pace U n c e rta in ty ," I n te r n a ti o n a l Com
m erce, February 19, 1958, pp. 22-24.
31
I n te r n a ti o n a l Commerce, November 2 0 , 1 9 6 7 , p p .
26- 2 8 .
144
Increases of 8.4 percent (1966); 8.9 percent (1967); and
’I p
7.6 percent (1968). As a r e s u l t of high wages, many
firm s in the t e x t i l e and garment in d u s trie s have gone out
of business and tfthers have moved in to co u n trie s w ith low
33
wages. J This i s In accordance with the government's
po licy o f s tr u c t u r a l r a tio n a liz a ti o n whereby in e f f i c i e n t
and m arginal firm s w i l l be driven out of the economy.
Again, the employment p o lic ie s have helped Sweden to
achieve a high r a te of growth. At the same time Sweden Is
reported to be experiencing a chronic d e f i c i t In i t s
balance o f payments. Trade d e f i c i t s have been 401 m illio n
d o lla rs in 1965» 296 m illio n d o lla rs In 1966, and a p re
d icted 281 m illio n d o lla rs In 1967- D espite such sub
s t a n t i a l trad e d e f i c i t s , Sweden's gold and foreign ex-
34
change continue to r i s e .
32
"Now the Swedes Feel the Pinch," Business Week.
June 25, 1966, pp. 55-56.
5 3 I b id .
34
American Economic Review, s u p p l., June, 1968,
on. c i t . . p. 8.
145
CHAPTER VII
SCANDINAVIAN C O M M O N EM PLOYM ENT M ARKET
Free movement of la b o r from one European country to
another was very common In Europe u n t i l 1924. In those
y ears wherever la b o r was scarce or in d u s trie s beckoned,
th e re workers would move. There were no c e n tr a l c le a rin g
houses nor employment agencies to bring employee and em
ployer to g e th e r. I t was a l a i s s e z - f a i r e movement of
workers and, of course, i t was b e se t w ith b o ttlen e ck s and
confusion. A fter 1924 the fre e movement of labor ended as
n a tio n s erec ted a r t i f i c i a l b a r r i e r s to keep foreign workers
o u t . 1
A d e sire to form a common employment market began to
c r y s t a l l i z e in 1933, but i t was in 1959 when the f i r s t
European Employment Market was formed. N ational Employment
2
S erv ices were s e t up in each of the sig n a to ry s t a t e s .
T heir primary function was to f a c i l i t a t e the movement o f
lab o r between c o u n trie s . Despite the pomp and pageantry
which accompanied i t s form ation, the Western European Em
ployment Market was a f a i l u r e ; i t placed only 265
1
This was the year when United S ta te s stopped ex
ce ssiv e in flu x of European im m igrants.
2
The B russels Treaty O rganization co nsisted o f
Belgium, France, Luxembourg, N etherlands, and B r ita in .
146
3
w o rk ers. Two o th e r examples o f a European common la b o r
m arket can be c i t e d . There were th e Benelux C learance
Arrangements which Involved Belgium, N eth e rla n d s and
Luxembourg, and th e European Coal and th e S t e e l Community
C learance Arrangements which attem p ted to remove r e s t r i c -
A
tio n s on s k i l l e d w orkers.
The most n o ta b le common employment m arket, which has
had a lo n g e r l i f e , i s the S candinavian (N ordic) Common
Labor M arket. S e v e ra l f a c t o r s have c o n trib u te d to i t s
s u c c e s s . I t i s our i n t e n t i o n to p re s e n t th e s e f a c t o r s
a n a l y t i c a l l y , to expound on th e o p e ra tio n o f the common
la b o r m arket and e v a lu a te i t s r e l a t i v e s u c c e s s . The
c h a p te r b eg in s w ith a t h e o r e t i c a l a n a l y s i s and a d e s c r i p
tio n o f n o n - p ric e impediments which h in d e r the smooth
o p e ra tio n o f the model. This i s follow ed by a d e s c r i p t i o n
o f the f a c t o r s p e c u l i a r to S candinavian c o u n t r ie s , which
i s th e c e n t r a l theme o f the c h a p te r . The c h a p te r ends w ith
an e v a lu a tio n o f th e N ordic employment m a rk et.
3
"R ecent Developments in the C learance o f Manpower
Between W estern European C o u n trie s ," I n t e r n a t i o n a l Labour
Review. I . L . O . , Geneva, F eb ru ary , 1959* V ol. LXXIX, No. 2,
pp. 175-177.
4
I b i d .
147
T h e o re tic al Aspects of a Common Labor Market
The S t a t i c Model
Economic theory a s s e r ts th a t c o rre c t a llo c a tio n o f
fa c to rs of production i s m aintained when re so u rce s are ab le
to move f r e e ly . M isallo c atio n r e s u l t s where th e re are im
pediments to resource m o b ility . For example, suppose th e re
are two submarkets (or two small c o u n trie s A and B. Let
us suppose labor is d iv i s i b l e and homogeneous, and th a t the
product produced in the two c o u n trie s i s the same. The
su p p lie s o f la b o r in both c o u n trie s d i f f e r , w ith the
Country A having more u n its o f la b o r than Country B. Let
the demand curves of la b o r be and bbdb , r e s p e c tiv e ly ,
and the supply curves be S^SA and S-gSg.
In both c o u n trie s the p ric e s of la b o r w i l l d i f f e r ,
i l l u s t r a t i n g m is a llo c a tio n and m a ld is trib u tio n . Let us
denote the r e l a t i v e wages as and W BW B. (See Figure
2, page 148.) In Country A the n a tio n a l product i s below
i t s maximum p o te n tia l since la b o r i s no t re c e iv in g the
p o te n tia l value o f i t s m arginal pro d u ct. In Country B
labor i s re c e iv in g too high a p r ic e . I f lab o r could move
fre e ly between the c o u n trie s , the p rice mechanism would
c o rre c t the wage i n e q u a l i t i e s .
Suppose f u r th e r th a t the c o u n trie s r e a l i z e th is and
s e t up a common employment m arket. The high wages in
Country B w ill a t t r a c t lab o r from Country A. As u n its of
la b o r leave Country A, the supply curve s h i f t s to the l e f t
8
L
0
Labor
B
Labor
Figure 2
LABOR RESOURCE MAXIMIZATION
148
149
1 1
t ° SASA, and as the u n its of lab o r take employment In
Country B, the l a t t e r ' s supply curve w ill s h i f t downward.
The process w ill continue u n t i l wages have been equalized
in the two c o u n trie s .
Impediments to Free Labor M obility
The s im p lic ity of our a n a ly s is has been made pos
s ib le by our underlying assumption o f p e rfe c t com petition
and absence of impediments. However, In the r e a l world
v ario u s o b s ta c le s p r e v a i l. S o c io lo g ic a l and psychological,
i n s t i t u t i o n a l and economic f a c to rs are a t play, and theBe
work a g a in s t the optimum a llo c a tio n o f la b o r, even in
c o u n trie s where agreements perm it lab o r m o b ility .
Economic f a c to r s which m i l i t a t e a g a in s t labor
m o b ility are Job and wage in s e c u r ity , lo s s of s e n io r ity ,
and inadequate in fo rm atio n . A p o te n tia l m igrant would
lik e to have an id e a o f the a d d itio n a l revenue which he
could earn by r e lo c a tin g b efore he leav es h is n a tiv e
country. He w ill estim ate the cost ( ta n g ib le and i n
ta n g ib le ) and attem pt to compare i t w ith h is revenue.
Since h is inform ation i s inadequate, th e re is a tendency
to exaggerate e i t h e r h is co st or revenue. Moreover, he
may fin d on h is a r r i v a l th a t the job has already been
f i l l e d or th a t the s k i l l s req u ire d by the employer are
o th e r than those th a t he p o sse sse s. Not unusually, the
p o te n tia l m igrant may h e s i t a t e to leave h is job and h is
accumulated s e n io r i ty to tr y a new job in another country
150
where both Job and wages are In secu re . I t has been ob
served t h a t workers who b u ild up s u b s t a n tia l c r e d its t o
ward re tire m e n t an n u ity are r e lu c ta n t to s h i f t Jobs fo r
fe a r of f o r f e i t i n g accumulated re tire m e n t c r e d i t s . Hence,
5
pensions a c t as a brake to la b o r m o b ility .
S ocio -p sy ch o lo g lcal f a c to r s may in clu d e (1) pos
s i b i l i t i e s of a s s im ila tio n (n atio n alism and r a c i a l p r e
ju d ic e s ), (2) r e l i g i o n , and (3) education. There i s a
common a n tip a th y to fo re ig n e rs which a r i s e s in th a t the
fo re ig n e r speaks a d if f e r e n t language, has d if f e r e n t man
nerism s and customs, or belongs to a d if f e r e n t ra c e . This
f e e lin g o f "foreignness" makes i t d i f f i c u l t fo r a s s im ila
t i o n . An Immigrant w ith a d i f f e r e n t r e lig i o n may fin d i t
d i f f i c u l t to get a Job. A c l a s s i c example i s in Belgium,
where Flem ish-speaking Belgians re fu se to accept employ
ment in a C atholic French-speaking se c tio n of the country
to the a l t e r n a t i v e o f a prolonged unemployment. I t i s
also common th a t m igrants are those with lower ed u catio n al
standards and w ith s k i l l s n o t desired by the h o st country.
An im portant i n s t i t u t i o n a l f a c to r is an immigration
department which ad m in isters perm its to fo re ig n workers.
The department has a u th o rity reg ard in g the issue of p e r
m its and can be reprimanded by the M in istry o f Labor i f
C
Robert C. M ilJus and Alton C. Johnson, "M ulti-
Employer Pensions and Labor M o b ility ," Harvard Business
Review. Vol. 41, No. 5» September, 1963* P* i^Y.
151
too many fo re ig n e rs are adm itted a t one time to compete
w ith n a tiv e s fo r a v a ila b le jobs. To avoid censure, the
immigration departm ent tends to r e s t r i c t perm its so as to
keep fo re ig n e rs o u t. Moreover, those th a t are adm itted
are granted perm its to work p e r io d ic a lly and t h e i r perm its
can be revoked by the department according to i t s d is c r e
t io n . The temporary n a tu re o f the perm its make employers
h e s i t a t e to employ fo reig n workers and fo re ig n e rs become
i n d i f f e r e n t to in te g r a tin g themselves in to the l i f e of the
h o st country.
There i s no doubt th a t the smooth operation o f a
common la b o r market n e c e s s ita t e s the f u lf i llm e n t of c e r
ta in p r e r e q u i s i t e s . The p r e r e q u is ite s may be p o l i t i c a l ,
g eo g rap h ical, s o c ia l or economic. I t i s to these f a c to rs
t h a t we now tu rn .
C o n trib u tin g Factors to the
Nordic Labor Market
The f a c t o r s which have c o n trib u ted to the r e l a t i v e
success of the Nordic common lab o r market are grouped
under ( l) g eo g rap h ical, (2) p o l i t i c a l , (3) s o c ia l, and (4)
economic. Our a n a ly s is follow s in t h i s o rd er.
G eographical F acto rs
The Scandinavian c o u n trie s are lo c ate d between 55°
and 71°N. l a t i t u d e , yet enjoy a m ilder clim ate than
S ib e ria and A laska, both on the same l a t i t u d e . I t i s a
tem perate clim ate w ith the Gulf Stream warming i t s c o a s t
l i n e s , Winters in the n o rth ern p o rtio n of the c o u n trie s
are so severe as to b rin g economic a c t i v i t i e s to a sta n d
s t i l l , Seasonal unemployment is common and the formation
of a common Scandinavian employment market h elp s to m ini
mize economical f l u c t u a t i o n s . The s iz e of each country is
very sm all, Denmark i s 16,600 square m iles, Finland
130,100 square m ile s , Norway 125*100 square m ile s, and
Sweden 173,600 square m ile s. Together they form an area
of 445,400 square m ile s. (See Table 9 .)
The Nordic c o u n trie s were denied any d ep o sits of
co al, but were granted an abundant supply o f w a te r f a lls
from which they developed h y d r o e le c tric power fo r indus-
7
t r i a l l z a t i o n . The f o r e s ts y ie ld spruce, f i r , b irc h , e t c . ,
while o th e r m ineral d ep o sits such as iro n ore abound. Al
though n a tu re was so sp arin g in i t s supply of n a tu r a l r e
sources, th is g eographical d e fic ie n c y i s remedied by the
energy and s k i l l o f the people.
Demographically, the c o u n trie s are th in ly populated.
Denmark has 5 m illio n people; Finland haB 4.5 m illio n ;
Norway 3.7 m illio n ; and Sweden 7*7 m illio n . In economic
in te g r a tio n , they c o n s titu te a population of approxim ately
^Scandinavia; A Golden Market (Stockholm: A. B.
Ottoson Froduktlon, 1965), p. 7*
7
W. R. Mead, An Economic Geography of th e Scandi
navian S ta te s and Finland (London: U n iv ersity o f London
P re ss, 1958), pp. 1-117*
153
TABLE 9
GEOGRAPHICAL AND POPULATION FEATURES
Population
(1,000)
Size in
Square Miles
In h a b ita n ts
p er Square
Mile
Denmark 4,756 16,600 286
Finland 4,612 130,100
35
Norway 3,723 125,100 30
Sweden 7,730 173,600 44
Scandinavia 20,821 445,400
47
Source: S candinavia; A Golden Market (Stockholm: A. B.
Ottoson Produktlon, 1965), p. 7-
154
20.8 m illio n . A common employment market provides fre e
movement of manpower, wide choice of in d iv id u a l employment
openings, g re a te r com petition and g r e a te r s p e c ia liz a tio n .
P o l i t i c a l Factors
Prom ea rly h i s t o r y , the Scandinavian co u n trie s have
enjoyed p o l i t i c a l co o p eratio n . In the Middle Ages the
Scandinavian th ro n e s had been u n ite d to g e th e r. Denmark
and Norway were under the Danish king fo r over 400 y e a rs ,
from 1375 to 1814. Evidence o f p o l i t i c a l union o f the
Scandinavian c o u n trie s e x is ts as f a r back as 1389, when
Denmark-Norway and Sweden-Pinland came under one s in g le
monarch, Queen M argrete. As v i s i b l e dem onstration of a
s in g le p o l i t i c a l u n ity , the queen had her successor
Q
crowned King of a l l th e kingdoms a t Kalmar in 1397* Al
though the Kalmar Union la s te d u n t i l 1520, i t s t i l l has a
h i s t o r i c a l s ig n ific a n c e of common t i e s o f the Nordic
p e o p le s.
Denmark and Icelan d had a p o l i t i c a l m arriage from
1918 to 1944. This union d isso lv ed in 1944 when the
people o f Iceland voted in a p l e b i s c i t e f o r a rep u b lican
government. The union between Sweden and Finland was
Joseph A. Lauwerys f e d . ) , Scandinavian Democracy;
Thought and I n s t i t u t i o n s in Denmark. Norway and Sweden.
P ub lish ed by the Danish I n s t i t u t e (d et Dansk S elskab), the
Norwegian Office o f C u ltu ra l R e la tio n s , and the Swedish
I n s t i t u t e in Cooperation w ith the American-Scandlnavian
Foundation, Copenhagen, 1958, pp. 366-376.
155
broken In 1809 by th e conquest o f th e Russian Czar.^
N e v e rth e le s s, Scandinavianism as a movement d id n o t
d i e . During th e e a rly n in e te e n th cen tu ry , u n iv e r s ity
s tu d e n ts , l i b e r a l b o u rg eo isie and e n lig h te n ed farm ers
provided an id e o lo g ic a l and pragm atic b a s is fo r Scandi
navian oneness. In 1907 a N orthern I n te r-P a rlia m e n ta r y
Union was formed f o r the t h e o r e t i c a l study o f problems o f
i n t e r e s t to members o f P a rliam en t in the d i f f e r e n t
c o u n tr ie s .
Events o f World Wars I and I I had a rem arkable i n
flu en c e on N ordic c o o p e ra tio n . In both wars th e n o rth e rn
c o u n trie s adopted a n e u t r a l p o lic y , even though German
in v a sio n during th e second war I n te r ru p te d t h e i r
n e u t r a l i t y . The h a rd sh ip s o f blockade and submarine w are-
f a r e forced th e governments in to economic c o o p e ra tio n .
During the p e rio d o f th e League o f N ations and l a t e r th e
U nited N a tio n s, the Nordic c o u n trie s p r a c tic e d Jo in t con
s u l t a t i o n . The t h r e a t o f a S o v ie t Invasion and the Cold
War galvanized th e Nordic governments in to th e form ation
o f a N orthern P arliam en ta ry Council in 1951» and conse
q u e n tly a Scandinavian Defense A llia n c e which culm inated
In th e form ation o f one o f th e w o rld 's b e s t armed a i r
fo rc e in 1953-
9
I b i d .
1 0 I b i d .
156
P r e s e n t l y , th e N ordic c o u n tr ie s have d em ocratic
1 1
ty p e s o f governm ents. F in lan d i s a r e p u b lic w ith a
p r e s id e n t and a chamber in P a rlia m e n t; i t s p a rlia m e n t con
s i s t s o f 200 members who a re e le c te d every fo u r y e a r s .
Denmark, Norway, and Sweden have m onarchies but th e k in g s
have lim ite d powers. Sweden has a two chamber P a rlia m e n t
s i m i l a r to th e U nited S t a t e s ' Houses o f S en ate and R epre
s e n t a t i v e s . I t i s a b u n d a n tly c l e a r t h a t even in p o l i t i c s
th e r e a re l i t t l e o r no i d e o l o g i c a l d i f f e r e n c e s .
S o c ia l F a c to rs
S o c i o l o g i c a l l y , th e S candinavian c o u n trie s have
very s i m i l a r la n g u ag e s, c i v i l law s, c u l t u r e s , r e l i g i o n and
12
e d u c a tio n a l system s.
A f f i n i t y of language between Danes, I c e l a n d e r s ,
Norwegians and Swedes has e x i s te d sin c e th e S can d in av ian s
f i r s t appeared in h i s t o r y . The "Danish tongue" used to be
a common language a t an e a r l y p e rio d o f t h e i r h i s t o r y ;
however, i t d isa p p e a re d l a t e r . Today t h e r e a re so few d i f
fe re n c e s in th e languages t h a t i t only ta k e s a few weeks
to m a ste r one la n g u ag e. I c e la n d e r s can speak D anish; Finns
^ The S can d in av ian M arket; A S t a t i s t i c a l Survey o f
th e Four S can d in av ia n C o u n trie s . P u b lish e d by N o rd fin a n z -
Bank, Z u ric h , 1966» pp. 61-65.
12
The S candinavian S t a t e s and F in la n d , a P o l i t i c a l
and Economic S u rv ey . (New York: Royal I n s t i t u t e o f
I n t e r n a t i o n a l A f f a i r s , Oxford U n iv e r s ity P r e s s , 1951)»
pp. 1 -7 .
157
speak Swedish. Also, the schools in the v a rio u s c o u n trie s
te a c h Danish, Swedish, and Norwegian. I t is a common
s ig h t to see c o -n a tio n a ls o f fiv e c o u n trie s ta lk in g to one
an o th er w ithout i n t e r p r e t e r s . This community o f language
provides the stim u la n t to la b o r m o b ility and an in v alu ab le
s e rv ic e to the common employment market of the n o rth .
The p r in c ip le s of law and concepts o f ju s tic e are
13
very sim ila r In S candinavia. * * This s i m i l a r i t y in le g a l
a f f a i r s has f a c i l i t a t e d co o rd in atio n in c i v i l laws, mar
r ia g e and d iv o rce . I t i s common, in c i v i l law s u i t s , f o r
c o u rt d ec isio n s o f one country to be executed In another
country.
Cooperation in o th e r c u l t u r a l a f f a i r s i s also e v i
d e n t. In m edical m a tte rs , Scandinavian doctors have f r e
q u en tly met to d isc u ss common p u b lic h e a lth problems and
means to solve them. J o in t f ig h ts a g a in s t epidemics and
j o i n t q u aran tin e re g u la tio n s m an ifest th e i r s p i r i t of
s o l i d a r i t y . The a c t i v i t i e s of the Forenlngen Norden (The
Norden A sso ciatio n ) have been in stru m e n ta l towards th is
1 4
s o l i d a r i t y . In m a tte rs of communication and tr a n s p o r ta
t i o n , th e re alre a d y e x i s t coordinated p o s ta l, te le g ra p h ,
13
In the tw e lfth and t h i r t e e n t h c e n tu r ie s , th e re
e x is te d a Nordic le g a l system; a lso the Medieval "Provin
c i a l Laws" g r e a tly paved the way f o r subsequent develop
ment o f Nordic l e g i s l a t i o n .
14
The Norden A ssociation adopts v ario u s media in
p o p u la riz in g Scandinavianism .
158
and telephone s e rv ic e s . The Northern Council made Scandi
n av ia a sin g le p assp o rt area whereby a Swede, Dane or
Norwegian can t r a v e l to any Scandinavian country w ithout a
p assp o rt document. The same Northern Council Inaugurated
the Scandinavian A irlin e s System {S.A.S.) which o rig in a te d
the P o lar a i r ro u te from Copenhagen to Los Angeles. This
i s an i n t e r e s t i n g example of cooperation and p r a c t ic a l
teamwork in a world of discord and su sp icio n .
The u n ity of the Scandinavian peoples has been
strengthened not only by a common language and common
o r ig in but also by the ex isten ce o f a common r e l i g i o n . In
the e a rly days of t h e i r e x iste n c e , the peoples o f Scandi
n av ia were predominantly pagans. Paganism was l a t e r r e
placed by C h r is t ia n i ty during the Viking e ra . With the
coming of the g re a t r e lig i o u s upheaval which shook Papal
power to i t s very foundation and the sw ift spread of
P ro te sta n tism in the f i f t e e n t h century, the Scandinavian
peoples d eserted C atholicism in favor of P ro te sta n tism
w ith the same speed as they had embraced the form er. The
r e s u l t i s th a t today a g re a te r prop o rtio n of the Nordic
peoples are P r o te s ta n ts .
Scandinavia has a high standard o f education. For
over 100 years compulsory elem entary education has been
prominent among the Nordic peoples. Much c r e d i t should be
accorded Lutheran p r i e s t s who, a f t e r the Reform ation,
c o n trib u te d g r e a tly to the education of t h e i r f o ld . The
159
v ario u s S ta te s BUpport fre e education a t u n i v e r s i t i e s and
te c h n ic a l and a g r i c u l t u r a l i n s t i t u t i o n s . Higher education
has promoted s k i l l s among the la b o rin g c la s s , as w e ll as
promoting s o c ia l e q u a lity and c la s s m o b ility .
The s p i r i t o f cooperation among the Nordic peoples
was w ell expressed by a Danish fo reig n m in is te r:
The main p resu p p o sitio n fo r the form and the course
o f Scandinavian cooperation i s the f a c t th a t we th in k
along s im ila r lin e s about a l o t of problems. Time and
again we have found th a t one of us may express ex a ctly
th e thoughts the o th e rs have been th in k in g , even i f
the su b je c t has never been touched b efo re. The
s im ila r it y o f language and common l e g i s l a t i o n a re also
p e r tin e n t f a c t s . 15
Thus, in s o c ia l and c u l tu r a l m atters th e re are many
s i m i l a r i t i e s .
Economic F actors
Economic cooperation among Scandinavian c o u n trie s
has been in e x iste n c e from ea rly h is t o r y in the form of a
monetary union, customs union and trad e and commerce. In
1873 a currency union was inaugurated between Denmark,
Norway and Sweden. The agreement s ti p u la t e d th a t "Coins
In any one country were le g a l ten d er in any of the
o t h e r s . L a t e r i t was extended to in clu d e bank n o te s,
15
Copenhagen D ally, P o litik e n , September 10, 19^7;
a ls o In Henning E r i i s , Scandinavia Between East and West
(Ith a c a : C ornell U n iv ersity - P r e s s , 1950), pp. 317-18*
D elegations f o r the Promotion o f Economic Co
o p eratio n Between the N orthern C o u n tries, The Northern
C ountries in World Economy (Finland: Otava P rin tin g
O ffic e , 1937), PP- 180-91.
l e t t e r s of c r e d i t from c e n tr a l banks through an enactment
17
o f the In ter-S can d in av ian Bank D rafts Act o f 1880. How
ev er, th is monetary union broke down during the F i r s t
World War.
The success o f a monetary union in the 1870*s
c o n trib u te d to the form ation o f the Customs Union in 1954.
Despite the avalanche of su p p o rters f o r t h i s economic
i n te g r a tio n , i t i s fo rtu n a te th a t the Customs Union did not
prove su c c e s sfu l. A major impediment was the predominance
of com plem entarities among Scandinavian economies. For
in s ta n c e , both Norway and Sweden export lumber, pulp and
n ew sp rin t; Finland and Norway compete in the export of
iro n ore and Sweden i s one o f 't h e w o rld 's major ex p o rte rs
of iro n ore. Also, a l l th re e c o u n trie s export copper.
Hence, the absence o f su p p le m e n taritie s g r e a tly undermined
the success and f e a s i b i l i t y of t h e i r economic in te g r a
t i o n . 18
Today the fiv e Scandinavian c o u n trie s are highly
developed econom ically, enjoying a high standard o f liv in g
and a r e l a t i v e l y hig h per c a p ita income. Since I960 the
Scandinavian c o u n trie s have been exp erien cin g a growth
17
Henning F r i l s , S candinavia, op. c l t . , p. 311-
18
The Scandinavian M arket, op. c l t . , pp. 17-24.
161
r a t e o f 4 .4 p e rc e n t a n n u a lly . (See Table 10 .) They
depend m ostly on fo re ig n tr a d e , ex p o rtin g both m anufactured
and prim ary p ro d u c ts. Wages a re very h ig h , e s p e c i a lly in
the m an u factu rin g s e c to r . A common f e a tu r e among the
c o u n trie s i s the p rev alen ce o f a f u l l employment economy
and a sh o rta g e o f la b o r to the e x te n t o f ta p p in g non-
t r a d i t i o n a l sources o f la b o r such as m arried women and
fo re ig n w o rk ers. The p ro p o rtio n o f th e la b o r fo rc e in
a g r i c u l t u r e i s d e c re a sin g , w hile in the s e rv ic e s e c to r i t
i s in c r e a s in g , r e f l e c t i n g the hig h le v e l o f economic
growth. (This i s n o t so pronounced in F in la n d .)
Government ownership in S candinavia i s very sm all,
ran g in g from 3 to 10 p e r c e n t. There i s more p r iv a te
e n t e r p r is e and the Nordic governments have l i t t l e c o n tro l
over th e e s ta b lish m e n t o f p r iv a te firm s. This may come as
a s u r p ris e to many a b’e s te r n e r who th in k s o f the Nordic
governments as s o c i a l i s t i c . C om paratively, th e re i s more
peace in i n d u s t r i a l r e l a t i o n s . Labor and management
seldom b reak out in open d is p u te s and s t r i k e s or lo c k
outs a re fewer and o f s h o r te r d u r a tio n . Strong la b o r
unions e x i s t a lo n g sid e o f e q u a lly stro n g employer unions,
c r e a tin g a form of c o u n te rv a ilin g power to n e u t r a l i z e each
o th e r. Aware t h a t economic p ro g re ss i s a d i r e c t fu n c tio n
o f p r o d u c tiv i ty , la b o r unions r a r e l y r e s i s t r a t i o n a l i z a t i o n
measures o f em ployers. B esides the use o f monetary and
f i s c a l p o lic y as c o u n te r c y c lic a l m easures, the governments
1 6 2
TABLE 10
PURCHASING POW ER OP SCANDINAVIAN COUNTRIES
GNP
p er C apita
Growth
Rate
(P ercent)
P riv a te
Consumption
per Capita
(in U, S.
d o l l a r s )
Denmark 2,110 4 ,4 1,320
Finland 1,760
4.9
1,030
Norway 1,880 4.6 1,020
Sweden 2,510 4 .1 1,420
Scandinavia 2,140 4 .4 1,240
Source: Scandinavia, A Golden Market (Stockholm: A, B.
Ottoson P roduktlon, 1965)» p. 8.
also conduct an a c tiv e la b o r market policy in the form of
19
r e t r a i n i n g , r e s e ttle m e n t, and lo c a tio n of i n d u s t r ie s .
Unemployment tre n d s have been provided In the ta b le on the
foregoing page fo r the period from 196O-6 5 . For t h i s
period Finland averaged 1 .4 percent . ‘unemployed; Sweden,
1.2 p ercen t; Norway, 1.5 p erce n t; while Denmark led w ith
the maximum r a t e of 2.7 p e rce n t. (See Table 11.)
The above a n a ly s is suggests t h a t a Scandinavian
Common Labor Market is a lo g ic a l outcome o f such a long
record of co o p eratio n . S o c io lo g ic a l and p o l i t i c a l fa c to r s
have c o n trib u ted to i t s form ation. G eographical and
economic f a c to r s have encouraged i t .
Now we s h a l l turn to the Common Employment Market
proper and d e sc rib e i t s development, operation and any
p r a c t i c a l measures which have been i n s t i t u t e d to safeguard
i t .
19
^ I t i s i n t e r e s t i n g to note th a t s im ila r it y In
economic a f f a i r s led the c o u n trie s In th e 1930's to the
form ation of a re g io n a l economic block, commonly c a lle d
the Oslo Group. I t s aim was to combat th e G reat Depres
sion by in c re a s in g mutual tra d e through r e c ip r o c a l
t a r i f f , concessions and commercial exchanges. Unfor
tu n a te ly , la c k o f com plem entarities in the region f o ile d
the p la n •
TABLE 11
RELATIVE NUM BER AND PERCENTAGE OP UNEMPLOYMENT, 1960-65
I960________1961________1962________1963________1964________1965
Finland (Number) 31.0 26.0 2 7 .0 32.0 33.0 31.0
%
1.5
1.2 1.2 1.5 1.5
1.4
Denmark (Number) 31.4
28.9 25.0 33.0 21.8
18.3
$
4.3 3.9 3.3 4.3 2.9
2.4
Norway (Number)
17.1
13.0 1 5 .2
17.7 15.5
13.4
$
1.7
1.2 1.4
1.7
1.4 1.2
Sweden (Number)
18.9
16.6 18.6 20.1 17.0 16.6
%
1.4 1.2
1.3
1.4 1.1 1.1
Numbers are in thousands.
Source: U. N. S t a t i s t i c a l Yearbook (New York: United N ations, 1967)» pp. 108-110.
H
o\
165
Common Employment Market in S can d in av ia
G enesis
The f i r s t s te p toward a S can d in av ian common la b o r
m arket was i n i t i a t e d by Sweden. At th e b e g in n in g o f the
Second World War th e S candinavian c o u n t r ie s unanim ously
r e v e r te d to t h e i r wartim e p o lic y o f n e u t r a l i t y . This
n e u t r a l i t y did n o t m a t e r i a l i z e , however, because Germany
Invaded and occupied some o f th e s i s t e r c o u n t r i e s . P a r t l y
to a s s i s t and s h e l t e r r e s i s t a n c e groups and r e fu g e e s from
o th e r N ordic c o u n tr ie s and p a r t l y to so lv e i t s sh o rtag e o f
la b o r problem s, Sweden began to remove im m igration ob
s t a c l e s f o r n a t i o n a l s o f S candinavian c o u n t r i e s . I t
exempted S can d in av ia n s from o b ta in in g work p erm its w hile a t
th e same tim e encouraging them to ta k e employment In
Sweden. A fte r th e c e s s a tio n o f h o s t i l i t i e s t h i s p r a c t i c e
c o n tin u e d . The main reaso n f o r the c o n tin u a tio n o f th e
p o lic y was th e p e r s i s t e n c e o f ac u te la b o r sh o rta g e which
plagued th e Swedish la b o r m a rk e t.
Both th e l a b o r unions and th e employer a s s o c i a t i o n s
had been a c t i v e l y a t work. H it h e r t o , S candinavian em
p lo y e rs had been h o ld in g co n v en tio n s to solve common
problem s. The Labor Unions had been m a in ta in in g c lo se
r e l a t i o n s and as e a r l y as 1886 th e f i r s t S candinavian
1 6 6
20
lab o r congress had met. In sp ired by the tra d e unions
and Social-D em ocratic le a d e rs , the la b o r movements became
a p o ten t fo rce behind Nordic s o l i d a r i t y , and p e r s i s t e n t l y
urged t h e i r vario u s Scandinavian governments to c o lla b o ra te
toward a common employment m arket. T heir a g i ta t io n s fo r a
common employment market showed signs of m a te r ia liz in g
when, In 1945t the M in isters of Labor and S o c ia l A ffa irs
concluded an agreement e s ta b lis h in g an in tra-S can d in av ia n
21
la b o r exchange. Modeled on the Swedish wartime example,
the convention agreed to a b o lish working perm its fo r c i t i
zens of the Nordic s t a t e s . Norway and Finland h e s ita te d
in r a t i f y i n g the convention, being a f r a i d th a t they would
22
lo s e too much o f t h e i r la b o r fo rc e .
The a t t i t u d e s o f both c o u n trie s changed, however,
w ith the r e tu r n o f normalcy. The Nordic Council had also
P O
Orvar Odd, "How C o llec tiv e Bargaining Works in
Sweden," American F e d e r a t lo n ls t, Vol. 47, No. 5, May 19,
1940, pp. 522-24.
21
"Meeting a t Copenhagen of the S o cial M in iste rs
o f the N orthern European C o u n trie s," I n te r n a ti o n a l Labour
Review, Vol. L I I I , Nos. 1-2, January-F ebruary, 1946, p. 99.
22
Norway and Finland were a t th a t time re c o n s tru c tin g
t h e i r d isru p te d economies and were alre a d y experiencing
la b o r sh o rta g e s. Sweden, on the o th e r hand, had escaped
th e ravages o f war and was more advantageously placed to
e n tic e manpower. To a v e rt t h i s s i t u a t i o n , an agreement
was reached th a t c o u n trie s needing la b o r must f i r s t obtain
th e consent o f the d o n o r's re p re s e n ta tiv e in the jo in t
committee. Time h as, o f course, changed t h i s .
1 6 7
been a c t i v e l y expounding th e ad v an tag es which would accru e
from such a common m a rk e t. In 1954 a n o th e r convention was
concluded and a l l th e S candinavian c o u n t r i e s , w ith th e ex
c e p tio n o f I c e la n d , sig n ed an agreem ent toward th e ex
change o f manpower w ith in th e s ig n a to r y s t a t e s . The main
p r o v is io n s o f th e agreem ent a re s t a t e d b elo w :2" *
1 . That th e r e should be c o l l a b o r a t i o n in employ
ment m a tte rs e s p e c i a l l y in tim es o f unemploy
ment and la b o r s h o rta g e in o rd e r to avoid un
d e s i r a b l e c o m p e titio n f o r Jobs and w orkers.
2. That working p e rm its should be a b o lis h e d to
f a c i l i t a t e la b o r m o b ility w ith in th e Nordic
c o u n t r i e s .
5. That th e r e would be exchange o f in fo rm atio n
r e g a r d in g employment, Job v a c a n c ie s , e t c . I t
was agreed t h a t te le p h o n e s should be used as a
communication medium between c o u n t r i e s .
4. That each co u n try should s e t up a two-man
com mittee whose f u n c tio n would be to review
developm ents In the la b o r m a rk e t.
The F unction o f th e N ordic Labor M arket
The most d i s t i n c t i v e f e a t u r e about the N ordic Labor
2^John H. W uorlnen, S can d in av ia (Englewood C l i f f s ,
New J e r s e y : P r e n t i c e - H a l l , I n c . , 1965)» PP* 121-30.
168
Market i s i t s d e c e n tr a liz a tio n . During the ea rly period
of the program, the p a r tic ip a n t s discovered th a t a c e n tr a l-
24
ized o rg a n iz a tio n a l s tr u c tu re would be I n e f f i c i e n t ,
Hence, they agreed th a t t r a n s f e r s o f workers between
c o u n trie s should be conducted by lo c a l employment o f f ic e s ,
under the sup erv isio n of the re g io n a l s e rv ic e s . This is
in conform ity w ith the I n te r n a tio n a l Labor O rganization
which s t a t e s t h a t , "The employment se rv ic e s h a ll be so
organized as to ensure e f f e c tiv e rec ru itm e n t and placement
and f o r th is purpose s h a l l take th e a p p ro p ria te measures
to . . . f a c i l i t a t e any movement of workers from one
country to another which may have been approved by th e
O C
government concerned." 3
The Employment S erv ices are t r i p a r t i t e in s tr u c tu r e .
At the top is th e C entral O rganization, followed by the
Regional O ffices and then th e Local O ffic e s . The Regional
O ffices d ir e c t placement in the d i s t r i c t s and the Local
O ffic es serve in placement o f workers a t the lo c a l l e v e l .
Denmark has th ir ty - s e v e n Regional and Local O ffices; Fin
land has n in e ty -th re e , Norway and Sweden have s ix ty - f iv e
24
This discovery was made a f t e r they had unsuccess
f u l l y attem pted a c e n tr a l system in which c e n tra l
a u t h o r i t i e s in each country a c tu a lly operated the move
ment of la b o r from country to country.
25
I n te r n a tio n a l Labor Conference, 51st S ession,
1948, re p rin te d In I n te r n a ti o n a l Labour Review, Vol. LXVIII,
Nos. 4-5, October-November, 1953, p* 369.
169
and 236, r e s p e c tiv e ly . Moreover, th e re are la rg e lo c a l
agencies in Sweden, Denmark and Norway which a c tiv e ly
p a r t i c i p a t e in placement.
Functions of th e Employment S ervices
The Employment S erv ices a c t as manpower c lea rin g
houses in the sense th a t an employee seeking employment
b u t liv i n g in one area Is brought in to c o n tac t with an em
p lo y e r in a n o th e r a re a . Of course, the employee and em
p lo y e r could meet w ithout the help of an employment
agency, but only in a l e s s o rd e rly manner. The Employment
S erv ice s tend to bring o rd er to the m arket. In compliance
w ith the I n te r n a ti o n a l Labor O rganization, the Nordic
Employment S erv ice s seek:
1, To f a c i l i t a t e geographical m o b ility with a view
to a s s i s t i n g the movement of workers to a re a s with
s u ita b le employment o p p o r tu n itie s .
2. To f a c i l i t a t e temporary t r a n s f e r of workers
from one a r e a to an o th er as a means of meeting
temporary l o c a l m aladjustm ents in the supply of or
the demand f o r w o rk e rs.2®
The estab lish m en t of the Employment S erv ices did
n o t create any s o c ia l d isru p tio n in the c o u n trie s , m ainly
because they a lre a d y had s im ila r o rg a n iz a tio n s , pro
cedures and employment s e rv ic e s .
Here i s how the system works. A p ro sp ectiv e worker
g e ts inform ation through h is lo c a l employment serv ice
Pfi
I n te r n a tio n a l Labour Review, February, 1959»
op. c i t .. pp. 173-74.
170
about a Job opening In another country. The inform ation
s t a t e s the Job requirem ents, the r a t e of rem uneration, and
s im ila r q u a l i f i c a t i o n s . I f the worker l i k e s the opening,
he inform s h is lo c a l placement o f f i c e . The placement
o f f ic e w i l l r e la y h is i n t e r e s t by telephone o r o th e r com
m unication to the employer in the o th e r co u n try . There
a f t e r , arrangem ents are made re g ard in g the employee's
t r a n s f e r and h is accommodation in the h o st country. The
system i s r e l a t i v e l y sim ple, e lim in a tin g unnecessary i n t e r
m ediaries and avoiding u s e le s s t r i p s .
Safeguards to the Nordic Labor Market
S everal p r a c t i c a l measures have been i n s t i t u t e d to
f a c i l i t a t e la b o r m o b ility and e f f ic ie n c y o f the program.
These are (1) mutual s o c ia l b e n e f i ts , (2) exchange of
t r a i n e e s , (3) a c tio n s o f c e n tr a l a u t h o r i t i e s , employees'
and em ployers' a s s o c ia tio n s , and (4) adequate Bystem of
communications media. We s h a ll d isc u ss each in tu r n .
Mutual S o c ia l B e n efits
W e found above th a t la b o r m o b ility i s impeded by
the f e a r of lo s in g o n e 's s e n io r i ty r i g h t s and pensions.
This impediment to m o b ility has been rendered impotent by
m utual s o c ia l b e n e fits which p r e v a il in the Nordic
c o u n tr ie s . The aim i s n o t to provide the same s o c ia l
b e n e f its which a worker i s used to in h is country, but
r a t h e r to make the g u est worker enjoy the same s o c ia l
171
b e n e fits as the c i tiz e n s o f th a t p a r t i c u l a r country enjoy.
To i l l u s t r a t e :
I f . . . a Danish worker takes a Job in Sweden, he
can t r a n s f e r h is membership in the Danish unemploy
ment fund to the Swedish; a f t e r a few weeks of em
ployment he w i l l be e n t i t l e d to a l l b e n e fits granted
by the l a t t e r . I f he g e ts in to f in a n c ia l d i f f i
c u l t i e s he can obtain p u b lic a s s is ta n c e on the same
terms as a Swedish c i t i z e n . I f he i s in ju re d or
k i l l e d he, or h is fam ily , re c e iv e due compensation
in the homeland. Moreover, a Scandinavian c i tiz e n
r e s id in g fiv e years in another Scandinavian country
becomes e n t i t l e d to an old age pension on ex a c tly the
same terms as the c i t i z e n s of the host country. Any
one moving to another Scandinavian country may c a rry
over h is h e a lth insurance simply by tr a n s f e r r in g h is
r e g i s t r a t i o n papers. There I s no q u a lify in g period.
B e n e fits begin a t once, i r r e s p e c tiv e of age or
h e a lth . Furtherm ore, any Scandinavian c itiz e n v i s i t
ing an o th er Nordic o o u n try , f o r however b r i e f a
period, may rec e iv e f u l l m edical care on p re c is e ly
the same terms as c i t i z e n s o f the country v i s i t e d ,
the only condition being th a t the v i s i t o r must be a
member of a h e a lth Insurance so c ie ty a t home. These
se rv ic e s are given w ithout reimbursement from the
p a t i e n t 's own h e a lth f u n d .27
The mutual s o c ia l b e n e fits and the a b o litio n of labor p e r
m its are meant to encourage la b o r m o b ility . Thus, a
Scandinavian worker is encouraged to move f r e e ly w ithin
the e n tir e a re a w ithout w a itin g fo r the consent o f any
a u th o r ity .
C itiz e n s of one Nordic country can be employed In
th e p u b lic se rv ic e of a n o th e r. Another p ro v isio n perm its
c i v i l se rv an ts to work f o r about twelve months in another
Scandinavian country on a government g ra n t. This p ro v i
27
Joseph A. Lauwerys, Scandinavian Democracy.
op. c i t . , p. 378-
172
sio n g iv e s c i v i l s e r v a n ts o f one co u n try an i n s i g h t in to
th e a d m in is t r a tio n o f a n o th e r c o u n try ; and a t th e same
tim e i t encourages exchange o f id e a s and f r i e n d s h i p . In
1956 an agreem ent was signed exem pting " . . . c i t i z e n s o f
one co u n try who ta k e up re s id e n c e in a n o th e r co u n try from
b ein g c o n s c r ip te d f o r m i l i t a r y s e r v ic e in more than one
no
N ordic c o u n try ." T his adds a n o th e r advantage to th e
m aintenance and w orkable o p e ra tio n o f in tr a -S c a n d in a v ia n
la b o r m o b il ity .
Exchange of T r a in e e s .
By common c o n sen t t r a i n e e s who are between the ages
o f 18 and 35 a r e exchanged between N ordic c o u n t r i e s . The
program was i n i t i a l l y begun a f t e r th e F i r s t World War but
was r e s t r i c t e d to a g r i c u l t u r a l t r a i n e e s ; a f t e r th e Second
World War, i t was open to a l l o c c u p a tio n s . The program
p e rm its s e le c te d towns to r e c e iv e t r a i n e e s from o th e r
29
S candinavian c o u n t r i e s . The t r a i n e e s may spend about
s i x months In th e h o s t town p a r t i c i p a t i n g in a s p e c ia l
t r a i n i n g program which has been a rra n g e d f o r them by th e
p Q
F ra n tz W. Wendt, The N ordic O ouncll and Coopera
t i o n In S ca n d in a v ia (Copenhagen; M unksgaard, 1959)» p •
139.
2^The s e le c te d towns a re c a l l e d " f r i e n d tow ns."
173
30
" s p e c ia l com m ittee." The c o s t o f the program i s borne
by th e p u b lic . At the end o f th e t r a i n i n g the tr a i n e e s
a re handed over to the employment s e rv ic e s which assume the
r e s p o n s i b i l i t y o f f in d in g them Jobs, e i t h e r w ith in th e h o st
country o r in t h e i r own co u n try .
G raduates o f th e m edical p ro fe s s io n who need
s p e c ia l t r a i n i n g from a noted s p e c i a l i s t o r a h o s p i t a l in
a n o th e r Nordic co u n try a re a lso p erm itted to tak e p a r t in
t h i s exchange o f t r a i n e e s program. The same tre a tm e n t i s
31
accorded to h e a lth o f f i c i a l s .
A ctions o f C e n tra l A u th o r itie s
To achieve success o f th e program, th e re must be
maximum degree o f c o lla b o r a tio n between a u t h o r i t i e s re g a r d
in g employment m a tte rs and a co n sciousness of t h e i r
r e s p o n s i b i l i t y to th e whole Scandinavian m arket. C e n tra l
a u t h o r i t i e s in S candinavia have a c t i v e l y been working t o
ward t h i s o b je c ti v e . R e p re s e n ta tiv e s o f th e C onfederation
o f Workers Unions from v a rio u s Scandinavian c o u n trie s have
been notew orthy f o r t h e i r p e r io d ic m eetings during which
th ey examine q u e s tio n s o f p r in c ip l e and m a tte rs o f p ro -
*^The committee i s made up o f r e p r e s e n t a t i v e s of
l o c a l a u t h o r i t i e s , em ployers, workers o rg a n iz a tio n s , em
ployment s e rv ic e s and the l o c a l r e p r e s e n t a t i v e s o f in d u s
t r y and la b o r . "Exchange o f T rain ee s Between Norway and
Sweden," In d u s try and Labour. Vol. V III, No. 5* March,
1952, p. IB2TI
51I b id .
1 7 4
ced u res re g a rd in g th e movement o f manpower. C ooperation
between em ployers has been e f f e c t e d th ro u g h an agreem ent
which p r o h i b i t s em ployers from r e c r u i t i n g la rg e numbers o f
w orkers a c ro s s a b o rd er w ith o u t f i r s t c o n s u ltin g t h e i r
home employment o f f i c e .
C e n tra l employment a u t h o r i t i e s and em ployees' and
em ployers' a s s o c i a t i o n s a re to h o ld d is c u s s io n s p r i o r to
th e t r a n s f e r o f l a r g e - s c a l e manpower. This i s done so as
to avoid s o c i a l and economic problem s which an exodus o f
la b o r would c r e a t e . For in s t a n c e , in 1957 la rg e numbers
o f Finns who came to Sweden on t h e i r own accord found to
t h e i r dismay t h a t th e r e were no jb b s f o r them. Con
s e q u e n tly , an agreem ent was reac h ed whereby Finns were
asked in th e f u t u r e to c o n s u lt t h e i r home placem ent o f f i c e
b e fo re t r a v e l i n g ; and Swedish a u t h o r i t i e s were asked to
32
keep F in n is h o f f i c e r s inform ed on up to d a te in fo rm a tio n .
There i s a ls o a "g e n tle m e n 's agreem ent" which i s
in te n d e d to av o id t r o u b l e .
I f th e good id e a o f a f r e e common N orthern employ
ment i s to be so lv e d f o r th e f u t u r e , th e m arket can
n o t be l e f t e n t i r e l y to l a l s s e z f a i r e ; t r a n s f e r s o f
manpower must ta k e p lace under th e s u p e rv is io n o f th e
c e n t r a l employment a u t h o r i t i e s in an o rd e rly manner
and w ith due re g a rd f o r th e l e g i t i m a t e i n t e r e s t s o f
a l l p a r t i e s . 33
3 2
I n t e r n a t i o n a l Labour Review, F e b ru ary , 1959»
on. c i t . . p. 178.
■^Berfcii 01sson, "The Common Employment Market f o r
th e N o rth ern C o u n trie s ," I n t e r n a t i o n a l Labour Review. 5Tol.
LXVTII, Nos. 4 -5 , October-November, 1953» P# 371.
System o f Communications
Communication of the r i g h t inform ation i s the main
d i e t upon which a common employment market n o u rish es.
R e la tiv e ly accu rate inform ation re g ard in g job requirem ents,
job v ac an c ies, job f i l l i n g s , wages and frin g e b e n e fits are
needed. The r e l a t i v e sw iftn ess w ith which the inform ation
i s communicated to employees and employers w ill tend to
minimize f r u s t r a t i o n and avoid u s e le s s t r i p s . Inform ation
re g ard in g job openings or employment market r e p o rts of
o th e r c o u n trie s are c o lle c te d and tra n s m itte d weekly to
the r e g io n a l and lo c a l employment o f f i c e s .
Data are reviewed p e r io d ic a lly and the reviews are
exchanged between Scandinavian employment s e rv ic e s , with
the view of supplying each country w ith up to date inform a
t io n . Along w ith the above are exchanges of r e p o r ts of
employment market co n d itio n s and the g e n e ra l economic
tren d o f each country. D ire c to rie s a re d is t r ib u t e d among
the p u b lic employment o f f i c e s . The d ir e c to r i e s show ad
d re sse s and telephone numbers o f designated o f f i c e s , and
the names of the o f f i c i a l s re sp o n sib le f o r i n t r a -
Scandinavian employment c le a ran c e .
Each country uses such communications media as
telep h o n es, ra d io , newspapers, p ro fe s s io n a l and tra d e
unions jo u rn als and magazines. Regional and lo c a l o ffic e s
re la y employment inform ation to the p u b lic through the
tra d e unions o rg a n iz a tio n s , p r o fe s s io n a l and economic
176
o rg a n iz a tio n s , and by rad io or newspapers to the masses.
The content of the inform ation simply s ta te s job openings
in one country and procedures re g ard in g t h e i r f u l f i l l m e n t .
E valuation
In c o n tr a d is tin c tio n to the Western European Common
Employment Market, which was s tru c tu re d on c e n tr a liz a t io n ,
the Nordic system o f d e c e n tr a liz a tio n h as, among o th e r
th in g s , c o n trib u te d to the temporary success of the common
market by (1) e lim in a tin g numerous in te rm e d ia rie s between
p o te n tia l workers and employers, (2) by reducing channels
34
o f communication, and (3) by sh ortening time la g s .
The Nordic employment market has provided a la r g e r
a re a where workers can look f o r a job w ithout being con
fin ed to t h e i r own home m arket. Before 1914 Scandinavians
who wanted to broaden t h e i r h o riz o n s, to g ath er experience
in t h e i r re s p e c tiv e tr a d e s , or merely to see new lands
would t r a v e l to Europe, Prance, or I t a l y to work. A fter
the F i r s t World War, the roaming workers (w anderjahre)
were denied th is lu x u ry . The common employment market has
opened o p p o rtu n itie s fo r the r e s t l e s s youths.
I t was pointed out e a r l i e r th a t the Scandinavian
c o u n trie s made u n su ccessfu l attem pts a t economic in te g r a -
34
To some a u t h o r i t i e s , the Western European Common
Market was f o ile d by th e high degree of c e n t r a l i z a t i o n .
I n te r n a ti o n a l Labour Review, February, 1959. on. c l t . ,
pp. 173-88.
177
t i o n —a system whereby f a c t o r s o f pro d u ctio n would move
f r e e l y among the c o u n trie s w ith o u t any a r t i f i c i a l b a r r i e r s .
The common employment m arket se rv e s as a p relude to
economic i n t e g r a t i o n .
The common la b o r market has made i t p o s s ib le fo r
i n d u s t r i e s in S candinavia to draw on workers who share the
same b e l i e f s , p o sse ss s im ila r c u l t u r a l backgrounds, and
speak common lan g u ag es. Workers, on th e o th e r hand, are
a b le to seek jobs i n , f o r example, Swedish and Norwegian
f a c t o r i e s and f o r e s t s during a p erio d o f economic i n
a c t i v i t y in Denmark o r F in la n d . To I l l u s t r a t e , unemploy
ment in Denmark ro s e s i g n i f i c a n t l y (4-.3 p e rc e n t) in 1963*
and two y ears l a t e r Danish immigrant workers in Norway and
35
Sweden in c re a se d to 6,089 and 18,370, r e s p e c t i v e l y .
During t h a t p e rio d , F in n ish Immigrants in Sweden in c re ase d
from 58,067 to 66,695* (See Table 1 2 .) I t may n o t be
in a p p r o p r ia te to remark t h a t the movement o f manpower has
been m ainly d ir e c te d to Sweden. Table 13 in d ic a te d th a t
in 1965 th e re were 97,105 workers from o th e r Scandinavian
c o u n trie s in Sweden. Approximately 65 p e rc e n t o f them
were F in n s.
The re a d e r w i l l r e c a l l the con clu sio n from the
s t a t i c th eo ry a t the beginning of the c h a p te r which sa id
^ s t a t i s t i c a l Yearbook o f Norway, C e n tra l Bureau
o f S t a t i s t i c s o f Norway, Oslo, 1965> P* 54-.
TABLE 12
IMMIGRANTS INTO SWEDEN, 1958-1964
Country
of O rlcin
Total 1958 1959
i 960 1961 1962
1963 1964
Denmark
19,727
3,661 2,492
2,695 2,695
2,411 2,990
2,783
Finland 79,761 7,645 7,518 12,311 12,830 9,770
10,385
19,302
Norway 14,932 1,752 1,708 2,281 2,364 2,090
2,155
2,582
T otals 13,058 11,718 17,287 17,889 14,271
15,530
24,667
Source: S t a t i s t i c a l A bstract of Sweden, C entral Bureau of S t a t i s t i c s , 1965, pp. 55-57,
227.
H
-a
C D
TABLE 13
ECONOMICALLY ACTIVE IMMIGRANTS IN SWEDEN, 1960-1965
Country
of Origin I960 1962
1963 .
1964
1965 Total
Denmark 14,612 18,781
18,805 18,639
18,370
99,207
Finland 37,092 51,388
52,159 58,067 66,695
265,411
Norway 8,677 10,931
11,464
11.363 12,040 54,475
Total 60,381 81,100 82,438 88,069 97,105 409,093
Source: S t a t i s t i c a l A bstract of Sweden, C entral Bureau of S t a t i s t i c s , 1965, on. c l t , .
PP. 55-57, 227.
H
VO
t h a t t r a n s f e r s of manpower from one region w ith lower
wage le v e ls to another w ith h ig h e r wages may serve to even
ou t extreme d iffe re n c e s in wages. The Nordic la b o r market
~ Z i f
has been slu g g ish in e q u a lis in g wages. The post-w ar
Scandinavian c o u n trie s have had wage d i f f e r e n t i a l s , a l
though the d i f f e r e n t i a l s are very s l i g h t . Table 14 shows
nominal wages fo r m anufacturing workers in th e Scandinavian
c o u n tr ie s . Sweden has the h ig h e s t wage r a t e , followed by
Denmark, Norway, and F inland. The theory m aintains t h a t ,
o th e r th in g s being equal, h ig h e r wages w i l l e n tic e la b o r,
e s p e c ia lly from lower wage a re a s . Our evidence i s incon
c lu s iv e . Data from 1960-65 in d ic a te th a t th e re are more
Finns working in Sweden than any o th e r n a tio n a ls from
S candinavia. The c o n tra d ic tio n to our model i s evidenced
in data from e a r l i e r y e a rs . P rio r to 1959* Sweden had the
h ig h e s t wage r a t e s followed by Finland, Norway, and Den
mark. "D espite the h ig h er le v e l of wages in Sweden,
th e re has been l i t t l e m ig ratio n of labour from Norway and
37
Denmark to Sweden."
-^Perhaps t h i s slu g g ish n ess i s due to th e presence
o f m onopolistic elements such as tra d e unions and employers
a s s o c ia tio n s , o r simply because th e re have not been la rg e
numbers of m igrants to even out the wage d if f e r e n c e s , o r
perhaps n o n -p ric e impediments to la b o r m o b ility are a t
work.
•^Nordic Economic C o-operation, Report by the Nordic
Economic C o-operation Committee, 1958 (Copenhagen, 1958),
p. 123.
181
TABLE 14
RELATIVE HOURLY W AGES IN SCANDINAVIA
1960-65 (U. S. #)
Country I960 1961 1962 1963 1964
1965
Finland .76 .82 .86
.91
1.01 1.12
Denmark .88 1.01 1.10
1.19
1.28 1.43
Norway .90 .97
1.06 1.12 1.18 1.29
Sweden 1.21
1.51
1.42 1.52 1.68 1.82
Source: United Nations S t a t i s t i c a l Yearbook S e r ie s , 1967»
PP. 525-27.
Data were converted in to U. S. d o lla rs by use of
o f f i c i a l exchange r a t e s of the c o u n trie s .
182
The r e s u l t s of the Nordic common lab o r market have
been s a t i s f a c t o r y so f a r . N e v e rth e le ss, th ere i s more to
be d e s ire d . For in s ta n c e , the system i s not so adequate
as to s a t i s f y both employer and employee to the f u l l e s t
e x te n t. Nor are the c e n tr a l a u t h o r i t i e s able to super
v is e and d i r e c t the f re e movements of la b o r.
183
CHAPTER V I II
RELEVANCE OP THE SWEDISH MODEL
TO AN AFRICAN NATION: GHANA
In tro d u c tio n
The growth o f tra d e unionism i s always a s s o c ia te d
w ith economic and I n d u s t r i a l developm ent. This i s
p a r t i c u l a r l y tr u e in Ghana, as i t was in Sweden. A low
l e v e l o f economic development does n o t p reclu d e th e growth
o f tr a d e unionism . In th e pro cess o f i n d u s t r i a l i z a t i o n ,
th e s o c i a l s t r u c t u r e i s d is ru p te d g iv in g r i s e to d i s
c o n te n t, sq u a lo r and e x p l o i t a t i o n . An a l ie n a te d group o f
p e o p le—p r o l e t a r i a t —emerges, d i s s a t i s f i e d w ith the d i s
t r i b u t i o n o f w e a lth . I t s d i s s a t i s f a c t i o n i s c r y s t a l l i z e d
among a group o f s p e c ia liz e d workers who r e s o lv e to im
prove t h e i r economic c o n d itio n s through u n io n iz a tio n . In
1
Sweden, i t was th e h a n d i c r a f t w orkers; in Ghana, i t was
th e m iners and th e d r i v e r s . In Sweden, th e unions found
t h a t t h e i r o b je c tiv e s would be achieved through a s s o c ia
tio n w ith th e p o l i t i c a l movement, as c a r r ie d ou t by th e
S o c ia l Democratic P a rty ; Ghanaian c o u n te r p a rts sought
p o l i t i c a l , o r g a n iz a tio n a l and f i n a n c i a l s tr e n g t h in th e
^Refer to page 11, C hapter I .
184
p
C onvention's People .Party (CPP).
An a n a ly s is of the relev an ce of the Swedish model
w i l l be preceded by a d e s c rip tio n of Ghana's geographic,
h i s t o r i c a l , s o c ia l and economic c h a r a c t e r i s t i c s . The
background inform ation i s necessary fo r an understanding
of the a p p l i c a b i l i t y o r n o n a p p lic a b ility o f the model.
Thence the a n a ly s is w i l l proceed to a d isc o u rse on
Ghana's I n d u s t r i a l r e l a t i o n s w hile p o in tin g out s i m i l a r i
t i e s and d i s s i m i l a r i t i e s and n o tin g le sso n s derived from
Sweden's experience. The conclusion attem pts to t i e
everything to g e th e r.
The w r i te r i s ap o lo g etic f o r the d e lib e r a te ex
clu sio n o f Ghanaian i n d u s t r i a l r e l a t i o n s l e g i s l a t i o n under
the p re se n t m il ita r y regime on the grounds th a t the regime
i s only t r a n s i t o r y .
In tro d u cin g Ghana
G eographical Inform ation
Lying between l a t i t u d e s 4°44' and 1 1 °1 0 ', Ghana
has an a re a o f 92,100 square m ile s . I t s southern co a st
i s washed by the A tla n tic Ocean w hile the r e s t of th e
country i s sandwiched between th e former French Colonies
o f Ivory Coast, Togo and Upper V olta. Being c lim a tic a lly
2
G. E. Lynd, The P o l i t i c s o f A frican Trade Unionism
(New York: Praeger P u b lish in g u o ., ly o o j, pp. j>o-4Y.
185
t r o p i c a l , i t has h ig h hum idity, m oderately hig h tem pera
tu r e s o f 80° and heavy r a i n f a l l . (The clim ate v a r ie s as
one t r a v e l s from the c o a st in la n d and a ls o on th e e a ste rn
p o rtio n o f th e c o u n t r y .) The v e g e ta tio n i s a r e f l e c t i o n
o f th e c lim a tic c o n d itio n s , and in c lu d e s a t r o p i c a l f o r e s t
b e l t a l t e r n a t i n g w ith c o a s ta l swamps and lagoons in the
so u th which g r a d u a lly y ie ld to t a l l g ra ssla n d and f i n a l l y
to sc ru b lan d in the n o r th .
With re g ard to p h y s ic a l and human r e s o u r c e s , n atu re
* 5
was generous to Ghana. M inerals abound such as g o ld ,
diamonds, b a u x ite , manganese, and th e s e m in e ra ls are he
w
ing mined. Power re s o u rc e s are n o n e x is te n t. There are
no co al and o i l d e p o s its and no w a t e r f a l l s . The t r o p i c a l
f o r e s t y ie ld s v a lu a b le tim b e r. Human re s o u rc e s a re
p l e n t i f u l —n o t too much so as to c r e a te o v erp o p u la tio n ,
but enough f o r economic developm ent. The l a t e s t census
i n d i c a t e s a t o t a l p o p u latio n o f 7 .5 m illio n p eo p le, and
an e stim a te d r a t e o f In c re a s e o f 2 .6 p erc e n t p er y e a r.
H i s t o r i c a l and S o c ia l F a c to rs
Ghana had c o n ta c ts w ith the o u ts id e world long b e-
^ I t was th e d isc o v ery o f gold t h a t gave th e country
I t s pre-Independence name, "The Gold C o ast."
4
This tr a d e agreement i s r e f e r r e d to as th e Bond o f
1844. According to th e Bond, England was to have tra d in g
r i g h t s in th e colony f o r a 100 year p e rio d .
186
fo re the European "Age o f D iscovery." As e a rly as the
te n th and e le v e n th c e n tu r ie s , the Phoenicians had v is i te d
and traded w ith Ghanaians. In t h e i r eagerness fo r a new
ro u te to I n d ia , the Portuguese v i s i t e d Ghana in 1482 and
decided to e r e c t a f o r t r e s s . They were followed by o th e r
European n a tio n s . During th e scram ble fo r A fric a , when
European powers carved out one A frican colony a f t e r
another i r r e s p e c tiv e o f e th n ic or t r i b a l b o rd ers, England
thought i t wise to colonize the country under the p re te n se
o f a trad e agreem ent. Por about 113 y ears the people bore
th e heavy yoke o f c o lo n iz a tio n and h u m ilia tio n u n t i l
B r ita in f i n a l l y re lin q u is h e d the government o f the country
to I t s r i g h t f u l owners. With a o n e-p arty system and
headed by itB ch a rism a tic le a d e r , Kwame Nkrumah, the
country took I t s unsteady stand among o ld e r n a tio n s In
1957. Along w ith independence came new hopes, new
v i t a l i t y and new problems. The outlook of the people
broadened and t h e i r wants m u ltip lie d . The one-party
government am b itio u sly undertook the c o lo s s a l job of
economic p ro g re ss. In an attem pt to stim u la te an economic
ta k e - o ff , the government caused economic and s o c ia l
la c e r a tio n s on c e r ta in vested I n t e r e s t groups. These
groups took advantage o f the worsening economic co n d itio n s
to overthrow the government. P re s e n tly , th e government Is
under m il ita r y r u l e . I t i s re p o rte d th a t a change to
c i v i l i a n r u l e w i l l be c a rrie d on t h i s y e a r.
187
S o c io lo g ic a lly , the country i s a conglomeration of
"e th n ic groups" or tribes,"* such as AshantiB, P a n tis ,
Ewes, Nzimas, Dagombas, e t c . Ethnic lo y a lty i s very
stro n g and each group has i t s own d i a l e c t and customs.
Within the eth n ic groups are many extended fa m ilie s
(Abusua). An Abusua c o n s is ts of a l l members o f a family
who have a common m a t r i l i n e a l a n c e s to r. A common bond
keeps the members i n t a c t . Members have t h e i r r i g h t s and
o b lig a tio n s . The more prosperous a re expected to take
care o f the le s s f o r tu n a te . Within t h i s system no one
sta rv e s and no one Is d e s t i t u t e . When a member i s sick
he i s cared fo r; when he d ies he i s given a f i t t i n g
fu n e r a l. Unemployment compensation, old age pensions,
d i s a b i l i t y insurance and o th e r w elfare programs are a l l
embodied in the Abusua o rg a n iz a tio n .
Three languages dominate--Twi, P an ti and Hausa.
However, English is spoken widely and i t i s regarded as
the o f f i c i a l language. Denomination-wise, the people can
be divided in to two main groups: ( l ) C h ris tia n s and (2)
n o n -C h ristia n s. C h ris tia n s include Homan C a th o lics and
P r o te s ta n ts ; in the n o n -C h ristia n group are found Islam s,
pagans, and nonconform ists.
The e d u c a tio n a l pyramid i s s im ila r to t h a t of the
^Resentment of the usage of the word "tribe" com
pels this author to substitute "ethnic group" throughout
the dissertation.
advanced c o u n trie s : a la r g e population of prim ary school
stu d e n ts (approxim ately 1 m illio n In 1964), follow ed by
secondary stu d e n ts (about o n e -q u a rte r of a m i l l i o n ) ,
te c h n ic a l or v o catio n a l stu d e n ts (13,967), and college
s tu d e n ts (3*848). Prom Table 15 i t appears t h a t only one
out of every fo u r primary school graduates en te re d
secondary, te c h n ic a l o r te a c h e r tr a in in g sch o o ls. Com
pu lso ry education has not been i n s t i t u t e d and u n t i l r e
c e n tly p a re n ts had to d i r e c t l y pay fo r t h e i r c h i ld r e n 's
education in both elem entary and secondary sch o o l le v e ls .
TABLE 15
EDUCATIONAL PYRAMID OP GHANA, 1964
Number of
Schools Staff
Number of
Students
Primary
7,985 32,937
1,088,344
Secondary
2,291
9,842 298,592
Technical
107
708
13,967
Teacher Training 47 653 10,203
Colleges
3
564 3,848
Source: U. N. S t a t i s t i c a l Yearbook (New Yorlc: United
N a tio n s, 1967), pp. 731-74-0.
The Economy
The country I s s t i l l l e s s developed a lth o u g h a t
tem pts were made by th e form er government to l i f t up the
country from the v ic io u s c i r c l e of p o v erty : m a ln u tr itio n ,
low l e v e l s of p r o d u c tiv ity , low n a tio n a l income, low con
sumption, and p o v e rty . A d u a l economic s t r u c t u r e p re
v a i l s : a s u b s is te n c e economy alongside a m arket economy*
The s u b siste n c e economy fo rm erly played an im p o rtan t r o l e
as a c o u n te r c y c lic a l in s tru m e n t. Since a g r e a t e r p e r c e n t
age o f th e p o p u la tio n used to l i v e in th e r u r a l a re a s , th e
market or modern economy would draw on th e r u r a l la b o r
fo rc e d u rin g peaks o f the b u s in e s s c y c le . In a slump
p e rio d , th e in a c tiv e la b o r would go back to th e sub
s is te n c e s e c to r . This was p o s s ib le because th e sub
s is te n c e s e c to r maximizes w e lfa re and has a f l e x i b l e p ro
du ctio n fu n c tio n , in c o n t r a d is ti n c tio n to th e modern
s e c to r which has a fix e d p ro d u ctio n fu n c tio n and p r o f i t
m axim ization as i t s o b je c tiv e .
The gross dom estic p ro d u c t stood a t $944 m illio n
and $ 1 ,3 7 7 .6 m illio n (U. S. d o l l a r s ) in 1955 and 1962,
r e s p e c t i v e l y . Per c a p ita g ro s s domestic p ro d u ct was $168
in 1955 and $193-2 in 1962.^ The country ex p e rien ce s a
r e l a t i v e l y high sta n d a rd o f l i v i n g , .‘ .in A f r ic a . This
^W alter B. Birmingham ( e d . ) , A Study o f Contemporary
Ghana (London: A llen and TJnwin P u b lish in g Co. , 1966),
P- 55-
190
r e l a t i v e l y high standard of l i v i n g has, i n t e r a l i a , a t
t r a c t e d many A frican s to Ghana.
Like many underdeveloped c o u n trie s , Ghana has r e
c e n tly been plagued hy in c re a sin g balance o f payments
d e f i c i t s . Imports have o u tstrip p e d e x p o rts. (See Table
1 6 .) U n til 1958, th e c o u n try 's exports were enough to
c r e a te favorable tra d e b alan ces: exports were $263 m illio n
as a g a in s t im ports o f $237 m illio n . By i 9 6 0 , however, the
s i t u a t i o n had changed: exports t o t a l l e d $294 m illio n and
im ports $363 m illio n , c re a tin g a d e f i c i t o f $69 m illio n .
This adverse tra d e Imbalance has been a t t r i b u t e d to f a l l
in g p ric e s of cocoa and o ther foods, t e x t i l e item s, and
p la n t and machinery f o r development p r o je c ts . Various
a tte m p ts by the government to d i v e r s i t y the economy have
so f a r been u n su c c e ssfu l.
A vailable s t a t i s t i c s in d ic a te the t o t a l labor
fo rc e to be 2.5 m illio n . As i t i s always the case w ith
underdeveloped c o u n trie s , a l a r g e r percentage of la b o r i s
employed in a g r ic u ltu r e and a sm a lle r p ro p o rtio n Is in
s e rv ic e and m anufacturing. The s itu a tio n I s not d i f
f e r e n t in Ghana. A g ricu ltu re s t i l l claim s 60 percent of
th e la b o r population while s e rv ic e and m anufacturing claim ,
r e s p e c tiv e ly , 5-7 and 8.6 p e rc e n t.
The la b o r fo rc e is h ig h ly mobile as m igrant la b o r
flow s to and from a re a s of employment. S t a t i s t i c s re g a rd
ing la b o r m igration a re very d is t o r te d so t h a t I t would be
191
TABLE 16
BALANCE OP PAYMENTS OP GHANA
1948-1966 (U. S. $ M illio n )
Period Exports Imports Balance
19^8 202
127 75
1958 263 237
26
I960 294
363 -69
1962 291 333 -42
1964 293 341
- 7
1966 244 352 - 8
Source: U. N. Yearbook o f I n te r n a ti o n a l Trade
S t a t i s t i c s (New York: United N ations, 1966),
pp. 16-17'."
192
m isleading to c i t e any h e re . M igrants come m ostly from
th e n o rth ern region and from the surrounding c o u n trie s .
M igrants may sta y for as long as two y ears and re tu r n to
t h e i r homes.
TABLE 17
RELATIVE RATES OP UNEM PLOYM ENT
1956-1965
Period Ghana N ig eria
S ie rra
Leone
1956
6.3 2.7 .9
1957 7.5 2.7 1.6
1958
8.9 5-1
2.6
1959
8.8
5.1 2.9
I960
11.3 6.9 3.9
1961
14.7
13.8
2.5
1962
15.5 15.1 4.3
1963
15.4 16.8 4.8
1964 14.0 20.8
5.3
1965 11.3 20.9
6.8
Source : I n te r n a ti o n a l Labour O rganization, Labour
S t a t i s t i c s S e r ie s , 1966, pp. 370-71.
Table 17 gives us an approximate Idea o f the r a te s
o f unemployment in Ghana, N ig e ria and S ie rra Leone. A ll
th re e c o u n trie s e x h ib it in c re a s in g r a t e s of unemployment,
e s p e c ia lly a f t e r i 9 6 0. Ghana ranged from a low o f 6 p er-
193
cen t to a high of 15«5 p e rc e n t. S ie r ra Leone has the
lowest r a t e of unemployment, ranging from 1 percent to 7
percent In the period from 1956 to 1965- A population
explosion has been the fundamental cause of in c re a sin g
r a te s o f unemployment in sub-Saharan A frican c o u n trie s .
I n d u s tr ie s are r e l a t i v e l y few and are m ostly in
the e x tr a c tiv e f i e l d s . Com paratively, Ghana is the most
prosperous and ra p id ly growing country in black A fric a .
Monthly wages are very low. In 1965, the average non-
a g r i c u l t u r a l wage amounted to $156.8 (In U. S. d o l l a r s ) .
In comparison w ith o th e r A frican c o u n trie s , wages In
Ghana a re r e l a t i v e l y high: in i 9 6 0, wages Btood a t $43.0,
$14.2, $23.8, and $116.0, r e s p e c tiv e ly In N ig eria ,
Malawi, Kenya and Ghana. (See Table 18.) I t I s n o t an
exaggeration to s t a t e the r e l a t i v e l y high wages, among
o th e r f a c t o r s , have a t t r a c t e d many A frican m igrants to
Ghana.
I n d u s t r i a l R e la tio n s in Ghana
The Growth of Trade Unionism in C olonial Ghana
U n til the F i r s t World War th ere were th re e types of
wage e a rn e rs in Ghana: (1) workers In cocoa farm s, (2)
workers in European estab lish m e n ts, u su a lly in mining and
tra d in g a c t i v i t i e s , and (3 ) workers In the government
s e r v ic e .
194
TABLE 18
RELATIVE WAGES IN NON-AGRICULTURAL SECTORS
1957-1965 (in U. S. Dollars)
Period Ghana Kenya Malawi Nigeria
1957 102.3 n. a. 1 0 .6 n. a.
1958 104.0 1 9 .8
12.3
24.1
1959
108.0 2 0 .6 14.1
41.9
i 960 116.0 23.8 14.2 43.2
1961 13 0 .0
27.1 15.3
n. a.
1962
137.3 28.7 18.3 n. a.
1963
142.0 32.6 18.8 n. a.
1964 149.0 27-0 19.7
n. a.
1965
1 5 6 .8 34.6 20 .0 U • St •
Source: Figures were taken from I.L.O., Labour Statistics
Series, and converted into U. S. dollars. They
are wages of nonskllled workers.
195
Cocoa workers were mainly migrants who came from
the northern portion of the country. They lived In rural
areas where communication and transportation systems were
inadequate. Some of the workers received outright monthly
wages hut many of them received remuneration under the
7
Abusa System.' Circumstances were such that workers In
this group have not been able to unite or form a union.
Government employees formed the largest number of wage
earners in urban areas. Their wages and salaries were
not any better and civil service regulations have always
discouraged their attempt at unionism.
It was the latter group of workers which held the
key to unionism. The mining and trading companies were
owned by foreigners who never came to the country, hav
ing entrusted the management of their enterprises to
general managers. They were instructed to keep wage costs
as low as possible; accordingly, managers were always
eager to refuse even the most reasonable demands for wage
increase.
Economic conditions of the miners were poor and
many abuses existed. Mining centers were also centers of
urbanization where workers could conveniently get together
7
'Abusa means tripartite and Abusa System is a
system of remuneration where employees receive one-third
of the sales proceeds at the end of the cocoa season.
196
to discuss common problems. Discontent was breeding in
the mining areas. Another trouble area was the railway
department. To facilitate transportation of minerals to
the coast, a railway network had been constructed Joining
mining towns to the main harbor. The railways supplied
another cornerstone to trade unionism, as it supplied the
communications network which the workers needed.
Sporadic organizations and spontaneous demonstra
tions would occasionally appear in mining and transporta
tion workers but the harshness of the colonial rule al
ways thwarted attempts to unionize.
. . . the British, as a matter of deliberate policy,
tried to maintain the social and political fabric
intact by their system of indirect rule, which in
volved administering the territory through existing
native authorities. The economic implications of
this policy were that the land and the people should
remain such as they always had been. • • . money
economy, the spread of education, the growth of migra
tion, and the development of urban centers were all
incompatible with such a policy.8
Immediately after the First World War there were
signs of amelioration in the British colonial policy. The
mother country was in dire need of raw materials to heal
the economic wounds which the war had inflicted. Her
former interest in reduction of the wage bill changed into
emphasis on labor productivity and efficiency. Other
Q
R. B. Davison, “Labor Relations and Trade Unions
in the Gold Coast (Ghana)," Industrial and Labor Rela
tions Review, Vol. 7» No. 4, July, 1954, p. 595-
197
fa c to rs were also a t work. Labor u p ris in g s in In d ia and
th e West In d ie s and the form ation of the I n te r n a tio n a l
Labor O ffice in 1919 compelled the B r i t i s h Government to
review i t s c o lo n ia l la b o r p o lic y . A trad e union ordinance
was passed in 194-1, and by 1948 the follow ing unions had
g
been formed and r e g i s t e r e d . (See Table 19.)
TABLE 19
TRADE UNIONS IN GHANA 1942-48
Union____________________________________ Date_________ Membership
Western Province D riv e rs '
Union 1942 n. a.
Railway Employees' Union
1943
Ha Ei
Mines' Employees Union
1945
15,000
Post O ffice Union 1946 1,5 0 0
Public Works Union 1946 5,000
United A frican Company Union 1948 2,500
Kumasl M unicipal Union 1948 1,300
Numerous unions emerged. V ir tu a lly a l l e n te r p ris e s
or companies had t h e i r own unions. The unions earned the
degrading a p p e lla tio n o f "company or house u n io n s." I t
was said th a t p r io r to the attain m en t of independence,
9
I b i d . . p. 6 0 0 .
1 98
t h e r e were ap p ro x im ately 158 unions In e x i s te n c e . A ttem pt
was made to c e n t r a l i z e th e u n io n s, and th e Gold Coast
T rades Union CongresB (GCTUC) was c r e a te d . I t was an ad
v is o r y o r g a n iz a tio n o n ly . The GCTUC was b e s e t w ith c o r
r u p t i o n , c o n f l i c t and schism . L a te r on, a n o th e r co n g ress
was form ed— the Ghana Trades Union Congress (GTUC). The
unions had common c h a r a c t e r i s t i c s o f weak o r g a n iz a tio n ,
weak f i n a n c i a l s t r e n g t h , and weak b a r g a in in g p o s i t i o n s .
Employers manifested the same kind of hostility to
Ghanaian trade unionism as their counterparts had done in
other countries. They refused to recognize or negotiate
with the unions, often indulging in trade union busting
and intimidation. Strikers were often fired or im-
prisoned.
Such was trade unionism under the British rule— a
weak association of workers without trained leadership and
without legal rights and recognition. Nevertheless, the
seeds of unionism had been sown and were awaiting a favor
able condition for germination. Independence created such
a condition.
Unionism After Independence
After sixteen years of operation, the British trade
^ D u r i n g th e g e n e ra l s t r i k e o f 1950, union le a d e r s
were p ro se c u te d and im p riso n ed .
199
union model was found u n s u ita b le f o r th e young independent
country* For a tim e, tra d e unions observed th a t by t u r n
ing to p o l i t i c a l a c tio n they would achieve the ends which
were denied them through I n d u s t r i a l means. An a l l i a n c e
w ith th e le a d in g p o l i t i c a l p a rty would be m utually a d
vantageous; tr a d e unionism would achieve r e c o g n itio n ,
b e t t e r f i n a n c i a l h e a l t h , and a s tro n g e r b a rg a in in g p o s i
tio n * The p o l i t i c a l p a rty would re c e iv e th e backing o f
th e w orkers in i t s commitment fo r p o l i t i c a l and economic
1 1
p ro g re s s .
Independence w itn essed a p a r tn e rs h ip between tra d e
unions and p o l i t i c s . H enceforth, tra d e u n io n s 1 o b je c tiv e s
would be n o t only f o r b e t t e r working c o n d itio n s and
e q u ita b le d i s t r i b u t i o n o f w ea lth but a ls o f o r the p o l i
t i c a l and economic development o f the c o u n try .
' i t would be a m i s t a k e , ' sa id P re s id e n t Nkrumah,
' i f tra d e u n io n is ts were to co n sid er t h a t t h e i r
d u tie s in re g a rd to A fric a co n siste d m erely in h e l p
ing to e s t a b l i s h tra d e u n io n s. I t i s e s s e n t i a l t h a t
tra d e u n io n s' movements throughout th e world u n d er
sta n d and tak e in to account the p o l i t i c a l and
economic developments which are ta k in g place in
A fr ic a . . . • The tra d e union movement has a g r e a t e r
p a r t to play and a f a r w ider ta sk to perform than
L e s te r N. Trachtman, "Ghanaian Labor L e g is la tio n
Since Independence," Labor Law J o u r n a l. V ol. 12, No. 6,
June, 1961, pp. 5 ^ 7 - 5 ^ Also Douglas Rlmmer, "The New
I n d u s t r i a l R e la tio n s in Ghana," I n d u s t r i a l and Labor
R e la tio n s Review, V ol. 14, No. 2, Jan u ary , 1961, PP*
206- 2 2 6 .
200
merely the safeguarding of the co n d itio n s and wages
o f I t s members.1 ^
The trad e u n io n s - p o lit ic a l p arty a l lia n c e proved
h e lp fu l to the growth of trad e unionism. Trade unions
obtained n a tio n a l and in te r n a tio n a l r e c o g n itio n . The
m u l t i p l i c i t y of unions was reduced to six te e n n a tio n a l
unions and a sin g le Trades Union Congress h eld sway over
the n a tio n a l unions. The unions l o s t t h e i r r ig h t to
s t r i k e and accepted a subordinate r o l e , but they had
le g a l re c o g n itio n and r i g h t s of n e g o tia tio n .
The f in a n c ia l p o s itio n of the movement took a turn
fo r the b e t t e r . H enceforth, dues"^ would be c o lle c te d by
th e employer and then handed over to the unions. (Non
union members could c o n tra c t out o f th is "check-off"
system by a w ritte n a p p l ic a tio n .) The dues thus received
by the GTUC were disbursed as follow s: 45 p ercen t went
to GTUC and 55 p ercen t went to the branch and n a tio n a l
union. Of th e GTUC funds, 10 p ercen t was devoted to a
s o c ia l w elfare and insurance fund, and 5 percent each f o r
investm ent in b u sin ess e n te r p r is e and the g en eral s t r i k e
12
R. B. Davison, "Labor R e la tio n s in G hana.".Annals
o f the American Academy of P o l i t i c a l and S o c ia l S cie n ce.
Vol. 310, March, 1957, p. 139.
13
Dues were 30 cents (U. S .) per month.
201
fu n d .1^
The m in is te r appointed an a u d ito r to review th e
accounts of the tra d e unions a t each le v e l of the h i e r
archy. Expenditures n o t in c u rred in the i n t e r e s t o f the
movement had to be refunded by the o f f i c e r s . Also,
government could freeze the funds o f the tra d e union
movement i f i t took any a c tio n c o n tra ry to public p o lic y .
This clause was defended by th e then M in is te r of Labor,
Mr. Ako Adjei, on grounds of public interest. ^
I t would be a p p ro p riate to po in t out a t th is stage
th e s i m i l a r i t i e s and d i s s i m i l a r i t i e s in th e evolution of
Swedish and Ghanaian tra d e unionism . Swedish trade
unionism emerged a f t e r the Swedish i n d u s t r i a l re v o lu tio n ;
the Ghanaian c o u n te rp art a rriv e d before i n d u s t r i a l i z a t i o n
o f Ghana. The time p a tte rn does no t in i t s e l f n u l l i f y or
im pede:successful fu tu re growth o f tra d e unionism in
Ghana. I t merely In d ic a te s the new s ty le o f trade union
ism. Ghanaian tra d e unionism i s n o t c h a ra c te riz e d by ex
cessiv e stro n g c e n tr a liz a tio n which is n o tic e a b le in the
LO and the SAP. S eparate co n fed eratio n s fo r b lu e - c o lla r
14
For n o n c e rtif ie d unions, the GTUC took 40 p ercen t
and re tu rn e d the r e s t to the branches and n a tio n a l unions.
A l a t e r amendment gave GTUC 100 p ercen t c o n tro l of the
funds. See I n d u s t r i a l and Labor R e la tio n s Review. Janu
a ry , 1961, on. c l t . . pp. 220-21.
•^Ghana p arliam entary D ebates, Col. 547 > Vol. 12,
No. 13, December 17» 195Q* p. 195* Government employees
were f i r s t exempted from the ch eck -o ff system but a l a t e r
amendment (I960) included them.
202
unions and w h ite - c o lla r unions are no t found in Ghana.
The tren d towards c e n tr a liz a t io n i s dem onstrated by the
ev o lu tio n o f the GTUC, and u n lik e Sweden, Ghana's Trades
Union Congress has the advantage o f re p re s e n tin g both
b lu e - and w h ite - c o lla r unions.
Trade unionism in both c o u n trie s rece iv ed co n sid e r
able support from p o l i t i c a l p a r t i e s . A sh o rt p re se n ta tio n
o f Swedish tra d e u n io n -p arty a l l i a n c e i s o f I n t e r e s t .
During the form ative y ea rs o f the Swedish la b o r movement,
th e S o cia l Democratic P arty gave th e in c ip ie n t movement
th e n ecessary o rg a n iz a tio n a l a id . Being f a i t h f u l d i s
c ip le s of K arl Marx, the s o c i a l i s t s saw in the unions an
e f f e c t iv e b a s is fo r p a rty o rg a n iz a tio n . Taking advantage
o f the unions' p l i g h t , the s o c i a l i s t s ea g erly pointed out
t h a t improvements in wages, hours and working conditions
which workers were s t r i v i n g f o r c o n s titu te d only symptoms
o f t h e i r ailm e n t. The r e a l cause o f t h e i r m isery was the
c a p i t a l i s t system and th e e x is tin g s o c ia l s t r u c t u r e . Only
p o l i t i c a l a c tio n could emancipate them from t h e i r economic
and s o c ia l s e rv itu d e . The same pronouncement was n o t i c e
able in Ghana's Convention P e o p le 's P a rty : seek f i r s t the
p o l i t i c a l kingdom and a l l these th in g s s h a ll be added unto
you.
The a l lia n c e o f Swedish tra d e unions w ith the S o cia l
Democratic P arty (SDP) was described a s , ". . . Siamese
203
tw in s , th e l i f e o f one dependent upon t h a t o f th e o th e r .
The p a r ty became th e c e n te r o f th e union movement and th e
d r iv in g fo rc e behind i t . Both found m utual dependence and
advantage in th e a l l i a n c e . The le a d e r o f th e SDP, H jalm ar
B ra n tin g , remarked d u rin g one o f t h e i r co n v e n tio n s t h a t
M . . . s o c ia lis m and th e w o rk e rs ' movement a re growing
i n t o one a n o th e r more and more . . . th e la b o u r movement
i s a s in g le e n t i t y , working in a tr a d e -u n lo n d i r e c t i o n and
in a p o l i t i c a l d i r e c t i o n , n e i t h e r s t i f l i n g th e o th e r , b u t
s u p p o rtin g each o t h e r and w orking hand In hand f o r s o c i a l
17
e m an cip atio n .
As th e t r a d e u n io n s ' movement mushroomed in Sweden,
th e r e was a common f e a r in th e p a rty ra n k s t h a t u n io n s'
a l l e g i a n c e would be d i v e r t e d . To avoid such a co n tin g e n c y ,
th e SDP proposed th e fo rm atio n o f a tr a d e union c o n fe d e ra
t i o n , l a t e r to be c a lle d th e LO. Trades u n io n -p a r ty
r e l a t i o n s h i p h e n c e f o r th underw ent some m o d if ic a tio n .
Trade union o rg a n iz a tio n became s t a b i l i z e d and stro n g ; th e
SDP became th e le a d in g p a r ty in p o l i t i c s w ith th e LO
For a more com plete d e s c r i p t i o n , see Donald J .
B lake, "Swedish Trade Unions and th e S o c ia l Democratic
P a r ty ; The Form ative Y e a rs." The S candinavian Economic
H is to r y Review. V ol. XIII, N o . T , l£6o, pp. 19-44.
1 7
I b i d . , p . 21. A s i m i l a r u t t e r a n c e i s found in
th e Ghanaian movement— 't h e OPP and GTUO a r e o n e .' See
L . H. Trachtm an, op. c l t . , p . 547.
204
s o lid ly behind I t . P arty and union became in terdependent
18
e n t i t l e s .
Leaders o f tra d e s unions in Ghana a re m ostly p o l i
t i c a l a s p ir a n ts who f e e l th a t a u n io n s1 backing would
f u r th e r t h e i r p o l i t i c a l am bitions. Union le a d e rs in
Sweden were drawn from t h e i r own ran k s. Since he does
not belong to the la b o rin g c l a s s , a union le a d e r in Ghana
r a r e l y shares th e same f e e lin g s o f the co n s titu e n c y . Here
i s a c u l t u r a l gap and a cause fo r o rg a n iz a tio n weakness.
Hot u n u su a lly , the le a d e r f e e l s he i s condescending, and
the rank and f i l e are aware o f t h e i r i n f e r i o r i t y . Only
when union members can draw le a d e rsh ip from t h e i r own
ran k s, then and only then can they expect to build a more
cohesively stro n g o rg a n iz a tio n s im ila r to LC^s.
A c u l t u r a l problem tends to undermine a LO-type
o rg a n iz a tio n . For in s ta n c e , the Swede looks to the union
as a permanent economic and s o c ia l o rg a n iz a tio n . The
Ghanaian o r A frican does not share the same view. His
c u l t u r a l , s o c ia l and economic o rg a n iz a tio n is p rim a rily
h is Abusua and secondly h is eth n ic group. Any o th er
o rg an iz atio n Is secondary and t r a n s i e n t . His I n t e r e s t In
th e union g e ts e x c e p tio n a lly high when an emergency such
as dem onstrations and p ic k e tin g a r i s e s . But a f t e r the
passage o f such emergency, he re la p s e s in to h i s normal
1 R
F re d e ric g l e l s h e r . . The Hew Sweden: The Challenge
of a D isc ip lin e d Democracy (HetTTorEI u av ia Mcitay uompany,
I n c ., 1967), pp. 46-47.
205
behavior o f in d if f e r e n c e and apathy. U n til an a l t e r n a t i v e
form of s e c u r ity i s devised to re p la c e the fam ily
s t r u c t u r e , t h i s problem w i l l undermine any union o rg an iz a
t io n .
An em ployers' a s s o c ia tio n s im ila r to th e SAF does
n o t e x i s t in Ghana, An employment a s s o c ia tio n has been
formed bu t i t i s mainly an ad v iso ry body. Many employers
p r e f e r to operate independently, fe a rin g th a t one big firm
might dominate the a s s o c ia tio n . This a t t i t u d e w i l l change
as soon as workers are ab le to evolve a more powerful
o rg a n iz a tio n .
Collective Bargaining in Ghana
(A) Legal Framework
The th re e s i g n i f i c a n t item s o f l e g i s l a t i o n in
I n d u s t r i a l r e l a t i o n s a re : (1) th e Labour Ordinances of
1938 and 194-8; (2) th e I n d u s t r i a l R e la t io n 's Act of 1958,
and (3) th e i 960 Amendment Act.
The Labour Ordinances of 1958 and 1948. —P ressu re
from th e B r i t i s h Trade Union movement compelled th e p as
sage of the 1958 Labour Ordinance. I t s e t up the Labour
Department of Ghana. I t s fu n c tio n was to make the
government th e m ediator and a r b i t r a t o r in la b o r d is p u te s .
The C olonial Government did n o t implement t h i s fu n ctio n
on grounds th a t m ediation and a r b i t r a t i o n would I n t e r f e r e
w ith the f re e v o lu n tary n e g o tia tio n which was supposed to
206
19
e x i s t in a f r e e labor m arket.
A second Labour Ordinance in 1948 aimed a t
s e t t i n g up Wages Boards c o n s is tin g of r e p r e s e n ta tiv e s of
employers and trade u nions. I t s fu n c tio n was the r e g u la
t i o n of working co n d itio n s and rem uneration o f workers.
Again, the e x is tin g l a i s s e z - f a i r e a t t i t u d e o f the C olonial
Government prevented implem entation o f th is ordinance, and
i t was r e le g a te d to the background.
The I n d u s t r i a l R e la tio n s Act o f 1958. — The most o u t
stan d in g landmark in Ghanaian I n d u s t r i a l r e l a t i o n s was
th e advent o f the I n d u s t r i a l R e la tio n s Act o f 1958. Among
o th e r th in g s the Act provided: (1) ex clu siv e b argaining
r i g h t s to c e r t i f i c a t e d unions, (2) machinery f o r s e t t l i n g
d isp u te s in a r a t i o n a l manner through c o n c ilia tio n and
a r b i t r a t i o n , (5) d isc o n tin u a tio n o f "u n fa ir" la b o r
p r a c t i c e s , and (4) complete e lim in a tio n of s t r i k e s o r lo c k
o u ts .
The Act gave th e M in ister e la b o ra te power to
d esig n ate one union to n e g o tia te w ith the employer or
em ployers' a s s o c ia tio n in tim es of d is p u te s . The d esig n a
ti o n was in th e form o f a c e r t i f i c a t e to r e g is te r e d unions
only. The Act forbade c e r t i f i c a t i o n to p u b lic employees'
^ I o a n Davies, A frican Trade Unions (Harmondsworth,
England: C. K ich o lls and Company, L td ., 1966), Chapter 2.
unions, lo c a l a u th o r ity , employees or te a c h e r s 1 unions.
Exclusion o f p u b lic s e r v a n ts ' unions from c e r t i f i c a t i o n
was explained on th e grounds t h a t p u b lic se rv a n ts had a
s ta tu to r y arrangement w ith th e government and t h e i r wages
had been e s ta b lis h e d by l e g i s l a t i o n and not c o lle c tiv e
20
b a rg a in in g . The M in iste r o f Labour was to co n su lt w ith
th e a p p ro p ria te employers b efore is s u in g the c e r t i f i c a t e .
Unions had to send t h e i r a p p lic a tio n s through the Trades
Union Congress. A fte r c e r t i f i c a t i o n , the a p p ro p ria te em
plo y er and union would e s t a b l i s h a stan d in g committee to
21
d eal w ith the m a tte r.
"U nfair lab o u r p ra c tic e s " were defined as (1) an
em ployer's d is c rim in a tio n a g a in s t an employee because of
the l a t t e r ' s a f f i l i a t i o n w ith a union, (2) an em ployer's
in tim id a tio n of a worker from jo in in g a union, (3) em
p lo y e r 's in te rf e r e n c e w ith union form ation, (4) u n io n 's
in te r f e r e n c e w ith management's b u sin e ss, and (5) u n io n 's
meeting during b u sin ess hourB. The Act s e t up an U nfair
Labour P r a c tic e s T ribunal to enforce th e se p ro v isio n s.
The T rib u n al had powers to stop u n f a ir p r a c tic e s by fin in g
20
Ghana P arliam en tary Debates, 1958, op. c i t . , ~
Vol. 12, No. 13, Col. 552, p. 196.
21
The exclusive b arg ain in g r i g h t s clause i s
s im ila r to the T a ft-H a rtle y Act of the United S ta te s .
208
22
the g u i l t y p a rty .
In a d d itio n , the Act rendered com pletely Impotent
the use o f s tr ik e s or lo ck -o u ts as economic sa n c tio n s in
la b o r r e l a t i o n s . The r a tio n a le behind the e lim in a tio n of
s t r i k e s was tw o -fo ld . F i r s t , th e government had com
m itted i t s e l f toward economic p ro g re ss. I t was necessary
th a t la b o r should co o rd in ate i t s e f f o r t s w ith the govern
m ent's p o lic y of encouraging i n d u s t r i a l i z a t i o n and I n v e s t
ment in new I n d u s tr ie s as an i n t e g r a l p a r t of the plan fo r
economic independence. Secondly, the country wants
i n d u s t r i a l peace. 11. . . The purpose of t h i s machinery
or p ro ced u re," remarked the M in is te r of Labor, " is to
enable g riev an ces to be solved in a r a t i o n a l manner, w ith
f u l l d isc u ssio n and in v e s tig a tio n , and to ren d er the use
of s t r i k e s and lo c k -o u ts , which harm the pockets of both
employers and employees and h in d e r the expansion o f Indus-
23
t r y , l a r g e ly o b s o le te ." T h ird ly , Ghanaian t r a d i t i o n
m a in tain s t h a t d is p u te s should be reso lv ed through d i s
cu ssio n . S trik e s and lo c k -o u ts occur when th e re i s com
p le te breakdown o f or an absence o f adequate b arg ain in g
22
This i s a ls o s im ila r to American Labor Law. See
the Lab or-Management R e latio n s Act. 194-7, S ections 7 and 8.
23
•'Mr. Ako A d je i, P arliam entary Debates, Vol. 12,
Ho. 13, December 17, 1958, C ols. 545-546, 549, 550. I t
appears th a t th e second motive i s a c o ro lla ry o f the
f i r s t .
209
machinery f o r re s o lv in g d is p u te s . S trik e s and lo ck -o u ts
do not in the long run solve the problem and enough
volumes have been w ritte n of i r r e t r i e v a b l e economic
lo s s e s r e s u l t i n g from work stoppages. The Swedish economy
can absorb such lo s s e s , but th e economy o f Ghana cannot
absorb the huge coBts of economic s a n c tio n s .
The 1959 and I960 Amendments A cts.--Two Acts amend
ed the 1958 I n d u s t r i a l R e la tio n s Act. The f i r s t Amendment
(1959) stren g th en ed the o rg a n iz a tio n of the TUG but d e a lt
l i t t l e w ith c o lle c tiv e b a rg ain in g , p er s e . The Second
Amendment Act ( i 9 6 0 ) changed th e a r b i t r a t i o n procedure in
t h a t the a r b i t r a t o r could now summon w itn e sses and
examine them under o ath . E lab o ratin g on th e motive fo r
the new amendment, a lo c a l newspaper re p o rte d th a t I t was
to ". . . provide d is c ip lin a r y c o n tro l of the trade
unions In a manner th a t would make them more resp o n sib le
24
in t h e i r a c tio n s ."
(B) B argaining In Action
C o lle c tiv e barg ain in g has gone a long way since the
2^P a lly Graphic (Ghana), August 26, i 9 6 0 , p. 1.
210
days of co lo n ialism . In those days, n e g o tia tio n in the
sense of having employer and employee bargain back and
f o r th and a r r iv in g a t some conclusion was n o n e x is te n t.
There was no a r b i t r a t i o n or c o n c ilia tio n body to s e t t l e
d i s p u t e s .2'* The C olonial Government claimed th a t i t p re
fe rre d v o lu n ta ry n e g o tia tio n s im ila r to t h a t in the mother
country. The Labour Department was e n tru ste d with the
la b o r r e la tio n s h i p but i t was in e f f e c tiv e and p a r t i a l . Em
p lo y ers h ire d and dism issed workers a t t h e i r d is c r e tio n .
Wages were s e t by l e g i s l a t i v e f i a t and p r iv a te e n te r p ris e s
only followed in l i n e . The r i g h t to s t r i k e was not known.
Such was th e s t a t e of a f f a i r s when the I n d u s t r i a l R ela
tio n s Act was enacted.
The “New S tru c tu re " se t up a compulsory n e g o tia tio n
machinery w ith a stan d in g committee which ad ju d ic a te d f o r
26
the c o n f lic tin g p a r t i e s . P a r tie s who re fu s e d to
27
n e g o tia te were fin e d . Before t h i s standing committee
2 * 5
Two in sta n c e s o f a J o in t N eg o tiatin g Committee
could be found in the mining in d u stry and a tra d in g com
pany. These were the J o in t N e g o tia tin g Committee of
Chamber of Mines and Mines Employees Union and the J o in t
C o n su lta tiv e Body of U nited A frican Company and i t s Em
ployees Union.
26
The M in istry o f Labour sends a r e p r e s e n ta tiv e to
approve the r u l e s of th e committee and a s s i s t in I t s
estab lish m e n t.
27
'The p en a lty was $5.60 fo r an employer. An em
p lo y e r who re fu se d to n e g o tia te had to pay th e pen alty o f
$5 .6 0 f o r every employee involved in the case; a union was
fin ed $2.80 f o r each employee.
211
th e two p a r tie s would p re se n t t h e i r ca ses. The c e r t i f i
cated union would bargain f o r the employees e i th e r on an
e n te r p r is e b a s is or industry-w ide b a s is ; employers would
2g
n e g o tia te in d iv id u a lly or in a s s o c ia tio n .
I f the n e g o tia tio n reached a deadlock, re fe re n ce
was made to a second sta g e , i . e . , c o n c i l i a t i o n . At t h i s
p o in t n o t i f i c a t i o n was made to the M in iste r o f Labor.
Upon r e c e ip t o f t h i s n o t i f i c a t i o n the M in is te r would ap
p o in t a c o n c i l i a t o r . The c o n c i l i a t o r was always a person
knowledgeable in i n d u s t r i a l r e l a t i o n s . W ithin two weeks,
i f th e re was no agreement, one o f the p a r t i e s could r e
quest the r i g h t o f a r b i t r a t i o n from the M in istry o f
Labour, givbn t h a t the o th e r p a rty had agreed to the
fo rm e r's i n te n tio n s . I t must be borne in mind th a t the
tra d e unions had committed them selves to compulsory
a r b i t r a t i o n and could nb t but co n sen t. I f , and only i f ,
the M in iste r of Labour did no t submit the case to a r b i t r a
tio n could the p a r t i e s s t r i k e o r lo c k -o u t, provided a
d e c la ra tio n o f t h e i r I n te n tio n s had been made w ithin four
weeks. However, sin ce the government did n o t condone
s t r i k e s , and sin c e a s t r i k e or lo c k -o u t a t t h i s stage of
th e b argaining would r e f l e c t unfavorably on the M in iste r
28
Ghana Employers A sso ciatio n was Inaugurated as an
o rg a n iz a tio n of employers in a l l in d u s t r ie s in 1959. See
F i r s t Annual Report of the Ghana Employers1 A s s o c ia tio n ,
p. 7.
212
o f Labour, he was always ready to appoint an a r b i t r a t o r .
The a r b i t r a t i o n stage was the l a s t in th e b arg ain in g p ro
cess and no f u r t h e r reco u rse was a v a ila b le . ( I t was n o t
u s u a lly th e r u le th a t the p a r t i e s would go t h i s f a r . D is
putes a re u su a lly s e t t l e d before the second sta g e , i . e . ,
a t the c o n c ila tio n l e v e l . ) Oases thus s e t t l e d are con
sid e re d s e t t l e d fo r a p erio d o f one y e a r.
The b a rg ain in g system o f Ghana, u n lik e th a t in
Sweden, has more l e g i s l a t i v e and s t a t e c o n tro l. S ta te
c o n tro l was i n s t i t u t e d to p r o te c t the unions a g a in s t em
p lo y e rs. Nationwide barg ain in g s im ila r to LO-SAF frame
agreement i s n o t the r u le in Ghana. Employers in Ghana
p r e f e r to b arg ain in d iv id u a lly so th a t they can a d ju s t
wages and co n d itio n s of employment r a t h e r than d eleg atin g
th e fu n ctio n to a c e n tr a l body. Moreover, e n te rp ris e s
d i f f e r w ith r e s p e c t to aims and s i z e s . N e v e rth e less, a
tre n d towards nationw ide b a rg ain in g i s in the o ffin g . For
example, la b o r l e g i s l a t i o n empowered th e M in iste r of Labour
to "extend" a c o l l e c t i v e agreement to a l l the employers
and employees In a s im ila r In d u stry or in a c e r ta in t e r r i
t o r i a l a re a . Agreements which have been concluded between
management and la b o r in a c e r ta in s e c to r have a tendency
to be used as re fe re n c e s o r examples. S ignatory unions
and the TUO could always e x e rt p ressu re on the o ther
unions o r employees who were re c e iv in g le s s favorable
terms o f employment from o th e r em ployers. Thus, through
213
le g a l s t i p u l a t i o n and moral suasion a c o lle c tiv e agreement
becomes binding on th e la r g e s t p o ssib le number of em-
29
ployees and employers.
Contents o f C o llec tiv e Agreements.- - C o lle c tiv e
agreements u s u a lly s t i p u l a t e a s p e c ts of the employment
r e l a t i o n s h i p such as h ir in g , promotion, d is c ip li n a r y
a c tio n and rem uneration. So f a r , th e em ployers' r i g h t to
h ir e whom they p le a se has not been questioned or r e
s t r i c t e d . In many la rg e e n t e r p r is e s , employees seeking
permanent employment a re expected to serve a p ro b atio n ary
p e rio d , th e le n g th o f which i s always s ta te d in the a g re e
ments. In the c i v i l serv ic e i t i s th re e y e a rs ; In p riv a te
firm s the p erio d v a r ie s from one firm to a n o th e r. Some
tim es new employees are expected to undergo a p p re n tic e s h ip ,
in which case the c o lle c tiv e agreem ents w i l l s ti p u la t e the
term s. For in s ta n c e , the 1961 agreement f o r the p r in tin g
tra d e s e s ta b lis h e d an a p p re n tic e s h ip committee whose main
fu n ctio n was to review a p p re n tic e sh ip tr a in i n g problems
and to make recom m endations.^
Though promotion i s always covered in th e c o l
le c t i v e agreem ent, th e employers s t i l l w ield g r e a te r in -
^B enjam in C. Roberts and L. Greyfie de Bellcombe,
C o lle c tiv e B argaining in African C ountries (New York: S t.
M a rtin ’s P re s s , 1967)» Chapter 6 .
50l b i a . . p. 90.
214
flu e n c e in d e c isio n who s h a l l "be promoted. C o lle c tiv e
agreem ents norm ally m ain tain t h a t m e rit should be the
main y a r d s ti c k f o r prom otion. I t i s a common p r a c tic e fo r
employers to look around, in case o f a vacancy, f o r
q u a l if i e d p erso n n el w ith in th e e n t e r p r is e b e fo re seeking
c a n d id ates o u ts id e .
Nowhere i s th e c o l l e c t i v e agreement so r e s t r i c t i v e
and so d e t a il e d as in employee d is m is s a l. Agreements have
tended to curb a r b i t r a r y d is m is s a l by r e q u e s tin g n o tic e of
d is m is s a l, com pensation, and o th e r re q u ire m e n ts. Where
v i o l a t i o n o f s e rio u s d i s c i p l i n e or m isconduct i s con
cerned, an employee f o r f e i t s any advance n o tic e o f term in a
t i o n o r com pensation.
Wage D eterm ination in Ghana. —Wages a re determ ined
by u n i l a t e r a l d e c is io n s o f em ployers. In the c i v i l
s e r v ic e , th e government e s ta b li s h e s th e b a s ic wage p a tte r n
and makes th e key wage d e c is io n s . I f th e re i s d i s s a t i s
f a c t io n re g a rd in g wages and working c o n d itio n s , r e s o r t i s
made to a commission o f in q u ir y f o r a new wage p o lic y
recommendation. P r iv a te i n d u s t r i e s a re u s u a lly compelled
by unions to adopt government wage r a t e s . I n v a r ia b ly ,
government r a t e s tend to be the wage f l o o r . We need to
c l a r i f y t h i s sta te m e n t. W ritin g in th e 1 9 5 0 's , W..A.
Lewis concluded t h a t s u b s is te n c e Income which an A frican
215
could earn on the land s e t th e f lo o r fo r w a g e s .^ This
a p p lie s to u n s k ille d and r u r a l lab o r t h a t Is uncommitted
to i n d u s t r i a l work. For the s k i l l e d and the co lleg e
tr a in e d , the governm ent's wage r a t e s s e t the minimum.
Would the Swedish s ty l e of f re e wage n e g o tia tio n
o p erate in Ghana.-: The author does n o t th in k so. Sweden
is an i n d u s t r i a l country; Ghana i s only embarking upon
i n d u s t r i a l i z a t i o n . By allow ing unions and employers fre e
re in s in determ ining wages, th e re i s f e a r t h a t unneces
s a r i l y high wages would r e s u l t and consequently economic
p ro g ress would be impeded. I t Is probably tru e t h a t ,
c e t e r i s p a r ib u s , h ig h e r wages would in c re a s e demand fo r
consumer goods. But since supply i s I n e l a s t i c w ith in the
country, in f l a t i o n a r y p re ssu re s would be g en erated . To
avoid such unwanted in te r f e r e n c e , government would have to
in c re a se im ports of consumer goods. An in c re a se in im
p o rts would re q u ire fo reig n exchange, which i s alread y in
sh o rt supply. Im ports of c a p i t a l goods would have to be
c u r ta ile d and c a p i t a l accum ulation would be ad v e rsely a f
fe c te d . This would c re a te b o ttle n e c k s in the development
p ro cess.
Moreover, f r e e wage n e g o tia tio n of the LO-SAF type
presupposes the e x iste n c e of pow erful, w ell organized
A. Lewis, "Development w ith U nlim ited Supplies
o f Labour," M anchester School o f Economic and S o c ia l
S tu d ie s . Vol. XXII, No. 2, May, 1954, pp. 139-92.
2 1 6
super-unions and s u p e r-a s s o c ia tio n s ; i n d u s t r i a l mammoths
such as th e se do not e x is t in Ghana. I t would be s u i c i d a l
fo r immature unions to b a rg a in with c o lo s s a l employers on
wages and co n d itio n s of work. Reliance on the government
i s a n e c e s s ity . Employers and employees a lik e welcome
th e im portant r o l e of government in te rv e n tio n in wage
n e g o tia tio n .
I t should be pointed o u t th a t th e p rin c ip le s and
c r i t e r i a f o r wage d eterm in atio n are the same in both
c o u n trie s . Unions expect t h a t rem uneration must be a
d i r e c t fu n ctio n o f the type o f job which th e worker p e r
forms in the e n te r p r is e . T h is has c a lle d f o r jofi c l a s s i
f i c a t i o n s . Job c l a s s i f i c a t i o n s do not p o ssess the same
degree o f e la b o ra tio n and com prehensiveness which i s found
in Sweden. For in sta n ce , a worker may be c la s s if ie d as
" s k i l l e d ," " s e m i-s k ille d ," and " u n s k ille d ," or ju n io r,
in te rm e d ia te , o r sen io r o f f i c e r ; and each le v e l has I t s
r a t e o f In c re a s e in the wage s c a le .
Unions expect equal rem uneration f o r equal work I r
r e s p e c tiv e o f n a tio n a l o r i g i n , sex, age and sta tu s p ro
vided the w orkers' output, work, and q u a l if i c a t io n s a r e the
same. Many agreements s t i p u l a t e th a t le n g th of se rv ic e
should be taken in to account In wage In c r e a s e s , and th e
lo n g e r and more deserving a worker is th e h igher would be
th e r a t e of h i s rem uneration. Bonuses a r e to correspond
to th e le n g th o f se rv ic e . Dangerous or d i f f i c u l t jobs a re
217
rewarded more than the normal.
LO's p o lic y of s o l i d a r i t y which aims id e o lo g ic a lly
a t narrowing wage d i f f e r e n t i a l s would he im p ra c tic a b le a t
t h i s stage of Ghana's economic development. Wage
s t r u c t u r e in Ghana e x h ib its wide d i f f e r e n t i a l s e s p e c ia lly
between the u n s k ille d and s k i l l e d (in clu d in g college
t r a i n e d p eo p le). U nskilled workers rece iv e an average
m onthly base pay o f 160 s h i l l i n g s , while u n iv e rs ity
g rad u ates g e t 1,134 s h i l l i n g s , giving r i s e to a common
32
r a t i o of 7 :1 . U n iv ersity tr a in e d employees also r e
ce iv e frin g e b e n e f i t s in the form of fre e housing, or
ho u sin g a t lower r e n t s , car allow ance, v a c rtio n and leave
allow ance, f re e m edical c a re , and b e t t e r pensions. Many
o f these frin g e b e n e fits are denied u n s k ille d workers.
Wage d i f f e r e n t i a l s are in stru m e n ta l in c o rre c tin g
th e imbalance between s k ille d and u n sk ille d workers w ith
in the country. As long as an u n sk ille d la b o re r can earn
32
The wide wage d i f f e r e n t i a l was a c o lo n ia l legacy.
I t was i n s t i t u t e d by B rita in w ith the view of r e c r u iti n g
e x p a tr ia te s to th e co lo n ies. As Ghanaians took over the
jo b s of the e x p a tr ia te s , they m aintained the wage
s t r u c t u r e . S ev eral attem pts have been made by the
Government to reduce the wage d i f f e r e n t i a l s by (1) r e
ducing or e lim in a tin g com pletely the frin g e b e n e fits ,
and ( 2 ) by stu b b o rn ly re f u s in g to raiBe s a l a r i e s of c i v i l
s e rv a n ts at upper l e v e l s . I t s attem pt has proved un
s u c c e s s fu l p a r t l y because o f r i s i n g p ric e s and p a r tly be
cause of supply and demand f a c t o r s . Demand f o r the
s k i l l e d has been and s t i l l i s o u ts trip p in g supply, and
t h i s condition more than a n y th in g else has c o n trib u te d
t o th e p erp e tu a tio n of wage d i f f e r e n t i a l s .
218
s l i g h t l y l e s s than a s h i l l e d worker who has undergone a
long p erio d o f a p p r e n tic e s h ip , he w i l l n o t be m otivated to
undertake any t r a i n i n g . Wage d i f f e r e n t i a l s serve as i n
c e n tiv e to th e u n s k ille d and th e youth. Adoption o f LO's
s o l i d a r i t y p o lic y would m itig a te such in c e n ti v e .
In view of th e d if f e r e n c e s e x i s t i n g between the
c o u n t r ie s , i t i s th e a u t h o r 's c o n te n tio n t h a t wage p o lic y
in Ghana should s t r i v e f o r th e fo llo w in g o b je c ti v e s :
1. Wage p o lic y must e s t a b l i s h minimum sta n d a rd s
o f wages f o r a l l w orkers and a b o l is h m a lp r a c tic e s .
Minimum sta n d a rd s should tak e in to c o n s id e r a tio n th e
economic needs o f th e worker, th e em ployers' a b i l i t y to
pay, and th e e f f e c t s o f wage in c re a s e s upon the economy.
An a c c e p ta b le minimum wage w i l l h e lp to r a i s e the
sta n d ard o f l i v i n g o f lower p aid wage e a rn e rs and w i l l
in s u re a b e t t e r u t i l i z a t i o n o f manpower. L e g is la tio n
must s t a t e c a t e g o r i c a l l y the minimum r a t e s and th e groups
of workers to be covered.
2. Wage p o lic y must in s u r e t h a t th e worker en
joys a f a i r share o f th e in c r e a s in g n a t i o n a l w ea lth .
This I s n e c e ss a ry i f th e worker o r, more b ro a d ly , th e
populace i s expected to provide a s iz e a b le market f o r
I n d u s t r i a l p ro d u cts and a r e l a t i v e l y h ig h l e v e l o f p r iv a te
sav in g .
3 . Wage p o lic y should s tim u la te workers in to
growing i n d u s t r i e s and m o tiv a te them in to b e t t e r perform
ance. At p re s e n t ab sen teeism o r la b o r tu rn o v e r Is p r e
v a l e n t . The p r i n c i p a l In c e n tiv e f o r working in the
modern s e c t o r i s the wage and th e p r e s ti g e o f being ab le
to a c q u ire m a te r ia l p o sse ssio n s such as b ic y c le s , f u r n i
t u r e , r a d i o s , or au to m o b iles. Many o c c id e n ta l w r i te r s
e r r by concluding t h a t th e Ghanaian r e q u ir e s work mainly
to s a t i s f y h i s p h y s io lo g ic a l n e e d s. This i s a f a l l a c y .
Ghana i s n o t very w ealthy bu t i t i s easy f o r people to
fin d food and s h e l t e r . Whenever job rem uneration f a l l s
below e x p e c ta tio n , th e d e s ire to work i s d u lle d and
p o t e n t i a l w orkers s ta y in th e t r a d i t i o n a l s e c t o r . Since
demands f o r m a te r ia l p o s s e s s io n s a re in c re a s in g on a c
count o f ed u catio n and broadened e x p e rien c e , b e t t e r wages
and re a s o n a b le frin g e b e n e f i t s t h a t a re h ig h e r than
rem u n eratio n s in th e s u b s is te n c e s e c to r w i l l , o th e r th in g s
e q u a l, a t t r a c t w orkers In to th e modern s e c to r , reduce ab
sen teeism , and in c re a s e p r o d u c tiv i ty . At th e same tim e,
i n d u s t r i e s in Ghana must be a l e r t e d to th e growing oppor
t u n i t i e s f o r employment f o r th e s k i l l e d and educated
Ghanaian. For in s ta n c e , th e Government i s competing f o r
them; i n t e r n a t i o n a l o rg a n iz a tio n s are seeking them o u t;
and advanced c o u n trie s have been employing Ghanaian
d o c to rs , s c i e n t i s t s and a d m in is t r a to r s . The evidence i s
q u ite c o n c lu siv e t h a t only through b e t t e r rem uneration and
more s u i t a b l e o p p o r tu n itie s w i l l I n d u s t r i e s keep the
lim ite d number o f s k i l l e d people a t t h e i r jo b s.
220
Relevance of J o in t Labor-Management
C o n su ltatio n a t th e Factory Level
The Swedish system o f 3 °ln t c o n s u lta tio n between
la b o r and management could be ap p lied in Ghana. J o in t
c o n s u lta tio n o f worker and employer has been a Ghanaian
t r a d i t i o n f o r a long tim e. W ithin the t r a d i t i o n a l se c to r
i t is customary f o r an employee to go to h is employer, or
v ic e v e rs a , and d isc u ss b e t t e r ways o f performing the
work. I t i s an accepted b e l i e f th a t through t h i s d i s
cussion the employer g ets an in s ig h t in to problems facin g
th e employee which he may have overlooked. I t i s a form
o f ;)oint c o n s u lta tio n .
J o in t c o n s u lta tio n in Ghana could be promulgated
e i t h e r by the government o r by la b o r and management. I t
does n o t have to be as e la b o ra te as th e Swedish LO-SAF
system. I t s aims should be ( 1 ) to reduce la b o r tu rn o v er,
( 2 ) to r a i s e la b o r p ro d u c tiv ity , and ( 3 ) to improve
b e t t e r communications.
Labor Turnover
Textbooks in economic development p o in t out the
hig h prevalence o f lab o r tu rn o v er o r absenteeism in the
l e s s developed c o u n trie s . Few t r y to lo c a te th e cause or
p re s c rib e a cure f o r t h i s i n d u s t r i a l malady. The main
cause o f absenteeism in Ghana I s th e I n a b i l i t y of the
modern economy to c re a te an a l t e r n a t i v e forw ard-looking
221
i n s t i t u t i o n which ta k e s care o f w o rk ers' p h y s io lo g ic a l and
p s y c h o -s o c io lo g ic a l n e e d s. The t r a d i t i o n a l economy i s
f l e x i b l e enough to pro v id e fo r every p e r s o n 's needs. To
fo re sa k e th e extended fam ily e n t i r e l y i s to commit economic,
p sy c h o lo g ic a l and s o c io lo g ic a l s u ic id e . To m ain tain a t
tachment to th e extended fam ily r e q u ir e s t h a t the i n d i v i
d u a l r e tu r n home p e r i o d i c a l l y f o r f u n e r a ls , s e ttle m e n t of
fam ily d is p u te s and l i t i g a t i o n o r s ic k n e s s w ith in the
fa m ily , fam ily f e s t i v i t i e s , and so on. The s i t u a t i o n 'i s
worsened by low wages, poor working c o n d itio n s and i n
s e c u r i t y in th e modern economy.
Labor P r o d u c t i v i t y ^
J o in t c o n s u lta tio n would a id in r a i s i n g la b o r p ro
d u c t i v i t y . I t i s customary f o r w r i te r s to compare pro^
d u c t i v i t i e s in underdeveloped c o u n trie s w ith those o f ad
vanced c o u n tr ie s . This approach i s n o t ap p e alin g to the
a u th o r. U n til a more r e f in e d method i s discovered which
se g re g a te s l a b o r 's c o n tr ib u tio n to t o t a l o u tp u t, p ro
d u c t i v i t y comparisons a re mere sham. S u f f ic e i t to s t a t e
t h a t la b o r p r o d u c tiv i ty i s low in Ghana. How could 3 o ln t
c o n s u lta tio n improve th e s i t u a ti o n ? Through la b o r -
management d is c u s s io n e f f o r t s would be made to d isc o v er
-5 -5
•^Labor p r o d u c tiv ity Is th e r a t i o o f t o t a l o u tp u t to
la b o r tim e. I t i s common knowledge t h a t la b o r i s only one
f a c t o r in th e p ro d u ctio n p ro ce ss; o th e r f a c t o r s such as
la n d , c a p i t a l , and management a re n o t co n sid ered .
222
th e causes of low p r o d u c tiv ity . We are o f the opinion
t h a t low p ro d u c tiv ity in Ghana, and A frica as w e ll, i s
caused by ( !) Inadequate t r a i n i n g , ( 2 ) bad su p e rv isio n ,
(3) poor h e a lth , (4) low wages, and (5) low morale and bad
a t t i t u d e s o f w orkers. These p o in ts w i l l be discussed
f u l l y .
Labor-management should s e t up t r a i n i n g programs
f o r the u n s k ille d . Labor t r a i n i n g i s a n e c e s s ity in
every e n te r p ris e which aims to survive in A fric a . This
need a r i s e s from th e f a c t th a t A fric a , l i k e many an under
developed country, must employ modern te ch n o lo g ies in her
i n d u s t r i a l i z a t i o n . Advanced te ch n o lo g ies are many y ears
removed from and u n fa m ilia r to w orkers. The s i t u a ti o n is
aggravated by an ed u c a tio n a l system which i s geared more
to purely academic courses than to the needs of the
country. Trainees must be m otivated through wage in c en
t i v e s , re tire m e n t allow ances, and reward f o r le n g th o f
Bervice. Once given such o p p o r tu n itie s , workers would
fin d i t d i f f i c u l t to go back to the t r a d i t i o n a l s e c to r or
to another e n t e r p r is e , and they would work hard to
m aintain t h e i r s t a t u s .
Who should bear the c o s t o f the tra in in g ? Opinions
d i f f e r on t h i s q u e s tio n . There seems to be a g en eral con
sensus th a t the type o f tr a in i n g Bhould determ ine who
223
34
should bear the c o s t. in g en eral tr a in i n g where
i n d i v i d u a l 's knowledge is a p p lic a b le in s e v e ra l indus
t r i e s and e n te r p r is e s , p a r t of th e cost ought to be borne
by the tr a in e e in the form of lower wages. In s p e c ia liz e d
t r a i n i n g , such as le a rn in g to be an a s tro n a u t where the
tr a in e e s have lim ite d employment avenues, the e n te r p ris e
should bear the e n t ir e c o s t. There i s much t r u t h in the
argument, but i s i t pragmatic? Would i t work in A frica
where e n te r p r is e s n o t only have the problem o f tr a in in g
but a ls o th a t o f e n tic in g la b o r to leav e the t r a d i t i o n a l
economy and of making f u l l commitment to i n d u s t r i a l l i f e ?
The au th o r does not th in k so. The above argument w ill be
a p p lic a b le i f , and only i f , la b o r becomes f u l l y committed
to i n d u s t r i a l l i f e . Meanwhile, i t i s recommended th a t the
co st o f on-the-;)ob t r a i n i n g be borne by the e n te r p r is e and
to some ex ten t by the unions.
Bad su p erv isio n i s another cause fo r low product
i v i t y . Bad su p erv isio n comes from ignorance o f the
s u p e r v is o r 's ro le in the o rg an iz atio n and m isconceptions
o f the v alu es o f the Ghanaian worker. A s u p e rv is o r's
fu n c tio n i s to understand the problem and f e e lin g s o f h is
su b o rd in ates and guide and m otivate su b o rd in ates toward
34
Gary S. Becker, "Investm ent In Human C a p ita l: A
T h e o re tic a l A n aly sis," The Jo u rn al o f P o l i t i c a l Economy
Supplement, Vol. LXX, No, 5, P a rt 2, October, 1962, pp.
2 2 4
c a rr y in g out company p la n s . To achieve the above ob
j e c t i v e s , he has to develop co o p eratio n among h is sub
o r d in a te s , d i r e c t and d i s c i p l i n e them, and c re a te a p e r
m issiv e two-way communication between h im s e lf and th e
su p e rv is e d . He must te a c h h is su b o rd in a te s to manage
t h e m s e l v e s . ^
The t r a d i t i o n a l a t t i t u d e o f "th e c a r r o t and the
s t i c k 1 ' i s s t i l l e x i s t e n t in many em ployers. Like any
o th e r worker, th e Ghanaian l i k e s to be t r e a t e d as e q u a lly
human as management and n o t as a f a c t o r o f p ro d u ctio n . He
l i k e s to be rewarded f o r work done and expects to be
n o t i f i e d i f th e r e are prom otional p ro s p e c ts w ith in the
e n t e r p r i s e f o r h im s e lf o r o th e r A fric a n s . P re fe ra b ly , th e
worker l i k e s s t r i c t , humorous, f r i e n d l y s u p e rv is o rs .
Given th ese q u a l i t i e s , a s u p e rv is o r would n o t f in d i t d i f
f i c u l t to m o tiv ate the workers toward maximum o u tp u t,
assuming th a t th e re i s a c l e a r o r g a n iz a tio n , d i r e c t r e l a
ti o n between Jobs and men, sound communications netw orks,
and sound company o b je c tiv e s and p o l i c i e s .
S tu d en ts o f management adm it t h a t a fa v o rab le a t
t i t u d e toward work c o n tr ib u te s to p r o d u c tiv i ty . Unfor
tu n a t e l y , a t t i t u d e s tow ards manual la b o r a re t r a d i t i o n a l l y
35
^Saul W. G ellerm an, M otivation and P ro d u c tiv ity
(New York: V a il-B a llo u P re s s , 196 3 ), p. 221
225
n e g a tiv e in Ghana. A g r e a t e r p ro p o rtio n o f th e people
b e lie v e t h a t manual la b o r i s n o t d ig n if ie d . I t i s a deep-
seate d problem, but i t can be e r a d ic a te d . J o i n t c o n s u lta
tio n of la b o r and management would provide machinery f o r
ed u c atin g th e worker on the d ig n it y o f h is la b o r.
The m orale o f th e Ghanaian worker i s boosted in
36
e n t e r p r i s e s which have an " A fric a n iz a tio n p o lic y ."
C o lo n izatio n l e f t unhappy memories o f la b o r e x p l o ita tio n
in A fric a . Among o th e r th in g s , c o lo n ia l d is c rim in a tio n
k ep t A fric a n workers a t th e low er l e v e l s o f the o rg a n iz a
t i o n . C onsequently, workers became I n d i f f e r e n t and r e
fused to perm anently oommit them selves to i n d u s t r i a l em
ploym ent. The A frican worker I s i n t e l l i g e n t and conscious
o f h im s e lf . Being an "economic man" he i s co n tin u o u sly
eq u atin g h is "m arginal co st" w ith th e a d d i tio n a l Income
o r s a t i s f a c t i o n he r e c e iv e s .
Ghanaians want to c o n trib u te toward the p ro g re ss o f
the c o u n try . They would l i k e to see how t h e i r d a i ly Job
f i t s in to th e n a t i o n 's g o a l. A c o n s tru c tio n firm in
Ghana, Parkinson and Howard ad m itted in a r e c e n t survey
t h a t t h e i r " . . . workers took p rid e in th e f a c t th a t they
36
An A fr ic a n iz a tio n p o lic y I b any p o lic y which
alms a t t r a i n i n g A fric an s and r e c r u i t i n g them in to h ig h e r
l e v e ls o f management. The p o lic y was i n s t i t u t e d by th e
form er Convention P e o p le 's P a rty .
226
were building the country’s biggest port."^ Another
company, Mobil Oil, tries to satiBfy this need by a film
series which relate the worker's job and the company's
existence to the building of the country. The company is
convinced that this strategy has contributed substantially
■ 2 0
to raising workers' morale and productivity.
Sound health is a necessary factor in increasing
productivity. Joint consultation can assist workers by
instructing them in health education. Many endemic and
delibitating diseases plague Africans. While one enter
prise cannot completely wipe out the diseases, much can
be done in making workers aware of the symptoms of these
diseases and sources of relief. Health programs can be
set up to aid workers. One British trading company, UAC,
experimented with health programs. It found that by in
structing its workers on malaria and ,f. • .by distribut
ing anti-malaria pills costing one cent per man per week,
they were able to control malaria effectively."-^
Joint labor-management consultation could prevent
37
G. H. Wlttman, Inc., The Ghana. Report; Economic
and Investment Opportunities, Legal Problems Relative to
Investment, Sociological Factors Relative to General
Economic Development (New York, 1959)* pp. 229-30.
38Ibld.
3 9 I b l d . . p . 2 3 1 .
227
unnecessary industrial accidents. Safety measures are
badly needed in the mining industry where hundreds of
workers die annually.
Communication
Nowhere Is the problem of communication so acute
as in African industrial relations. One-way communication-
from master to servant--has always been and still Is the
rule. Workers are oftentimes ignorant of the company's
objectives, policies and welfare programs. Management
finds it difficult to communicate effectively with workers.
Language and inadequate media form barriers to effective
communications. Management and the managed may both speak
English but each Interprets it differently. Since it is
a one-way system, there is no feedback to verify whether
effective communication, in the sense of transmission and
response of facts and feelings between the transmitter and
the receiver, has taken place. Recent research by the
Social Welfare Department concluded that visual aids,
films, slides and charts are mostly effective when they
are carefully explained. YJhat is needed is the institu
tion of better channels of communication other than the
traditional channels of command and effective utilization
of a "grapevine system."
Relevance of Swedish Employment Policies to Ghana
Swedish unemployment policies are directed to the
228
causes of the problem. Diagnosis must precede prescrip
tion. Prom the same token, we shall first identify the
causes of unemployment in Ghana and attempt a remedial
policy.
Ghana's unemployment and underemployment originate
from the seasonality of some occupations, labor migration
and growth of population. Seasonal unemployment is common
in the subsistence sector. During the planting and
harvesting seasons, there is a high rate of employment
which may result in a labor shortage. When the season
passes, employment slackens, resulting in labor surpluses
and underemployment. Rural migration to urban centers has
created urban unemployment. Negative attitudes toward
manual labor cause middle school graduates to turn their
backs on agricultural employment and move to the towns in
search of white-collar jobs. An increase in per capita
income and a longer life span brought about by scientific
control of diseases have accelerated the rate of growth
of population. The death rate has fallen while the birth
rate is still relatively high, giving rise to a popula
tion explosion. The phenominal growth of population has
not been matched by the rate of industrialization. Viewed
from a broader perspective, the root of unemployment and
underemployment is in economic underdevelopment. It is a
universal problem In every underdeveloped country. The key
to the problem's solution is Industrialization.
I f the country i s to i n d u s t r i a l i z e , what p rin c ip le s
should guide i t s a c tio n to in su re success? F i r s t , develop
ment o f in d u s tr ie s must aim a t securing wider lo c a tio n s in
o rd e r to a l l e v i a t e population p re ssu re and slum c re a tio n
in la rg e urban c e n te rs . Regional d isp e rs io n r a th e r than
c e n tr a liz a t io n of in d u s t r ie s w ill Insure su c c e ssfu l
o p eratio n o f the economy in tim es of re g io n a l d i s a s t e r or
emergency. D e c e n tra liz a tio n of I n d u s tr ie s tends to en
courage o th e r reg io n s to develop a l s o . (V is ito rs to any
A frican country n o tic e the d is p r o p o r tio n a lity o f develop
ment in the re g io n s. Modem towns have grown around p o rts
and harborB w hile twenty m iles in lan d the a re a has
sc a rc e ly been touched by development.) Secondly, since
lo c a l en terp re n eu rs do n o t have the c a p i t a l and the
m anagerial s k i l l , the Government should s e t up in d u s trie s
and o p erate them during t h e i r I n i t i a l sta g e s; l a t e r on
they can be Bold to p r iv a te c i tiz e n s or to the workers.
Capable en trep ren eu rs are a f r a id to take v en tu res due to
p o l i t i c a l I n s t a b i l i t y and d i s t r u s t of government o f
f i c i a l s . T hirdly, in d u s t r ie s must adopt c a p i t a l -
in te n s iv e tech n iq u es. This sug g estio n , however, may meet
stro n g o p position from th e o r e tic i a n s , hence we s h a ll
e la b o ra te on i t .
Economic theory m aintains th a t i f la b o r i s p r a c t i
c a lly a fre e good or inexpensive r e l a t i v e to c a p i t a l , the
g r e a t e s t economic e ffic ie n c y ( i . e . , th e low est co st per
2 3 0
u n it of product) i s achieved a t the po in t where the r a t i o
o f c a p ita l to la b o r maximizes the product per u n it of
c a p i t a l . ^ 0 Underdeveloped c o u n trie s are long on la b o r but
a re Bhort on c a p i t a l and s k il le d manpower. They should
employ more of th e f a c to r endowment which i s abundant and
le s s of the sc arc e f a c t o r s . P o licy recommendations emanat
ing from th is a n a ly s is are c l e a r : underdeveloped n a tio n s
must concentrate on small sc ale and h a n d ic r a ft in d u s tr ie s
because these re q u ire l i t t l e c a p i t a l but more la b o r and
they have prom ising avenues fo r more f u l l employment.
Experience shows th a t la b o r In ten siv e techniques
a re in c o n s is te n t w ith the p r a c tic e s of underdeveloped
n a tio n s . They a re taking modern c a p ita l In te n siv e
techniques from advanced c o u n trie s . Why such a dev iatio n ?
Apart from the s p e c ia l lim ite d case of the model, ex p erts
o f the I n te r n a tio n a l Labour O rganization who reviewed the
experience o f a number o f c o u n trie s concluded th a t
. . . as techniques are made le s s c a p i t a l -
in te n s iv e , more la b o r can, o f course, be employed w ith
any given volume o f investm ent, but i t does n o t ap
pear to be th e case th a t techniques th a t employ more
labour per u n i t o f c a p ita l always y ie ld a la rg e r o u t
put per u n i t o f c a p i t a l . Indeed In a number of cases,
i t has been observed th a t some techniques th a t use
A n
Richard H. Leftw ich, The P ric e System and Re
source A llo c atio n (New York: H o lt, R inehart and Winston,
1 9 6 6 ) , C hapter 7 .
231
much la b o r a lso use much c a p ita l p er u n it of o u t
p u t. *1
Economic h i s t o r i a n s argue th a t th e I n d u s tr ia l
re v o lu tio n of B r ita in u t i l i z e d very simple to o ls and
te ch n o lo g ies in t h e i r development; and t h a t new indus
t r i a l i z i n g n a tio n s should do lik e w is e . S in g er r e j e c t s
t h i s argument by saying t h a t :
. . . in many re s p e c ts th e technology o f a hundred
y ea rs ago would be d e s ira b le f o r them (th e developing
c o u n tr ie s ) , and would make t h e i r economic development
e a s i e r . But t h a t technology no lo n g e r e x i s t s . I t
has been scrapped, and r i g h t l y scrapped, in the
i n d u s t r i a l i z e d c o u n trie s —and the technology of the
i n d u s t r i a l i z e d c o u n trie s i s the only e x is tin g te c h
n o lo g y .^ 2
Ghana s u f f e r s from a shortage of s k il le d la b o r, the
supply o f which i s i n e l a s t i c in the sh o rt ru n . Why p u r
chase cheaper secondhand machinery which re q u ir e s fre q u e n t
r e p a ir s and maintenance when more expensive machinery w i l l
re q u ire l i t t l e of the s c a rc e s t f a c t o r , s i l l e d labor?
Hirschman argues t h a t machine-paced o p e ratio n s are a d v is
able in o rd er to prevent breakdowns and th e n e g le c t o f
maintenance which would c u r t a i l p r o d u c tiv ity of c a p i t a l .
He claims th a t modern up to d ate technology
. . . perform (s) a c r u c i a l fu n c tio n in aid in g
management in performance o f new, u n fa m ilia r, and
A * l
I n te r n a ti o n a l Labour O ffic e , Employment O bjectives
in Economic Development, Report o f a Meeting of Experts
(Geneva, 1961), p. 6 7 .
ho
Hans W. S in g er, I n te r n a ti o n a l Development:
Growth and Change (New York: McGraw-Hill Boot Go. , 1964),
p . 6 4 .
2 3 2
perhaps somewhat uncongenial ta s k s . By predeterm ining
to a co n sid erab le e x te n t what i s to be done, where
and a t what point of tim e, the machines and the
mechanical processes they perform reduce th ese d i f
f i c u l t i e s immeasurably in comparison w ith a s i t u a
tio n where work schedules depend e x c lu siv e ly on the
convergence and co o rd in a tio n of many human w ills and
a c t i o n s . 43
Thus, s t r u c t u r a l r a t i o n a l i z a t i o n of the Swedish
type i s no t f a r removed from p r a c tic e s of underdeveloped
c o u n trie s . The qu estio n which a r i s e s i s th a t since
development of in d u s trie s must take c a p ita l- i n te n s iv e
tech n o lo g ies and consequently absorb lesB and l e s s o f the
growing la b o r fo rc e r e l a t i v e to g en eral population growth
o f urban a r e a s , what recommendations or im p lic a tio n s are
th e re f o r unemployment reduction?
Experience w ith automation shows th a t g r e a te r
m echanization re q u ir e s a s u b s t a n tia l se rv ic e se c to r in
order to fu n ctio n p ro p e rly . Could no t an expansion of the
se rv ic e s e c to r provide a so lu tio n to our unemployment
problem? (We are using "se rv ic e s " here to mean productive
s e rv ic e s and no t the p a r a s i t i c s e rv ic e s which are
u b iq u ito u s ly seen in underdeveloped c o u n t r i e s . ) Galenson
has c a lle d our a t te n t io n to t h i s s e c to r as an unemployment
red u c tio n avenue by s t a t i n g th a t ,
. . . too l i t t l e a t te n t io n has been paid to those
s e c to rs o f the economy in which the bulk of the new
^A lbert 0. Hlrschman, The S tra te g y of Economic De-
velopment (Hew Haven: Yale U n iv e rsity P re ss, 1958), pp.
1 4 5 ,1 4 6 - 4 7 .
233
Jobs a re l i k e l y to be lo c a te d , namely commerce and
s e rv ic e s . This does no t mean th a t m anufacturing i s
unim portant; on the co n tra ry , i t i s in my estim atio n
the key s e c to r f o r economic growth. Under co n d itio n s
of modern technology, however, i t s r o le i s not l i k e l y
to be th a t of a major source of new employment.
R ather, i t w i l l tend to generate the e f f e c tiv e demand
le a d in g to employment expansion in o th e r s e c to r s .
This m u l t i p l i e r e f f e c t i s a p t to be much more s i g n i
f ic a n t than any d i r e c t c o n trib u tio n s t h a t the manu
fa c tu rin g s e c to r can make to the a l l e v i a t i o n o f mass
unemployment .44-
In s e t t i n g up i n d u s t r i e s , a t te n t io n needs to be
paid to g e n e ra tio n of fo re ig n exchange. The s i g n i f i c a n t
r o le of fo re ig n exchange i s e v id e n t: fo re ig n exchange Is
req u ire d f o r purchase o f fo reig n machinery and equipment
fo r development. Foreign exchange can be generated in
two ways through (1) in c re a sin g exports and (2) reducing
im ports. (Other ways o f ac q u irin g fo re ig n exchange such
as fo re ig n a i d , borrowing from abroad, e t c . w i l l n o t be
touched upon here because they a re exogenous fa c to rs and
out of c o n tro l by the government of Ghana.)
Export o rie n te d in d u s trie s should be s e t up and
e x is tin g ones expanded or made more e f f i c i e n t . Concentra
tio n must be made on production of raw m a te r ia ls , semi
processed and processed p roducts. E f f o r ts should be made
to render exports more com petitive in world m arkets. Im
p o rt s u b s t itu ti o n I n d u s tr ie s should s t r i v e f o r production
4 4
W alter Galenson, "Economic Development and the
S e c to ra l Expansion o f Employment," I n te r n a ti o n a l Labour
Review. Vol. LXXXVII, No. 6, June, 1963, pp. 5&fe-o7.
234
o f consumer goods which a re p r e s e n tly imported from
abroad and which can eaBily he produced w ith in the country.
L ight i n d u s t r ie s sta n d a b e t t e r chance o f succeed
in g ; heavy i n d u s t r ie s are a lre a d y in the hands of advanced
c o u n trie s and few A frican c o u n trie s have a chance o f com
p e tin g s u c c e s s fu lly . T e x tile and c lo th in g and food and
beverage in d u s t r ie s are examples of the kinds o f l i g h t
i n d u s t r i e s which can be s e t up. T e x tile s and c lo th in g r e
q u ire r e l a t i v e l y sm all c a p i t a l investm ent, and s k i l l can
be e a s ily developed in a s h o rt tim e. Moreover, a t e x t i l e
in d u s try re q u ire s la rg e q u a n t i t i e s of la b o r fo r i t s opera
t i o n . Pood and beverage item s are very Im portant items in
the balance of payments, hence t h e i r domestic production
w i l l help to reduce trad e d e f i c i t s .
P u b lic Works and Employment
U tili z a tio n of p u b lic works as sh o rt run employ
ment c re a tin g measures i s w idely known. P u b lic works can
supply the country w ith i n f r a s t r u c t u r e s which are badly
needed fo r I n d u s t r i a l i z a t i o n . Roads, b rid g e s , h o s p i t a l s ,
h o u se b, dams and schools a re p r e r e q u is i te s to economic
development. In t h i s case, th e e x iste n c e o f a surplus
45
la b o r force may appear to be a b le s s in g in d is g u is e .
A c “
"llagnar Nurkse, Problems of C a p ita l Formation in
Underdeveloped Areas {New York: Oxford U n iv e rsity P re ss,
1964), pp. 32-49.
235
With sim ple to o ls th e unemployed can c o n s tru c t fe e d e r
roads con n ectin g the v i l l a g e s and farms to th e towns, th u s
f a c i l i t a t i n g ra p id tr a n s p o r t a t i o n o f food. S urplus la b o r
can b u ild sc h o o ls, h o s p i t a l s and o th e r community develop
ment p r o j e c t s . ( I t Has been p o in te d out t h a t p u b lic
works which u t i l i z e la b o r in te n s iv e tech n iq u es are more
c o s tly than those which u t i l i z e c a p i t a l in te n s iv e te c h
n iq u e s. ) But as a s h o r t run d evice f o r a l l e v i a t i n g unem
ployment, we can make th e choice o f more ;)obs h* h ig h e r
46
c o s ts in the s h o r t ru n .
A nother adverse e f f e c t o f p u b lic works as a
c o u n te r c y c lic a l t o o l i s pro p ag atio n o f i n f l a t i o n . This
can be p a r t i a l l y o f f s e t by government ta x a t i o n . The new
la b o r fo rc e would come w ith in th e purview o f th e modern
s e c to r and can e a s i l y be ta x e d . The e s ta b lish m e n t of
farms by e f f o r t s o f su rp lu s workers would produce most o f
th e food needed to feed the work fo rc e .
Reform o f Education System
That th e e d u c a tio n a l system needs a refo rm atio n to
make i t c o n s is te n t w ith th e needs of th e country i s ap
p a re n t. The p re s e n t Bystem was s e t up to meet demands o f
a c o lo n ia l regime and the system has o u tliv e d I t s u s e f u l-
46 ;
"Economic Development, Employment and P u b lic Works
In A fric an C o u n trie s ," I n t e r n a t i o n a l Labour Review. Vol.
91, No. 1, January, 196b» PP*
2 3 6
nesB. A new Bystem geared to th e co u n try ’s needs i s de
s i r a b l e . P u p ils must be fa m ilia r iz e d w ith the c o u n try 's
problems as e a rly as p o s s ib le . Technical courses, a g r i
c u ltu re , n u rsin g and business courses must be included in
the curriculum as f a r down as the secondary school le v e l.
This would prepare sch o lars to e n te r v ario u s tra d e s as
e a rly as p o s s ib le .
School a d m in is tra to rs , p r in c ip a ls , and p re sid e n ts
must be a l e r te d th a t education i s a derived demand— a
means to an end and n o t the end i t s e l f . They should co
o p erate w ith In d u stry in s e t t i n g up a fu n c tio n a l education
a l system which i s c o n s is te n t w ith demands o f the n atio n
and no t a mere mimicking of Cambridge, London o r Oxford
school programs.
A ctive Labor Market Board
Borrowing from Sweden, Ghana could s e t up an
A ctive Labor Market Board to coordinate v ario u s employment
p o lic ie s and programs. Many departments and programs
e x i s t today in Ghana which c a te r to manpower development,
b u t r e g r e t f u l l y they are much compartmentized. For i n
sta n c e , th e re i s th e B uilders Brigade which tr a in s and
employs young workers in a g r ic u ltu r e and c o n stru c tio n ;
th e re i s the M in istry of Education which d ea ls only w ith
form al education; th e M in istry of Labor i s concerned w ith
employment o f standards and tr a in i n g o f se m i-sk ille d
la b o r; the M in istry of In d u stry concerns i t s e l f with
237
te c h n ic a l and f in a n c ia l problems. What i s needed i s a
m in istry or board which can see the s i t u a ti o n in i t s en
t i r e t y . This fu n ctio n can be performed by a Labor Market
Board.
The fu n c tio n s of a Labor Market Board would be (1)
a s s i s t i n g in developing and lo c a tin g new i n d u s t r ie s ,
(2) preparing workers fo r new occupations through t r a i n
in g , (3) su p e rv isin g employment, and (4) co o rd in atin g
vario u s a c t i v i t i e s of the government agencies which r e l a t e
to la b o r, ed u c atio n , manpower and economic development.
The Board would c o n s is t o f r e p r e s e n ta tiv e s of the
m in i s tr ie s o f education, la b o r and economic development,
la b o r unions, and em ployers' a s s o c ia tio n s .
2 3 8
CHAPTER IX
SUM M ARY AND CONCLUSIONS
G hana's aim I s t o m odernize, t h a t i s , to put an
end to the s u b s is te n c e economy and th e t r a d i t i o n a l
te c h n iq u e s o f p ro d u c tio n . I t I s o u r c o n v ic tio n t h a t la b o r
and management have a r o l e to p la y in t h i s m o d e rn iz a tio n .
We a r e aware t h a t underdeveloped n a t i o n s , which a re making
th e g r e a t a s c e n t , can l e a r n much from advanced c o u n trie s
and from th e m se lv e s. Our l i t e r a r y e x p lo ra tio n from
t r o p i c a l Ghana to s e m ia r c tic Sweden h as been m o tiv ated
m ain ly by o u r s e a rc h f o r a p r a c t i c a l program f o r a c tio n
in th e f i e l d o f i n d u s t r i a l r e l a t i o n s .
The l a b o r movement in Sweden began as a r e s u l t o f
p r o t e s t to low wages and bad w orking c o n d itio n s o f
w o rk e rs . I t developed i n t o s u p e r-u n io n s , w ith th e LO as
th e le a d in g spokesman f o r l a b o r . Employers responded by
c r e a t i n g an e q u a lly pow erful s u p e r - a s s o c i a t i o n , th e SAP,
to c o u n te rb a la n c e l a b o r . The two c o l l o s i developed
I n t e r n a l w orking arrangem ents to r e g u l a t e t h e i r a c t i o n s .
Among th e p u b l i c and p r i v a t e arrangem ents a re th e Media
t i o n A cts, C o lle c tiv e C o n tra c ts A ct, Labor C ourt A ct, and
th e B asic Agreem ent.
The Swedish system o f c e n t r a l i z a t i o n h a s advantages
and d is a d v a n ta g e s , w ith th e form er outw eighing th e l a t t e r .
C e n t r a l i z a t i o n has g r e a t l y s i m p l i f i e d th e b a rg a in in g
239
system . I t has c re a te d a sense of s e c u r ity and s t a b i l i t y
in in d u s try . Small firm s and unions a re a b le to enjoy
the f r u i t s of b a rg a in in g . The system p re v e n ts employers
from In d u lg in g in c u tth r o a t co m p etitio n f o r w orkers in
tim es o f la b o r sh o rtag e and o f la b o r p la y in g one employer
a g a in s t an o th er f o r h ig h e r wages. Through c e n t r a l i z a t i o n
SAF and LO have been ab le to s e t up e d u c a tio n a l programs
fo r t h e i r members. On the ag g reg ate l e v e l , c e n t r a l i z a t i o n
has c o n trib u te d to the s t a b i l i t y o f the Swedish economy.
1
For example, in a period o f i n f l a t i o n , LO and SAF were
a b le to adopt a v o lu n ta ry wage f r e e z e .
The main o b je c tio n to c e n t r a l i z a t i o n i s t h a t i t
ten d s to curb in n o v a tio n by r e s t r i c t i n g th e I n i t i a t i v e o f
in d iv i d u a ls . Employers and unions o fte n have to w a it f o r
i n s t r u c t i o n s and guidance from Stockholm.
H i s t o r i c a l l y , w h i t e - c o l l a r workers were slow In
o rg a n iz in g . Worsening economic c o n d itio n s , however, com
p e lle d t h e i r o r g a n iz a tio n . Three main c o n fe d e ra tio n s have
evolved: TOO, SACO, and SR. TOO r e p r e s e n ts a l l w h ite -
c o l l a r w orkers, SACO i d e n t i f i e s I t s e l f w ith p r o f e s s io n a ls ,
and SR i s composed p r im a rily of c i v i l s e rv a n ts .
Lack o f s o l i d a r i t y has m i l i t a t e d a g a in s t p a r t i c i p a -
1
C harles A. Myers, I n d u s t r i a l R e la tio n s in Sweden:
Some Comparisons w ith American Experience (Cambridge,
M a ss.: The Technology P r e s s , 1951)» p p . 28-32.
240
tio n in c e n tr a l b arg ain in g . (Since 1956 w h ite - c o lla r
workers have no t p a r tic ip a te d in c e n tr a l b a r g a in in g .)
W h ite -c o lla r workers have opted f o r a d e c e n tra liz e d
barg ain in g system r a th e r than the c e n tra liz e d system
u t i l i z e d by SAP and LO.
The Swedish tra d e union movement did n o t leave
female workers untouched. Women workers have sought fo r
s h e l t e r in u n io n iz a tio n . Swedish women have been placed
in the la b o r fo rce p a r tly by economic progress and p a r tly
by i n d u s t r i a l i z a t i o n . T heir in c re a s in g numbers in the
la b o r fo rce has c a lle d f o r s p e c ia l a t t e n t i o n . The Swedish
government, la b o r unions and em an cip atio n ists are a c tiv e
in d iv e rse programs to improve th e economic co n d itio n s
th a t women fa ce .
A v o lu n tary agreement between the LO and SAP
e s ta b lis h e d jo in t c o n s u lta tio n machinery, known as Works
C ouncils, through which workers and management could meet
away from the b arg ain in g ta b le to d isc u ss mutual and
lo c a l problems. The u ltim a te o b je c tiv e of j o in t c o n s u lta
tio n i s in creased m otivation of employees. Labor and
management b e liev e th a t workers have an i n t e r e s t in t h e i r
work but due to the o rg a n iz a tio n a l com plexities o f modern
I n d u s tr ie s t h i s I n t e r e s t i s no t s tim u la te d . Management
looks to j o in t c o n s u lta tio n as a means toward h ig h e r
p ro d u c tiv ity ; th e worker views i t , a s a ste p toward indus
t r i a l democracy.
F a c to rs which a f f e c t p r o d u c tiv ity Buch as Job
s e c u r ity , m inor wage a d ju stm e n ts, p ro d u ctio n , w e lfa re and
p erso n n e l problems a re d iscu sse d a t th e Works C ouncils.
As chairman o f a Works C ouncil, a manager b ea rs i t s c o s ts
and he i s re s p o n s ib le f o r supplying f i n a n c i a l and produc
t i o n In fo rm atio n which c o n s t i t u t e s th e main theme o f the
d is c u s s io n .
To re n d e r J o in t c o n s u lta tio n more e f f ic a c io u s , the
LO and SAF have provided t r a i n i n g program s. They c o n s is t
o f form al s h o r t term sch o o lin g where members study tech n o
l o g i c a l improvements, economics, communication, and ad
m i n i s t r a t i o n .
A s i g n i f i c a n t source o f c o n f l i c t in i n d u s t r i a l
r e l a t i o n s i s wages. Swedish ex p erien ce in wage d eterm in a
t i o n t e s t i f i e s to the f a c t t h a t th e re i s a g u lf between
th e e le g a n t curves o f economic wage th e o ry and th e r e a l
p r a c t ic e s o f employers and employees. Wages a re n o t p re
c i s e l y s e t by demand and supply f a c t o r s ; o th e r dynamic non-
q u a n t if i a b le v a r ia b le s a re in v o lv e d »
In c e n t r a l b a rg a in in g th e LO and SAF e s t a b l i s h wage
f l o o r s and wage c e i l i n g s f o r i n d u s t r i e s . W ithin the L0-
SAF frame agreem ents in d iv id u a l e n t e r p r i s e s a d j u s t t h e i r
wage in c r e a s e s . (W h ite -c o lla r workers have a tendency to
adopt LO-SAF agreem ents as the b a s is f o r t h e i r wage
n e g o t i a t i o n .) In d iv id u a l employers ta k e in to c o n s id e ra tio n
s k i l l , p r o d u c tiv i ty , t r a i n i n g , and the c o st o f l i v i n g in
a d ju s tin g wages.
The LO-SAF wage n e g o tia tio n has four o b je c tiv e s .
I t i s th e p o licy of the c e n tr a l bodies to (1) prevent
government in te rv e n tio n , (2) e lim in a te wage d i f f e r e n t i a l s ,
(3) avoid i n f l a t i o n , and (4) m aintain f u l l employment. So
f a r , the LO-SAF wage p o lic y has been p a r tly s u c c e s sfu l and
p a r t l y u n su c c essfu l. I t has been su c c e s sfu l in minimizing
i n d u s t r i a l c o n f l i c t s and consequently in preventing
government In te rv e n tio n In I n d u s t r i a l r e l a t i o n s . I t has
a lso c o n trib u te d to the narrowing o f wage d i f f e r e n t i a l s In
Sweden.
However, t h e i r wage p o lic y has no t been su c c e ssfu l
in avoiding i n f l a t i o n . Wage d r i f t s t i l l plagues Sweden
and th e re Is no workable s o lu tio n in view to stop I t . I t
i s adm itted th a t wage d r i f t has been the predominant
f a c t o r in postwar wage In c re a s e s , but opinions d i f f e r as
to whether wages {or f a c t o r c o s ts ) have been the main
cause o f the p re se n t i n f l a t i o n in Sweden.
With reg ard to th e maintenance o f f u l l employment,
the evidence i s q u ite conclusive th a t h ig h e r wages in
Sweden have no t been accompanied by a h ig h e r r a t e of un
employment. (The r a t e of unemployment has been averaging
l e s s than 2 p e r c e n t.) The Swedes' success in unemployment
re d u c tio n I s due la rg e ly to t h e i r experience in planning
and t h e i r unusual p ro p en sity to experiment w ith new id e a s.
Monetary and f i s c a l p o lic ie s are u t i l i z e d , bu t un-
243
l i k e o th e r n a tio n s Sweden u t i l i z e s s e le c tiv e p o lic ie s to
a id the s t r u c t u r a l l y unemployed. Each type o f unemploy
ment i s diagnosed and rem edial p o lic ie s are a p p lie d . The
Government’s p o lic y of s t r u c t u r a l r a t i o n a l i z a t i o n iB
complemented with th e a c t i v i t i e s of a Labor Market Board.
Advocated by Gosta Rehn, the Labor Market Board i s en
t r u s te d w ith the r e s p o n s i b i l i t i e s of (1) a c tin g as
l a b o r 's clearan ce house, (2) implementing the Government's
em ploym ent-creating measures, (3) promoting geographical
and o ccu p atio n al m o b ility , and (4) a s s i s t i n g companies in
lo c a tin g new in d u s t r ie s in o th e r p a rts of th e country.
The r e s u l t s o f Swedish employment p o lic ie s have been
e x tr a o r d in a r ily s u c c e s s fu l. There have been fewer b u s i
ness f lu c tu a tio n s , h ig h e r per c a p ita incomes, and r e l a
t i v e l y lower r a te s of unemployment.
The Swedish employment market forms p a r t of a
Scandinavian Common Employment Market which came in to be
ing in 1945. Composed o f such Nordic c o u n trie s as Norway,
Sweden, Denmark, Finland and Ic e la n d , the Scandinavian
Common Employment Market has f a c i l i t a t e d the movement of
la b o r ac ro ss n a tio n a l boundaries. The homogeneity of the
Nordic peoples has c o n trib u te d g re a tly to the r e l a t i v e
success o f the common la b o r m arket. Contrary to expecta
tio n , wages in the c o u n trie s have n o t been equalized*
To what e x te n t could t h i s model be a p p lic a b le to
ihana? The LO-SAF types of o rg a n iz a tio n s in Ghana would
2 4 4
face s o c ia l,e c o n o m ic and p o l i t i c a l o b s t a c l e s . Even assum
ing t h a t th e s e problem s were overcome, i n d u s t r i a l r e l a t i o n s
would s t i l l be d i f f e r e n t from th e Swedish scheme. The
p re s e n t form of tr a d e unionism in Ghana has been greatly-
in flu e n c e d by c o lo n ia lis m , economic underdevelopm ent and
n a t io n a l is m . Trade unionism and i n d u s t r i a l r e l a t i o n s in
th e f u t u r e are bound to change as th e c h a r a c t e r and
com position of th e la b o r change, as new economic and
s o c i a l problem s emerge, and as p ro d u c tio n te c h n iq u e s im
p rove.
A nother sphere o f weakness i s union membership.
Wage e a r n e r s in Ghana c o n s t i t u t e a sm all p e rc e n ta g e o f
th e p o p u la tio n . Hence, union membership i s r e l a t i v e l y
sm a ll. Union members have been a p a t h e t i c because they
see no s e c u r i t y in a movement which would r e p la c e th e
extended fam ily o r g a n iz a tio n . Union le a d e r s w i l l have to
s e l l th e movement t o th e p u b lic by d e m o n stra tin g th e
v alu e o f i t s a c t i v i t i e s . The i n s t i t u t i o n o f th e c lo se d
shop system which makes union membership a c o n d itio n o f
employment would c o n t r ib u t e g r e a t l y to membership
s t r e n g t h . However, th e dangerB o f com pulsion o r co
e rc io n m ight undermine th e s t r e n g t h o f th e movement. The
system a l s o needs th e a id o f a benign p o l i t i c a l p a r ty .
I t I s co m fo rtin g to s t a t e t h a t th e Ghana T rades Union
Congress ap p ears to be a tre n d tow ard th e LO-type o r g a n i
z a t i o n .
245
A la rg e percentage of w h ite -c o lla r workers have not
committed them selves to unionism. Their re lu c ta n c e has
been due la r g e ly to t h e i r improved economic c o n d itio n s.
p
L a te r on as t h e i r economic co n d itio n s worsen, they w i l l
unionize in order to p r o te c t and promote t h e i r v o c a tio n a l
i n t e r e s t s . When they do, pride and common i n t e r e s t w ill
s e t them a p a rt from b lu e - c o lla r unions. In t h i s way, TCO,
SACO or SR-types o f o rg a n iz a tio n s may e v e n tu a lly emerge.
P rogress toward stro n g e r LO-type o rg an iz atio n is
incumbent upon the assurance of a steady flow of funds to
finance t h e i r a c t i v i t i e s . The in tro d u c tio n of the check
o f f system w i l l c o n trib u te to o rg a n iz a tio n a l stre n g th by
making i t f i n a n c i a l l y independent.
Assuming th a t th e problem of funds and membership
a re solved, th e re e x i s ts th e more d e lic a te problem of
le a d e r s h ip . Unionism re q u ire s e f f e c tiv e and able le ad e rs
whose sole lo y a lty and attachm ent w ill be to the union.
Moreover, union le a d e rsh ip Is s u b je c t to m utation. In the
form ative period of unionism, le a d e rs are expected to
p ossess q u a l i t i e s of a demagogue, i . e . , the a b i l i t y to
r a l l y members and gain re c o g n itio n from h o s t i l e employers
and an u n frie n d ly government. L a te r stages c a l l fo r more
b u re a u c ra tic le a d e rsh ip w ith a b i l i t y to a d m in iste r, stim u-
2
Economic co n d itio n s are expected to worsen f o r
w h ite - c o lla r workers because they are In c re a s in g in number
r e l a t i v e to the a n tic ip a te d demand.
2 4 6
l a t e and i n s p i r e . The p r e s e n t union le a d e r s in Ghana
p erform d u al r o l e s : th e y a re p o l i t i c a l as w e ll a s union
l e a d e r s . The n e c e s s a r y cohesion o f union l o y a l t y and
r e s p o n s i b i l i t y i s n o t e x i s t i n g . U n t i l unions a re a b le to
r e c r u i t le a d e r s h ip from among t h e i r own ra n k s , th e L0-
ty p e o r g a n iz a tio n w i l l be im p r a c tic a b le f o r Ghana.
The c o n fe d e ra tio n o f em ployers s i m i l a r to the
Swedish model would be p o s s ib le p ro v id ed la b o r could
ev o lv e a s i m i l a r LO-type a s s o c i a t i o n . H i s t o r i c a l l y , em
p lo y e rs have been always on th e d e f e n s iv e . They o rg an ize
p u rp o se ly to p r e s e n t a common r e s i s t a n c e to th e claim s of
th e u n io n s . The p r e s e n t e m p lo y ers’ a s s o c i a t i o n in Ghana
i s a v o lu n ta ry body whose fu n c tio n i s to p ro v id e a forum
f o r d is c u s s io n o f i n d u s t r i a l r e l a t i o n s p o lic y . They have
l i t t l e power to compel members in t o ta k in g any l i n e o f
a c t i o n , s i m i l a r to th e SAP. T his i s due to th e f a c t t h a t
la b o r has n o t been a b le to b u ild a s tr o n g e r o r g a n iz a tio n
which t h r e a t e n s t h e i r e x i s te n c e .
The LO-SAP b a rg a in in g system would be p o s s ib le i f
th e LO and SAP-type a s s o c i a t i o n s e x i s t e d . However, a
m o d ifie d in d u s try -w id e b a rg a in in g system has ev olved.
L e g i s l a t i o n has empowered th e M in is te r o f Labor to extend
c o l l e c t i v e agreem ent o f one firm to a l l firm s w ith in the
in d u s t r y .
N e g o tia tio n p ro ced u res do n o t d i f f e r in Sweden and
Ghana. The s ta n d in g com m ittee b e fo re which th e employer
and the c e r t i f i c a t e d union meet are s im ila r in the two
c o u n trie s . The c o n c ilia tio n and a r b i t r a t i o n stag es which
come in to being in Ghana when th e re i s a deadlock com
p a re s fav o rab ly w ith procedures in Sweden. However, a
tr u e LO-SAF type b arg ain in g system would n o t be p o ssib le
p a r tly due to Ghana's attem pt to evolve an income p o lic y ,
and p a r tly due to i t s d e s ire to develop. The same f a c to r s
ex p lain th e le g a l r e s t r i c t i o n s on the use o f economic
sa n ctio n s in b a rg a in in g . S trik e s a re d e s ira b le when and
only when s o c ie ty has no adequate machinery f o r re d re s s
o f g riev an ces. But when the c o s ts of s t r i k e s exceed the
b e n e fits to s o c ie ty and when an adequate machinery f o r
s e t t l i n g d is p u te s e x i s t s , the use o f economic sa n ctio n s
becomes unnecessary.
The adoption o f J o in t c o n s u lta tio n a t th e fa c to ry
le v e l would be in stru m e n ta l in so lv in g la b o r tu rn o v e r,
improving i n t e r n a l communications, and r a i s i n g product
i v i t y . The p ro d u c tiv ity of la b o r could be ra is e d through
o n -th e-jo b tr a in i n g , b e t t e r su p e rv isio n , i n s t r u c tio n on
h e a lth and s a n i t a t i o n , and the e le v a tio n o f employees'
m orale. Since Ghana, l i k e any o th e r underdeveloped
cou n try , must depend on Imported technology, which in
most cases i s many ste p s h ig h e r than the le v e l of workers
s k i l l , o n -th e -jo b t r a in i n g i s mandatory. Improving the
h e a lth of workers i s a n ec essary and p r o f ita b le in v e s t
ment.
248
Government in te rv e n tio n in i n d u s t r i a l r e l a t i o n s is
in e v ita b le . Government has to in te rv e n e as an employer
and as an agent to economic development. Unions w ill have
to depend on the government fo r a s s is ta n c e and government
w ill have to depend on unions f o r the achievement of i t s
development programs. To perform t h i s fu n c tio n su c c ess
f u lly , unions w ill have to p a r t i c i p a t e in economic p la n
ning. Denied of t h i s r o le , unions w ill r e v e r t to seeking
h igher wages and o th e r opposing I n t e r e s t s .
In conclusion, th e w r ite r b e lie v e s t h a t the
Swedish system of i n d u s t r i a l r e l a t i o n s could be a p p lic a b le
to Ghana. Of course, there would be problems and y e a rs of
t r i a l and e r r o r . The 10-SAP type of o rg a n iz a tio n s could
be f e a s i b l e In Ghana. C o llec tiv e barg ain in g in Ghana
could be c e n tr a liz e d . S trik e s and lockouts could be
elim inated or minimized in o rd er to render economic
development le s s p a i n f u l . Labor and management could
e s ta b li s h a c o n s u lta tio n machinery s im ila r to the Swedish
Works C ouncils. F in a lly , an a c tiv e labor market board of
the Swedish model could be s e t up In Ghana to u t i l i z e
human reso u rce s more e f f i c i e n t l y .
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C. GOVERNM ENT PUBLICATIONS, LEARNED
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1967, U nited N a tio n s , New York.
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Creator Yankey, David Beikwaw (author)

Core Title The Industrial Relations System In Sweden With Suggestions Concerning Itsrelevance To An African Nation, Ghana

Degree Doctor of Philosophy

Degree Program Economics

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

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Advisor Pollard, Spencer D. (committee chair), Phillips, E. Bryant (committee member), Robbins, Edwin C. (committee member)

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