Boxing and dancing in Sweden
As soon as Prime Minister Reinfeldt was inaugurated, he declared a reform of Sweden’s welfare system. Cutting unemployment benefits was a part of that reform. He thought that the public would be discouraged from working when welfare benefits were too generous or excessive. LO initiated a nationwide strike and protested, but Prime Minister Reinfeldt didn’t budge.
A dialogue between the conservative government and LO began, and soon, LO was convinced of the government’s policy. The move set LO back tremendously. The unionization rate fell from over 90 percent to the 70 percent level. In Sweden, the unemployment fund is managed and paid by the union. When unemployment benefits were reduced, members left the union.
But LO did not respond with a struggle. Instead, it adopted the conservative government’s union policy. The Swedish Trade Union Confederation’s director said that the union first opposed the unemployment benefit reform, but in the end, the government policy was correct, and more people were willing to work. The entry-level salary was largely reduced this year, based on the same principle, and LO signed an agreement with the Swedish Employers Association (SAF) that employers can hire workers at 75 percent of the existing entry-level salary. The move was intended to reduce youth unemployment.
“We don’t just fight,” the director said. “If we share a cause, we cooperate so that the national economy operates better. We call the relationship ‘boxing and dancing.’”
So wages aren’t raised arbitrarily. When a wage raise is determined, the IF Metall, which Prime Minister Stefan Lofven formerly led, plays a crucial role. The raise rate of the IF Metall is the norm for overall wage increases in Sweden. And IF Metall pays close attention to IG Metall, the Industrial Union of Metalworkers in Germany. The union argues that Germany is Sweden’s biggest competitor and companies will struggle if Sweden’s wage level is higher than the Germans. Another tradition is to give more raises to the lower-income workers and less to high-income earners.
Prime Minister Lofven announced the end of an era of pro-market policies. But he is not likely to completely overturn Reinfeldt’s actions. Just as he did with IF Metall, he will continue the policies that work and supplement the shortcomings, like social polarization. When will Korean politicians, unions and managers form a boxing and dancing relationship, rather than constantly degrading and opposing one another’s policies?
*The author is a senior reporter of employment and labor news.
BY KIM KI-CHAN
JoongAng Ilbo, Sept. 17, Page 33