comparative employment and industrial relation final

8/2/2019 Comparative Employment and Industrial Relation Final

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Comparative Employment and Industrial relations

Fabry LaureViatour Astrid

Professor Ida Regalia

Comparison between the

Industrial relation in Sweden and

in UK

APRIL 2012

Universit degli studi di Milano


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PLAN

Industrial Relation in Sweden

1- Context1.1 Political context

1.2 Economic and social context

2- History of labor movement3- Main actors

3.1 Trade-Union

3.2 Employer

4- Industrial relation4.1 Bilateral relation

Industrial conflict Collective bargaining

4.2 Tripartite relation

Industrial Relation in UK

1- Context1.1 Political context1.2 Economic and social context


3.1 Trade-Union

3.2 Employer

4- Industrial relation4.1 Bilateral relationship


4.2 Tripartite relationship

Comparison between the two industrial relation systems

1- Context1.1 Politcal context1.2 Economic and social context



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3.1 Trade Union

3.2 Employer

4- Industrial relation4.1 Bilateral relationship


4.2 Tripartite relationship

5- Conclusion


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Sweden Laure Fabry

1- Context1a. Political Context

The Kingdom of Sweden is a constitutional monarchy based on parliamentary democracy.

The foundation of parliamentary democracy in Sweden stipulates that all power emanates from the

people. In addition, Sweden has three levels of government: national, regional and local levels. At the

regional level, Sweden is divided into 21 departments that rely on general councils. At the local level,

Sweden is divided into 290 municipalities, each with a municipal council. Finally, at the national level,

is there the Riksdag or Swedish Parliament, the main representative of the people.

Sweden is based on a multiparty system where different parties are obliged to form coalitions,

because no party can gain power alone. The country's main political parties are:

The Social Democratic Party The Moderate Party The Centre Party the Liberal Peoples Party the Christian DemocratsThe Social Democratic Party dominates over 70 years the Swedish Policy. But the opposition

parties thought that they are not able to represent a viable and clear alternative, to provide enough

visibility and that they are not able to form a government. These different parties have decided to

unite to form an alliance (The Alliance): Its led by Prime Minister Fredrik Reinfeldt from the

Moderate Party, and it so consists of the Moderate Party (Moderaterna), the Centre Party

(Centerpartiet), the Liberal Peoples Party (Folkpartiet liberalerna) and the Christian Democrats

(Kristdemokraterna).1

The prime minister wants to implement a policy favorable to employment, and reduce taxes for

low and middle incomes. He insists on the importance of improving conditions for integration of

immigrants living in Sweden. The next parliamentary elections will be held in September 2014.

1 THE ECONOMIST. Sweden Political structure , website The Economist On line.http://www.economist.com/node/14155425 consulted on the 11 of april 2012

and

The Swedish Institute Fact about Sweden : Government PDF On line.

http://www.sweden.se/upload/Sweden_se/english/factsheets/SI/SI_FS55z_The_Swedish_System_of_Government/FS21-The-Swedish-system-of-government-low-resolution.pdf consulted on the 11 of april 2012
http://www.economist.com/node/14155425http://www.economist.com/node/14155425


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Finally, according to the index of democracy "The Economist" published in 2008, Sweden is the

most democratic country in the world with a rating of 9.88 / 10.2

1b. Economic and social context

Its in 1995 that Sweden joinded the European Union, but the country has its own currency,the Swedish Krona, and so is not a member of the monetary union. The country had, for many years,

a high dependency on exports. Several of their export economy is oriented to multinational

corporations. That represent about the half of earning of their gross domestic product (GDP) and

means that the Sweden economy is very sensitive to global financial market and demand. 3 Sweden is

the 22th economic power on the world.

GDP Growth 3.8%

GDP composition by sector

Agriculture Industry Services

1.8%

26.9%

71.3%

Inflation 2%

Public Debt(General government gross debt as a % of GDP)

37 %

Public Deficit(General government net lending/borrowing as a % of GDP)

-1.14%

In Sweden, we can observe that a high level of social protection is featured by the welfare

state and employment system. It is based on universal coverage and solidarity, a large public sector,

relatively low unemployment and a labour market regulation based largely on collective agreements.

The unemployment rate is about 9.5% in 2010 and estimates about 7.8% in 20124. In 2008,

like lot of other European countries, Sweden was not saved by the global economic crisis. One of the

main impacts was the unemployment rate, which is steadily growing and stood at 8.3% in April

20095. Of course, the circumstances have had directly influence and impact on industrials relations in

Sweden. Thousands of members of trade unions lose their jobs because of shorter working time

agreements and similar measures requested from the employer.

2THE ECONOMIST. The Economist Intelligence Units Index of Democracy 2008 , website The Economist

On line. http://graphics.eiu.com/PDF/Democracy%20Index%202008.pdfconsulted on the 9 of april 20123GLOBAL FINANCE Sweden Country Report Website of THE GLOBAL On line http://www.gfmag.com/gdp-

data-country-reports/169-sweden-gdp-country-report.html#axzz1rYLEa7Su consulted on the 9 of april 20124

TRADINGECONOMICS Sweden unemployment rate Website of the TRADINGECONOMICS On line

http://www.tradingeconomics.com/sweden/unemployment-rate consulted on the 12 of april 20125L. Fulton (2009) Worker representation in Europe. Labour Research Department and ETUI (online

publication) Sweden : Industrial and relations profile
http://graphics.eiu.com/PDF/Democracy%20Index%202008.pdfhttp://www.gfmag.com/gdp-data-country-reports/169-sweden-gdp-country-report.html#axzz1rYLEa7Suhttp://www.gfmag.com/gdp-data-country-reports/169-sweden-gdp-country-report.html#axzz1rYLEa7Suhttp://www.tradingeconomics.com/sweden/unemployment-ratehttp://www.tradingeconomics.com/sweden/unemployment-ratehttp://www.gfmag.com/gdp-data-country-reports/169-sweden-gdp-country-report.html#axzz1rYLEa7Suhttp://www.gfmag.com/gdp-data-country-reports/169-sweden-gdp-country-report.html#axzz1rYLEa7Suhttp://graphics.eiu.com/PDF/Democracy%20Index%202008.pdf


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2- History of the labour movementThe Swedish model is complex, composed of a series of elements each of which has profoundly

influenced society in the twentieth century. We can explain it by six components, taking into

consideration the fact that social dialogue and relation to the labor market have a directly impact on

them.

The Saltsjbaden Agreement, in 1938, meeting with the union and managementrepresentatives where a negotiation procedure was written and a model of collective

agreement that would take by the legislature (For example: minimum wages are guaranteed

by collective agreements and not by a law passed by Parliament). Accepting them as rules,

employers have received a guarantee of social peace as long as the negotiated agreements

would be respected, unions pledging to act for themselves allowing for spontaneous strikes

to occur. The labor movement has become a respected partner that neither employers nor

the government could not now ignore.

Ernst Wigforss, ministre of the finance Social Democrat, defended a new policy of Keynesianinspiration since the electoral victory of his party in 1932. The gradual improvement of

economic conditions made possible by the first social reform: still shy in the 1930s, they were

pursued on a large scale after the war.

The Rehn-Meidner model, in 1951, created by the two economic experts of the trade union

LO (Landsorganisationen, historical ally of the Swedish Social Democratic Party), and wherean overall vision of economic policy was developed, in giving a key role in trade union action

in the organization of the labor market. According to this model, the government was

managing public finances, taking aim at controlling inflation, while unemployment should be

tackled with targeted measures, tailored to the needs of regions and sectors. Accelerating

the restructuring and growth, this mechanism contributed to the rapid increase in living

standards in the postwar decades.

In 1959 was the establishment of the compensation principle, working in all social insurancewho begin with the establishment of a general supplementary pension, which formed the

basis of the Swedish Welfare State. By tying compensation to labor income, this principle


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included the great mass of employees within the same social protection system, instead of

providing basic protection to the poor.

Following this is the construction of a large public service financed by taxation, not only incharge of education and health, but also the maternal assistance and care of the elderly.

It was in 1970 that was designed the labor right, thanks to the radicalization of the left in thelate 60s. Indeed, the political debate began to focus on the importance of democracy in labor

law. Some laws are still applicable today, as the laws on environmental protection and the

law on the protection of employees.

At the beginning of that decade, an economic crisis emerged which became highly visiblethrough the increase in unemployment. Some of the reforms where then implemented, such

as major cuts in public service, lower rates of compensation for social protection systems and

the opening of public service to private actors (eg. in the education). This changed largely theSwedish model, which was so far almost exclusively based on the production of such public

services. It is important to note that the basic structure of social protection was maintained.

The possibility of increased income tax, introduction to finance health systems and care for

the elderly, was then discussed by the leadership of the Social Democratic Party.6

3- Main actors

3.1 Trade Union

In Sweden, almost 71% of the population present on the labor market is unionized, which is

very high. It is in the public sector union density is highest and the lowest rate is in the private service

sector. There are three main trade union organizations: the Swedish Trade Union Confederation (LO

below) which comprises 85% of manual workers, the Swedish Confederation of Professional and

employees (hereafter TCO) which includes 80% of non-manual or researchers employment, and the

Swedish Confederation of Professional Associations (SACO below) which includes 70% of graduates. 7

The decrease in the number of centralized collective bargaining reduced the power of big

unions and therefore the power of unions at the national level. Local trade unions now have greater

flexibility and their influence has increased. The role of confederations is still important in

coordinating the union's demands.

Relationships between organizations are generally good. Most unions affiliated to LO and

TCO have agreements to resolve potential conflicts of demarcation. Competition between TCO and

6HA. Bengtsson Le modle sudois lpreuve des rformes librales Website La vie des ides.fr On line.http://www.laviedesidees.fr/Le-modele-suedois-a-l-epreuve-des.html consulted on the 13 of april 2012andOECD LEconomie politique de la rforme: Retraite Emplois et Drglementations dans dix pays de lOECD ,

2010, p. 3707L. FULTON. Syndicat s, Website Worker-participation.eu On line. http://fr.worker-

participation.eu/Systemes-nationaux/Pays/Suede/Syndicats consulted on the 09 of april 2012
http://www.laviedesidees.fr/_Bengtsson-Hakan-A_.htmlhttp://www.laviedesidees.fr/_Bengtsson-Hakan-A_.htmlhttp://www.laviedesidees.fr/Le-modele-suedois-a-l-epreuve-des.htmlhttp://www.laviedesidees.fr/Le-modele-suedois-a-l-epreuve-des.htmlhttp://www.laviedesidees.fr/_Bengtsson-Hakan-A_.html


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SACO is, in turn, greater, because many workers may choose one or the other. Moreover, there is

virtually no competition between the unions since it is mainly the last craft unions. Thus, in most

companies, several unions are present without this causing a problem8.

3.2 Employer

In the private sector, the Confederation of Swedish Enterprise (FAS) represents about 54,000

businesses. In the public sector, the Swedish public sector employers represents employers in

general public services in approximately 270 public service agencies. In addition the federation of

county committees representing the employers of more than 250,000 people. The Swedish

association of local authorities is, in turn, all Swedish municipalities.9

Bargaining power belongs almost exclusively to industry associations and local in both the

private and the public. They have a duty to provide information to the confederation even though

they have decision-making authority. Indeed, in 1991, the FAS was estimated to be the hostage of an

industrial relations system exceeded and therefore decided to withdraw from all bipartite andtripartite bodies. She also refused the request of the Conservative government to open negotiations

with national unions. Therefore, the FAS has chosen to give priority to the decentralization of

bargaining in promoting the enterprise level.

Thus, employers' organizations affiliated enjoy relatively high autonomy and act accordingly,

regardless of their national central employer association, in order that the representation of interests

of employers in this field is more level affiliates those central level associations. The unions are faced

with professional organizations or employers during negotiations.

The agreement between employers and unions signed the same agreements is ensured by the

provision of "social peace" which states that the social partners are expected to cooperate and

comply with the agreements. Even within the business, it does not seem to be any misunderstanding.

4- Industrial Relation4.1 Bilateral relationship

Industrial conflictIn Sweden, the right to strikes is not almost limited. Its one of the freest systems in Europe,

because every sector possess his own collective agreement which forbids strikes actions who could

be harmful to the society in cause of risk generating for the life of the workers or for the society.

Industrial conflict, like the WDL (Work Day Lost) caused by industrial action, and the numberworkers involved, are directly depending on the bargaining rounds. The last major bargaining roundwas in 2007, when about 500 out of 600 agreements were negotiated, in total. There are 13,666 days

8P. Olsson et C. E. Triomphe, (2003). Linformation sur les conventions collectives en Sude, Rapport IGAS No

2003 088, page 3, 99L. FULTON. Reprsentation sur les lieux de travail , Site Worker-participation.eu On line. http://fr.worker-

participation.eu/Systemes-nationaux/Pays/Suede/Syndicats consulted on the 09 of april 2012


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were lost due to the 9 strikes occurred (both in private and public sectors) and 3,636 employeeswere involved. In 2008, when only about 90 agreements were negotiated, three strikes took place.

The number of strikes is low in Sweden, like we can see in comparison with the other European

contries10, and their range is limited. The National Mediation Office (Medlingsinstitutet, MI) is often

used in occasions of conflict in comparison with other European countries. Its an agency for centralgovernment activities in the mediation field, and depends of the Minister of labour. It mediates in

labour disputes and aims to promote an efficient wage formation process. It is also responsible for

public statistics relating to wages and salaries. The number of strikes has declined in recent years.

Forced interventions in mediations between the social partners are not necessary as the partners

themselves request such help if required11.

The MI estimates that about 13,000 individuals were involved and about 110,000 workdays werelost. These high numbers were mainly caused by the protracted conflict between the SwedishAssociation of Health Professionals (Vrdfrbundet) and SKL (Sddeutsche Klassenlotterie)12..

Collective bargaining

10K. Sisson, 2010, Employment Relations Matter, chapter 7: Changing expression ofconflict, IRRU, University of

Warwick11

Office national de meditation Rapport 2010: Synthse 12 L. Fulton (2009) Worker representation in Europe. Labour Research Department and ETUI (onlinepublication) Sweden
http://www.skl.de/http://www.skl.de/http://www.skl.de/


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When we speak about to labor market, the "Scandinavian model" is often mentioned, a model of

social consensus that is the envy of many countries around the world, especially because of the

industrial peace that prevails in most time. At the heart of this model is it Sweden. The situation of

workers in Sweden is unique in the sense that almost 90% of them are covered by a collective labor

agreement, the percentage of workers belonging to a union being about 71%. Labor organizations, by

industry or business, negotiate with employers individually or grouped in the form of industry

organizations (private, public, regional associations).

In recent years, a strong decentralization of collective bargaining is widely felt in Sweden,

particularly in the private sector. All aspects of the performance of work may be negotiated

collectively between the social partners in the Swedish system. A special feature of the Swedish

system is that there is no minimum wage established by the companies and unions have more

latitude in this regard. It is replaced with a starting salary that comes from the collective bargaining

process like all other working conditions.

In labor relations in Sweden, there is a clear hierarchy between the different levels of collectiveagreements. On authorization of local or regional sections, the confederation of trade unions can act

and negotiate directly with the caller employers. The bargaining system and the topics to be covered

during the sessions are left to the discretion of workers. The lower sections, limited by trade or

geographically, can discuss with their independently same section and reach agreements that will be

applicable to their sector. Agreements reached at the lower cannot contain provisions that run

counter to those negotiated at sectoral or national example. Companies that are not members of an

alliance employer can also apply a sectoral collective agreement for which they have not participated

in the negotiations. So they sign this agreement voluntarily and apply the working conditions therein.

In addition, negotiations may be initiated by any level of union and employer association.

In addition, it is possible to see that the Swedish labor law is very flexible, collective agreements

can substitute for the majority of legal provisions, for example working hours, leave and protection

devices jobs. Since the Scandinavian model is based on social consensus and not confrontation

between management and the union, we can see that this approach generally does well in Sweden.

Since most of the limitations imposed by the state may be replaced by others, it helps to find other

forms of compromise and adapt the rules and operating a business in particular operational context

in which it can face. In doing so, when an agreement, a competitive advantage can be identified and

boost the competitiveness of the organization.13

4.2. Tripartite relationship

In Sweden, tripartite negotiations are rare because the social partners do not welcome the

government or any other party intervening in collective bargaining. The idea of self-regulation

through collective bargaining by the social partners is strong in Sweden.

As in the German model, the Swedish state is authorized to intervene in collective bargaining

between unions and management as an employer or mediator. So, insofar as "points of view clash,

compromise can only result of conciliation," insofar as there is government intervention. In this

13

P. Olsson et C. E. Triomphe, (2003). Linformation sur les conventions collectives en Sude, Rapport IGAS No2003 088, page 3


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regard, although the situation is different in most of Europe and that Germany has also considered

the liberalization of state intervention in collective bargaining, the position of Sweden is like a statue

on this issue. In addition, the State may confer with the social partners to promote standards of fair

wages and do some minor tasks, but it has no power of decision and action in relation to collective

agreements.

The effectiveness of the Swedish model is based on the role that social partners independent

of the state have played. Being able to conclude agreements on the labor market, in consultation and

without the intervention of the political system, allows employees to ensure good working

conditions, strengthen the unions that represent them, and ensure social peace and stability of

businesses and the working world in general. The existing labor law is, essentially, left in the hands of

the social partners14.

14A. LATTARD sous la direction dIsabelle Bourgeois. 2005. . Le modle social allemand en mutation -Ngociation collective : quel avenir pour la convention de branche? , CIRAC, Cergy-Pontoise, page 60

AndP. Olsson et C. E. Triomphe, (2003). Linformation sur les conventions collectives en Sude, Rapport IGAS No2003 088, page 9


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United Kingdom Astrid Viatour

1- Context1.1 Political Context

The United Kingdom (UK) consists of England, Wales, Scotland (which together make up Great

Britain) and Northern Ireland. London is the capital.

The United Kingdom is a member of the European Union since the 1st January 197315. But the UK

has negotiated four opt-outs clauses, meaning that it was not required to partake in the Schengen

agreement, in the Charter of Fundamental Rights of the European Union, in the area of freedom,

security and justice and finally in the economic and monetary union (EMU) and consequently it

doesnt introduce the euro (the UK currency is the pound sterling).

A major characteristic of the UK is the feature of its Constitution because it isnt codified and apart of it isnt written16. Indeed, the UK Constitution doesnt consist of a single document but it is

based on common law, developed by UK case law, and on the statute law, drafted by the legislative

power, as well as constitutional conventions.

The United Kingdom is a constitutional monarchy and a parliamentary democracy in which the

Monarch is the head of the State, that is to say the supreme authority. But the powers of the

Monarch are essentially ceremonial. Currently, the Queen Elizabeth II is the Monarch. Concerning the

Prime Minister of United Kingdom, which is David Cameron since the 12 th May 2011 (following up

Gordon Brown), he is the head of the Government of Her Majesty. The political system is organized

according to a tripartite institutional model: executive, legislative and judiciary (this latter beingindependent of the other two).

The judicial power is hold by several courts which work under the Supreme Court.

The legislative power is a bicameralism system, meaning that it is managed by two houses, the

House of Commons and the House of Lords17. These two Houses constitute the UK Parliament. The

first one, also called the lower house, possesses the bulk of the legislative rights. It consists of

members elected in each constituency in the Country. The House of Commons is able to cause

general elections, when the government doesnt have its support anymore. The election cannot be

more than five years after the last one and it is usually around four years after the last one. The lastelections were on the 6th May 2012 and so the next due date is on May 2015.

The second one, also called the high house, is made up of different type of members, called peers.

Contrary to the House of Commons, the House of Lords isnt made up of elected members because

they are appointed by the head of the government.

15J. MONAR and W. WESSELS, The European Union after the treaty of Amsterdam, Library of Congress, London,

2001, p. 285 and next.16

G. LATRE, Economic, legal, social and political issues , Syllabus of 1st

year in multilingual communicationMaster, Universit Catholique de Louvain-Belgium, 2010-2011.17

UK PARLIAMENT WEBSITE, http://www.parliament.uk, last visit on April 2012.
http://www.parliament.uk/http://www.parliament.uk/


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Peers fall into the following categories: life peers, remaining hereditary peers, law lords (collectively

named the Lords Temporal) and bishops (the Lords Spiritual). This House plays a secondary role in

the legislative process because most bills and new legislation are generated in the House of

Commons. Once passed in the Commons, the bill is passed to the Lords for further debate and

approval before being passed to the monarch who finally approves the bill to make it as a law.

Concerning the executive power, it is exercised by Her Majestys Government which is the

government of the United Kingdom of Great Britain and Northern Ireland. The Prime Minister selects

and runs the Ministers who administrate the Country and adopt bills and new laws.

The Prime Minister and the other most senior Ministers belong to the supreme decision-making

committee, known as the Cabinet. The UK has many political parties but three of them are

considered as the most important: The Labour, The Conservative and the Liberal Democrat, also

called LibDem. These three work in both the House of Commons and House of Lords. After 13 years

of majority, the labour party lost its political position in the House of Commons following the 6 th May

2010 general elections. The currently parliament has 301 conservatives, 257 labour, 57 Liberal

democrats and 28 members of small regional parties. Given that the conservatives dont have a total

majority, on the 11th May 2010, the Prime Minister David Cameron (from the Conservative party) has

announced that he was forming a coalition, Nick Clegg (in the head of the liberal democrat party)

becoming deputy prime minister. This coalitions government breaks a bipartite tradition existing

since the Second World War in the UK18.

According to the Democracy Index of 2011, an index compiled by the Economist Intelligence

Unit that measures the state ofdemocracy in 167 countries, UK is considered as the eighteenth most

democratic country with a rating of 8.16/1019.

1.2 Economic and social context

UK is the 6th largest economy in the world, the 3rd largest in Europe. The GDP per capita is

$35.974 and the inflation rate is 3.4%20.

Like we said during the political analysis, the UK has its own currency (the pound sterling)

because, although UK is a European Member State, this State has required an opt-out clause

concerning the EMU.

In order to confront the economic crisis of 2008, the government presented a program having

for main goal to decrease the public expenditure having reached tops by the government of Tony

Blair. The main goal of these austerity measures is to reduce the budget deficit from 11% to 1% from

2010 to 2015.This reduction includes a wage freeze in this sector. This strict policy substantially

affects the employment (almost 700 000 job losses expected in the public sector), the purchasing

18 EUROFOUND WEBSITE, Eurofound, Industrial Relations and Working Conditions Developments en Europe2010, [on line], http://www.eurofound.europa.eu, last visit on April 2012.19

The Economic Intelligence Unit - The Economist, Democracy index 2011, democracy under stress, London, 4th

edition, 2011, p.4.20UK PARLIAMENT WEBSITE, Topics: Economic situation, [on line], http://www.parliament.uk, last visit on April2012.
http://en.wikipedia.org/wiki/Cabinet_of_the_United_Kingdomhttp://en.wikipedia.org/wiki/Economist_Intelligence_Unithttp://en.wikipedia.org/wiki/Economist_Intelligence_Unithttp://en.wikipedia.org/wiki/Democracyhttp://www.eurofound.europa.eu%2C/http://www.parliament.uk/http://www.parliament.uk/http://www.eurofound.europa.eu%2C/http://en.wikipedia.org/wiki/Democracyhttp://en.wikipedia.org/wiki/Economist_Intelligence_Unithttp://en.wikipedia.org/wiki/Economist_Intelligence_Unithttp://en.wikipedia.org/wiki/Cabinet_of_the_United_Kingdom


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power (with cuts in social expenditure and the increases in taxation) and more generally the

growth21.

The economic crisis of 2008 has strongly affected the UKs economic level which has known a

major cumulated recession up to -6.9% of the GDP in 2009. In the last quarter of 2011, the UnitedKingdom is again entering formal recession (decline of 0.2 % of GDP).

The UKs unemployment rate was 8.4% of the economically active population in January 2012

and more than 21 per cent are young people under the age of 2422. The number of unemployed

people is 2.67 million (total UKs population = 62.3 million and total UKs inactive population = 9.29

million).The unemployment rate has not been higher since 199523.UK is the 7th leading importer country and the 11th leading exporter nation in the world.

21PERSPECTIVE MONDE, Election au Royaume-Uni dun gouvernement dirig par le conservateur DavidCameron, 6th May 2010, [on line], http://perspective.usherbrooke.ca, last visit on April 2012.22

THE POVERTY WEBSITE, UK: young adult unemployment, [on line], http://www.poverty.org.uk, last visit on

April 2012.23 TRADING ECONOMIC WEBSITE, UK indicators, [on line], http://www.tradingeconomic.com, last visit on April2012.
http://perspective.usherbrooke.ca%2C/http://www.eurofound.europa.eu%2C/http://www.tradingeconomic.com/http://www.tradingeconomic.com/http://www.eurofound.europa.eu%2C/http://perspective.usherbrooke.ca%2C/


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As we seen thanks to this scheme24, a significant part of the UKs exportations goes to Russia,

India, Australia and United Arab Emirates. The main exported products are gemstones, nuclear

products, mineral fuels and cars.

Since the beginning of 2011, UKs monthly trade deficit has hit record level of more than 4

billion/month. There are two traditional causes to this record trade deficit: the high inflation rate and

budget deficit25.

The UKs social expenditure represents 26.8% of GDP26. The British system is from Beveridge

logical (like in Ireland, Spain, Italy, Portugal, Sweden, Greece, Denmark, Finland

27

), which globallymeans that it is based essentially on state funding, and this model recognize an universal right for the

whole population to benefit from health care for free28.

2- History of labour movementThe United Kingdom is one of the pioneers Country in term of trade union because the first one

was born during the end of the 18 th century. However, a few years later, the British Parliament

introduced the Combination Acts of 1799 and 1800 which formally bans all the working

consultation. Nevertheless, in 1824, the Combination Laws Repeal Act deleted the Combination

Acts and the criminal prosecutions for facts of consultation, but the formation of trade union is still

forbidden. In 1868, whereas the formation of trade-union is always formally prohibited, several trade

unions created the first trade-union national confederation (Trade Union Congress - TUC).

24 THE GUARDIAN WEBSITE, UK trade exports-imports, [on line], http://www.guardian.co.uk, last visit on April2012.25

ECONOMYWATCH WEBSITE, World economy UK: export-import, [on line], http://www.economywatch.com,last visit on April 2012.26 UK NATIONAL STATISTICS WEBSITE, Theme: health and social cares, [on line], http://www.statistics.gov.uk,last visit on April 2012.27

W. GERVEN, The European Union: a polity of states and people, Stanford University Press, Stanford, 2005,

p.192.28 For further explanations, see T. BEISSINGER and O. BSSE, Bismarck versus Beveridge: which unemploymentcompensation system is more prone to labour market shock?, IZA, Bonn, 2001.
http://www.guardian.co.uk/http://www.economywatch.com%2C/http://www.statistics.gov.uk/http://www.statistics.gov.uk/http://www.economywatch.com%2C/http://www.guardian.co.uk/


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Later, some laws have rectified the situation, preventing the courts from going against the legal

strikes (Trade Disputes Act of 1906), and giving a legal status to the trade unions (Trade Union Act of

1871)29.

With this indicator board30, we can deduce that in other OECD countries, the decade between

1980 and 1990 wasnt beneficial for the UKs trade-unions in term of memberships. Until the end of

the seventies, the British trade-unions were very powerful and influential on the political scene. In

1979, it counts more than 13 million syndicated members, which accounts for around 50% of theworkers. But during the eighties and nineties, trade-unions had to face to important challenges such

as unemployment, and especially the conservative government of the First Minister Margaret

Thatcher in place from 1975 to 1990 and hostile with the trade unions31. Following the decision of

this government to close about twenty coal mines, very massive strikes opposing the most important

labor organization to the government took place between 1984 and 1985. This type of offensive has

to be added to some modifications of the law between 1984 and 1993 concerning the trade unions

and the prohibition of the right to strike, as well as the wish of several employers to not recognize

the trade unions anymore. That will have serious consequences on the trade-union density. Indeed,

the percentage of union members has passed from 50.4% in 1980 to 39.1% in 1990 and reached

today 26.5%32.

29 P. GAGNON, Le droit du travail, Laval, Les Presses de lUniversit de Laval, 1987, pp. 17-18.30

F.TRAXLER and J. VISSER, Collective bargaining: level and coverage, p.184, [on line], http://www.oecd.org,last visit on April 2012.31

MONDE DIPLOMATIQUE,Atlas Histoire - Histoire Critique du XXme

sicle, Vuibert, Paris, 2011, pp. 88-89.32 OECD LIBRARY WEBSITE, Country statistical profiles Trade-union density, [on line], http://www.oecd-ilibrary.org, last visit on April 2012.
http://www.oecd.org/http://www.oecd-ilibrary.org/http://www.oecd-ilibrary.org/http://www.oecd-ilibrary.org/http://www.oecd-ilibrary.org/http://www.oecd.org/


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3-Main actors3.1 Trade Union33

As we just have seen, over a quarter (26.5%) of UK employees are union members, although

union density is much higher in the public sector (57%), where there are proportionately a lot ofemployees, than in the private sector (15 %). The collective bargaining coverage is 34%.

The majority of unionized population is affiliated to the TUC, the trade-union center of the

United Kingdom. This one is not present in Northern Ireland where the workers are mainly affiliated

to the Irish Congress of Trade Union (ICTU).

In the United Kingdom, the types of trade unions are various. There exist trade unions which

represent a specific profession (by example the teacher), or representing only the workers of certain

companies (by example the workers of the Aegon company: AEGIS34), but the majority of the

unionized workers are represented by big and overall trade unions which cover several economic

sectors. Actually, craft trade-unions are declining, even if the building sectors trade-union is

significant (UCATT).

There exist three main trade unions in the United Kingdom:

-UNIT, which been became the most important UK trade-union after a fusion in 2007 between

Amicus and T&G, the two more important trade unions before this time. This one is made up with

more than 1,5 million members (2009) in quasi all the sectors, essentially the private sector.

-UNISON is the second trade-union of the Country, with more than 1,3 million members, mainly

in the private sector.

-GMB is the third trade union of the Country. The affiliated of GMB are approximately 600.000,

primary manuals workers of the industry sector.

Together, these three trade unions represent 57% of the whole members of TUC.

The other TUC affiliated trade-unions35 are smaller than the three above and are more linked to

specific industries and occupations (like craft unions).

These individual unions are independent from the TUC.

33L. FULTON, Worker representation in Europe United Kingdom, [on line], Brussels, ETUI and Labour Research

Department, http://www.worker-participation.eu, last visit on April 2012.34

Aegon is a company specialized in the pension insurance in UK.35There are only two significant unions, in terms of membership, which are not affiliated to the TUC: the RCN,which organises nurses and the BMA, which organises doctors From L.FULTON, Op.cit.
http://www.worker-participation.eu/http://www.worker-participation.eu/


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3.2 Employer36

The Confederation of British Industry (CBI) is the body encompassing all the employer

organization but there are other actors, like the British Chambers of Commerce and the Institute of

Directors, which represent general business interests nationally, but they cant be considered as an

employers organization.

The CBI represents 20% of the UKs companies, regardless of sector (services or manufacturing) or

size (multinationals or small and medium sized enterprises). The CBIs memberships can be sectoral

organization as much as individual employers.

The purpose of the CBI is to fight for all business interests of its members (from a tax, industrial,

perspective) through national bipartite consultation. It doesnt have a collective bargaining role but it

can negotiate join texts with the TUC.

As we are going to see ( infra), because of the decentralization phenomenon, in the industrial

relations the role of the CBI is decreasing more and more and inversely, the role of the employers

themselves is increasing.

4- Industrial Relations4.1 Bilateral relationship

Industrial conflictIn English law, there is no formal right to strike because of the excessive limits provided by the

law and more specifically by the limited immunity from liability for making economic torts 37. Indeed,

as we have seen during the history of labour movement (supra), from years 1984 and 1993 the

government has started to restrict to right to strike. Indeed, the Trade Union Act of 1984, Part II and

the Trade Union Reform and Employment Rights Act of 199338 established an obligation on trade

unions to ballot their members in advance of industrial action and to give some specified information

to employers when, firstly, an intention to begin the strike is born and secondly, before and after this

ballot. The legal immunity of the trade-unions with regards to the liability in tort during the strike is

admit only if trade-unions have respected the obligation of ballot and informing the employers. If the

trade-unions dont respect the section 219 (i.e. the provisions about the immunity) of the 1992 Act,

they are guilty of economic torts. So, its obvious that the fundamental right to strike is particularly

supervised in UK39.

The main problem is the fact that theses procedural requirements open the door to limits of the

right to strike in view of the fact that the Courts can easily invalid and prohibit strike on the grounds

36 EUROFOUND WEBSITE, EIRO: UK developments in social partnerorganizations: employers organization, [online], http://www.eurofound.europa.eu, last visit on April 2012.37

D. STILITZ, Strikes and individual actions in KBW, May 2011, pp.1-11.38

Now, these two statutory provisions now are contained in the Trade Union and Labour Relations

(Consolidation) Act of 1992.39 R. DUKES, The right to strike under UK law: something more than a slogan? in Industrial Law Journal, n40,2011, pp. 302-311.
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that the statutory requirement havent been respected by the trade-unions. In this order, the

attitude of the judge is very important: if he is very strict, given the complexity of the requirements,

its elementary to condemn the strike and to depriving strikers of protected status40. On the other

hand, if the judge is adept of substantial compliance41, the strike could be declared valid. But we

can admit that, thanks to the decisions of the Court of Appeal in British Airways42and National Union

of Rail, Maritime & Transport Workers43, there is a retreat from the formalistic rigors of the previous

judgments44 about the right to strike. In fact, if the trade-unions respect certain basic standards of

compliance, the courts dont have to require an unrealistically exacting approach of the statutory

requirements. But a strict judgment is possible when the only goal of the industrial conflict initiated

by the trade-unions is to cause a lot of disruption, especially in the public sector.

There is a State institute which is responsible of the mediation between the actors of an

industrial conflict: the Advisory, Conciliation and Arbitration Service (ACAS). This actor is an outside

help which supports lots of individual conciliation in order to help employers and trade-unions to

resolve disputes in a number of different ways45.

Regarding the number of strikes, there is a decline in industrial conflict because of the

decreasing of union density rates and the non favor union laws ( supra), especially in the private

sector46:

We can observe some variations of strikes between the sectors: by example, in 2007, main strikes

appeared in communication, transport, storage, education and public sectors (like defence)47. On the

40NATIONAL LABOUR RELATIONS BOARD, Sufficiency of strike notices in Decisions and orders of the National

Labour Relation Board, vol.335, 2001, p.670.41Ibid.42 British Airways plc v Unite the Union [2010] EWCA Civ 669 [2010] ICR 1316.43

National Union of Rail, Maritime & Transport Workers v Serco Ltd [2011] EWCA Civ 226 [2011] IRLR 399.44

Like in Metrobus Ltd v Unite the Union [2009] EWCA Civ 829 [2010] ICR 173.45

DIRECT GOVERNMENT WEBSITE,ACAS, [on line], http://www.direct.gov.uk, last visit on April 2012.46 TRIMETRIC WEBSITE, Working day lost due to strike action in the public sector,[on line],http://www.timetric.com, last visit on April 2012.
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30th 2011, there was a massive strike of the public sector (airport, hospital, schools) in order to

protest again the public pension reform of the government48. This massive strike involved a real peak

in the number of working days lost due to strike actions in the public sector, as we can see below49:

Collective bargainingAs we know, the parties involved in collective bargaining are trade-unions and employers. The

former are union officials or companys union representative or both. The employers are represented

by themselves or by an employers organization if the negotiation takes place at sectoral orencompassing level.

Traditionally, at the central level, several trade-unions participate in the negotiations and agree on a

common position on the subjects which are going to be negotiated 50. Nevertheless, because of

several mergers, it is more and more common that a single trade-union is present at the negotiating

table.

Even if industry level agreements exist, they are not legally binding on the parties who sign them

because employers arent forced to respect an agreement signed by an employers' federation,

whether they are member of it or not51. Concerning the TUC, it has not been involved in negotiations

47Thank you to Masha Mihailevskaia and Aurianne Vendenberghe for their power point about industrial

relations in UK.48 THE GUARDIAN WEBSITE, Strikes hit services as millions heed unionscall to fight pension cuts, [on line],http://www.guardian.co.uk, last visit on April 2012.49

TRIMETRIC WEBSITE, Op.cit.50

INTERNATIONAL LABOUR OFFICE, The trade union situation in the United Kingdom report of a Mission fromthe International Labour office, Geneva, La tribune de Genve, 1961.51

L.FULTON, Op.cit.
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about pay since the end of the seventies52. Moreover, there is no common practice relating to

negotiations between the TUC and the CBI53.

At lower levels, there is no legal statutory obligation for the employer to negotiate with the trade-

unions. The lonely situation where he is forced to recognize their role in collective bargaining is when

there is a legally binding decision of the Central Arbitration Committee (CAC), but, even in this case,the subjects of the negotiation have to be related to setting pay and working conditions (i.e. working

time and holidays). In October 2010, the government has established the national minimum wage,

banishing negotiations about wage lower than 5.93 per hour. According to a law of 1999, the CAC,

which is a governmental and independent institution, have to establish a statutory recognition of

trade-unions if their companies are endowed of at least 21 employees if trade-unions can prove that

a majority of employees want to be represented54. But this official recognition isnt common. So,

generally, it is the reign of voluntarism: thats the influence of the trade-unions and the nature of the

relations uniting them to the employers which determine the existence of collective bargaining. The

validity of collective agreements is generally 12 months, in order to be adapted to the price index 55.

Finally, there isnt any extension clause in UK law56; an extension clause allows extending collective

agreement negotiated for a group of workers to the other workers of the same business sector.

52L.FULTON, Op.cit.

53However, in 2003 the two sides reached agreement on how the EUs information and consultation directive

should be implemented (see section on workplace representation), and in 2008 there was an agreementbetween the TUC and CBI on agency workers which ended the UK governments opposition to an EU directiveon this issue. However, such agreements are the exception . FromL.FULTON, Op.cit.54

L. FULTON, Op.cit.55

Ibid.56EUROFOUND WEBSITE, EIRO: collective bargaining coverage and extension clause, [on line],http://www.eurofound.europa.eu, lastvisit on April 2012.
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1= company level *

2= sectoral level **

3=central level

The current situation doesnt have changed with the situation on this indicator board57. Indeed,

in the private sector, collective bargaining about setting pay and working condition takes place

essentially at the level of the company or of the establishment and more rarely at the sectoral level

like in the textile industry 581*. However, in the public sector, negotiations take place mainly at

the sectoral, industry level2**. It is a decentralization phenomenon2->1.

Thanks to this indicator board59, we can observe a decreasing of the coverage rate because

currently, only 33,6 % of the workers are covered by the collective bargaining which include 18,7 %

(against 40% in the nineties) in the private sector and 70,5 % (against 78% in ne nineties)in the public

sector. So, most workers dont benefit from a negotiated system of pay and working conditions60. As

we can see with the indicator board below61, compared to other European countries, UKs workers

are the last in term of confidence in the usefulness of the collective bargaining coverage.

57 F.TRAXLER and J. VISSER, Op.cit., p.175.58

Ibid., p.168.59

F. TRAXLER and J. VISSER, Op.cit.., p.181.60

See supra (history of labour movement) for the decreasing rate of trade-unions memberships.61TIJDENS K. and M. VAN KLAVEREN, Collective bargaining coverage in Wage indicators WIBAR report, n5,26/02/2007, p.11.


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4.2. Tripartite relationship

A specificity of the industrial relations in the United Kingdom is the non-intervention of the State

in this field. Indeed, there is a bipartite relation between employers and the trade unions within the

workplace, thus leaving the State outside of the labour relationships, like in Germany62.

Contrary to other European countries such as France or Belgium, the United Kingdom does not

have legislations establishing the process of collective bargaining. In the majority of the cases, the

companies will fix their conditions unilaterally. Indeed, the government is convinced that legislation

is superfluous and would have contrary effects because the participation of the workers producesthe best results when it is flexible and adapted to the needs and the culture of each workplace63.

This UK voluntarist tradition, which involves uncommon policy consultation, is obviously wanted

by the State but also by trade-unions. Indeed, these latter dont have confidence in the law and

judicialization so they prefer the collective negotiations mechanism, which gives them some

authority64.

So, the relationship between the employees and the employers during the collective bargaining

takes the shape of an implicit and abstract exchange on the basis ofa gentlemans agreement. The

essential purpose of this agreement resides in the fact that instead of being imposed, it is chosen and

based on the honor of the two parties65.

62O. GIRAUD, M. DUPR, Programme formation-recherche : Ltat et les relations industrielles en Allemagne

et en France Compositions et recompositions de modles nationaux in Centre interdisciplinaire dtudes etde recherches sur lAllemagne, [on line], http://www.ciera.fr, last visit on April 2012.63 EUROPEAN EMPLOYMENT OBSERVATORY, Geographical area: UK, [on line], http://www.eu-employment-observatory.net, last visit on April 2012.64

C. VOYNNET FOURBOUL, Relations industrielles compares, [on line], http://voynnetf.free.fr/, last visit on

April 2012.65 R. BEAN, Comparative industrial relations: an introduction to cross national perspectives, Thomson, London,1994, p.76.
http://www.ciera.fr/http://www.eu-employment-observatory.net/http://www.eu-employment-observatory.net/http://voynnetf.free.fr/http://voynnetf.free.fr/http://www.eu-employment-observatory.net/http://www.eu-employment-observatory.net/http://www.ciera.fr/


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Comparison between the two industrial

relation systems

1- Context1.1 Political Context

UK began a European Member State earlier than the Sweden because this latter began a

European member state 22 years after the UK. Moreover, both countries are not member of the

economic and monetary union. There are both a constitutional monarchy and parliamentary

democracy. Following the recently political trends, both of them have a multi party system at the

head of their State.

1.2 Economic and social Context

Although UK is a more important economic power at the world level than Sweden, the

Sweden rate of unemployment (7.4%) is lower than the UK rate (8.4%). Concerning the social

expenditure, we can observe a higher level of social protection in Sweden than in UK because of

some big differences in term of social policies and of the economic crisis which not affected social

expenditure in the same way. Both Countries have the same social security model: a system based on

the Beveridge logical. But, thanks to this scheme below, we can see that Sweden invest more public

expenditure (contributions publiques) in the social security, such as the Swedish employers

through their contributions (contributions employeurs).

2- History of the labour movementIndustrial relations of the both Countries took different turns following

the historic events: the Swedish policy recognizes an important place for trade unions in industrial

relations, unlike the UK which tends to diminish the importance of this actor.


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3- Main actors3.1 Trade Union

A fundamental difference between the two countries is certainly the unionization

rates. Indeed, this one is particularly high in Sweden (71%) and

particularly low in UK (26.5%). Moreover, the Swedish participation is higher in the private sector,unlike in UK where it is higher in the public sector. In Sweden there is no single trade union

confederation (like TUC in UK) but there are three (TCO, LO and SACO). English and Swedish trade

unions are organized at national and local level, although some craft unions in the

UK remain significant.

3.1 Employers

There is in the two sides a central institution of employers representation, and Swedish and

UKs employers are represented at local level.

The decentralization phenomenon takes place in both Countries.4- Industrial relation

4.1Bilateral relationship Industrial conflict

The right to strike is recognized in the two Countries but it isnt applied in the same way.

Indeed, this right benefit from a high recognition which is almost unlimited in Sweden, contrary to UK

where it is restricted by certain laws, although the recent UK cases law tend to take more and more

into account the right to strike in the favor of the workers. On the other hand, these two countries

have a governmental organ of mediation (ACAS in UK and MI in Sweden) in case of industrial conflict.

Collective bargainingAs the employers unionized rate, the difference between the workers covered by collective

bargaining in Sweden and in UK is significant: in Sweden, 90 % of the workers are covered, against

only 33.6% in UK.

In these two countries, we can notice that collective bargaining is extremely decentralized.

Therefore, a wide autonomy is given to every sector, and even to every company.

The UK government fixed in October 2010 a minimum wage, what doesnt exist in Sweden.

But in this country there is the "starting salary ", established by collective agreement, which defines

the salary that every starter worker in every domain has to receive.

The Swedish system is less voluntarist than the UK system because the Swedish system

recognizes a major role to trade-unions in collective bargaining, while the UK trade-unions benefit

from an official recognition of the employers in collective bargaining under certain conditions (only

legally binding decision of the yew CAC).


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4.2Trilateral relationshipIn both countries, the State hasnt a full part in the industrial relations. Indeed, it is more

considered as an outside actor, making sure of the good running of the industrial relations between

the employers and the employees.

5- ConclusionWe found very interesting to compare these two European countries, which are widely

industrially and economically developed. However, we cant declare that the level of social

relationships reaches the same level in both countries. Indeed, it is obvious that Sweden is a

supporter of a protective policy concerning the rights of the workers while UK developed in this

political domain a restrictive and voluntarist view. Furthermore, these two countries have reacted

differently in dealing with the last economic crisis seen that UK has more cut in its welfare

expenditures than Sweden to decrease its budget deficit.

comparative employment and industrial relation final

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