What anything can the UK learn from the Sweden system of employment management?
Sweden is reputed to have one of the most advanced forms of employee participation in the world, this is at both organisational and workplace levels. This policy was introduced with the setting up of the National Labour Market Board in 1948, which consists of representatives from labour, employees and government, participating in economic planning. This industrial democracy was extended in 1977 with the co-determination at work act (MBL), which extended the scope of collective bargaining to include organisational and technical change (Beardwell, I. et al. 2004).
The main points of the policy are the attempt to control inflation through a restrictive fiscal policy and a wage policy of solidarity. The restoration of full employment then becomes the function of labour market policy. Within a period of time, measures which relate to the supply side of labour were also included in the strategy, mainly taking the form of promoting the mobility of the unemployed. Organisations with low profitability were forced to reconsider their business or face closure. Enterprises with high profitability, on the other hand, benefited from the wage policy (Sihto, M. 2001).
The introduction of the employment policy was viewed by some as with a political motive. There are many critics of the policy. Kalecki (1971) argued the “Political aspects of full employment, combining with economic stability are impossible in the long term. Full employment leads to a growth in trade union power, although inflation is one consequence of the abandonment of full employment policy” (Kalecki (1971) cited in Sihto, M. 2001:685).
The reality in Sweden is the employee representatives in the co-determination system tend to be union representatives. The unions were the driving force in introducing the policy, focusing on health and safety issues. The unions position is straighten by co-determination, ensuring they will always be an important part of Swedish employee relations (Beardwell, I. et al. 2004). The strength of the unions in the UK is in decline. A major factor in the changes to employment practices was in 1979 when conservative leader Margaret Thatcher came to power. Her aspirations were to return to “Victorian values” in the UK. Thatcherism began, with a policy of non intervention of the markets, allowing areas of industry to decline, finding their natural levels. To obtain non intervention, the power of the unions was reduced; they would have fought to prevent industries going into decline (Wheen, F 2004)
Trade unions in Britain have existed for over two hundred years. The 1980s, arguably, saw the major transformation in the climate of industrial relations in Britain. The Conservative government, instead of introducing large scale legislative reform, passed a number of acts on the rights of the unions, each of which restricted their power. This loss of power slowly eroded the unions, reducing their influence on organisations, therefore introducing a co-determination system in the UK would lead to an unequal power share, and employers would still hold all the major power (Farnham, D 2002)
The unions in the UK were replaced with HR practices, the lack of union power allowed individualism of the employment relationship (Beardwell, I. et al. 2004). This individualism has been mirrored with the reduction in collective bargaining. Collective agreements normally set rules on how workers should be treated, thereby limiting the chance of being subjected to the complete control of the employer. Under a collective agreement, management decisions must conform to the rules and procedures set out in the agreement. If they are not, then the union will challenge these decisions for the employee (Farnham, D. 2002).
The second democratic characteristic of collective bargaining is the ability it gives to employees to state their opinions, concerns and demands. This is achieved in a self governed arena in the workplace. An individual can only show dissatisfaction with the organisation by leaving their employment. This does not wield any power; only if there was a mass exit of employees would the organisation investigate the cause (Farnham, D. 2002)
It is argued within the UK that from its inception human resource management reflected the management agenda to the disregard of workers’ concerns. Its appeal to management was the claim that it was a route to excellence and high performance (Overell, S 2005). Some claim that HRM offers a new model of the management of people at work, based around attempts to increase their commitment (Guest, D. 1999).
The possible implications of HRM for employees in the UK have been highlighted by the division that has frequently been drawn between what were initially described by Storey (1987) as ‘hard’ and `soft” versions of HRM (Storey (1987) cited in Guest, D 1999). The ‘hard’ version is widely acknowledged to place little emphasis on workers’ concerns and, therefore, within its paradigm, any judgments of the effectiveness of HRM would be based on business performance criteria. In contrast, ‘soft’ HRM, while also having business performance as its primary concern, would be more likely to advocate a parallel concern for workers’ outcomes (Guest, D 1999)
There are many models of HR theory, giving them warm accounts as to why there has been an increase in this management practice. Walton (1985) defined HR as “mutual goals, mutual influence, mutual respect, mutual rewards, and mutual responsibility” Walton further added that the ‘psychological contract’ under this unitarist, high commitment model is one of mutuality, but it is a mutuality strictly bounded by the need to operate within an essentially unitary framework (Walton cited in Beardwell, l. et al 2004).
This definition of HR within the UK leads to the assumption that employees are partners within the organisation, that they can wield the same power as their employers. Power in the employment contract is one sided with the employer holding the largest share, Beardwell and Holden discussed that “the employment relationship, although is contractually based and freely entered into, removes all the freedom of action from the individual”. When new policies and practices are introduced to an organisation there should be a full understanding of the implications to both parties, not just the power (Beardwell, l. et al 2004)
Partnerships are being introduced by HR practioners as an answer to the unions and collective bargaining. The whole concept of partnership has come under fierce attack from critics in academia and the trade union movement. Mullins (2005) argued that the correct response to HRM and Employee involvement programs is trade union militancy. The growing hostility of employers to any form of unionism, which reduces the employees benefits gained from industrial action are diluted by the meagre consequences of moderation, this is leading to a continuing antagonism of interests between workers and employers (Mullins, L 2005).
These partnerships are an interface between the employee and employer. It has been encouraged by both Government funding and ACAS guidance, as well as by a tighter labour market and the EU’s preference for employee consultation (ACAS, 2001). There is, a substantial variety of such co-operative relationships, and within this variety lie very different implications for employers as well as for trade unions (Oxenbridge, S. & Brown, W. 2002).
It is argued within the UK that partnership with employers that the unions, where they are still active, are simply throwing themselves at the mercy of employers; through attempting to engage with management at a strategic level in an effort to change corporate behaviour towards something more favourable to union members. Unions are well aware that social partnerships are vulnerable to the whims of employers, especially when they are not based in a strong union organisation. Although most unions now feel with the increase of individualism that partnerships are the only way they can be involved in employee negotiations (Blyton, P & Turnbull, P. (2004).
There are a growing number of organisations within the UK that have replaced union presence with partnerships, these to not have the strength to change a corporate agenda. Madeleine Bunting (2004) discussed that the weakening of the trade union movement, neo-liberalism and New-Ageist ideology, that have all contributed to a work environment that is more and more intolerable for workers. Changes over the past two decades in working practices have seen a decline in employees’ environment (Bunting, M 2004).
Even though unemployment in Sweden has risen to 8.5 percent in the 1990s Beardwell (2004) concluded that “the balance of power between state union and employers changes continually with each economic phase, there is no reason to believe the essence of the system will not survive……….the culture of involvement is still very well developed compared with most other countries” (Beardwell, I. et al. 2004:567).
Sweden has a long tradition of active labour market policy with large placements of unemployed in various training, practice or subsidised employment programme. These labour market programmes were gradually expanded in the post-war period. They reached a peak during the Swedish unemployment crisis in the first half of the 1990s. In that period, Sweden spent more on active labour market policies than any other OECD country, almost 2 percent of GDP (Calmfors, L. 2004).
One of the main reasons that the Swedish policy could not be fully introduced in the UK is the cost. With a large programme as undertaken in Sweden, huge inefficiencies are bound to arise. Especially with large training and practice schemes, as the delivery could become of low quality, due to the amount of resources required. The schemes of public job creation and subsidised private-sector employment appear to just cover “tasks that would not otherwise have been carried out”; this would have to be done, to reach minimum unemployment. This could become an emotive political issue, with justification of costs for non existent roles (Calmfors, L. 2004).
The efficiency of the programme would be severely tested, large placements in long-duration programmes of the Swedish type creates a lot of administrative work, this could crowd out other tasks such as training and matching the unemployed with vacancies. To reduce some of the problems the introduction of measures such as counselling, frequent contacts between employment offices and job seekers, individual action plans for the unemployed, tougher requirements on which jobs to accept, more benefit sanctions when job offers are not accepted The UK is moving in this direction with several of these policies in place (Calmfors, L. 2004).
As labour demand increases, hiring costs of employers fall, there is less wage pressure therefore the employers can fill their vacancies quickly. Although it could be argued that in very high unemployment, vacancies tend to be filled quickly anyway, both employers’ hiring costs and wage pressure are already low. Active labour market policy is most effective as a complement to other measures. Activation measures are likely to work best when vacancies increase and unemployment is falling anyway, this can reinforce such a process (Gruhb, D and Martin, J. 2001).
Introducing the Swedish employment policy in the UK would just give the employers more power. Employees are underrepresented by unions; therefore the power share would still be unequal. The input on the Swedish policy is three faceted, protecting the employee. The HR practices in the UK have lead to Individualism of the contract of employment, this has led to a reduction in collective bargaining, these issues would need to addressed before any co-determination policy could be introduced.
The initial set up costs would be large; this would lead to intense political debate on the policy. Therefore the policies would need backing from all political interests. If this was introduced in the UK the power balance would require monitoring, to ensure it is not used as another form of management control.
The Swedish model is viewed as successful, even when unemployment rose, although with supply and demand of labour this will always affect wages and the level of unemployment.
Bibliography
Books
Beardwell, I. et al. (2004) (4th Edition) Human Resource Management a Contemporary Approach Prentice Hall, Harlow.
Blyton, P & Turnbull, P. (2004) (3rd edition) The Dynamics of Employee Relations. Macmillan, Basingstoke
Bunting, M. (2004) How the Overwork Culture is Ruling Our Lives
Harper Collins, London
Farnham, D (2002) (2nd Edition) Employee relations in Context
CIPD, London
Mullins, L (2005) (7th Edition) Management and Organisational Behaviour
Prentice Hall, Pearson Education, Edinburgh
Wheen, F. (2004) How Mumbo-Jumbo Conquered the World: A Short History of Modern Delusions Harper Collins, London
Journals
Calmfors, L. (2004) Activation versus Other Employment Policies
CESifo Forum. München: Summer 2004Vol.5, Iss. 2;
Guest, D (1999) Human Resource Management–The Workers’ Verdict
Human Resource Management Journal, London, 1999.Vol.9, Iss. 3;
Grubb, D. and J. Martin (2001) What Works and for Whom: A Review of OECD Countries’ Experiences with Active Labour Market Policies, Swedish Economic Policy Review No 2.
Overell, S. (2005) Nonsense on Jobs
Personnel Today Jan 2005
Oxenbridge, S. & Brown, W. (2002) The two faces of partnership?
Employee Relations, Bradford: 2002.Vol.24
Sihto, M. (2001)The Strategy of an Active Labour Market Policy
International Journal of Manpower, Bradford: 2001Vol.22, Iss. 7/8