Swedish Social Democracy: Death of a Model? - Studies in Political ...

Swedish Social Democracy: Death of a Model?' RIANNE MAHON

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he interest in "new" social democracy arises in a context where the old model, forged in the first half of the twentieth century and elaborated in the "golden" postwar decades, no longer seems viable. "Globalization," "post-industrialism" and the "post-patriarchal family" are understood substantially to have changed the game.? At the same time, neo-liberalism's claim to be the only solution appropriate to the new conditions is challenged by victories of parties of the left, armed with a new agenda) Blair's "New Labour" and the Schroeder's Red-Green coalition can be seen as the exemplars of the new social democracy.4 This paper, however, focuses on the Swedish case. The Swedish model is of interest not simply because it was seen as a particularly well-developed version ofthe postwar model! nor even because it proved more durable than most, surviving the first decade of the crisis largely intact.« Rather it is because the Swedish model of social democratic governance continues to offer a viable alternative to neo-liberalism. To be sure, in the 1990s the Swedish model seemed to have succumbed to the forces that had earlier undermined the other postwar social democracies. Unemployment rose from 2.1 percent in 1990 to 12.5 percent in 19937 and remained high even when the export sector recovered in 1994.8 Employment security was undermined not only by the sudden and dramatic rise in unemployment, but also by changes to labour legislation introduced by the Conservative-led Bildt government. When the famed Volvo plants in Uddevalla and Kalmar closed in 1993, it seemed that even in Sweden, post-Fordism would come in the form of lean (and mean) production, with the intensity of work sharply

increased for the much-reduced core and precarious work becoming the norm for many. Studies in Political Economy 63, Autumn 2000

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Studies in Political Economy

Unemployment also affected the Swedish welfare state. A substantial portion of social benefits are linked to employment status; thus the rise in unemployment shifted the balance between universalism and residualism.? The income replacement rate was cut (from 90 to 75 percent), giving better off workers incentive to look to private sector supplements. Social services, and with them, public sector employment, were trimmed as municipalities and counties, denied recourse to compensatory tax increases, struggled to cope with reductions in transfer levels. The Swedish Social Democratic party's dominance of the political landscape has been seriously eroded. Although they won the 1994 election and managed to hold on to office in 1998,10 they have never regained their historic level of support. In the last five years, they lost forty percent of their membership.i! The main reason the left has been able to hold onto office is that a substantial number of former social democrats, especially blue collar voters, have gone over to the former Eurocommunist Left party. At the same time, the Left party's capacity to consolidate what was initially a protest vote appears to spell the end to the paramount position which allowed it to be the governing party for so 10ng.!2 These developments lend credence to the argument that the Swedish model could not survive, given the changes that have everywhere undermined the economic and political foundations of postwar social democracy. Circumstances have indeed changed, but the question is, how much? The first section of this paper argues that, with modest adjustments, the Swedish model remains an effective way of combining growth and employment with social justice. Here I focus particularly on the model's social and labour market aspects. The remainder of the paper addresses the question of the potential political base for rejuvenation of the model in light of the challenges posed by socio-economic change. Here I take issue with those who claim that social democratic parties need to jettison class and embrace the new social movements. In the golden years, the Swedish Social Democrats were effective partly because they were able to integrate the new social movements into an expanded working class agenda. The question is are they still capable of fashioning the kind of hegemonic strategies that served them well in the past?

Globalization, Post·Industrialism and the Pest-Patriarchal Family 28

Globalization

is one of the main challenges to postwar

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social democratic models. The last decades of the twentieth century were marked by a qualitative increase in global economic interconnections and the emergent economic order bears a clear neo-liberal imprint. This is understood to have imposed substantial constraints on what social democratic governments can do. Thus Kitschelt argues that globalization has limited policy options to such an extent that the only "politically serious positions range from a new economic liberalism demanding more market competition, lower taxation and reduced public spending to a modest defense ofthe accomplishments of the welfare state."13For others, it is not so much globalization that has rendered the simultaneous pursuit of the classic social democratic goals of full employment and equality impossible but rather the shift to post-industrialism.tThe (difficult) emergence of the "post-patriarchal family"15 also poses important challenges, especially for social democrats for whom a return to the male breadwinner family form is not an option. A more careful examination of the evidence, however, suggests that a genuine left response to these challenges can be developed out of the core elements of the Swedish model. Let us begin with globalization. One of the arguments, which dates back to the new international division of labour literature of the late 1970s,16is that trade liberalization has allowed exports from low wage Southern countries to flood Northern markets, undermining the basis for full employment and high wages. This argument is less relevant for countries like Sweden, however, than it is for North American and the Antipodes. I? The lion's share of European trade takes place within the region, with only ten percent involving the rest of the world and the latter including North America.is Moreover, the small European social democracies like Sweden's have long been open to trade. Their postwar growth models were predicated on the GATT-supported liberalization of markets, and their social and labour market policies were designed specifically to cushion the domestic adjustment induced by growing international competition. Although trade dependence increased in the 1980s, even for countries like Sweden, the increase was modest and posed no serious problems for existing institutions. Financial deregulation represents a more serious challenge for social democratic economic management strategies because it constrains the use of classic Keynesian economic policy instruments. For Sweden, however, the problem is less the limits thus 29


imposed on demand stimulation. The Rehn-Meidner adaptation of Keynes meant that demand stimulation was kept modest to keep pressure on the least efficient firms and industries to modernize. Financial liberalization did affect certain supply-side instruments, important to Sweden's postwar growth model. Yet this does not mean that social democratic governments had to abandon social democratic for neo-liberal supply side policies. As Huber and Stephens argue, judicious recourse can still be had to the important supply-side policy instruments: "policies such as differential tax rates for invested, as opposed to distributed profits, tax breaks for industrial credit but not consumer credit, countercyclical investment funds, and so forth could be restructured to fit the current economic environment."19 Public pension reforms can also be designed to cope with the aging population while, at the same time, providing an avenue for collective influence over the investment process.P Globalization, in the form of transnational corporations, also strengthens the structural power of capital. The latter is linked to capital's market expanding capacity, which "asserts the power of the market and of the logic of incessant capital accumulation against stable territorial forms of control."21 More concretely, the increasingly transnational scope of corporate operations enhances the bargaining power of transnational firms vis-a-vis national governments and national trade unions. This is also the case for Sweden, whose large transnational firms have become much less reliant on home market sales.22 The transnationalization of capital need not, however, mean that social democratic governments must follow a strategy of capital appeasement. As Hay reminds us, the indeterminate nature of capital's interests gives social democratic governments even today the political space to "shape, educate and transform."23 Neutralizing capital's opposition depends, in part, on the Social Democrats' willingness and capacity to develop a plus sum growth strategy, just as they did in the past. Here is where the discussion of supply side policies comes in again. Such policies can provide national governments the means to engage capital in a process of productivity improvement supportive of the high wage, high value added option touted in the literature on flexible specialization and post-Fordism. Certainly, some versions of post-Fordism more properly fit within a neo-liberal context, but just as in the postwar era, capitalists can be taught to accept more progressive options,

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including those in which classic social democratic values are given new life.24 In other words, post-Fordist productivity gains can be captured under conditions that genuinely enhance worker autonomy and even workers' structural power. The Swedish model contained important features favourable to such an outcome, notably a national framework governing the regulation of wage bargaining, skill acquisition, work time and employment security. The 1970s industrial democracy reforms also began to provide some of the supports needed to give workers a collective voice at the local level. This is not to suggest that all the elements were there, of course. The model did come under increasing stress in the 1980s and these stress-lines revealed the need for certain modifications. Thus the very egalitarian version of wages solidarity of the 1970s produced a disincentive to skills acquisition, but the original version was consistent with legitimate, skills-based differentials and could be adapted to favour post-Fordist productivity gains.s> The system of coordinated bargaining, in which the accord between the employers' organization, SAF, and the blue collar unions in the private sector played a pacesetting function for the rest, had also become inadequate, with the rapid growth and unionization of both a white-collar workforce and the public sector. Finally, while Sweden's active labour market policy did combine flexibility and security, the growing practice of firm-based training meant changes were needed here too.26 Yet, while these signs of stress opened the way for a neo-liberal offensive launched by the large Swedish engineering firms, they also alerted the unions and the Social Democrats to the need for changeP Thus the question to which I shall return is whether Swedish Social Democrats have been able and willing to tackle the political impediments to rejuvenation. Even if a social democratic government were to adjust policies to promote a solidaristic version of post-Fordist production, this would not solve the employment problem. The majority of jobs will not be in the goods-producing industries that played such an important part in the postwar era. Most jobs will be service jobs, and this is where we come to the other two challenges: the postpatriarchal family and post-industrialism. The two are distinct but related. Changes in the pattern of gender relations contributed to the

employment challenge facing social democratic governments, as women's rising labour force participation rates have increased the

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Studies in Political Economy population covered by the promise of full employment. Women's increased labour market participation is also associated with the demographic developmentsfalling fertility levels and the flip side of this, the aging of the populace-which add to the travails of the welfare state. In addition, women's greater economic autonomy fuelled second-wave feminism, but the difficult birth of a post-patriarchal family form has rendered unstable one of the institutions that in the past cushioned the impact of market-turbulence. The post-patriarchal, two earner family can, however, be seen as a potential source of demand for social and personal services and thus post-industrial job creation.P Yet, although such post-industrial jobs may help solve the employment problem, they give rise to another dilemma: does the shift to a post-industrial economy force social democratic governments to choose between employment and equality, or, as Iversen and Wren (1998) put it, between employment, equality and fiscal balance? Women's rising labour force participation rate is visible across OECD countries, albeit at an uneven rate.29 As feminists have long argued, and mainstream political economists are now recognizing, this and related changes have altered the equation for social democrats and neo-liberals alike. For Carnoy and Castells: (T)he continuous increase of women into the labor force and the formation of two-wage earner families ... produces several outcomes: the family loses the stability provided by having one parent's-most often the woman's-activities centered in the home ....Women's bargaining power in the family is reinforced and their rising wage contribution to family income undermines the legitimacy of partriarchal ideology. The pressure for more egalitarian families increases, but is resisted, not only by deep-seated patriarchal habits, but also by the institutions of society as a whole.w

For Carnoy and Castells, the problem is not the post-patriarchal family but rather factors impeding its birth. Thus they, like Giddens, 31 argue for policies supporting institutionalization of a new, more democratic family. It is Esping-Andersen, however, who provides the best-developed argument for public support for this family form. Esping-Andersen sees the two earner, post-patriarchal family as potentially supportive of greater labour market flexibility: "If the contemporary economy generates severe unemployment or

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income risks, one counter strategy is to nurture the double-career family. Two incomes make the household less vulnerable to unemployment or career change. Being less dependent on male breadwinner job security and entitlements, the two-earner family is also more equipped to adapt to labour market flexibilization."32 His key contribution, however, is to see the time-pressed two earner household as a crucial source of demand for personal and social services. Such families face time constraints, making it more difficult to provide these services within the household. They are also more likely to have the disposable income to purchase such services-although some form of subsidization will be necessary, especially if all dual-earner (and solo parent) families are to be included. In other words, such households presuppose what they create and governments have a critical role to play, facilitating access to the services they need. An added benefit of policies to reconcile work and child rearing is that they also counterbalance the aging of society. The social democratic form of welfare state developed in Sweden and the other Nordic countries was restructured during the 1970s and 1980s in a manner supportive of the post-patriarchal family.v The reforms included individual taxation, generous parental leave and publicly provided day care. Such supports favoured intergenerational reproduction, raising fertility rates, and they have generated lots of (public) service sector jobs. While the latter include many lower skilled as well as professional jobs, even the former offers, "security of employment and...freedom from the brutalization often associated with low skilled and low paid work."34 Thus as Esping-Andersen recognized in his earlier work.I> the Swedish model of social democracy responded proactively to the challenges posed by the emergence of the post-patriarchal family and did so in a way that stimulated post-industrial job growth while maintaining a relatively egalitarian wage structure.to His more recent work, however, is less optimistic. His conclusion is consistent with Iversen and Wren's "trilemma:" in the post-industrial era, countries can only successfully pursue two of full employment, fiscal balance and equality. This confronts social democratic governments with a difficult choice. They can choose to maintain a relatively compressed wage structure at the expense

of employment creation (the German pattern), or, if much of that growth occurs in the public sector, at the expense of a growing tax 33


burden (the Swedish case). To restore full employment, Sweden will have to accept flexible and low wages."37 This argument can be challenged. It rests on Baumol's hypothesized "cost-disease," which is based on the assumption of a systematic productivity gap between the goods-producing sector, where productivity gains mean few new jobs, and the service sector, where most of the new jobs are being generated. This argument ignores the contribution of the service sector to productivity, lower costs, and the quality of life in the goods-producing sector (e.g., education and public health care). This is the insight that underlies the current appeal of social capital theoristsv but it is a connection that, in the past, helped persuade Swedish workers in the export sector to bargain in solidarity with workers in the service sector. More broadly, as economists themselves recognize, current ways of measuring productivity derive from a goods-producing economy and thus are ill-suited to assess the productivity of services.t? Current measures are thus misleading but that does not mean that the problem can be dismissed. Here it is important to challenge the idea that, with some exceptions.sv the opportunities for productivity gains in the service sector are limited. Even in the most labour intensive social and personal services, there is potential for productivity gains - if appropriate strategies are followed. There is some room to enhance productivity through the more extensive and effective use of information technologies. Yet there is greater potential for performance improvement through the application of strategies which recognize the basic characteristics of service production. Herzenberg et al offer one such alternative, which they call the "interpretive" model: In the interpretive model, workers individually or as part of a group, both interpret needs and execute tasks .... The worker may also seek to influence, subtly or not, the expression of needs. Performance improvement follows from improvement in the workers' ability to elicit, understand, and respond to situations, to select and follow work practices from an available repertoire, and perhaps to learn or invent new practices.U In New Rules, Herzenberg et

at

develop this model, and the

economies of depth and coordination associated therewith, supporting their argument by showing how it has been applied in a 34

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broad range of services.s- The key point here is that such strategies can be applied to personal and social services to enhance performance and thus provide the material basis for rising wages in this sector too. The economic rationale for substantial wage differentials is thus attenuated. More broadly, the policy implications of this approach are more compatible with classic social democratic values of solidarity, such as the postwar Swedish strategy which combined efficiency and equality, than with policies that permit wages to fall in order to generate jobs. In other words, productivity and social justice can both be served when wages remain coupled across the two sectors. This allows for modest restraint in the higher productivity sectors, while forcing the rest to raise productivity levels. Thus just as in the postwar economy, so too today can coordinated bargaining, along solidaristic lines,43 put pressure on low productivity firms in the services to modernize. Such a policy, of course, needs to be accompanied by appropriate education and training programmes, as well as policies designed specifically to foster and disseminate productivity-enhancing work redesign. Such reforms not only raise productivity and improve the quality of jobs, but also they also enable the welfare state to jettison the "one size fits all" model of universality in favour of one more sensitive to the diverse needs and interests of the citizenry.sThus globalization, the emergence of the post-patriarchal family and the shift to post-industrialism have not undermined the viability of the Swedish model of social democratic governance. Active labour market policy, with a strong emphasis on training and education, combined with a family policy favouring two earners, can provide labour market flexibility without sacrificing security. A Swedish-style post-patriarchal family policy also forms a critical part of a social democratic employment policy for the post-industrial era, with particular stress on the provision of family-friendly social services. Finally, Swedish-style coordinated bargaining along solidaristic lines can contribute to overall wage restraint, while putting pressure on low productivity producers of goods and services to modernize their operations. Social democratic supply-side policies can, in turn, help them to do so. If the Swedish model is still viable, why did Sweden run into such difficulties in the 1990s? To some extent, the problems can be

traced to policy errors and bad luck, notably the bad timing of the decision to lift credit ceilings 45 and, later, of the pegging of the 35


Swedish crown to the German mark. It goes deeper than this, however. Acceptance of financial deregulation blunted important policy tools-although the SAP went further than need be by actually abandoning important supply-side policy instruments.w More broadly, the policy adopted by the Social Democrats on their return to office in 1982 broke with one of the core precepts of the RehnMeidner strategy-that economic policy should be geared to sustaining pressure on firms to modernize-and this locked industry into established paths, blocking industrial renewal.'? The third road also helped the leading engineering firms undermine the system of coordinated bargaining through which the unions had pursued their solidaristic wage policy.48 The question is less what went wrong, than whether the political conditions exist in Sweden to rejuvenate the model. Here again new social democracy theorists suggest that the very raw materials of politics have changed, such that old-style class politics no longer works. Certainly socio-economic changes have modified the terms of the equation but not so much so that left parties need bid adieu to the working class. In fact, one of the main conditions for renewal is the restoration of the kind of hegemonic class politics- (gendered) wage earner solidarity-that developed in the Golden Age. Post·IndustriallPost·Patriarchal Politics? It is not enough to argue that the Swedish model of social democratic governance contains many of the elements of a viable left alternative to neoliberalism. A strategy may well address current economic and social challenges in ways that promote social justice but it will remain utopian ifthe left cannot build a coalition offorces to support its implementation. The importance of establishing an appropriate political base was recognized in earlier work on the Swedish model. Thus Martins? and Esping-Andersenw foreshadowed Kitschelt's>r argument that socio-economic development continually opens up new political possibilities for parties ofthe left, even while foreclosing others. The question of the potential political basis for left policies today has been taken up in the recent literature. Thus Garrett argues that globalization increases the potential support base for social democracy by spreading a sense of insecurity well beyond the ranks of blue collar workers.v Nor has globalization diminished capital's potential interest in economic and political securi-

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ty. Thus social democrats have something to offer white as well as blue collar workers, employers as well as employees. Kitschelt pins his hopes on a narrower group. He argues that social democratic parties need to cut their ties with the losers-those in the traditionally male-dominated goods-producing branches, threatened by international competition who constitute the social base of right-wing backlash.53 Productivity and social justice can both be served when wages remain coupled across the two sectors, allowing for modest restraint in the higher productivity sectors, while forcing the rest to raise productivity levels. Instead, these parties need to focus on the social categories produced by the post-industrial shift. Postindustrialism, in other words, is understood to have created a new set of potential supports: the highly educated; those with jobs offering a substantial degree of autonomy; and those working "with clients' individuality or with cultural symbols that invoke the development of human individuality (in education, art, communications, health care, counselling, social work)."54 As the expansion of such jobs has coincided with women's rising labour force participation rates, women figure large among these potential new supporters of the left. The emphasis Kitschelt and others place on these new social categories is not novel. Thus for instance, earlier work pointed to the political importance of the new middle clasS.55Then of course, the argument was that the left needed to develop policies that addressed the radical potential ofthat new middle class in alliance with the working class. New social democracy theorists like Kitschelt, however, see these new categories as a substitute for the working class and its organized representatives, the trade unions and the mass parties. Kitschelt's thesis may have some validity where unions have remained largely confined to traditional areas of male blue collar strength, as in Austria and Germany. In countries like Sweden, however, where unions have organized women in a rapidly expanding service sector and where the union movement is strongly committed to solidarity, the classic union-party nexus can in fact support important policy innovations.56 The Swedish Social Democrats began to recognize the political importance of working women as early as the 1960s-before they became a significant part of the electorate-and thus to develop the very women-friendly policies highlighted above)? At that time, of course, the burgeoning ranks of white collar workers were 37


the target of parties anxious to recruit new supporters and the Social Democrats faced competition especially from the two middle parties, the Liberals and the Center. Yet the stirring of second wave feminism in the Liberal, Left and Social Democratic parties 58 pushed the latter to take up the banner of equality between the sexes. Given the heightened competition among parties, induced by the sense that socio-economic changes were opening up the political game, their voices were heard. This is not to suggest that the Social Democrats and their union allies, LO, were prepared fully to embrace a feminist agenda.>? For LO in particular, questions of class equality continued to take priority over the equality of the sexes and feminists in the party lost important battles in the 1970s over the six hour day and quotas to ensure that fathers took their share of parental leave.6o Nevertheless, with the active support of LO and the white- collar union central, TCO, the party established policies that laid the basis of public support for the post-patriarchal family. In this way, the party's new social base-wage earners, an alliance of blue and white collar workers-was given a gender dimension. Certain developments seem to suggest that the Swedish social democratic party is moving to cut its ties with LO and to develop in place of this, links to new social movements like the women's movement. Thus the SAP's adoption of the third road economic policy in 1982 reflected its increased policy autonomy from LO and, with this, an openness to neo-liberal ideas.e! Moreover, relations between LO and the SAP became increasingly strained throughout the 1980s and by the end of the decade, it was clear that the crisis of representation extended to the rank and file.62 The Social Democrats lost the 1991 election and some of their traditional sources of support-notably, young blue collar men-for the first time looked to the Right. More importantly, the drop in women's representation in parliament (from 38 to 32 percent) was given political salience by a renascent women's movement, with its own voice in the Support Stockings, a network of feminist activists. The latter's success in gaining the political spotlight fuelled speculation that a new party would be formed and the polls showed that such a party would draw the majority of its support from the SAP and the other parties of the left.63 It could be argued that the Social Democrats were jettisoning their ties to the industrial age, represented by LO, and embracing the post-industrial, "post-material" politics of new social move38

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ments. The Stockings should, however, be seen as the (temporary) product of a new wave of feminist organizing within existing structures that began in the mid-1980s. The new wave was triggered by two developments. The first was the publication of a major government report demonstrating that women were underrepresented in all spheres of public life.64The second arose when it became clear that the increasingly decentralized bargaining system was permitting the gender wage gap to grow. Feminists within the white and blue collar unions began to agitate for pay equity, giving birth to a new and stronger wage earner feminism. The demands of the Support Stockings-"halfthe power, all the wage" -thus do not arise from a new, autonomous women's movement but reflected a renascent wage earner feminism.e> Moreover, in developing the SAP's appeal to women during the 1991 and 1994 election campaign, the La played an important part.66The newly elected SAP government was quick to strengthen its links with the recharged feminist movement.e? A systematic analysis of the impact of this on SAP policies has yet to appear. There is, however, evidence that the revival of wage earner feminism sparked a renewal of the political will to rejuvenate the social service sector. This was not so easy to see when the Social Democrats returned to office in 1994. Then the Social Democrats seemed concerned simply with tackling the deficit. Despite the promise that cuts would be concentrated on transfers to individuals and families rather than social services, the latter were clearly affected. Over 50,000 jobs disappeared from the municipal sector alone between 1990 and 1997,68and most of this occurred after the Social Democrats had returned to office. The erosion of the social service sector is of particular concern for the reasons brought out above: the existence of a well-developed social service sector, under public auspices, forms a crucial part of the social democratic response to the dual challenges of the post-patriarchal family and post-industrialism. Changes to the original structure, of course, were needed if the potential for performance improvement was to be realized, laying the basis for more rewarding jobs, higher wages and better services, but restructuring in the 1980s and 1990s was heavily influenced by neo-liberal managerial nostrums.v? More importantly, unemployment had given rise to a debate on how to generate jobs, which, in line with the post-industrial trilemma, favoured the post-industrial trajectory pioneered in the US. 39


Liberal economist Anne Marie Palsson introduced the idea, arguing that tax deductions should be available to cover the costs of domestic help. The Conservative, Liberal and Christian Democratic parties made it a central part of their solution to Sweden's unemployment problem. The idea also held a certain attraction for the women wage earner-citizens who formed an important part of the Social Democrats' electoral base, for it offered to lighten (at least for some) the double burden they continue to bear even in Sweden. Accordingly, certain elements within the social democratic party and the unions picked it up. In an important debate piece, three prominent social democratic women argued for tax deductions on domestic services as the equivalent (for women) to construction projects supported in classic public works programs. Then leader of the TCO, Inger Ohlsson, went on record in favour of policies supporting job growth in the private service sector, including domestic help.?v While the latter might be dismissed as merely reflecting the interests of middle class women who can afford such services, several LO unions also were sympathetic."! WhenLO economist, Dan Andersson, was appointed to look into personal services as an area of potential job growth, it was clear that the Social Democratic government too was prepared to explore this strategy. It is precisely at this point, however, that the behind-the-scenes feminist strategy of mainstreaming seems to have paid off as the SAP chose instead to renew the public sector.t? The SAP's dependence on the Left and Green parties since the 1998 election has reinforced this stance. When the European Union (EU) members agreed on a trial three year reduction of the value added tax on personal services, Sweden, like Finland, opted out,73 The government's (re)commitment to the public sector first became visible in the so-called "Persson funds" -special increments on top of regular national, block fund transfers to the counties and municipalities, which are specifically intended to restore social services.t- The commitment to renewal involves more than a matter of money. It also appears to be a commitment to upgrading public sector jobs and thus to investing in the kind of performance improvements needed to lay the foundations for wage equality as between this sector and the high productivity export sector. Certainly the key unions in this sector favour this outcome." The establishment of a Health Care Commission 76in the spring of 1998 also indicated their willingness to invest in public 40

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sector renewal. This means improving quality, for personnel as well as patients. Thus Persson stressed that, "personnel relations in the care sector are not acceptable. They are too poorly paid. There must be an end to the steadily rolling 'temporary' jobs and involuntary part time employment. Care personnel must get permanent full time jobs and wages that they can live on."77The Minister of the Interior also made clear that public sector renewal would involve a combination of technology, more democratic forms of work organization and better terms of employment. The SAP has invested heavily in education and training since its return to office. The number of post-secondary places has been significantly expanded and the government has invested heavily in education for the unemployed. These steps all can be seen as part of the alternative advocated above, upgrading service sector jobs, especially social services. This is not to suggest that the personal service sector will be ignored. As the government considers its policies concerning elder care, it is likely to look with favour on the idea of subsidies to seniors for home help, an idea suggested by Andersson and supported by Kommunal, the Municipal Workers Union. Nor do I wish to suggest that the recharged political will to renew the public social service sector will result in the kind of rejuvenation required. Certainly the Care Commission's proposals were rather modest in this regard.?" One of the potential barriers to renewal is the degree of autonomy enjoyed by lower levels of government.Z? In the past, the SAP was able to use its spending power, and its connections with local social democratic governments, to implement national priorities. The three largest municipalities--covering Stockholm, Goteborg and MalmO-- are, though, currently governed by the Right.w As an impediment to public sector renewal, however, the resistance by lower levels of government pales by comparison with what some have called the resurgence of old fashioned distributional politics. Class Politics Still Matters-But Which Kind? While Kitschelt looks to the new politics based on post-industrial social movements, others focus on more classic distributional struggles. Thus Iversen and Wren suggest that the appeal of parties of the left to public sector workers have "little to do with the rise of a new postmaterial cleavage and everything to do with old fashioned distributional conflict in the context of a rising service economy."81 In 41


other words, the costs generated by large public sectors characteristic of Scandianvian social democracies have driven a wedge between high productivity workers associated with the private, export sector, and the low productivity public sector workforce. Similarly, Clayton and Pontusson stress the formation of a crossclass coalition in the export sector. Here employers are seen to refrain from their preferred option-across the board cuts-in order to induce their workers to go along with the decoupling of wage formation in the two sectors and cuts to public services.sThis represents the renascence of one form of class politics and, as we shall see, it certainly captures part of contemporary Swedish politics. At the same time, the elements are there for the renewal of the kind of hegemonic left politics characteristic of Sweden in the past, though to achieve this, the SAP will have to learn to work more closely with the Left and Green parties. The cross-class coalition thesis is supported by two important developments: growing tensions in the relationship between the unions and the SAP and the declining hegemony of LO within the trade union movement. With regard to the latter, the employers' drive to decentralize bargaining helped to weaken LO's position vis-a-vis its affiliates.s' This allowed internal tensions to surface between the unions in the export sector and those organizing workers in the service sector, among others. In the mid-1980s, the latter broke out into open conflict between the leaders of the two largest LO unions: Metall, the leading union in the goods-producing sector, and Kommunal, representing municipal workers. As LO's authority continued to wane in the 1990s, other differences also came to the fore.s- The nadir was reached in the 1995 bargaining round when the common bargaining strategy which the LO leadership had worked for months to produce fell apart, rejected (albeit for quite different reasons) by the Paper Workers, Handels and SEKO (a union of public sector transportation and communications workers). The alliance of blue- and white-collar workers was also more fragile than many realized. Although social policy reforms did much to secure the alliance of wage earners in the sphere of distribution, the division between them at the workplace and in collective bargaining remained. This left the unions vulnerable to the big engineering firms' drive to undermine national contracts by offering co-worker agreements at the local level. The unions managed to defend national agreements at the branch level by devel-

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oping new and deeper forms of cross-collar collaboration, opening up a real possibility for the joint pursuit of a union-made strategy for restructuring.s>Yet such cooperation stopped short of the peak level. The La leadership has been reluctant to work out a new relationship with the TCO in order to match the new cross-collar alliances at the branch level. In this context, TCO has looked to establish closer ties with SACD--the small trade union central that has been the bearer of a liberal professional rather than wageearner identity.s" Growing tensions between La and the SAP,the waning authority of La vis-a-vis its affiliates and development of new cross-collar alliances at the branch level have left the labour movement vulnerable to the big engineering firms' recent efforts to draw the industrial unions-white and blue collar-into the kind of crossclass coalition Clayton and Pontusson describe. There is nothing inevitable about this, however. To be sure, the pressures associated with globalization and post-industrialism create a material basis for this kind of coalition. Yet interests are not narrowly dictated by material circumstances, they are politically constructed. The possibility of alternative political constructions arises, in tum, from the relative malleability of material circumstances themselves. Thus as has been argued above, there are strategies that can be pursued which tackle the service sector cost disease in a plussum fashion, providing a material basis for the re-establishment of wage earner solidarities across branch lines. Appropriate policy innovations can give new life to the wage earner alliance. To some extent, the SAP leadership seem to have understood this. Since their re-election in 1994, the Swedish Social Democrats have engaged in a series of initiatives with the intention of re-establishing an encompassing system of labour market regulation, similar to the one that played such a central part in the old model. The intention is not simply to restore the old order, of course. This is where the post-industrial theorists have a point: the public sector and the white collar workforce in the private sector have grown too large for the original LO-SAF centered system still to work, and this the SAP and the unions clearly recognize. Rather, the aim is to re-establish an encompassing framework, supportive of wage earner solidarity, on new foundations. This has not proved an easy task. The Social Democrats themselves have displayed a certain ambivalence. On their return to office in 1994, they undid the 43


changes to labour laws introduced by the Bildt governments? but they did so on the understanding that the restoration was temporary. The unions were expected to reach agreement with the employers on a new, more flexible, regulatory regime. The Hagstrom Committee, with strong representation from the main union and employer associations, was given the mandate to work out new rules. The latter were to provide the kind of flexibility needed to raise productivity while, at the same time, meeting wage earners' interest in employment security and job enrichment and giving them a voice in the restructuring process. There were, however, deep divisions between the employers and the unions in the private sector and when the commission reported in May 1996, only the chair and the independent members were prepared to sign. To the unions, the Hagstrom proposals were all too similar to the Bildt government's legislation on the issue of exemptions from seniority. The new legislation went even further on the important question of the length of temporary contracts.88 When the Hagstrom Commission failed, the government sought branch level negotiations. The latter were proceeding reasonably well in the public sector, with a tentative agreement between the national government and its unions in August.s? but the division between employer and unions in the private sector was so deep that no negotiations took place. Then, on the eve of LO's 1996 congress, the SAP government introduced legislation which included one of the Hagstrom proposals that the unions had clearly rejected-the length of temporary contracts. It even went further, threatening to undermine the priority of national agreements-the very principle the unions in the export sector had fought so hard (and hitherto with considerable success) to defend. It thus allowed union locals to conclude agreements on local rules governing the hiring of temporary employees and exemptions from seniority when layoffs occur, which deviate from the national contract, without first seeking the approval of their union. In order to undercut the opposition, the SAP showed a certain (short term) political cunning. Aware that the legislation was likely to anger its core constituency, it played on tensions therein. By including clauses improving the rights of part time and replacement workers--of particular interest to public sector unions like Kommunal-it succeeded in producing an open (albeit temporary) rift between Kommunal and the industrial unions, who received the backing of the LO leadership. While this weakened opposition 44

Mahon/Sweden

to the bill, it certainly went against the SAP's longer term interest in re-establishing wage earner solidarity. It did not even work all that well in the short run, as opposition to the legislation-and to the government's single-minded focus on deficit reduction at the expense of unemployment-was widespread. In the fall of 1996, several major demonstrations were organized. Union locals and networks of the unemployed played a key role here, but some in the LO leadership made clear their endorsement. Within the party, a network of long-time social democrats formed to generate debate on changes needed to the party and its policies. Support for the SAP in opinion polls plummeted below 30 percent, with a concomitant rise in support for the Left and Green parties. In the election to the European parliament, held in the late autumn of 1996, 58 percent of LO voters stayed home and, of those who voted, more chose the Left and Green parties (46 percent) than supported the SAP (35 percent). This shift proved a harbinger of a new partisan alignment in which the SAP must make alliances with other parties if it is to govern. The protests did not stop the new labour legislation but they did persuade the Social Democrats to withdraw the proposed changes to unemployment insurance and they may have convinced the government not to introduce the equally unpalatable recommendations of the 1996 work time commission.w The spring of 1997 is also when the first "Persson funds" appeared, along with an additional 6 billion Crowns for adult and post-secondary education. At the SAP Congress in the fall of 1997, the government also promised to raise child allowances, to restore income replacement rates to 80 percent (from 75 percent) as of January 1998 and to reduce the period of sick leave paid by the employer to its original level-all of which were union demands. These initiatives went a considerable way to patching up the open rift between LO and the SAP, at the price of leaving a number of issues-work time, firm-based training and, most importantly, wage formation-unresolved. This is, in some respects, not surprising because the unions themselves were divided. Thus against the wishes of the SAP leadership, the unions in the export branch joined in favour of work time reduction with the Social Democratic Women's Federation (SSKF) at two successive SAP congresses.?! Major service sector unions like Kommunal that in the past supported the six hour day were now reluctant to advocate such policies, mainly because many of their members are 45


stuck in involuntary part time employment. For Kommunal, then, the issue had become the right to a full time job.92 In the face of such internal division, the SAP has been reluctant to go the legislative route, preferring the issue to be settled via collective bargaining. This, however, would allow the gap between the export sector-where employers are prepared to negotiate work time deals 93-and the rest to deepen. The government, however, remained under pressure to take a more pro-active stance on this issue. The Left and Green parties, on whose support the government now relies, secured a joint commission to look into this, which reported in the spring of 2000. In the face of deeply divided opinion, the commission was unable to choose between work time reduction through collective bargaining and a soft version of legislated reduction.sNevertheless, work time reduction remains high on the Left and Green parties' priority list. Moreover, LO seems to have settled its internal divisions. It has come up with a compromise solution: the formation of a work time bank equivalent to five working days, to be withdrawn in a manner suitable to each individual worker. While this solution is reminiscent ofthe additional week's holiday LO got the SAP to grant its private sector affiliates in 1988,95this time it encompasses all and is clearly designed to allow diverse patterns of outtake. As it is close to what the unions in the goods-producing sector achieved through collective bargaining, it also offers a way to spread the gain to the rest.96 This may make it easier for the SAP to act. The wage formation issue is proving more difficult. The decoupling of wage formation in the service sector from the high productivity export branch could unite unions and employers in the export branch. Conversely, a revival of coordinated bargaining along solidaristic lines-a policy which, as I have argued, can form part of a broader strategy for promoting performance improvement in the service sector-fits with a hegemonic wage earners form of class politics. LO and its affiliates officially embraced such a policy, allowing for differentials reflecting variation in tasks mastered and skills acquired, and the big TCO unions like SIF and SKTF also support such a return to the original version of solidarity wages. Moreover, this strategy is consistent with the wage earner feminist drive for pay equity, a goal for which there appears to be strong support even though it means tackling the issue of inter-sectoral inequities.?? Thus at one level, 46

Mahon/Sweden

the conditions exist for an innovative social democratic government to support the re-establishment of an encompassing structure for wage formation. To do so, however, the government has to find a way to resolve divisions which go beyond the employer-union divide to pit LO against TCO, SACO and, sotto voce, LO's affiliates in the export branch. In the spring of 1997, with the 1998 bargaining round looming, the question of a set of bargaining rules to replace the now defunct Saltsjobaden system took on a new immediacy. LO sought to establish a new system of coordinated wage bargaining based on new and firmer foundations. It proposed a committee of union and employer economists to set a national norm for wage increases in advance of negotiations, and another, similarly composed, to police the system using a comprehensive set of wage statistics to evaluate particular agreements likely to have an impact on other branches or regions. The active role which government-appointed mediators played in the 1990s bargaining rounds would be formalized and enlarged.w This position enjoyed the official support of key unions in the export branch, like Metall and the Paper Workers, as well as the large service sector unions, Kommunal and Handels. In fact, however, just as LO prepared to launch its campaign in favour of this system, its affiliates in the goods-producing sector joined with their white collar counterparts to conclude a cooperation agreement with SAF. The latter established procedures for bargaining, similar in certain ways to LO's, but with important differences. The role of the state and its mediation service is eliminated, reestablishing the principle of joint self-regulation that characterized the old Saltsjobaden system. The key point is, it applies only in that sector.s? The timing of the agreement did little to help LO's cause for it gave TCO and SACO, who had never been enthusiastic, an alternative. The latter thus rejected LO's proposal, in favour of sectoral agreements between the labour market parties themselves, patterned on the new industry cooperation agreement. This choice is understandable, given TCO and SACO's previous experience.IOO Yet division amongst the peak wage earner organizations made the SAP's job more difficult. To buy time, it appointed the Oberg commission to look into the question. In the 1998 round, the new cooperation agreement seemed to

work well for the industrial unions. The question remained whether it would be encompassed

within a set of rules for the 47


whole labour market or whether it would function as a pacesetter - much as the old LO-SAF agreements had-in a more decentralized system. New impetus was given by the 1998 election, which saw a minority SAP government dependent on the Left and Green partiestv! returned to office. In a manner reminiscent of the conditions leading to the 1938 Saltsjobaden accord between SAF and LO, the threat of intervention by a government drawn to the left proved enough to draw the employers back to the table. The outcome was less successful. Throughout the autumn, LO, TCO and SACO met with SAF to secure an agreement on a range of core policy issues.102 The talks fell apart however when LO, and ultimately TCO, refused to accept SAF's final position, which deliberately excluded any form of coordinated bargaining across the labour market.iv' The government's effort to get the parties back together in the early months of 1999 almost bore fruit. This time the three union centrals agreed on the need for a national institute for economic analysis to provide annual reports on the economic situation in Sweden and its trading partners. SAF, however, was not even prepared to go this far, arguing that the industry cooperation agreement was sufficient.lvThe situation has still to be resolved. The Oberg commission submitted its report but there is little support for its recommendations,IOSeven on the part ofLO. In part this is understandable, given the elements in the report designed to meet SAF's demands-i.e., that the rules governing labour market conflicts be adjusted to limit sympathy actions and a prohibition on recourse to tactics which are cheap for the user but cost the opponent dearly. Yet by March 1999, LO had also been persuaded to reject the aspects that were in line with its original proposal, i.e., the strengthening of the mediators' office. No doubt the position of the two LO unions-Transport and Handels--originally opposed LO's participation in the fall talks, had something to do with the change in LO's position. In addition, several other unions-the Construction Workers, SEKO and Industrifacket - had earlier expressed their misgivings. It is likely, however, that Metall's position proved decisive.106 That is, Metall now seems to agree with SAF that the industry cooperation agreement is sufficient. More broadly, Metall has come increasingly to accept important components of the big employers' agenda. Thus for instance, Metall's leader was party to another round of discus-

sions, organized under the new Ministry of Industry and Labour Markets, which came out in support of across the board tax cuts.l''? 48

Mahon/Sweden

This suggests that a cross-class coalition uniting employers and unions in the export branch is forming. If the Social Democrats allow this to continue, it will be difficult to pursue the promise of public sector renewal. As I have argued, the latter involves a re-establishment of coordinated bargaining along solidaristic lines, if pressure is to be put on the service sector to adopt performance-enhancing work organization. Sectoral regulation, along the lines suggested in the industry cooperation agreement, works against this. Certainly it would be easier for the SAP to act if the unions themselves could come to agreement. A new and closer relationship between La and TCO would certainly make the party's task easier and here there may be some grounds for optimism. The election in 1999 of a new TCO leader, Sture Nordh, held promise for Nordh's position more closely reflects the large public and private sector white collar unions favouring wage earner solidarity,l08 Whether the two can come to an agreement on a new wage formation system is an open question, but the Swedish economy's projected strong performance is lending support to those who argue that sector-based bargaining will not be enough to contain inflationary pressures. 109 Conclusion The real limits to the ability of the Swedish model's ability to ensure full employment and equality thus do not stem from globalization, post-industrialism or the post-patriarchal family. As I have argued, the core features of the model are, in fact, quite well suited to the contemporary period. Rather, the problems are political in nature. Even here the new social democracy discourse, to the extent that it suggests that the old class politics must cede place to a new politics, based on postindustrial social categories and the autonomous social movements associated therewith, has less to offer than old fashioned class politics. Thus the Swedish Social Democrats have proven quite successful in marrying the demands arising out ofthe contemporary women's movement with those of its wage-earner citizens. It was precisely their recognition of the gendered character of contemporary wage earners that gave the model some of its most advanced features. The renaissance of wage earner feminism in turn provided the basis for rekindling the political will to renew the public sector. The problem may come from the way in which tensions inter-

nal to the labour movement are currently being resolved. That is, the old blue-collar/white-collar

divide is being overcome at the 49


sectoral level, but these new forms of cross-collar cooperation have not been extended to the level of the labour market as a whole. Institutionalization of sectoral bargaining, without any mechanisms for placing these within a wider national context, established a finn basis for class politics of a divisive kind: a politics pitting the male-dominated export branch against the predominantly female-dominated service sector. The Social Democrats' efforts to prevent this have not been made easier by LO's failure to work out a new relationship with the TeO. Yet, in the past, the party has shown an ability to see the potential for new alliances and to develop policies that helped to bring these into being. There is still room for such proactive measures. In fact, the room for political creativity is all the greater in times like the present when collective identities are in flux as a result of changing socio-economic relations and the declining efficacy of old patterns of policy. The question is how the reconfiguration of the party scene will affect this. In a sense, the SAP faces a challenge similar to the one faced by the LO. Like the LO, it can refuse to accept that conditions have changed. If it takes this route, it is likely to be caught up in defensive partisan battles, distracting attention to an effort to find creative solutions to the problems outline above. This is what its attempts to evoke the spectre of communism suggest. Or it can accept the fact that the Left party has become a significant force, having done so in part by embracing the very principles which once made the SAP so successfulsocial justice, wage earner solidarity and gender equality.uv This is what is needed to restore the hegemonic version of class politics, which once served it so well. Notes I.

Research for this paper was funded by the Social Science and Humanities Council of Canada. I thank Ann Britt Hellmark for her research assistance and the Swedish Institute for Work Life Research - home base for my research in Sweden. I also thank George Ross, Greg Albo, Vincent Della Sala, Jonas Pontusson and Stephen McBride for their comments. 2. To this list, sustainable, or Green, development could be added. On Swedish social democracy and the environment see A. Jamison et al, The Making of the New Environmental Consciousness (Edinburgh: Edinburgh University Press, 1990); E. Hollander, Varfor var det sa segt? Om lagriskkemi, miljodriven innovation och kravformning (Stockholm: KTH, 1995); J. Anshelm, Socialdemkraterna och milofragan (Stockholm: Ostlings, 1995); and S. Edman, Viirldens Kris: Ny Majlighet far Sverige (Stockholm: Atlas, 1998). 3. The third way agenda is well summarized in A. Giddens, The Third Way: The Renewal of Social Democracy (Cambridge: Polity, 1998). Other pro-

50

Mahon/Sweden

4. 5.

6.

7.

8. 9. 10. II.

12.

13. 14.

ponents include F. Scharpf, Crisis and Choice in European Social Democracy (Ithaca: Cornell U. Press, 1991); and H. Kitschelt, The Transformation of European Social Democracy (Cambridge: Cambridge University Press 1994). Arguably, the Clinton Administration and the Labour government in Australia were important precursors. The Swedish model included an encompassing, generous and comprehensive social security system; a broad spectrum of social services financed and organized by government; and an especially innovative form of Keynesian economic policy. To promote the continual productivity gains on which the model depended, macro-economic policy was adjusted to sustain the pressure on inefficient employers by solidaristic wages bargaining. Workers who lost their jobs as a result were helped to obtain new ones through active labour market policies. Sweden was thus one of five countries that maintained full employment in the 1980s. Therborn argues that it was able to do so largely because it had institutionalized its commitment to full employment before the crisis broke out and thus had the policy instruments to cope with the crisis. G. Therborn, Why Some Peoples Are More Unemployed Than Others (London: Verso, 1986). The Swedish welfare state also enjoyed broad support, in part because of its very social democratic form. G. Esping-Andersen, "Power and Distributional Regimes," Politics and Society 14 (1985). Nevertheless, the Swedish social democrats (SAP) began to abandon their postwar economic model in the 1980s. For a good critique of their "third road" see J. Pontusson, "Sweden: After the Golden Age," in Mapping the West European Left, P. Anderson and P. Camiller, eds. (London: Verso, 1994). This figure includes those involved in various labour market measures. In July 1999 open unemployment stood at 8.4 percent with an additional 2.4 percent involved in labour market programmes. Dagens Nyheter, 5 August 1999. E. Huber and J. Stephens, "Internationalization and the Social Democratic Model: Crisis and Future Prospects," Comparative Political Studies 3113 (1998), p. 379. R. Clayton and J. Pontusson, "Welfare State Restructuring Revisited: Entitlement Cuts, Public Sector Restructuring and Inegalitarian Trends in Advanced Capitalist Societies," World Politics 51 (1998), p. 77. Although the SAP holds office, it depends on a pact with the Left and Green parties, which involves cooperation extending across the fields of economic, employment, social, gender equity and environmental policy. Svenska Dagbladet, 18 May 2000. The end of collective affiliation (1991) contributed to this but the precipitous decline set in after the party returned to office. It should, however, be noted that the Social Democrats are not alone here. The greenish Centre party lost a third of their members in the same period while the Conservative and Liberal parties lost fifty percent of their members between 1985 and 1995. As one commentator noted, the Left party is now regarded as a regular party. Dagens Nyheter, 23 May 2000. The SAP's capacity to dominate the left, while the bourgeois parties remained divided, was an important factor behind its long period in office (1932-1976; 1982-1991). See F. Castles, The Social Democratic Image of Society (London: Routledge and Kegan Paul, 1978). H. Kitschelt, Transformation, p. 21. In this debate, the focus is not on social democracy per se but that part of the

modern state - the welfare state - most closely associated with its values. See P. Pierson, "Irresistible forces, immovable objects: post-industrial welfare states confront permanent austerity," Journal of European Public Policy

51


15.

16.

17.

18. 19. 20.

21. 22.

23.

24.

25. 26.

52

5/4 (1998); and T. Iversen and A. Wren, "Equality, Employment and Budgetary Restraint: The Trilemma of the Service Economy," World Politics 50 (1998) for the most forceful formulations of this argument. I take the term from M. Castells, The Power of Identity (Oxford: Basil Blackwell, 1997), chapter 4. For a good feminist analysis of changing gender relations and their impact on states, markets and families, see J. O'Connor, A. Orloff and S. Shaver, States, Markets, Families (Cambridge: Cambridge University Press, 1999). On the earlier work see F. Frobel, J. Heinrichs and O. Kreye, The New International Division of Labour (Cambridge: Cambridge University Press, 1979). This initial wave of commentary gave way, in the mid-1980s, to literature focused on technological and organizational solutions open to high wage countries. M. Piore and C. Sabel's The Second Industrial Divide (New York: Basic Books, 1984) was especially important in this regard. The thesis of Northern decline was reasserted in the 1990s. See, for example, Adrian Wood, North-South Trade: Employment and Equality (Oxford: Clarendon, 1994). Esping-Andersen argues that only the UK and the USA have suffered substantial job loss due to competition from the South. G. Esping-Andersen, Social Foundations of Postindustrial Economies (Oxford: Oxford University Press, 1999), p. 102. Huber and Stephens, "Welfare states and Production Regimes" (Occasional Paper Number I, School of Social Science, Institute of Advanced Studies, 1999), suggest that trade liberalization also undermined the Antipodean wage earner welfare states. Esping-Andersen, Social Foundations, p. 101. Huber and Stephens, "Welfare States and Production Regimes," p. 391. For an incisive analysis of earlier debates on these issues in Sweden, especially as pertains to the hotly contested wage earner funds, see J. Pontusson, The Limits of Social Democracy (Ithaca: Cornell University Press 1992). The funds question has been (hesitantly) reintroduced to the debate over refinancing of the pension system. Some interest has also been shown in the Canadian idea that originated with the Quebec solidarity funds. G. Therborn, "Why Are Some Classes More Successful than Others?," New Left Review 138 (1983), p. 41. Sweden has long acted as home base to multinational corporations and the latter's power resources have become substantial. G. Olsen, "Labour Mobilization and the Strength of Capital: The Rise and Stall of Economic Democracy in Sweden," Swedish Social Democracy: A Model in Transition, W. Clement and R. Mahon, (eds.), (Toronto: Canadian Scholars Press, 1994). For more detail on transnational capital in Sweden, see T. Andersson, T. Fredriksson and R. Svensson, Multinational Restructuring, Internationalization and Small Economies (London: Routledge, 1996). C. Hay, "Anticipating Accommodations, Accommodating Anticipations: The Appeasement of Capital in the 'Modernization' of the British Labour Party, 1987-1992," Politics and Society 25/2 (1997), p. 236. See D. Leborgne and A. Lipietz, "New Technology, New Modes of Regulation: Some Spatial Implications," Space and Society 6/3 (1988); and R. Mahon, "From Solidaristic Wages to Solidaristic Work: A Post-Fordist Historic Compromise for Sweden?," Economic and Industrial Democracy 12/3 (1991). Huber and Stephens, "Welfare States and Production Regimes," p. 391. See A. Dahlberg and A. Tuijnman, "The Development of Human Resources in Internal Labour Markets: Implications for Swedish Labour Market Policy," Economic and Industrial Democracy 12/2 (1991).

Mahon/Sweden

27.

28.

29. 30. 31. 32. 33.

34. 35. 36.

37. 38.

39. 40.

41. 42.

On this, see R. Mahon, '''Yesterday's Modern Times are No Longer Modern': Swedish Unions Confront the Double Shift," in The Brave New World of European Labor, A. Martin and G. Ross, (eds.), (New York and Oxford: Berghahn Press, 1999). Esping-Andersen, Social Foundations. The Swedish welfare state has also made it possible for solo parents to work. On this see, See C. Winkler, The

Canary in the Gold Mine: Single Mothers and the Welfare State: The Swedish Experience (Ph.D. diss., University of Oregon, 1996). J. Rubery et al, Women and European Employment (London: Routledge, 1998). M. Carnoy and M. Castells, Sustainable Flexibility:A Prospective Study in Work, Family and Society (Paris: OECD, 1997) p. 24. Giddens, The Third Way, pp. 89-98. Esping-Andersen, Social Foundations, pages 162. This is not to suggest that gender equality has been achieved. Among feminist analyses which point out the limits of this system see SOU, Demokrati och makt i Sverige. Makt utredningens huvudrapport, (Stockhom: Almanna Forlaget, 1990); 1. Acker, "Reformer och kvinnor i den framtida viilflirdstaten," in Kvinnors och mans liv och arbete (Stockholm: SNS, 1992); J. Jenson and R. Mahon, "Representing Solidarity: Class, Gender and the Crisis of Social Democratic Sweden," New Left Review 201 (1993); and C. Bergqvist, Mans makt och kvinnors intressen (Uppsala: Uppsala University Press, 1994). C. Crouch, "Skills-based Full Employment: The Latest Philosopher's Stone," British Journal of Industrial Relations 35/3 (1997), p. 382. G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Oxford: Polity Press, 1990). The proportion of workers receiving less than 2/3 of the median wage in Sweden was only 5 percent, in marked contrast to the other exemplar of postindustrial job growth, the US (23 percent). Esping-Anderson, Social Foundations, p. 128. Esping-Anderson, Social Foundations, p. 179. R. Putnam, "The Prosperous Community: Social Capital and Economic Growth," American Prospect (Spring, 1993); and I. Kawachi et ai, "Social Capital, Income Inequality and Mortality," American Journal of Public Health 50 (1997). See, for example, the special issue of the Canadian Journal of Economics (April 1999). Business services, as well as the services (communications and transport) whose major period of expansion was associated with the rise of mass consumption economies, are often recognized as having the potential for technology-driven productivity growth. S. Herzenberg, J.Alic and H. Wial, New Rules for a New Economy (Ithaca: Cornell University Press, 1998), p. 88. They divide service occupations into four types: tightly constrained "McJobs" where rationalization and automation would yield the greatest gains; unrationallzed labour intensive occupations (e.g., home helps), semiautonomous work (insurance, air travel, retail, etc.) and high skill autonomous work (e.g., teachers and technicians). They provide examples which illustrate the way interpretive strategies can be applied to the latter. The greatest potential for labour-saving would occur in the first and the second, but the remaining jobs in the (once) labour intensive occupations would be more productive and higher skilled, hence warranting a higher rate of pay. Their approach to skills, especially in the "care" jobs, is in marked contrast to Esping-Andersen's. The latter falls prey to the assumption that such jobs

53


43. 44.

45.

46. 47.

simply draw on female talents, developed in the household, not occupational skills. Thus Esping-Anderson note that, "personal and social service jobs are usually the paid equivalent to domestic labour," and later describes them as, "the modem equivalent of erstwhile servitude." Social Foundations, pp. 104 and 105. See Jane Jenson, "The talents of women, the skills of men: flexible specialization and women," in The Transformation of Work, Stephen Wood, (ed.), (London: Unwin and Hyman, 1989) for a critique of this view. Defined in the original sense of equal pay for work of equal value - a concept now enhanced by feminist struggles for pay equity. For more on this, see R. Murray, "Transforming the Fordist State" and G. Albo, "Democratic citizenship and the future of public management," both of which appear in A Different Kind of State?, G. Albo, D. Langille and L. Panitch, (eds.), (Toronto: Oxford University Press, 1994). This was done in 1985, before changes were made to the tax system to eliminate the incentive to private borrowing and before regulations on foreign investment were lifted. This contributed to a credit boom in the second half of the 1980s, centred on domestic real estate and construction. The resulting inflation eroded the competitive edge gained from the 1982 devaluation thus helping to destroy the old system of collective bargaining. Huber and Stephens, "Welfare States and Production Regimes." See L. Erixon, "What's Wrong with the Swedish Model?," Institute for Social Research Bulletin 12 (1985); and J. Pontusson, The Limits of Social

Democracy. 48.

While the government initially convinced the unions not to recoup wages lost through devaluation, loss of macro-economic control in the second half ofthe 1980s resulted in wage drift that frequently exceeded contractually agreed rates. Such high levels of wage drift helped the engineering firms win the rest of SAF over to a more decentralized regime. 49. A. Martin, "The Dynamics of Change in a Keynesian Political Economy," in State and Economy in Contemporary Capitalism, C. Crouch, (ed.), (London: Croom Helm, 1978). 50. G. Esping-Andersen, Politics Against Markets (Princeton: Princeton University Press, 1985). 5 I. H. Kitschelt, Transformation. 52. G. Garrett, Partisan Politics in the Global Economy (Cambridge: Cambridge University Press, 1998), p. I I. 53. Kitschelt, Transformation, p. 23. 54. Ibid., p. 17. 55. See for instance Martin, "Dynamics of Change;" Esping-Andersen, Politics Against Markets; and J. Brodie and J. Jenson, Crisis, Challenge and Change: Party and Class in Canada Revisited (Ottawa: Carleton University Press, 1978). 56. C. Kunkel and J. Pontusson, "Corporatism vs. social democracy: divergent fortunes of the Austrian and Swedish labour movements," Western European Politics 21/2 (1998). 57. Kitschelt dismisses Swedish social democracy's embrace of second wave feminism for simply adopting those elements that fit its socialist ideology (Transformation, p. 271). Feminists like Orloff would take issue with his dismissive treatment of policies, like daycare and parental leave, that are supportive of women's economic independence. A. Orloff, "Gender and the Social Rights of Citizenship: The Comparative Analysis of Gender Relations and Welfare States," American Sociological Review 58 (1993). 58. Second wave feminism in Sweden took quite a different form than it did in the US. In Sweden, feminists organized within existing parties, unions and

S4

Mahon/Sweden

59.

the media. A particularly influential network linking them was Group 222 which included intellectuals from the three parties, the unions and the media SeeA. Baude, (ed.), Visionen om Jamstalldhet (Stockholm: SNS, 1992) for more on the Group, its demands and its strategy. La is the peak association for blue collar workers, formally linked with the SAP since 1898. On La as a hegemonic force within the Swedish union movement and as a source of inspiration for the La see inter alia EspingAndersen, Politics Against Markets; A. Kjellberg, "The Swedish Trade Union System: Centralization and Decentralization," (paper presented to the 12th World Congress of Sociology, 1991); and Pontusson, The Limits of

Social Democracy. 60.

61. 62.

63. 64. 65.

66.

67.

68. 69. 70. 71. 72.

73. 74.

See G. Karlsson, Manssamhiillet till behag? (Stockholm: SSKF-Tiden, 1990); and R. Mahon, "Women Wage Earners and the Future of Swedish Unions," Economic and Industrial Democracy 17/4 (1996). J. Pontusson, "After the Golden Age." R. Mahon, "From Solidaristic Wages to Solidaristic Work: A Post-Fordist Compromise for Sweden?," Economic and Industrial Democracy 12/3 (1991). P. Ulmanen, (S)veket mot kvinnorna och hur hogern sial feminismen (Stockholm: Atlas, 1998). SOU, Varannan Damarnas (Stockholm: SOU, 1987/19). The decision to eschew formal organization in favour of a fluid network reflects the founders' view of its temporary nature. (The Stockings' time horizon was the next election in 1994.) The decision to opt for the network form has been criticized by some feminists, like Ulmanen, but it was based on a sense of urgency. The new government included the Christian Democrats, a party whose stubborn support for the introduction of a care allowance for stay at home parents revealed a desire to return to the male breadwinner family. The main form of La's support for the SAP in the 1991 election campaign was the newly created "gals league" (Tjejligan) and the launching ofa new magazine, Clara, designed to appeal to young women. See Mahon, "Women Wage Earners," for more on this. All the leading figures in the Stockings were recruited to important advisory posts, and the government embraced mainstreaming - procedures aimed at ensuring that all proposed measures would be analyzed in terms of their gender implications before being adopted. See Ulmanen, (S)veket, pp. 66-70 for more detail. Dagens Nyheter, 20 April 1998. Clayton and Pontusson, "Welfare State Restructuring," p. 92. TCO, Tidningen, IS November 1997. These are the unions organizing cleaners (Fastighets), municipally run home helps (Kommunal) and Hotel and Restaurant Workers (HRF). The Andersson report favoured the elimination of payroll taxes on services competing with households or where there is a large black market. Criticized by the government's feminist advisors, the report was shelved. Interestingly, both Finance Ministers (Asbrink and Ringholm), were among the opponents. (Interviews with Agneta Stark and Birgitta Askeskog of the Equity Unit, May 1998.) In Cabinet, two of the strongest supporters are the Ministers coresponsible for growth, B. Rosengren and Mona Sahlin. Svenska Dagbladet, 12 September 1999. The special funds are named after Goran Persson, Prime Minister since the spring of 1996. Between 1997 and 2002, the Persson funds will have amounted to some 25 billion Swedish crowns. Whereas Carlsson, the former Prime

55


75.

76.

77. 78.

79.

80.

81. 82. 83.

84.

56

Minister, was recruited to the Social Democrats brain-trust in the 1960s, Persson came up through municipal politics, and his leadership style is of the classic social democratic form. He relies on the party executive - key government people and leading Social Democrats in the LO, the counties and municipalities (Dagens Nyheter, I October 1998). This does not mean that Persson is inattentive to new social movements. He is seen as quite committed to a Green politics. (See Goran Eriksson's piece in Dagens Nyheter, 6 April 1998.) My interview with Agneta Stark suggest that he has also been open to feminist arguments on key questions like this one. The two biggest unions-LO's Kommunal and its TCO counterpart, SKTFadopted a policy of public sector renewal via performance improvement. Kommunal has devoted considerable resources to this end, including the establishment of a union-run consulting bureau whose services are available to union locals and local employers. Kommunal also negotiated innovative skills-upgrading programs with post-secondary institutions for its members. The union, in fact, is so committed to restructuring that, at the height of public sector job loss, it refused to endorse a motion asking the government to invest some of the money currently going to unemployment insurance, social assistance and retraining be redirected to public sector job creation (Kommunalarbetaren, 21 October - 3 November 1996). The central focus has been on health care, though the Persson funds were also to include elder and child care. A recent wave of protests across the country highlighted the importance of quality improvements in child care and education. The government's decision (supported by the Left and Green parties) to give the municipalities an additional half billion Crowns to improve the quality of child care can be seen in this light. Dagens Nyheter, 14 May 1999. In addition to increasing training positions for doctors, nurses and others, the Commission recommended requiring the counties and municipalities to halve involuntary part-time employment by January 2001 or face tougher legislation and reduced transfers. This was implemented. It also stressed the need for more of a focus on leadership, including mechanisms to spread knowledge of good workplaces. These recommendations are consistent with the preferred strategy for performance improvement in social services. This is a complex issue. As Olsson showed, from the 1960s through into the 1980s, the national government used its spending power to gain considerable influence over priorities of lower levels of government (Social Policy and The Welfare State in Sweden (Lund: Arkiv, 1990», chapter 3. Yet even then, the national government had to resort to persuasion as well as financial pressure. Since the early 1990s, moreover, transfers from the national government have been bundled into block grants, which allow lower levels of government to determine how they will spend them. One of the key issues is privatization. Between 1990 and 1997, the share of private, for profit sector in day care, elder care and primary health care has increased by as much as 20-30 percent in certain municipalities (Dagens Nyheter, 12 November 1999). The SAP has tolerated this, due, in no small part, to support in its own ranks, but has drawn the line on privatization of hospitals. T. Iversen and A. Wren, "The Trilemma of the Service Economy," p. 540. R. Clayton and J. Pontusson, "Welfare State Restructuring," p. 97. A. Kjellberg, " Sweden: Can the Model Survive?," in Industrial Relations in the New Europe, A. Ferner and R. Hyman, (eds.), (Oxford: Basil Blackwell, 1992); and R. Mahon, "Yesterday's Modem Times." There are tensions within unions, like Metall, which organize workers in small and large firms, as well as between Metall and the Paper Workers.

Mahon/Sweden

85. 86. 87.

88. 89.

90. 91.

92. 93.

94.

95. 96. 97.

There are also differences within the service sector with Handels, the union of commercial and retail workers, to the left of Kommunal. Mahon, "Yesterday's Modern Times." R. Mahon, "Un modele paradigmatique it une coquille vide? Les syndicats suedois it la fin du vingtieme siecle," Sociologie et Societe (Fall 1998). The Conservative-led government did not introduce all the changes SAF asked for, but they did lengthen the permissible period for temporary and probational employment and seniority rights were attenuated as employers were allowed to exempt two people per seniority list. They also legalized private, for-profit labour exchanges, or manpower services. The Commission recommended that temporary contracts be extended to a maximum of 12 months and more (18), if the employer simultaneously increased employment by 25 percent or more. The tentative agreement went further toward addressing union concerns about temporary contracts than Hagstrom. It was slightly more generous on the terms for replacement workers and included a clause on distance work an issue TCO was particularly concerned to address. In line with the new labour legislation, the commission recommended transferring to union locals the right to conclude agreements that deviate from the national contract, without consulting the national union. This adds an ironic twist to the long-running story of the debate over the six hour day, which the SSKF has been pushing since the mid-1970s, often opposed by unions like Metall. The latter, however, has come under increasing pressure to deal with the work time issue as employers in the big firms push for local flex-time agreements for core workers. Metall would absorb the normal flux in demand at the expense of unemployed Metall members. See Karlsson, Manssamhiillet, chapter six, for more on the history of work time; and Mahon, "Women Wage Earners" on the 1980s. This is one of the issues that the Health Care Commission's recommendations focused on. In the 1998 bargaining round, several agreements in the export branch included provision for work time reduction. Most followed the Paper Workers' format, which allows individual workers to decide whether to trade in credits for wage increases, pension top-ups or work time reduction. Metall has stuck to its principles, however, as its agreement with VI specifies that adjustments come in the form of annual work time reduction. Thus rather than requiring reduction, the government could change the norm for full-time work and provide additional incentives in the form of reduced payroll or income taxes. Other partial measures might include increased parental leave, which the government has already done by adding a second "father month" to the existing 12 month leave provisions, or imposing limits to overtime. Kortare arbetstid - for och emot, Regeringskansliets arbetsgrupp for arbetstidsfragor (Stockholm: Government of Sweden, Ds 2000:22). In the 1988 election, the SAP went along with this proposal, while rejecting the SSKF's call for a shorter working day. See Oberg's excellent commentary, Svenska Dagbladet, 2 May 2000. Over the last decade, numerous polls have shown a consistent support for limited wage differentials as well as in favour of pay equity. Thus in a recent poll, 86 percent ofLO's members felt that wage differentials had become too great, which may not be surprising, but 55 percent of SACO's members agreed (Dagens Nyheter, 17 February 1999). The same report showed strong support for revaluation of women's jobs, and this time, unlike similar polls in

1988 and 1993, men supported this as strongly as women. 98.

In cooperation with the labour market parties, the latter would establish an action plan in advance of negotiations. If bargaining seemed to be running

57


99.

100.

101.

102. 103.

104. 105.

106.

107.

into difficulty, the mediator would also have the authority to assemble the various proposals, and the parties would have to take a position on the whole package, with the majority position decisive. The agreement, concluded in the spring of 1997, established an industrial committee of union and employer representatives, backed by an economic council made up of independent economists. The parties agreed to commence negotiations three months in advance of the expiry of the previous agreement. Instead of state appointed mediators, there would be an impartial chair who would have the authority to postpone recourse to conflict measures for up to 14 days. Once conflict breaks out, moreover, a united industrial committee could force a temporary halt. In addition, union-employer committees were established to explore other issues of potential common interest, such as firmbased training and research and development policy. Neither TCO nor SACO have played the kind of role in collective bargaining that LO did under the Saltsjobaden system. The latter system, which rested on the ability of the LO-SAF accord to set the pace for the rest, became less effective as white collar workers came to form a larger share of the workforce. In the 1970s, the latter began to exercise their weight through sectoral bargaining cartels - PTK for the private sector, KTK for municipal and county employees and TCO-S for national government employees. The 1998 election was the Social Democrats' worst since the introduction of universal suffrage. Their share of the vote fell to 36.6 percent while the Left Party reached a new high of 12 percent. Although some in the SAP leadership wanted to look to the middle parties, the election was interpreted as a shift to the left and the Persson government accordingly worked out an agreement with the Left and the Greens. The latter agreed not to challenge the pension reforms nor the greater independence previously granted the Bank of Sweden. Nor do the parties work together on European and security policy where there are important differences between them. They agreed, however, to cooperate on economic and employment policy, social justice, equity and the environment. The first report of the coordination group expressed general satisfaction with the agreement but did express the Left and Green parties' desire for more influence (Svenska Dagbladet, 17 May 2000). In addition to wage formation, these included taxation, training and Sweden's membership in the European Monetary Union (EMU). According to the report in LO Tidningen, LO was prepared to accept compromises on taxation policy, the EMU and even labour law but would not yield on the issue of the need for a comprehensive bargaining system (Tidningen, 15 January 1999). Dagens Nyheter, 15 March 1999. In addition to recommendations that would strengthen the mediator's office and alter legislation concerning industrial conflict somewhat along the lines SAF had argued for, Oberg proposed that the government collect comprehensive wage statistics, including those that would facilitate the push for pay equity. The industry unions also played an important role in a recent internal scuffle, which saw the chief spokesperson for wage policy coordination within LO withdraw his candidacy for the executive (Svenska Dagbladet, 23 May 2000). The Rosengren group was established in February 1998 after a meeting with industry leaders to discuss the reasons for the apparent departure of multinational firms (sparked by the merger of Swedish Alfa with Zeneco in

December). Here industry produced its wish list, which includes across the board income tax cuts, reduced corporate and inheritance taxes and Sweden's

S8

Mahon/Sweden

decision to join the EMU. Metall's leader has gone on record supporting much of this agenda. It should, however, be recalled that LO itself came close to endorsing this in the earlier round of negotiations, in the hopes that it could get an agreement on wage bargaining. Ironically, one of the main opponents of SAF's tax cut strategy was Finance Minister Asbrink, who resigned in March 1999 when the Prime Minister came out in favour of tax cuts for low and middle income groups. 108. Nordb, formerly the head of SKTF and then assistant to the Minister of Labour under the Carlsson government, replaces Inger Ohlsson, who had previously been the head ofthe nurses union, which now leans toward the liberal-professionalism of SACO. 109. The well-respected Konjunktur Institute recently revised its forecast, projecting a growth rate of 3.8 percent for this year (up from 2.2 percent) and 3.2 percent for 2000 (up from 2.9 percent). This has suddenly made the Social Democrats' goal of an unemployment rate of 4 percent by 2000 a real possibility, but it also raises concerns about inflation. The Institute has added its voice to those pushing for changes to the wage bargaining system (Svenska Dagbladet, 26 August 1999). 110. As support for the SAP hovers between 30 and 35 percent, the Left party has managed to appeal to the majority of dissatisfied SAP supporters, especially in the LO, one-fifth of whom now support it. More interestingly, while the SAP leadership has been cool to the idea of a common platform and common government after the elections, proposed by the Left party, over sixty percent of its own supporters favour such a move, and the strongest support comes from the younger members (aged 16-29) (Dagens Nyheter 23 May 2000).

S9