Labour Relations

In the 1970s foreigners saw Sweden as a land of freedom with no unemployment, clean streets, clean people, trains that ran on time and a welfare state that incorporated the most up-to-date social attitudes and welfare policies.

The older generation also noticed that from being a nest of industrial unrest in the 1920s when unemployment was uniformly running above 20%, Sweden had turned it all round with conflict almost completely absent from the shop floor.

In the 1950s and 1960s development economists believed there was a model of best practice that could be used to develop any country. Few believe this any longer.

But they did then and so foreigners flooded into the Venice of the North seeking the holy grail of economic development and the elixir of everlasting growth. They were impressed with what Sweden had done and assumed there must be a model they could follow.

At the time both Swedes and outsiders believed the key lay in Sweden's central bargaining system where management and worker representatives sat down together and divided up the cake between them.

The unions then went to their members and reminded them that firms needed to make profits if they were going to invest and that wage solidarity meant higher paid workers showing restraint to improve the position of the lower paid…a policy which solved the problem of wage differentials. In practice the union leaders never did much about the solidarity side of the coin but the mantra 'Profits good & Wage rises low!' normally did the trick. The unions delivered.