Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Sweden (RATIFICATION: 1950)

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A Government representative of Sweden stated that due to a dramatic increase in social insurance expenditure effective on 1 March 1991, the Government had reduced the compensation rate from 90 per cent to 65 per cent for the first three days of a period of illness, and to 80 per cent for following days, while providing the former compensation rate of 90 per cent after 90 days. Sickness allowance was also reduced by any amount in excess of 10 per cent that was received from the employer during the first 90 days of a period of illness, and after that date by the whole amount received from the employer. Collective agreement provisions regarding sick pay remained valid, but the Government assumed that parties to such agreements would adapt their provisions to the legislative amendments. However, if collective agreements on full compensation were concluded, there was a corresponding reduction in payments from the national sickness allowance scheme. He stated that further changes were made upon the entry into force of the Sick Pay Act in January 1992, so that employers were required to furnish sick pay during the first 14 days of an employee's illness, and employees were entitled to 75 per cent of their income during the first three days and 90 per cent during the remaining days. It was intended that, to avoid inequalities of sickness compensation among different groups, there would be no basic deviation from statutory sick pay levels. However, the Government did not intend to achieve this through statutory interference with the content of collective agreements or with freedom of collective bargaining. If new agreements were concluded providing a level of compensation above that provided under the Sick Pay Act, it was possible for legislation to be passed making this level the norm for all the labour market. The guaranteed level would then rise but not form a ceiling for levels of compensation. The final change made effective on 1 April 1993 consisted of a reduction in the compensation rate as of the 90th day of illness. He agreed with the Confederation of Professional Employees (TCO) that trade unions should have the right to seek to improve the living and working conditions of those they represented through collective bargaining and other legal means; that public authorities should refrain from any intervention that would limit or hinder this right; and that every such intervention violated the principle that employee and employer organizations should have the right to organize their activities and formulate their programmes freely. However, he did not agree that the measures which the Government had taken limited the right to conclude agreements freely on sick pay and were therefore in conflict with the basic principles of the Convention. All that the Government had done was to reduce a benefit under the health insurance system, while further reducing such benefits in cases where employers topped up wages over a certain level. He emphasized that there was no statutory ceiling placed on levels of sick pay. The parties remained free to negotiate and conclude agreements on full compensation. As insurer, the Government had to be free to guarantee the compensation which it found appropriate. Although such past guarantees had become a foundation for collective agreements, the guarantee of the right to collective bargaining provided under the Convention could not imply that levels of compensation under the social insurance system could never be changed. He emphasized that alleged contraventions of the Conventions which his country had ratified were considered very seriously because the Government wished to fulfil its obligations. In conclusion, he informed the Committee that parties to collective bargaining in his country had voluntarily reached agreements that did not exceed the total compensation level desired by the Government.

The Employers' members stated that, in strictly formal terms, it might be that the legislative measures taken by the Government, inter alia, to reduce the state contribution to sick pay, were not in full conformity with the Convention. However, while promoting free collective bargaining, the Convention did not exclude legislative measures in an area where there was also contractual regulation. Compulsory regulation under the legislation could be established where there were important considerations of common interest justifying such regulation, as in this case. The Convention did not guarantee any absolute freedom of collective bargaining and the Employers' members could only agree with the Committee of Experts that there was in fact no infringement of the Convention. The Employers considered that the Committee of Experts could look at this case again, if necessary.

The Workers' members stressed that the question was of a fundamental character and went far beyond technical considerations. Referring to the paragraphs 311, 312, 313, 316, 318 and 319 of the 1983 General Survey of the Committee of Experts on freedom of association and collective bargaining, they stated that the principle of autonomy of the parties and of non-interference by the authorities in collective bargaining should be strictly respected. The Workers considered that if a government wanted to take budgetary or economic decisions with implications on the revenue of workers or insured persons, it should choose mechanisms that did not affect free collective bargaining and the results of this process. The implementation of this principle required extensive tripartite consultations, mutual confidence and respect of the independence of the parties involved. The Workers regretted that lately certain governments exercised direct or indirect intervention in the collective bargaining process instead of developing social dialogue. This approach did not contribute to the solution of the economic and budgetary problems. They insisted that the Swedish Government review its policy and practice in the light of the Convention and keep the Committee of Experts informed of any new collective agreement or state measures dealing with this matter.

A Workers' member of Sweden explained that the Swedish insurance systems comprised a number of benefits, including health insurance, basic pension, occupational pension and partial pension schemes, as well as complementary payments which were governed by collective agreements on sick pay and supplementary pensions. The unions had long had the right to make agreements providing for sick pay coverage up to 100 per cent. The present legislation, however, limited such agreements; sick pay benefits ranged now from 75 to 90 per cent of the insured person's qualifying income and concerned even those with higher incomes. In order to make sure that these measures affected everyone, the Government had chosen a system which restricted the rights of certain classes of workers which benefited through agreements from a higher level of compensation in case of illness than other groups in society. In addition to this, as from 1 April 1993, the Government introduced one qualifying day and a level of compensation of 65 per cent for the second and third day of illness. These changes represented an encroachment on the right to negotiate freely and were in conflict with the principles of the Convention. There was a tangible long-term risk that these changes would be pushed further towards similar encroachments on other supplementary benefits, such as pensions covered by collective agreements. It was a very important matter of principle. The cost of the various social security schemes had been deducted from the funds generally available for pay rises, and the workers had always before chosen to use the money available for social security instead of for higher wages. The right to negotiate freely was also to comprise the right for employees' and employers' organizations to choose for themselves how they wished to structure and formulate the conditions of employment without restrictions being set by the legislator, particularly in the case of areas which had been governed by collective agreements for almost 50 years. Collective agreements guaranteeing 100 per cent sick pay would be made invalid and, consequently, there would be an encroachment on the right to negotiate freely. The Swedish trade unions wanted this Committee to pay special attention to the threats, qualified by the Committee of Experts as "something more than mere persuasion", from the side of the Swedish Government to establish a new sick pay ceiling. The Committee should adopt firm conclusions requiring the Government to give full effect to the provisions of the Convention, especially by amending the legislation, and to report next year on the implementation of its provisions.

A Workers' member of Germany stressed the necessity of preserving the principle of having more favourable regulations through collective agreements than those provided for by legislation. He stated that persuasive attempts by the Government in connection with collective bargaining were seen as a concrete threat to the trade unions and the employers, constituting an infringement of Article 4 of the Convention. This was all the more regrettable as Sweden had always been exemplary and supported the principles of freedom of association. He associated himself with the conclusions proposed by the Workers' member of Sweden.

A Workers' member of New Zealand supported the statement made by the Workers' members and the Workers' member of Sweden. He stated that a lot had been said in recent years about sanctity of agreements by employers and governments. The principle was that, a bargain having been agreed upon between employer and union parties, the terms of that bargain should be observed and there should not be any interference by governments in collective bargaining. He pointed out that under the National Insurance Act the Swedish Government had exercised state powers unfairly in a way which specifically diminished the value of the bargain negotiated on behalf of the workers. He suggested that this constituted an act of interference by the Government as agent for the employer in breach of Article 2 of the Convention. With reference to the proposed amendments to the Sick Pay Act, he stated that to threaten might not be a violation of the Convention, but it was nevertheless undesirable as having the potential to undermine the integrity of, and respect for, the terms of the Convention.

A Workers' member of Norway stated that this case touched the crucial legal question of the extent and limits of the autonomy of the social partners involved. Referring to paragraph 318 of the Committee of Experts' 1983 General Survey, he noted that the Government had, in fact, forbidden sickness allowances provided for under the voluntarily concluded collective agreements. If the social partners did not accede to the instructions given by the Government, they were threatened by legislation on this matter. This was contrary to the obligations under Article 4 of Convention No. 98 and Article 8 of Convention No. 154.

A Government member of the United Kingdom stated that cases such as this one, where the Committee of Experts had noted no violation of the Convention, should not be brought before this Committee.

The Government representative, referring to the conclusions made by the Committee of Experts, stated that his Government did not consider the measures taken to be in violation of the Convention. His Government would, of course, keep the Committee of Experts informed of any future development in this matter. The Government had only reduced a benefit in the health insurance system in cases where a worker, by obtaining sick pay from his employer, did not sustain a heavy loss. The social partners were still free to conclude agreements on higher compensation, including agreements on full sick pay. The measures taken by the Government had led to a reduction not only of expenditure from the social insurance system but also, to a great extent, had reduced sick leave and increased productivity in Swedish industry. The Government was of the opinion that Sweden had not violated any ILO Convention in this matter.

The Committee took note of the oral information submitted by the Government representative and of the discussion which had taken place in this Committee. The Committee recalled the importance of the principle of autonomy of the parties involved in collective bargaining, and that the public authorities in general should respect this autonomy and abstain from any intervention. The Committee considered that the Government should try to persuade the social partners to have regard voluntarily to major economic and social policy considerations and the general interest invoked by the Government, since persuasion was always preferable to any imposition. The Committee requested the Government to provide, in its next report, detailed information concerning any measure taken to encourage voluntary negotiations, including information on any new collective bargaining agreements, legislation and court decisions having a bearing on this matter.

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Article 4 of the Convention. Promotion of collective bargaining. Legislative developments. Posting of workers. In its previous comment, the Committee requested the Government to provide information on the application in practice of the Posting of Workers Act (1999:678), in particular through statistics on collective agreements concluded with foreign employers and on foreign employers that became bound by collective agreements through membership of an employers’ organization.

The Committee notes the Government’s indication that there are neither public statistics on the number of collective agreements concluded by foreign employers for posted workers nor statistics on the number of foreign employers that became bound by collective agreements through membership of an employers’ organization but that, nevertheless, several recent reports show that the recent legislative developments concerning the posted workers have the intended effect in practice, notably in the construction sector. The Committee notes that the Government indicates in particular that: (i) according to a report from the Swedish Institute for European Policy Studies focusing on posting of workers in the construction sector, both Swedish trade unions and employers’ organizations stated that posting employers voluntarily sign customary collective agreements, as opposed to posting collective agreements with limited legal effects, and that trade union representatives mentioned they have no difficulties identifying posting employers and to negotiate collective agreements for posted workers; and (ii) the Byggmarknadskommissionen, a commission conducted and funded by parties in the construction sector, analysed the existing legislative framework regarding posting workers and, after having given some consideration to the possibility to enforce a mechanism for the extension of collective agreements in the construction sector, the commission assessed that no amendments were needed to the existing regulatory framework for posted workers.

The Committee further notes that the Posting of Workers Act was amended three times during the reporting period. The Committee notes in particular that section 16, introduced in 2020, allows for trade unions to take industrial action to negotiate collective agreements for posted temporary agency workers. Welcoming the application of the Posting of Workers Act to posted temporary agency workers, the Committee requests the Government to continue providing information on the application in practice of this Act in the different sectors of the labour market and to provide any statistics in this regard.

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Article 4 of the Convention. Promotion of collective bargaining. Legislative developments. Posting of workers. The Committee recalls that in its previous comments it had noted with interest that, a parliamentary committee set up in November 2014 to consider legal amendments to the Foreign Posting of Employees Act (Lex Laval), had made a number of proposals to safeguard the Swedish labour market model and status of collective agreements in situations involving posted workers. The Committee had expressed its trust that the amendments ultimately adopted would have the effect of promoting voluntary collective bargaining for organizations representing posted workers.

The Committee notes with interest the Government’s indication that the amendments to the Posting of Workers Act, which were presented to the Parliament in February 2017 and entered into force on 1 June 2017, create a more effective and efficient system for the protection of the rights of posted workers. The Committee further notes with interest that the amendments include, among other things that: (i) an employer posting workers to Sweden must appoint a representative who is authorized to negotiate and conclude collective agreements requested by an employee’s organization; (ii) industrial action against an employer can be taken with the aim of bringing about a regulation by collective agreement (the employment conditions that trade unions can demand are limited to the minimum conditions set out in the European Union Posting of Workers Directive); (iii) posted workers who are not members of the trade union that concluded the collective agreement have the right to invoke certain conditions in the collective agreement, ultimately in a Swedish court; and (iv) there are provisions on increased transparency and predictability so that it is easier for foreign employers to find out in advance what conditions apply in the Swedish labour market. The Committee further notes that sections 10 and 11 of the law require foreign employers to report to the Swedish Work Environment Authority when they post workers to Sweden and to appoint a contact person in Sweden, who shall be able to provide documents to agencies and employee organizations that show that the requirements of the Act have been fulfilled. In addition, sections 14 and 24 provide for financial penalties as well as damages in the event of non-compliance. The Committee welcomes the legislative developments which have taken place since it last examined the situation in 2015 and requests the Government to provide in future reports information on the application in practice of the Posting of Workers Act since it entered into force in June 2017. The Committee further requests the Government to provide statistics on collective agreements concluded with foreign employers as well as statistics on foreign employers that became bound by collective agreements through membership of an employers’ organization.

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The Committee notes the observations made by the Swedish Trade Union Confederation (LO), the Swedish Confederation of Professional Employees (TCO) and the Swedish Confederation of Professional Associations (SACO) received on 6 October 2015.

Article 4 of the Convention. Promotion of collective bargaining. The Committee recalls that in its previous observation it had taken note of the observations provided by the LO and the TCO, as well as those of the Confederation of Swedish Enterprise (CSE) and the Government in relation to the impact on collective bargaining of the legislation introduced in Sweden in 2010 in response to the application of the European Court of Justice (ECJ) judgment in the case Laval un Partneri v. Svenska Byggnadsarbetareforbundet (Laval). At that time, the Committee had observed that the unions’ concerns were not related to a desire to have better terms and conditions of employment for foreign posted workers than those set out in collective agreements, but rather to ensure that the terms for foreign workers were comparable to those in the relevant sector and geographic area. The Committee had also noted the LO and TCO concerns that, even if a foreign employer had to appoint a contact person in Sweden, there was no requirement that the representative of the employer would be mandated to negotiate and conclude collective agreements and that there was an increasing number of “double agreements” in foreign companies which set terms at a very low level, while providing a second agreement only for presentation to the authorities and the trade union setting out better terms. Noting the concerns expressed by the LO and the TCO that the number of agreements had fallen dramatically after the ECJ judgment, the Committee had welcomed the plans for the submission of a bill whereby a foreign employer must report that it posts workers to Sweden and must appoint a contact person in Sweden. The Committee hoped that this bill would facilitate engagement in collective bargaining with foreign employers posting workers in Sweden.

The Committee notes with interest the information provided by the Government in its report under the Collective Bargaining Convention, 1981 (No. 154) that a statutory amendment to the Foreign Posting of Employees Act requiring a foreign employer to report to the Swedish Work Environment Authority when it posts workers to Sweden and to appoint a contact person entered into force on 1 July 2013. According to the Swedish Work Environment Authority, around 2,700 companies and 20,000 posted workers were registered between 1 July and 31 December 2013. The TCO and the SACO added that the second report from the Swedish Work Environment Authority shows 1,000 new companies registered between 1 January and 30 June 2014. The LO, TCO and SACO state that, while they are in favour of the legislation regarding the obligation to report posted workers, they query how the Government will ensure that the registered workers are genuinely posted workers and whether it will carry out spot checks.

The Committee further notes the statistics provided by the Government that there were a total of 251 registered collective agreements concluded directly with foreign employers as at mid-November 2013. The Swedish Building Workers’ Union (Byggnads) concluded 45 collective agreements directly with foreign employers in 2014 and an additional 11 foreign employers became bound by collective agreements with Byggnads through membership of an employers’ organization in 2014.

As regards the concerns raised relating to double agreements, the Government refers to the work assigned to the Parliamentary Committee of Inquiry regarding posting workers and further recalls the possibility of “confirmation agreements” whereby trade unions can take action aimed at getting the foreign employer to sign an agreement to confirm that the conditions required within the concerned sector shall be applied for posted workers when employers claim to apply the same or better conditions.

While observing that the LO, TCO and SACO briefly stated that they would wait until they had the full report of the Parliamentary Committee and all its proposals before making their comments, the Committee takes note of the Report of the Inquiry on the Posting of Foreign Workers to Sweden transmitted by the Government on 20 October 2015. The Committee notes with interest that the cross-party Inquiry committee makes a number of proposals to safeguard the Swedish labour market model and status of collective agreements in situations involving posted workers, and that it suggests that its proposals enter into force on 1 January 2017. Among the elements related to the Convention, the Inquiry committee proposes that Lex Laval be replaced by new regulations requiring a posting employer, when requested to do so, to appoint a representative who is authorized to negotiate and conclude collective agreements. The request for bargaining from the employees’ organization can be made whether or not the organization has members working for the employer and must include details of the minimum terms and conditions in the sector in question. Moreover, where an agreement has been entered into, the contracting employees’ organization has supervisory powers over its application, which includes an obligation on the employer to submit relevant documentation. Damages are proposed in the event of non-compliance.

The Committee trusts that the amendments ultimately adopted will have the effect of promoting voluntary collective bargaining for organizations representing posted workers and requests the Government to provide information on the progress made in this regard and to transmit a copy of the amendments once approved.

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The Committee notes the information provided by the Government on the impact of legislative changes and the comments of the Confederation of Swedish Enterprise attached to the Government’s report. It further takes note of the supplementary comments dated 10 August 2011 and 13 November 2012 made by the Swedish Trade Union Confederation (LO) and the Swedish Confederation of Professional Employees (TCO). The Committee invites the Government to provide any further information it considers relevant in reply to these comments.

The Committee refers to its comments under the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), as regards the general appreciation of the impact of the legislation introduced in Sweden in 2010 in response to the European Court of Justice (ECJ) judgment in the case Laval un Partneri v. Svenska Byggnadsarbetareforbundet (Laval).

Article 4 of the Convention. Promotion of collective bargaining. The Committee notes the Government’s statement, in reply to the LO and TCO comments, that the new legislation places no restriction on collective bargaining but only the conditions under which industrial action can be undertaken (see under Convention No. 87). The Committee takes due note, however, of the further assertions made by the LO and the TCO that the conditions for trade unions to negotiate with foreign employers have deteriorated given that the obligation to register a representative for the business domiciled in Sweden has been removed with reference to EU law and the Services Directive. According to the LO and the TCO, the absence of any legal obligation to have a representative in the country poses a significant obstacle to the exercise of collective bargaining with foreign employers. The LO and the TCO add that this is of particular concern within the Swedish context where legislation on pay rates is nearly non-existent and wages and employment conditions are regulated to a great extent through collective agreements (collective agreements cover 90 per cent of the workforce). Moreover, the LO and the TCO indicate that the impact of the various restrictions ever since the Laval judgment can be seen in the statistics issued by the National Mediation Office. In 2007, 107 collective agreements were signed with foreign companies, in 2008 only 40, in 2009, 29 agreements were signed and in 2010 there were only 27. They state that there is no corresponding decrease in collective agreements for Swedish companies.

In reply to the LO and TCO comments, the Government refers to plans to submit a Bill, at the latest on 30 November 2012, whereby foreign employers must report that they post workers to Sweden and appoint a contact person in Sweden, who shall be authorized to receive notice on behalf of the employer. The contact person shall further be able to provide documentation demonstrating that the requirements of the Foreign Posting of Employees Act, as regards employment conditions for posted workers, are met. Trade union knowledge of posted workers in the country may facilitate negotiations for collective agreements. As to the impact on concluded collective agreements, the Government adds that there were 62 registered collective agreements concluded directly with foreign employers at the end of 2011. The statistics of the Mediation Office indicate that the Swedish Building Workers’ Union (Byggnads) concluded 33 collective agreements directly with foreign employers in 2011 (27 in 2010, 29 in 2009, 40 in 2008). An additional five foreign employers became bound by agreements with the construction workers’ union through membership in an employer’s organization in 2011 (15 in 2010). Byggnads concluded 107 collective agreements in 2007 when approximately 15 foreign employers became bound through membership in an employer’s organization. The Government adds that there is no analysis for the reasons behind these figures or information on the number of foreign employers and posted workers in Sweden. The Government observes, however, that the investigation of the parliamentary committee and the legislative proposal on reporting obligations will enable such analysis.

The Confederation of Swedish Enterprise (CSE) does not consider that the fact that a foreign employer established in an EU or EEA country is not, in certain circumstances, required to have a representative resident in Sweden represents a barrier to the right of collective bargaining. A foreign employer who posts employees in Sweden is subject to the rules on negotiating obligations in the Codetermination Act which apply to Swedish employers. The Confederation does support however the part of the Government’s proposal that introduces provisions in the Posting of Workers Act under which foreign employers who post workers in Sweden shall be obliged to notify the Swedish Work Authority if the activity continues for more than five days. As regards the reduction in collective agreements signed with Byggnads, the Confederation considers that this cannot be attributed to the changes in the law, given that the amended legislation only came into force in April 2010 and therefore could not be responsible for the reduction between 2007 and 2010. In Sweden, wage-setting is a matter for the labour market parties, largely through the signing of collective agreements in each sector. The Confederation has difficulty understanding the argument advanced by the LO and the TCO that the fact that, in situations involving posting of workers, they are only able to take industrial action to demand the minimum levels set out by collective agreements opens the door to social dumping. To the contrary, it appears that the unions want to demand higher wages for foreign companies than Swedish companies in similar situations.

On this last point, the Committee understands that the concerns raised by the unions are not related to a desire to have better terms and conditions of employment for foreign posted workers than those set out in collective agreements, but rather that they would like to ensure that those terms are comparable to those in the relevant sector and geographic area and are not based on an often non-existent central minimum.

In its latest comment, the LO and TCO consider the plans to submit a bill requiring foreign employers to appoint a contact person in Sweden would be an improvement but remain concerned that, even with a counterpart, there is no requirement that the representative of the employer will be mandated to negotiate and conclude collective agreements. As regards the statistics provided by the Government, the LO and the TCO consider that the most telling are those concerning the reduction in collective agreements concluded after the Laval judgment. In this regard, they indicate that the Byggnads concluded 356 collective agreements with foreign companies between 2004 and 2007 (about 120 agreements per year). After the ECJ judgment in 2007 creating a new legal situation on the labour market, the number of agreements fell dramatically. This situation was made even worse by the 2010 changes in the Swedish legislation.

The Committee welcomes the plans to submit a Bill, at the latest on 30 November 2012, whereby a foreign employer must report that it posts workers to Sweden and appoint a contact person in Sweden, who shall be authorized to receive notice on behalf of the employer and hopes that this will facilitate engagement in collective bargaining with foreign employers. The Committee requests the Government to indicate the developments in this regard in its next report.

The Committee further notes the comments of the LO and the TCO that there are an increasing number of “double agreements” in foreign companies which set terms at a very low level and then provide a second agreement only for presentation to the authorities and the trade union setting out better terms. The Committee further expresses its concern that foreign companies may be exempt from collective bargaining demands provided they only “show” that minimum pay and conditions pertain. The Committee requests the Government to reply to these comments and to continue to provide information on any measures taken or envisaged to combat this practice.

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The Committee notes the comments made by the Swedish Trade Union Confederation (LO) and the Swedish Confederation of Professional Employees (TCO) on the application of the Convention within the framework of the European Court of Justice (ECJ) judgment in the case Laval un Partneri v. Svenska Byggnadsarbetareforbundet (Laval). The LO and the TCO refer in particular to the ex post facto application of the interpretation given to European Union law in the Laval judgment with regard to the industrial action giving rise to that case and the punitive damages and legal fees levied against the unions, as well as the subsequent legislative amendments to the Foreign Posting of Employees Act and the Co-determination Act of 1976, as well as other matters which they consider to undermine collective bargaining. The Committee takes due note of the Government’s report in which it touches upon the questions raised in a general manner and informs the Committee of the adoption of the new legislation and of the Government’s additional reply to the comments made by the Swedish trade unions, received on 30 November 2010. The Committee requests the Government to send detailed information on all of the matters raised, including in further response to the views of the social partners.

The Committee observes that the matters raised by the LO and the TCO touch upon both the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and Convention No. 98 and that the unions highlight the intrinsic link between collective bargaining rights and effective industrial action. Given the importance of the matters raised by the LO and the TCO, and the significance of the potential effect of the recent measures taken in the country, the Committee requests the Government to monitor the impact of these legislative changes on the rights under the Convention and provide a detailed report in time for its examination at the Committee’s next meeting in November–December 2011.

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The Committee notes the information provided in the Government’s reports and the comments made by the Confederation of Swedish Enterprise. The Committee refers the Government to its comments on Convention No. 87.

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The Committee notes the information supplied by the Government in its report.

Referring to its previous comments, the Committee takes due note of the Government's statement confirming that the amendment of the health insurance compensation rate does not mean that the parties are forbidden to conclude agreements on full compensation, and is not to be interpreted in this way.

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The Committee notes the information supplied in the Government's reports and the comments made by the Swedish Confederation of Professional Employees (TCO).

The Committee notes the Government's indication that the drafting committee appointed in 1993 to propose a new system of health and work injury insurance received new terms of reference to draft a scheme of universal illness insurance organized by the State, and not merely to reappraise its existing insurance system. The Committee was also to analyse the conditions in which supplementary insurances providing compensation over and above the universal illness insurance satisfied requirements of efficiency and fairness, so that insurances of this kind would not tend to augment the cost of universal illness insurance if current rules of reduction were abolished and the labour market parties assumed full responsibility for the supplementary insurances. The Committee's analysis was to include the rules of reduction existing in present-day sickness allowance insurance, whereby compensation out of national insurance is reduced in cases where the insured receives compensation from the employer or from contractual insurance above a certain level. The Committee presented its final report in 1996. It has been circulated for comment and there has as yet been no decision by the Government or Parliament concerning the proposal.

The Committee notes that, according to the TCO, the prohibition on agreements made in 1991 was still in effect and the Government's Proposition 1995/96:69 lowers the level of compensation to 75 per cent and requires that no fundamental deviations from the new benefit levels for the period of sick pay arise during the negotiations and conclusion of any agreements. The TCO concludes that these changes represent a continued encroachment on the right to negotiate freely.

In its reply, the Government indicates that the 1995 Bill proposed retaining the so-called reduction rules pending proposals from the Sickness and Work Injuries Committee. In the meantime, the Government indicates that it was assumed in the Bill that collective agreements would not entail any deviations of principle from the new compensation rate for the sick pay period, which is 75 per cent. Following the introduction of the Bill, the National Insurance Act and the Sick Pay Act were amended with effect from 1 January 1996, thus introducing a uniform compensation rate of 75 per cent of qualifying income in respect of sickness allowance and sick pay from the employer.

The Government asserts that the amendment of the health insurance compensation rate does not mean that the parties are forbidden to conclude agreements on full compensation, nor is it to be equated with any such prohibition. The Government has merely stated that, pending proposals from the Sickness and Work Injuries Committee, it anticipates that collective agreements will not include deviations of principle from the new compensation rate. The Government adds that this pronouncement does not contain anything which can be construed as a new "threat" of legislation in the event of agreements deviating from the compensation levels and concludes that it has only been trying to persuade the social partners to have regard voluntarily to major economic and social policy considerations and the general interest, as the Committee had requested.

The Committee notes the information and explanations provided by the Government, in particular the Government's indication that it is not threatening legislation in the event of agreements deviating from the new compensation levels but merely trying to persuade the social partners to have regard voluntarily to major economic and social policy considerations, as the Committee had emphasized in its previous comments. Nevertheless, the Committee requests the Government to provide along with its next report a copy of Proposition 1995/96:69, as well as any proposals made by the Sickness and Work Injuries Committee concerning the "reduction rules". In particular, it requests the Government to indicate the manner in which these reduction rules are to be applied and whether they might indirectly interfere with the collective bargaining process by invalidating any gains made through negotiation. It further requests the Government to provide information on any new collective agreements which might have a bearing on this matter.

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The Committee notes the information supplied by the Government in its report as well as the observations of the Swedish Employers' Confederation (SAF) and the Swedish Trade Union Confederation (LO). It also takes note of the oral information supplied by the Government to the Conference Committee in June 1993 and the discussion which took place there in relation to the comments presented by the Swedish Confederation of Professional Employees (TCO) concerning the 1990 amendments to the National Insurance Act and the 1991 Sick Pay Act.

The Committee notes that in reply to the TCO's comments that the legislation violated the right to conclude collective agreements concerning sick pay, the Government states that it has appointed a drafting committee to propose a new system of statutory insurance benefits in connection with illness and work injury, whereby insurance expenditure will not be included in the national budget. Among other things, the remit lays down that the recommendations put forward must conform with Sweden's commitments under international Conventions.

The Committee takes note of this information and recalls that it considers, like the Conference Committee, that the principle of autonomy of the parties involved in collective bargaining is important and that the public authorities in general should respect this autonomy and abstain from any intervention. It further considers that the Government should try to persuade the social partners to have regard voluntarily to major economic and social policy considerations and the general interest invoked by the Government, since persuasion is always preferable to any imposition.

The Committee expresses the hope that the recommendations of the drafting committee in respect of the new system of statutory insurance benefits will be in line with the above-mentioned principles and requests the Government, in its next report, to provide information thereon.

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The Committee asks the Government to supply in its next report information on the mandate and powers of the "controller" appointed by the Government to ensure that the social partners comply with its salary policy. The Committee also requests a copy of the enabling text.

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The Committee takes note of the comments presented by the Swedish Confederation of Professional Employees (TCO) concerning the 1990 amendments to the National Insurance Act and of the 1991 Sick Pay Act, and notes as well the information supplied by the Government in its reports.

TCO indicates that unions have long had the right to make agreements providing for up to 100 per cent of sick pay coverage and that the present legislation limits such agreements in violation of Conventions Nos. 98 and 154. The Government responds that it must cut costs and maintain equality in the social security system and that neither Act violates any of the ILO Conventions.

The Committee notes that the Government implemented new rules under the National Insurance Act from 1 March 1991 and, in the case of the Sick Pay Act from 1 January 1992. Sick pay benefits ranged from 65 to 90 per cent of an insured's qualifying income in the first enactment (now superseded) and range from 75 to 90 per cent in the second one, depending on the length of illness. Exceptions exist for chronic illnesses. Under the first plan of the National Insurance Act, the Government also created a mandatory ceiling on sick pay; if an employer or an employee's insurance provided a supplement over a specified level to the State's plan, the insuree was required to reimburse the Government. Under the second plan, the Sick Pay Act, the Government has called for voluntary restraints through collective bargaining with a view to preserving the ceiling on sick pay. However, the Government has threatened legislative action should unions and employers fail to observe the ceiling. A central difference between the two plans is that the Sick Pay Act calls for a ceiling on sick pay even where private employers, not the Government, must now pay for the first 14 days of coverage.

TCO asserts that the National Insurance Act violated the Conventions by, in effect, bypassing the contractual agreements already made with employers to pay supplements that provide up to 100 per cent of sick pay from the first day. TCO's subsequent communication of 12 October 1992 asserts that the legislative changes restrict the unions' rights to determine their own issues for negotiations and agreements.

In its reports, the Government rejects TCO's argument that the unions have traditionally had the right to bargain up to 100 per cent of sick pay. The Government indicates that such bargaining has always depended on the Government paying a substantial share of the costs. It points out that a recent court case determined that current contracts could not be assumed to provide 100 per cent coverage in the case of a reduction in the Government share of sick pay. It further provides testimony by officials about the need to cut costs and preserve equality by maintaining a sick pay ceiling. The Government indicates that its threats to mandate a new sick pay ceiling are "a perfectly legitimate political stratagem".

The Committee is not qualified to comment on whether contracts under the National Insurance Act provided a right to 100 per cent sick pay. As to contracts under the Sick Pay Act, while acknowledging the Government's action to preserve equality and to provide for individual safeguards in the operation of the pay system, the Committee notes the Government's threats to legislate a sick pay ceiling. The Committee recalls the importance attached to collective bargaining under Conventions Nos. 98 and 154. In the Committee's view, while not a violation of the Conventions, these threats amount to something more than mere persuasion. Accordingly, steps should be taken to persuade the parties to collective bargaining to have regard voluntarily in their negotiations to major economic and social policy considerations and the general interest invoked by the Government. (See General Survey on Freedom of Association and Collective Bargaining 1983, paragraph 318.)

The Committee asks the Government to keep it informed in the next report of any new collective bargaining agreements, legislation and court cases having a bearing on this matter.

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The Committee takes note of the report presented by the Government.

It would appreciate receiving information on the mandate and powers of the "controller" who will be henceforth appointed by the Government to ensure that the social partners comply with its salary policy, and a copy of the enabling text in that respect.