Strengths and Weaknesses of the Swedish Model of Labour Relations

Strengths and weaknesses of the Swedish model of labour relations

The Swedish model of labour relations is greatly characterized by the social democratic movement and its values of equality and social justice . The Swedish labor market is characterized by strong organization where a great portion of workers are members of trade unions. These trade unions enter into collective agreements with employer organizations. The collective agreements are binding under civil law but can generally be seen to be governed as much by trust built into the system by the social democratic nature of Swedish labor. There are different ways in which you can look at the strengths and weaknesses of such a system, but in order to fully understand the impact of this type of system within the context of the Vaxholm labor dispute, looking at the characteristics from the view point of firms operating within the system will give the best understanding.

The first major strength of the Swedish model of labor relations is the general level of trust between the parties involved and the general understanding of standards that must exist between involved parties due to the high level of coordination between political, labor and business interests. This is a strength for firms operating within the system due to the level of stability and predictability that it provides. In areas where labor relations are unstable and there is a high level of distain between workers and their employers, firms have less control over factors affecting the work itself, such as time given the presence of strikes and of course costs as a result of labor disputes. This level of trust can also allow firms who enter into collective bargaining agreements to reduce their administrative costs as they forge ahead with a steady set of ground rules in which they will operate within. As mentioned it will be less likely that firms will have disagreements with workers and thus do not incur the costs that firms in Liberal Market Economies face when there are disagreements between employers and employees.

Also of note are two strengths that come about with a system of this type which also relates to efficiency. For example when problems do arise, because of the level of coordination, it can be assumed that problems would be resolved more quickly. It is often in Liberal Market Economies to hear about labor disputes that drag out for months and sometimes years. However within the Swedish model it is foreseeable that these disagreements if existing at all would be resolved much more quickly and easily. Lastly and along the same lines are the benefits of the ease in flow of information and technology. As new ideas within business drive its competitive nature, it is foreseeable to think that the spread of ideas and new technology within industries would be effectively communicated to firms within that industry enabling those firms to compete and stay at the leading edge of technological advances within their specific industries.

Lastly and one of the most important strengths if looking at it from the viewpoint of a firm operating within the Swedish system is a high barrier to entry from new firms. As we saw with Laval, they were unable to compete at the wages set by the