Damaging a Long-Standing Image

Labor strife disrupts a "model" welfare state

Before he could fly to Yugoslavia to attend Tito's funeral, King Carl XVI Gustaf needed special dispensation from striking air-traffic controllers at Stockholm's Arlanda Airport. That was one ironic consequence of the most disastrous union vs. management quarrel in Sweden's history. Nearly a million people--a quarter of the work force--had stayed off their jobs in the third consecutive week of labor disruptions. Some were on strike, others had been locked out. As the country faced economic paralysis, airports and most urban public transportation shut down. Only one major port, Halsingborg, remained open to receive freighters. Responding to a growing fuel shortage, panicky Swedes were filling up their tanks at gas stations. They also began raiding the shelves of state-owned liquor stores after the announcement of a brewery lockout. Such staples as bread, milk and toilet paper were either rationed or unavailable.

The basic cause of conflict is a wage dispute involving the Swedish Confederation of Trade Unions (L.O.), which represents 2 million workers, and the Swedish Employers Confederation (S.A.F.), bargaining agent for 36,000 companies. L.O. is seeking pay hikes averaging 11.3%. S.A.F. has offered only 2.3%. After L.O. mounted a month-long ban on overtime work to pressure employers, S.A.F. responded by locking out 770,000 unionized workers. Meanwhile, after separate public-sector wage negotiations broke down, four other unions mounted "point strikes" of key government-paid employees, which crippled air and ground transport, curtailed hospital services and closed down the state-run television network. Last week the L.O. pulled out truck drivers who deliver 80% of the country's gasoline and heating oil.

The Swedish economy stands to lose an estimated $500 million every week the strikes continue, but even more profound damage has been done to the country's image as a model welfare state. With cradle-to-grave benefits supplementing average incomes of $10,000 and only about 2% unemployment, Sweden's laborers have long been the envy of the industrial world. Strikes were rare, thanks largely to a 1938 pact between labor and management that made negotiations in all labor disputes obligatory without government intervention. Another factor in maintaining industrial peace was the cozy relationship between labor and the Social Democratic government that ruled Sweden from 1932 to 1976.

Along with creating one of the world's highest living standards, however, the Social Democrats fostered the world's highest labor costs, which have eliminated Sweden's competitive edge in such export markets as mining and shipbuilding. The unions simply do not trust the non-socialist coalition now led by Prime Minister Thorbjorn Falldin. Many Swedes believe that L.O. has sanctioned the current strikes primarily to bring down Falldin's government, thereby paving the way for a return to power of his Social Democratic predecessor, Olof Palme.

Falldin has rejected appeals from Social Democrats and industry leaders to intervene, although the government has offered the unions a package of price freezes and tax cuts that, when added to S.A.F.'s proposal, would approximate labor's demand. Gunnar Nilsson, head of L.O., has rejected that approach. Many Swedes fear that the government's hands-off policy spells economic doom. But at week's end strike-bound Swedes were heartened by news that mediators had proposed pay boosts ranging from 6.8% to 7.3%. With that offer, an end to Sweden's costliest quarrel could finally be at hand.

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