Union chief warns of Tesla threat to Sweden’s labour model

Tesla’s refusal to sign a collective agreement in Sweden risks undermining the long-term future of the Swedish model that has underpinned decades of economic success in the Scandinavian country, according to the union leader taking on Elon Musk’s carmaker.

Marie Nilsson, the head of the IF Metall union behind the strike against Tesla, told the Financial Times that the famed Swedish model – developed in the 1930s – was at the heart of the country’s prosperity, with employers and unions taking joint decisions on the labour market.

“If you look at this in a long-term perspective, it could be a threat to the Swedish model. It’s really important for us,” she added.

The dispute between Tesla and Swedish unions has escalated in recent days. What started last month with about 130 mechanics in Sweden going on strike after years of trying to make Tesla accept collective bargaining, spread to postal workers, dockers, and cleaners taking action against the carmaker.

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Postal workers’ refusal to deliver registration plates for new Tesla cars led the US carmaker to file twin lawsuits against the Swedish state and postal service on Monday asking judges to allow it to collect the licence plates directly from the Swedish Transport Agency. Musk, Tesla’s chief executive, had called the postal workers’ actions “insane” on Friday.

Tesla scored an initial victory when it won an interim judgment forcing the state to allow the carmaker to collect the registration plates for its new cars directly from the agency.

The so-called Swedish model was developed in 1938 between unions and employers, and means that labour market conditions in Sweden including wages are set by the two parties and not the government. Both union and corporate leaders credit the system with a low level of strikes and believe it is crucial for the success of Sweden, a country of 10 million people and home to manufacturers such as Volvo Cars, Atlas Copco and Northvolt.

Nilsson said one big threat to the Swedish model was a new EU directive on the minimum wage, which would impose a level rather than leaving it to an agreement between employers and unions. Sweden won a derogation that the directive would not apply to countries where more than 80 per cent of the workforce is covered by collective agreements.

In Sweden, one of the most highly unionised countries in Europe, about 90 per cent of workers are covered by such deals.

“If Tesla shows it’s possible to operate in Sweden without a collective agreement, then other companies could be tempted to do the same. We have a successful model in Sweden. We have tried to explain it. It’s very seldom this type of conflict arises,” Nilsson added.

Union leaders say they have enough funds to support the striking workers – who currently receive about 130 per cent of their pay from unions to cover holidays and pensions as well – for decades as the emergency fund used for payments is rarely tapped. “We can carry on for a long, long time,” said Nilsson.

Tesla did not respond to a request for comment. – Copyright The Financial Times Limited 2023