After Corona, we must create a more secure labour market

Economy It is obvious that when we emerge from the Corona crisis, we must create a more secure labour market and a more equal society, by building further on the Swedish model. The Social Democrat-led Government has acted swiftly to manage the crisis. But the measures need to be complemented with more efforts. The LO Executive Council demands, inter alia, upgrading of Swedish infrastructure as well as climate and energy incentives.

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This article was published in the daily ´Dagens Nyheter´ on the 1st of May

Our country is now in the most serious crisis most of us have ever experienced. It is a crisis because people have been affected by a dangerous virus, but also because the pandemic is destroying so much of what we have built up together. Corona has suddenly put the brakes on Sweden. It is LO union members who are now keeping society going. They are often at the front line of the fight against the virus, too often without sufficient protection. It is not acceptable that by doing their jobs our members are exposed in the worst case to life-threatening infection. It is the responsibility of every employer to ensure that workers can do their job without risking life and health.

Even though disease control must of course have highest priority, the necessary measures for fighting the contagion are inflicting great damage on our economy. Sweden is heading towards an unemployment crisis. Since the first of March almost 100,000 people have registered as unemployed with the Swedish Public Employment Service and 60,000 people have been given notice of termination. Policies must now prevent the close-down of a large number of companies and the disappearance of jobs. This will also pave the way for a faster recovery.

When we then emerge from the acute crisis we must create a more secure labour market and a more equal society. We must equip our country with fewer precarious jobs, better welfare, more secure workers and investments in what builds a strong society.

The Social Democrat-led Government has acted swiftly and powerfully to manage the crisis. But measures must be further strengthened, and supplemented by more.

1. Safeguard welfare. Municipalities and regions need at least SEK 30 billion more per year to deliver welfare, which was underfunded already before the crisis. Government grants must increase and be permanent to enable municipalities to meet both the demographic challenge and resolve understaffing in both elderly care, childcare and support and service for people with functional impairments. Central government should also initiate investments in education aimed at improving staffing, above all in health care and social services.

2. Strengthen the short-term lay-off model. Already today about two million workers are affected by the short-term lay-off model, through just over 500 new collective agreements. It is a very good crisis policy that saves jobs. But to protect more workers from unemployment and more companies from insolvency the system needs to be even better. Currently lay-offs of up to 80 per cent are possible. But for a short period the possibility of full-time lay-offs is necessary, where the State bears the greater part of the cost. To avoid tax fraud and exploitation of employees, it must be a requirement that the company has a collective agreement or an application agreement. The companies that receive support from taxpayers must of course also stop distributing dividends and directors’ bonuses. Extensive training and skills enhancement measures are also necessary in the time made available for workers who are laid off.

3. Protect the unemployed. Many who will now become unemployed have had precarious jobs. For them the safety net in Sweden is weak. Many have not been able to qualify for unemployment insurance. But they too must of course be given financial protection. No-one should need to ask for income support or be forced to leave their home just because they have lost their job. So it is good that the Government has quickly ensured that more people can be covered by unemployment insurance. But the administration must be simplified to shorten processing times. People must receive their benefit in time to pay their bills.

The Government has raised the ceiling for benefit from unemployment insurance funds to SEK 1,200 per day for the first 100 days. With this, incomes of up to SEK 33,000 per month are covered. But the increase is only temporary, and many people will be unemployed for longer than that. The increase should therefore be permanent. The ceiling should be raised and apply to the entire benefit period. This will be crucial when unemployment increasingly consists of people who have been earning more than SEK 25,000 per month.

4. Support transition to the new jobs. LO welcomes the central government’s extension of educational forms, not least vocational education. Now the Government and the Riksdag also need to provide good opportunities to the unemployed of student financial support. Use the unemployment crisis to train people for shortage occupations. Allow people to study at municipal adult education (Komvux), vocational adult education (Yrkesvux) and higher vocational education (YH) with labour market policy allowance. There must also be a total ban on neo-liberal experiments and reforms of the Swedish Public Employment Service.

5. Increase infrastructure, digitalisation and climate incentives. The State should substantially increase government grants for overhauling and upgrading Swedish infrastructure, particularly electricity and computer traffic. Licensing and planning processes need to be simplified and speeded up to reduce the start-up phase for infrastructure projects. Public sector actors should already now plan to bring forward procurements for new infrastructure projects, while already planned maintenance and construction must continue. Increased resources should also be directed towards rail and other transport infrastructure, as well as towards energy and climate action. The requirements for decent working conditions in public sector procurements must also be tightened.

The things that historically made Sweden strong - well-functioning welfare and a labour market that provides security in job transitions - have been scaled down over a long period. The strong society has instead been replaced by neo-liberal armchair creations focused on market solutions and privatisation.

In times of crisis, however, the benefits of joint solutions become clearer. What is now happening cannot be managed by the market. It can only be managed jointly, by building further on the Swedish model.