The effectiveness of job-security councils could provide a lesson for the U.S., which has long struggled to get people back into the workforce after they lose their jobs, especially in places where jobs have been displaced by automation or trade. Sweden leads the OECD in helping displaced workers find new jobs—over 85 percent of such workers find new jobs within a year, primarily because of these arrangements between employers and social partners, according to a recent OECD report. The job-security councils are more effective than government-administered programs, according to the report, because they intervene immediately after a layoff, and because they have financial resources that public re-employment offices, which also exist in Sweden, can’t provide. They also encourage laid-off workers to have frequent contact with counselors, who encourage them as they seek a new job. They are available only for workers who are members of a union, which is about 70 percent of the Swedish workforce.
No studies provide hard, experimental data as to the effect of job-security councils, but many experts say that they are invaluable, though Sweden’s strong economy also undoubtedly plays a role in workers’ re-employment prospects. And, beyond the question of whether people do find a new job more easily, many people who have received a council’s assistance say that the psychological comfort mattered greatly, and helped them through a hard time.
Job-security councils also help make the economy more dynamic because they make it easier for companies to shed unproductive divisions without union resistance, while helping the workers who lose their jobs as a result of these layoffs to find new work, according to Lars Walter, a professor at the University of Gothenburg who has written a book about job-security councils. In other countries, unions would resist job cuts because they would want to protect their members, he said, in Sweden, unions agree to job cuts because they know workers will be retrained and made more productive. “The idea is that we shouldn’t defend jobs, we should support the worker,” Walter told me.
Historically, other countries in Europe have tried to find ways to prevent layoffs at big companies, Caroline Soder, the CEO of Trygghetsfonden, the job-security council for blue collar workers, told me. But economic theory suggests that just as some companies are born under changing business conditions, some companies die or must reorganize. The job-security councils make this transition easier. “It is the idea of not trying to hinder restructuring, its enabling restructuring,” she said.
Job-security councils arose out of conflict, according to Walter. In the early days of the 20th century, unions in Sweden were very militant, and there were frequent strike and labor disturbances. To try to stop the frequent disruptions to factories, the government encouraged companies to enter into collective bargaining agreements with unions. This collective relationship proved useful when employers started to lay off workers and outsource jobs in the 1970s. Unions were in a position to demand that employers do something in exchange for laying off workers. Unions and employers decided that the way to help laid-off employees was through job-security councils. “For unions to accept the idea that people get laid off from work, they need to know that people who are laid off get good support,” Walter said. The first job-security council was founded in 1972, the most recent one was established in 2012.