Sweden: Government plans drastic cuts to jobless benefits

Workers’ anger forces TUC to call protests

The new right wing government in Sweden did not even enjoy a short ‘honeymoon’ with the population. It came to power in September and by November its support plummeted.

The reason for this is the government’s budget proposals and, in particular, the plan to make drastic cuts to the unemployment insurance-system (a-kassa), which, in turn, paves the way for more low-pay jobs. While workers, the unemployed and the sick have to pay more, the rich and big companies pay lower taxes.

The budget, introduced in October, was immediately followed by a storm of protest, at least by recent Swedish standards. “Rarely has a proposal made by the government caused so much criticism”, commented the Swedish financial newspaper, ‘Dagens Industri’ (‘Today’s Business’), in its editorial.

The attacks on unemployment insurance immediately provoked widespread anger. Many, who voted for the traditional bosses’ parties, in the month before, felt betrayed.

Instead of a “policy for jobs” (‘Putting Sweden to work’), as the rightwing parties promised in the election, the government announced a policy of attacks against the long-term unemployed, and part-time, low paid, female workers – a policy aimed at undermining the strength of the trade union movement.

Sweden has changed over the last weeks and workers’ opposition now makes media headlines. This represents the first sign a fight-back movement. “Enough is enough”, said one metal union branch in a statement demanding a strike against the government. Nearly 75% of those who voted in ‘Aftonbladet’s’ (the biggest Swedish daily paper) web-poll supported the call for a strike against the government.

Demonstrations were held against the government and a small syndicalist union even organised a strike on 15 November. The following day, trade unions in one region organised demonstrations in three cities. Weekly demonstrations are held, every Monday, outside the prime minister’s office.

Rättvisepartiet Socialisterna (CWI in Sweden) campaigns for a political strike against the government on 14 December, the same day as the Swedish TUC plans a ‘Day of Protest’ (not strikes). A substantial number of trade union branches raised the same demand.

A nationwide strike and mass demonstrations, on 14 December, would be the most powerful and effective response to the right wing policies of the government.

However, the present level of workers’ anger, and the demand for a strike, frightened not just the government, but trade union leaders, as well.

“In a democracy, everyone has the right to have their say, but political strikes are undemocratic and overrules the election result”, commented the Employment Minister, Sven Otto Littorin.

The trade union leaders say exactly the same. “A political strike is the last resort and could only be used in the defence of the Constitution”, claimed one union leader.

The TUC leaders have started a campaign to defend their no strike-position. The government just has to sit back, while the union leaders, in public, denounce workers that demand a resolute stand.

Super-profits for rich

The cut in unemployment benefit is part of a programme of profound changes concerning the labour market, to force down wages and to maintain the present record level of profits for the super-rich. The government does not even hide the aim of their policies is to create what is called a “low-wage market”, beginning with the service sector.

There are also other government proposals leading to that conclusion; including proposals for tax reductions on private individuals’ purchases of domestic services, which are expected be enacted on 1 July 2007. This means the state subsidises domestic services for the better-off, while those people doing domestic labour will, of course, receive very little in wages.

To get unemployment benefit it is necessary to pay a monthly fee in to the Unemployment Insurance Funds, which are directly linked to the trade unions (The fee comes out of monthly trade union subscriptions, which explains the high level of union organisation).

There are 36 Unemployment Insurance Funds, with approximately 3.8 million members. The Funds, however, are mainly financed by the state, and the government aims to make the scheme more “self-financing”, and to break the link to the unions. An inquiry will be set up to investigate and propose structures for compulsory, state-controlled unemployment insurance, which is not linked to the unions. The first step towards this new policy is to compel workers to pay more to the funds (the charges will rise by € 22.2 to € 33.3 (SEK 200 to 300) per month), as well as cutting allowances. These changes, which triggered the opposition movement, will come into force on 1 January 2007.

Today’s unemployment benefit is 80% of income, but the government wants to cut it down to 70%, after more than 200 days of unemployment, and to only 65 % after 300 days. The maximum daily allowance will also be cut from € 81.00 (SEK 730) during the first 100 days, to € 75.5 (SEK 680). The long-term unemployed will loose out badly, by at least € 444. (SEK 4,000) each month.

Even today, an unemployed person could be forced to accept a job paying 10 per cent less than the daily cash benefit they are entitled to get. However, after New Year, an already low paid worker earning € 1880. (SEK 17 000) a month, can end up in a job paying just € 1111. (SEK 10,000), a month, after 300 days on jobless benefits.

This is how the new market of low paid jobs will be created; a labour market “in-line” with the rest of the capitalist Europe. This is not about creating ‘new jobs’, as the government claims, but “old” jobs paying less. And lower wage jobs tend to lower general wage levels. The government hopes that lower unemployment benefit will force workers to take accept worse conditions.

But worsening conditions will not stop there. People will have to work longer and it will take longer to qualify for unemployment benefit. Students, who finish their studies, will no longer be entitled to unemployment benefit after 10 months, as is the case today. The jobless could also be fined if they are “not actively seeking work”.

It is striking that even the ‘Council of Laws’, a body of judges who investigate every proposal made by the government before they become law, said the so-called reforms discriminate against women, who earn less, and often only part-time.

Start of wider cuts

But the present opposition movement to these attacks is not only about defending the Unemployment Insurance scheme. Many workers also feel this is only the beginning of wider cuts and attacks. If the government manage to carry out these proposals, new and even more severe attacks will follow, particularly as the economy is slowing down.

It is also clear that the government aims to weaken the trade unions, by making it too expensive to be a trade union member or even being a member of a National Insurance Fund. (To rub salt into the wound, the government also proposed that tax deductions for trade union membership fees, and contributions to unemployment insurance funds, should be cancelled).

The government aims to make it cheaper and easier to hire workers, which is another way of saying it should be easier to fire workers.

More than 600,000 workers got unemployment benefit, last year, and the proposed changes will affect 100,000s, who will be next out a job.

The level of unemployment is falling, due to present economic boom, but there are still many more job seekers than vacancies. And more people will be unemployed after the government abolishes many job-schemes, next year.

Only mass struggle and decisive action can defeat the government. The initiative has to come from below, to build a movement strong enough to force the union leaders to act. Such a movement is on the rise and that is why the TUC was compelled to organise a protest on 14 December.

But it is not enough to just let off steam. The most combative section of the working class learnt by experience that struggle has to go beyond petitions, street meetings, and even demonstrations. The call for a strike reflects the need to build a national movement, as well as showing ways to develop the struggle further than the opposition to cuts in the 1990s.

This approach was summed up in a letter from several miners’ union branches to the leaders of the TUC: “Why does the TUC not regard a political strike as an effective weapon? A strike on 14 December is far more effective than letters to the papers…do the leaders have any knowledge of what know the members think and want…?The TUC has lost ideology and that is why the trade union movement has to find ways back to its historical roots.”

The letter was in reply to a scandalous comment by the TUC Secretary, who said a political strike was not in members’ interests because it put in question the parliamentary system. This is the same as saying the trade union movement could never stage a strike against government policy. The same argument could be used against any kind of protest. The union leaders are not even prepared to fight when the future of the unions are at stake!

The union leaders are also wrong to argue that political strikes are not a tradition of the workers’ movement. Political strikes were always part of the arsenal of workers’ struggles. One of the most successful strikes in Sweden was a three-day strike for the right to vote, organised by the TUC in 1902. This mass action forced the government to back down and won new members for the unions. In 1928, the TUC organised a national strike against anti-trade union laws.

Since then, the call for a political strike was part of every big movement against previous governments, particularly since the beginning of the 1990s.

The political strike call was a prominent part of last year’s movement against the transport company, ‘Connex Sweden’, after it sacked Per Johansson (chairperson of the metro drivers’ union in Stockholm).

Fight-back begins

For a long time, unemployment benefit was 90 % of income. It was a right-wing government (1991-94) that reduced payments to 80%. This provoked mass anger and demonstrations and eventually the right wing parties were kicked out office in the 1994 general election.

The CWI in Sweden (then called ‘Offensiv’), played a key role in the grass roots upheaval, forcing the TUC leaders, reluctantly, to organise national protests on 6 October 1992 and in 1993 (the ‘Day of Justice’).

In 1996, the social democratic government decided to make further cuts to Unemployment Insurance (by, in practice, reducing benefits to 75%) which provoked more mass opposition, bringing Sweden very close to a complete stand-still.

The situation today is not exactly the same as ten years ago – the protest movement has not yet reached the same scale – but still it marks a beginning of a new situation.

At least, in embryonic form, a new rank-and-file movement is born in the unions and a process of union members’ re-activation is taking place.

The last weeks mark the beginning of workers’ fight-back, after years of low activity, when many heads went down, due to a lack of confidence and fighting morale because of setbacks and the severe economic crisis of the 1990s. This was combined with the treacherous role of the union leaders, who blocked the road to struggle.

Over the last years, big business profits soared, and every chief executive awarded themselves bonus and wage increases on a scale never seen before. The wages’ share of production is down to 1940s levels, and, next year, share-holders in Sweden will, in total, get € 29.4 billion (SEK 265 billion) from dividend payments, which is more than one third of the state budget expenditure for 2007. Some companies are paying much more in dividends than they invest, and the number of billionaires in Sweden has doubled over the last ten years.

The current economic recovery is made on the backs of workers and created a huge gap between incomes. The boom left many workers behind, particular low-paid, single parents, while the unemployed figures increased, despite three years economic expansion (this partly explains why the social democrats were voted out of office, in September 2006).

But when the new government announced plans to accelerate and intensify the same old right wing policies, mass anger erupted, changing the political climate in the course of just two months.

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November 2006