Klarna, the payments giant started talks with Unionen, Engineers of Sweden and Akavia on April 19th, and the same three unions are set to begin talks with Spotify on May 8th. Talks with several other big Swedish tech firms are expected to follow. 

But while Spotify’s management has agreed to proceed with the talks and has done nothing to shut down the highly active thread on the company’s internal Slack messaging service discussing the bargaining agreement, the company this week began to hand out flyers to employees arguing that a union deal would not be in their interests. 

According to the flyer, employees of the company have historically received salaries roughly twice as high as those ensured under the standard collective bargaining agreement for the tech industry, and they also enjoy better parental leave, pensions, and healthcare, as well as longer notice periods. 

“We respect how the Swedish Model is advantageous for certain types of companies, but we want to question whether the same model should be applied to a company like Spotify,” the flyer, titled The Spotify Way, reads. 

Is there any truth to the company’s claims?

We look at them one by one. 

Does a collective bargaining agreement have to be with the whole sector? 

In its message to employees, Spotify argues that the company would have to join an employer’s organisation and sign an off-the-shelf collective bargaining agreement. 

“A company of our size has to join an employers’ organisation which negotiates with many workers,” it claims. 

Both Sara Hedman, a specialist in agreements at Unionen and Heléne Robson, chief lawyer at Engineers of Sweden, told The Local confirmed that unions and employers’ organisations preferred to strike sector-wide agreements, although it is also possible for companies to sign a so-called hängavtal individually. 

“We do have hängavtal with companies and we don’t advise against them or try to recruit for the employer organisation, but we do point out the benefits, such as that the fees are a bit lower and the company can get help from the employer’s organisation,” Hedman said. 

Robson said it was preferable for a union if a company joins a broader industry-wide agreement as there would “otherwise be a risk of a very diverse market and a risk of companies trying to dump conditions and play out each other.”

If companies can “cherry pick certain things and not others”, she warned, it might ultimately threaten the collective pension plans and transition organisations such as Trygghetsrådet. 

But she stressed that what was most important was that a company did agree to a collective agreement and thereby gave their employees more secure working conditions. The exact form this takes was less important.

So it does seem that Spotify’s brochure is partly correct here. 

When The Local spoke to Sen Kanner, the chair of the union club for Unionen in Klarna, however, she said she hoped the negotiations which started last week would end up with a hängavtal. 

“My personal ideal would be to see Klarna have their own unique collective bargaining agreement, that would become the standard for the rest of the tech industry to follow,” she told The Local in our Sweden in Focus podcast. “We are a lot more fast-paced [than other companies]. We care a lot more about digitalization and working from home and these kinds of new trends. A lot of unions in Sweden are a little bit too old-fashioned for that.” 

Henry Catalini Smith, head of the Unionen club at Spotify, sees the off-the-shelf agreement agreed between Unionen and TechSverige, the employers’ organisation representing tech companies like Visma, Tietoevry, Ericsson, and IBM, as only “a starting point”. 

“There could be new stuff happening this time around that is a little bit unusual compared to the norm,” he said.  

Would foreigners get paid more or less with a collective bargaining agreement? 

In its flyer, Spotify said that joining a collective agreement would in practice mean that the salaries of employees would have to be in line with the “Swedish industry standard”, rather than around double that, as it claims is the case today. 

“It is going to be expected of us that we fit in and do not stick out,” it said. 

But as outlined above, companies like Spotify and Klarna would not have to sign the sector collective agreement, and even if they did, there is nothing to stop them paying above the union rate. 

“A collective agreement sets the minimum level, certain benefits that the employer can’t go under, such as, ‘you have to pay pension on this level, and you have to increase the salary by such an amount,” Hedman said.

But it did not set any salary limits on the upside. 

“We have companies that want to be a good employer and attract qualified people, and then can, of course, pay better. We would never say in the collective agreement that salary increases ‘should be 3.9 percent’. If the company wants to pay more in salary increases, or offer better pensions, it’s all open.” 

Robson, chief lawyer at Engineers of Sweden, said that under a collective agreement companies typically agreed to tie the total amount salaries will increase each year to the company’s results and other factors, but she stressed that there was no limit for salary increases for individuals.

“An employer can always pay more than is stated in the collective agreement or give more advantageous working conditions.”

What a collective agreement does is tie the company to certain pay rises over the relevant period, so that employees will get a minimum pay rise even if the company is doing badly, or if they individually are not deemed to have performed well. 

How would a collective bargaining agreement affect your parental leave?  

In its flyer, Spotify pointed out that employees currently receive 100 percent of their salary when they take parental leave. Under a collective agreement, it claimed, employees would only receive 90 percent with the total amount capped. 

But Hedman said that this was not the case. 

“In the collective agreement, we have certain levels for what parental leave pays, but as I said with the other benefits, if the employer wants to give them more, they can do it. It wouldn’t be, like, a crime against the collective agreement. But if you do need to cut costs and you have a collective agreement, you do need to pay what the collective agreement says, you can’t just stop.”

How would a collective bargaining agreement affect your pension?  

Spotify’s brochure also claims that under a collective agreement, employees would receive a union pension, whereas when working for Spotify they would receive an individual pension, with the implication that the Spotify pension is better.  

Hedman and Robson told The Local that it is indeed true that people working for companies with collective agreements have to have an ITP pension managed by Collectum, but that companies could choose to pay higher pensions through this scheme. 

“If they want to increase or decrease their contributions into ITP, they can do it, but they do have to sign up to an ITP plan. They can make exceptions, but that’s quite technical, but they can’t make individual pension plans other than ITP1 and ITP2.” 

She said that ITP’s scale gave it advantages. 

“Since they have so many members they can negotiate harder, so they have very low fees. Often, when we look at how much do you actually pay for your pension, and we compare it to ITP, we can see that you often get more money from the ITP plan.” 

Robson admitted, however, that this “was not always the case”, but stressed that even in cases where pensions outside of a collective agreement were higher, this should be balanced against greater security. 

“A pension plan in the collective agreement system cannot be changed by the company from one time to another and also gives the persons insured in it security, should the company not pay its premiums, for instance,” she said. “It also has components of insurance in the event of long-term illness as well as life insurance for the employees, which also must be weighed in when different pension plans are being compared.”

How would a collective bargaining agreement affect your notice period and redundancy?  

In Spotify’s brochure, the company claims that under their existing contract, workers are entitled to three months’ notice before losing their jobs, which would be reduced to just one month under a standard collective agreement. 

It also claims that a collective agreement actually makes it easier for companies to get around ‘first-in last-out’ employment laws, where employees are laid off in reverse order of seniority. 

Hedman told The Local that it was true that during a period of redundancies, a union could choose to sign an agreement granting the company more flexibility over who should be let go. 

“But that’s something that has to be signed together with the union club,” she said. “They have more flexibility, but we see that as being in the company’s interest, because if things go well for the company, the members will have better employment and redundancies will be fewer.” 

Robson agreed that companies with collective agreements tended to enjoy “a larger freedom to make layoffs”, due to “rules on how a company can exempt parts of the workforce from being laid off”. 

“A company with a collective agreement also has a better possibility to agree with the unions on how the future organisation should be staffed and therefore more flexible ways to handle a situation when the company needs to lay off employees,” she added. 

The number of months’ notice would depend on what agreement the unions eventually make with the company. 

For employees, one of the big benefits when going into a period of redundancy is that the union club needs to be involved at the earliest stages, meaning a company cannot start to plan future redundancies without the union being informed. 

How else could a collective agreement affect foreign tech workers? 

Robson was adamant that a collective agreement does not reduce a company’s ability to hire internationally, pointing out that her union is currently lobbying Sweden’s government to give companies with a collective agreement a fast track in work permit applications. 

Both Kanner and Catalini Smith believe having a collective agreement would make Klarna and Spotify even more attractive to foreign workers. 

“What Spotify is going to find is that it’s actually a competitive advantage,” Catalini Smith said. “There’s going to be such a boost to the employer brand to have been one of the companies that embraces all of this, because it’s going to be a differentiator from the likes of Apple and Amazon who’ve made arseholes of themselves, because they’ve tried to fight this, and Spotify is going to look forward-thinking.”

“Sweden is already very, very, very good in terms of the kind of benefits and conditions that you get during your work life, so a lot of people that move here from other countries think this is the best that they’re ever gonna get,” Kanner agreed.  “I think it can only get better. So that’s what we’re trying to do to make it even even more overwhelmingly amazing for everyone.”