Business: How the Scandinavians Do It

To much of the world, Scandinavia, rather than the U.S., represents the ideal of an economic Utopia. Sweden has the world’s second highest per capita income; Denmark, Norway and Finland also rank high. All four are free of slums, hunger and extreme poverty. All enjoy steady economic growth combined with full employment. By contrast, the U.S. is beset by labor unrest, rising unemployment and slow growth. How do the Scandinavians do so much better?

To find out, TIME London Correspondent Lansing Lament toured Scandinavia for two weeks, talking with government, industry and labor leaders. “Other nations,” he reports, “may be plagued by jolting strikes and shutdowns, but in Scandinavia relations between workers and employers remain remarkably serene. This tranquility between such traditionally adversary forces seems at times as magical as a Hans Christian Andersen fairy tale. It also happens to be the special glory of the Scandinavian economic system.”

Sweden has not had a major strike since 1945. Norway has had no strikes at all since 1965. Denmark has a less enviable record, but in terms of work days lost by strikes, it is almost 50 times better than the U.S.’s.

A stated goal of Sweden’s National Trade Union Confederation, or Lands-organisation, is “to give due consideration to the effect of wage developments on the national economy.” Sweden’s powerful LO represents one worker in every two, and Denmark’s LO also has every second worker as a member; Norway’s encompasses a third of all breadwinners. Management groups are equally strong, well-organized—and enlightened. Corporations provide quite a few fringe benefits. Oslo’s Tandbergs Radiofabrikk, for instance, supplies a gym for its employees and holds parties for them, including one near Christmas for their children.

Every two or three years in Sweden, representatives of labor and management negotiate an umbrella agreement, setting the rates for wage increases across the country. The terms are then written into detailed contracts for each industry. New contracts negotiated last June provided for an increase of 6.5% during the first year, plus another 3.5% the second year. One reason why employers can afford such increases is that the LOs enthusiastically cooperate in raising productivity, which in Sweden alone has gone up at an average of more than 7% a year during the 1960s.

With minor variations, the same negotiating patterns prevail throughout Scandinavia. The harmony derives from a distinctively Scandinavian sense of selfdiscipline. Items:

ATTITUDE: Each side takes care not to surprise the other. A labor-management committee meets three times yearly to discuss the next moves. It helps, too, that, as Clas-Erik Odhner, a top official of Sweden’s LO, puts it, “everyone knows everyone else. We are all friends.”

ORGANIZATION: Scandinavian unions are organized in large groupings that minimize jurisdictional squabbles. Unions do not try to raid each other for members or to leapfrog each other’s gains. Secure in their jobs, labor leaders are free from rank-and-file pressure to win ever higher wage settlements.

ENFORCEMENT: Contracts are legally binding, and LO officials deal harshly with any wildcat strike, threatening to expel an offending local from the national union. They are backed by labor courts, which have the power to fine individual strikers. When 1,000 longshore men walked out at Gothenburg last month in Sweden’s first sizable wildcat strike in 20 years, they prudently announced in advance that their protest against piecework wages would last only one week.

Layoff Bonuses. Governments usually stay clear of the negotiations, except to appoint a mediator occasionally, when the bargaining is especially tough. The government contributes to labor peace through selective intervention to aid the unemployed. Sweden’s National Labor Market Board has a highly honed intelligence system to warn of impending layoffs in plants. Often, the board establishes an employment office on the spot to arrange to retrain workers and find them new jobs. It pays the travel cost of interviews for job seekers, as well as moving expenses and family allowances, plus a $130 bonus for each worker, just to raise his morale. Says the board’s deputy director general, Bertil Rehnberg: “If we did not assist people to adjust to new possibilities, it would cost us much more in the long run.”

What can the U.S. learn from the Scandinavians? Among other things, there could be more regular contact between labor and management negotiators, prior agreement to negotiate any point of conflict and earlier involvement of national unions in local disputes. Beyond that, the price for labor peace in the U.S. would require that both labor and management relinquish part of their cherished economic sovereignty. So far, the U.S. has not even begun to debate that question.