Sweden is a country in northern Europe with a population of more than 10 million people. The majority of Sweden’s population is between the ages of 25 and 34. Currently, about 73% of Sweden’s labor force is employed but despite a youthful population, Sweden has a relatively high unemployment rate, at 531,000 people, or 9.7% of the population.

More than 3 million Swedes are employed in the private sector and taken together, the manufacturing industry and service sectors contribute 87.4% to the country’s GDP. The industrial sector employs around 17.7% of Sweden’s workforce and makes a contribution of 22.2% to the GDP. The service industry, like telecommunications and IT, employs 80.7% of Sweden’s workforce and contributes 65.2% towards the GDP.

In January 2019, all political parties in Sweden agreed that there was a need to reform the labor laws in Sweden. They proposed the “modernization of Swedish labor laws,” and as a result, an independent committee was formed to assess the current laws with a goal to modernize them. In mid-2020, the committee presented its amendments to the Employment Protection Act, and pending agreement of all parties and approval through the legislative system, the amendments are slated to become effective from January 2022 onwards.

The proposed amendments to the Employment Protection Act were:

Skills Training

According to the amendments proposed by the investigative committee, it was suggested that after 6 months of employment at an organization or a company, all employees should be eligible for mandatory skills training. Those employers who fail to comply with this regulation will have to pay for the damages to their employees who were not offered skills training. The damages can be paid either at the end of a fixed-term contract or during the termination, especially if the employee is being fired due to redundancy.

Promotions

When considering promotions, employers will be required to select the person most qualified and deserving of the position without any extra training. This means that if two people are contesting for the same senior position during the next round of promotions, then the employee who can immediately fit into the senior role with his or her exiting qualifications will be chosen instead of the one who requires 2 to 3 additional months of training and skill development to fit into the role.

Terminations

During a redundancy, the people who have been working for a company for a long time will be prioritized as compared to those who have recently joined the company. The ‘Last In, First Out’ rule remains a highly controversial rule in Sweden, and it is still being debated in Parliament. The only exception to this rule is when a company is unable to replace the new employee who is performing a key role in the company, in which case they can remain employed.

Another change to the termination clause is that now an employee who has been terminated with notice can no longer claim employee benefits, salary or enter the office premises during the period of the dispute. The court will have the right to examine the termination, but the employee will no longer be a functional employee at the company. And if the court rules in favor of the employee and recognizes the termination to have been unjust and unlawful, then the employer will only be required to pay for the damages but still will retain the right to terminate the employee.

What Does it Mean for the Swedish Labor Force?

Even though the Swedish population will now have better access to skills development and growth, employers will have the right to terminate an employee even when the court has recognized the termination as unlawful and unjust. This means that deserving employees could potentially be unemployed for months due to redundancy, and the company will not even be obliged to pay them their severance pay because the law would not make it mandatory for employers to cover their employees’ expenses after they have been terminated.

The current discussions on Sweden’s Employment Laws have led to a deadlock between the political parties, and the trade unions are demanding increased access to labor rights.