Mar 2, 2009, 14:49 GMT
Stockholm - Citing a 'state of emergency' in the Swedish economy, an influential Swedish blue-collar union announced Monday it has agreed to cut wages for its members to save jobs.
The Swedish economy is currently undergoing 'the worst crisis we have experienced,' Stefan Lofven, head of IF Metall, comprising the Swedish Industrial Workers' and the Swedish Metal Workers' Union, told reporters.
Lofven cited a Statistics Sweden statement on Friday that said the Swedish economy had contracted 4.9 per cent in the fourth-quarter 2008, which he described as one of 'the largest declines' in recent history.
As of Monday, the union said it has agreed with the Association of Swedish Engineering Industries that groups some 3,400 engineering companies to allow pay cuts of up to 20 per cent in return for not firing workers.
'This gives us a chance to reduce the need to dismiss employees and reduces costs for companies,' Anders Narvinger, chief executive of the Association of Swedish Engineering Industries, said.
The deal offered better terms than being fired and receiving dole payments, worth only 50-60 per cent of a salary including overtime, IF Metall negotiator Veli-Pekka Saikkala said.
The deal covered some 80 per cent of the union's 400,000 members.
Local employers and local union chapters were to hammer out terms, but IF Metall envisaged that workers who were laid off without pay could be offered extra training.
Lofven said the union had seen a surge in unemployment among its members since the world economic crisis hit Sweden and many of its export-based companies last year.
Some 34,000 members were unemployed and 40,000 have been given notice, he said.
'This summer we could hit 25 per cent unemployment' among members, he said, urging the government to step in and do more.
The agreement would be in effect until end of March 2010.
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