Working conditions in Sweden are among the best in the world, thanks to sophisticated environmental and worker-safety regulations. Its labor force of some 4.3 million is disciplined, educated, and experienced in most modern technologies. About 87 percent of Swedish workers belong to a labor union, arguably the world's highest rate, and unions are active partners with businesses in implementing more efficient programs. Swedish legislation provides for labor representation on the boards of directors of large corporations and requires management to negotiate with the unions prior to implementing major changes. Management-labor cooperation is traditionally non-confrontational. There is no fixed minimum wage, and all wages are set by collective bargaining. Since 1991, real wage increases have exceeded those of most EU countries. As the EMU debate gains momentum, labor unions are calling for buffer funds, similar to those created in Finland, as a "cushion" for pension savings and other worker benefits during the transition period to the euro, in the event that there are any large currency fluctuations.
Many pro-business observers, including those from the International Monetary Fund (IMF), have recommended some fundamental labor market reforms, including wage differentiation (to reduce labor costs for low-skilled jobs), introducing an incentive to increase individual competence, strict eligibility requirements and limitations on unemployment benefits, the reduction of income taxes and non-wage labor costs, making the unions and their members bear the costs of the unemployment insurance system, and liberalizing employment protection legislation. Such measures are believed to increase efficiency and competitiveness, but labor representatives complain that they would place more burdens on workers.
Sweden's primary labor-related problem remains its level of unemployment. During a very short period in the early 1990s, the unemployment rate rose from levels among the lowest in the industrialized world to the average EU levels, where it remained until the business cycle improved in 1998-99. By 2000, the unemployment rate was less than 5 percent, but was 8.7 percent for those employees involved in training programs. Sweden's government plans to reduce the unemployment rate to 4 percent and to assure that 80 percent of the working-age population have a full-time job by 2004.