Swedish PM Faces No-Confidence Vote as Labor Talks Collapse

(Bloomberg) -- Sweden's minority government is facing a vote of no confidence after talks between labor unions and employers' groups broke down in the early hours of Thursday.

Without the hoped for labor agreement, Prime Minister Stefan Lofven is now under pressure to propose adjustments to existing labor laws. But some lawmakers have already threatened to put forward a motion of no confidence if the prime minister goes ahead with the plan.

Jonas Sjostedt, leader of the Left Party, says he'll demand that Lofven step down if he tries to push through draft proposals to change existing labor law. Meanwhile the country's main opposition party, the Moderates, has said it won't back such a vote.

The tensions stem from an agreement Lofven struck after the last election. The inconclusive result following the 2018 vote forced him to enter political deals to secure enough support to rule. One such deal is now coming back to haunt him, namely a promise he made to the Center Party and the Liberals to relax labor market laws.

Such a step would be wildly unpopular with labor unions and even among members of Lofven's own party, the Social Democrats. Proposals to make it easier for employers to fire workers are particularly contentious, and the leader of Sweden's largest umbrella organization for labor unions, LO, said her organization would continue to fight them.

“We're not giving up. We will use all available means to succeed,” Susanna Gideonsson, who is also a deputy on the Social Democrats' executive committee, said on Twitter. “These are issues that should be dealt with by labor market parties and not by politicians.”

Without support from the Moderates, the Left's challenge to Lofven won't garner enough votes in parliament to topple him. That means Lofven, who has a history of surviving seemingly intractable conflicts, is probably safe for now.

The proposals drafted by a government-appointed panel include:

• Expanding the possibility for companies to disregard seniority when deciding whom to lay off in case of redundancies
• Mandatory requirement for employers to provide employees with education and skills development
• Cutting layoff costs by not allowing employment to continue in cases where an employee makes a legal claim to declare a termination invalid
• Removing the possibility to have a termination declared invalid in cases where the employer has fifteen employees or less (in such cases, employers would still need to pay damages if a court finds there was no legal ground for the termination)
• Strengthening protection for employees with general fixed-term employment

The proposals would affect 2.8 million privately employed workers. According to the January agreement between the government and co-operation parties, the inquiry's proposal will be implemented in 2022 if the social/labor partners do not agree.

©2020 Bloomberg L.P.