Elon Musk, the notoriously anti-union CEO of the electric car giant Tesla, finds himself on the ropes in his dispute with Swedish workers. After more than two months of strikes – the first against Tesla anywhere in the world – 10 Swedish unions have so far launched industrial action against the company and the pressure is growing.
The issue at the core of the original dispute concerns Tesla and the Swedish industrial union IF Metall, which sought a collective agreement to provide better wages and benefits for mechanics in Tesla’s repair shops. The union’s members in Sweden have been on strike since 27 October.
Tesla was already under pressure to unionise in the US and in Germany, where it has a large proportion of its almost 130,000 employees. So far Musk has managed to bat away their complaints. Tesla was unaffected, for example, by a six-week American automotive strike last year, because workers in the US (like those in the UK) have few legal protections if they strike against employers that refuse to recognise unions.
But nowhere in the world is the pressure stronger than in Sweden, which has been a trade union stronghold for more than 100 years.
Unions in Norway, Denmark and Finland have now joined their Swedish counterparts. This is because of another power that sets Nordic unions apart from their Anglo-Saxon comrades: the right to take solidarity industrial action, which was abolished in the US in 1947, and in the UK in 1982.
While other Swedish unions have no stake in the current dispute, they have come out in support of IF Metall. So for instance, the electrical workers’ union is blocking maintenance and repairs to Tesla’s repair shops and 213 charging stations throughout the country. The postal workers’ union has stopped mail deliveries to all Tesla offices (including licence plates for new vehicles), the transportation union will stop waste disposal for Tesla repair shops and has blocked the unloading of new Tesla cars in Sweden’s approximately 50 ports, and the building maintenance union is blocking all cleaning in Tesla’s repair shops and offices.
The unions acting in solidarity consider it especially important not to allow a big corporation to evade one of the pillars of the Nordic labour market model: collective agreements between employers and unions. If they look the other way with Tesla, the unions reason, other employers may follow suit. That would increase the share of workers not covered by collective agreements, which would pose a serious threat to the Swedish economic model.
Almost 90% of the workforce in Sweden is currently covered by collective bargaining. This rate of coverage is crucial because the Swedish model of worker protection rests far more on collective agreements than on legislation. For instance, there is no statutory minimum wage, and provisions on working time, employment security, pensions and other benefits are entirely or partly regulated in agreements.
Both unions and employers are content with the status quo. It allows unions to bargain for better wages and working conditions, and employers can adapt regulations flexibly to their sectors and businesses even at the firm level, in a manner that nationally applicable legislation might not allow.
However, this system will become unsustainable if employers begin opting out. The alternatives would then be to extend collective agreements by law, as in some other European countries – or to simply use legislation, which relegates labour market issues to the realm of party politics and usually sets standards far below collectively bargained provisions.
Swedish politicians typically maintain an arm’s-length approach to labour disputes, and both the prime minister and the employment minister have made public statements pledging not to interfere in the Tesla standoff. A Tesla lobbyist’s reported request for a meeting with the latter was said to have been declined by the ministry.
Another unorthodox measure has been similarly unsuccessful: namely Tesla’s lawsuits against the postal service PostNord and the Swedish transport agency over their decisions to respect the postal union’s blockade of deliveries of licence plates for new Teslas. The blockade has been partially upheld by the Swedish courts in preliminary decisions.
Not only are political and legal avenues now problematic, public sentiment has also turned against Tesla. According to a recent poll, almost six out of 10 Swedes support the strike and only two out of 10 are against it. More than half say that Tesla’s brand has been harmed by the dispute.
Meanwhile, pressure is also growing in the financial markets. A large Danish pension fund has decided to sell its Tesla holdings, and 16 Nordic institutional investors, including pension funds and insurance companies, have signed a joint letter urging Tesla to sign a collective agreement with IF Metall.
Elon Musk seems to neither care about nor even understand the Swedish model. His stance on unions is ideological, but also misinformed. Which is why there may be some hope of a pivot. At a recent New York Times forum, Musk offered some much-publicised derogatory remarks about unions. But he also made a less noted remark: “I don’t know, maybe we’ll be unionised.” He went on to say that he would consider it a failure – but the important thing is that he does not appear to rule it out.
Musk should consider the idiosyncrasies of the Nordic countries with the same interest that he studies car batteries or rocket designs. He would then realise that these economies have managed to be not only socially inclusive and egalitarian, but flexible, innovative and internationally competitive.
In the past 30 years, Sweden has had approximately 60% real wage growth for workers on all income levels, and remains among the world’s least unequal countries. Meanwhile, the country consistently ranks among the world’s most innovative, competitive and economically free nations (scoring higher than the US and the UK on most measures). And to be clear, this does not come with the cost of labour unrest. In fact, strikes are exceedingly rare in Sweden and its labour market is among the most peaceful in Europe. The Tesla strike is a rare exception. Put simply, the model benefits workers and firms, which is why it is widely supported.
In the current debate about how to increase British productivity as well as economic equality, it would be wise for UK policymakers, legislators and employer associations to turn their attention to Sweden. A good start would be to recognise the economy-wide benefits of a strong labour movement.
German Bender is chief analyst at the progressive Swedish thinktank Arena and a former visiting research fellow at Harvard Law School