Minimum wage regulation
In Sweden there are no statutory regulations guiding wage setting. Minimum wages are set by the mutually recognised social partners for each sector. Many low-wage occupations have set minimum wages in their collective agreements, either expressed in hourly or monthly rates. The lowest wages in collective agreements are usually negotiated separately from the general wage increases to not contribute to an increasing wage discrepancy between high- and low-wage earners: while the general wage increases are always expressed as a percentage of the applicable wage levels, the lowest minimum wages are increased by an (normally higher) absolute value.
None of the collective agreements are generally applicable, and there are no mechanisms for compulsory membership to an employer’s organisation, neither do extension mechanisms apply. There are two ways for a collective agreement to be binding on an employer: either the voluntary association with an employers’ organisation or the signature of a collective agreement directly with the relevant trade union (which is, in most cases, the same one as the sectoral agreement). However, employees are covered by the collective agreement regardless of their trade union membership status, as long as the employer has signed a collective bargaining agreement.
While voluntary participation from employers is integral to the system, the ability to strike for the purpose of securing a collective agreement is a vital aspect of its operation. Given the relatively high density of unions and the existence of the right to strike, it's uncommon for companies to abstain from signing collective agreements as they expand. Consequently, the coverage of such agreements tends to be smaller among smaller companies. During the duration of a signed agreement, a peace clause is enforced, promoting stability in the labour market. In essence, the right to strike serves as a safeguard for minimum wage standards, as it holds trade unions accountable for wage negotiations across the labour market.
Collective bargaining coverage for low-paid workers
According to a recent report on collective agreements' coverage rates and gaps (Kjellberg, 2023), the overall coverage of collective bargaining agreements stands at approximately 90%. Within the public sector, coverage reaches 100%, while in the private sector, it hovers around 80%. However, significant coverage gaps are evident, particularly in key sectors such as HORECA, certain segments of agriculture, platform-based employment, various transportation domains, hair and beauty services, and cleaning industries, among others. Many of these sectors represent some of the lowest-paid occupations.
Notably, coverage gaps extend beyond traditionally low-paying sectors to encompass white-collar professions, including both high- and low-paid roles, such as call centres, the video game industry, technology, and finance. In the HORECA sector, characterized by a relatively low rate of trade union organization (31%), the coverage stands at 70%.
Despite these gaps, the majority of the labour market operates under collective bargaining agreements. Small businesses often align their wage levels with those stipulated in applicable agreements but may refrain from formalizing agreements due to other considerations.
Certain groups of workers face heightened vulnerability, particularly seasonal workers who frequently operate on piece-rate pay structures and may lack coverage under collective agreements. Notably, seasonal workers engaged in berry picking have emerged as focal points in discussions regarding individuals excluded from Sweden's conventional wage-setting framework, placing them at risk of exploitation.
Actors involved in determining the minimum wages
The primary actors in the minimum wage setting are the relevant sectoral social partners. Overall, all social partners involved in wage setting adhere to the industrial wage setting norm, giving industrial social partners a greater influence over overall wage increases in each negotiation round.
The industrial trade unions are:
- IF Metall, Unionen, GS (forestry, woodwork and graphical union), Engineers of Sweden, Food Workers’ Union.
Eleven organisations represent industrial employers:
- the Association of Swedish Engineering Industries, The Association of Swedish Graphic Industry, The Swedish Federation of Green Employers, Innovation and Chemical Industries in Sweden, The Swedish Association of Industrial Employers, The Swedish steel producers' Association, The Swedish Food Federation, Swedish Forest Industries Federation, SveMin (Swedish mining industries), TEKO (Swedish textile and fashion industry), and The Swedish Federation of Wood and Furniture Industry.
As for other sectors, some social partners organise the lowest wage occupations to a higher degree than others. In general, blue-collar workers tend to earn less than white collar workers, meaning that the trade unions who are part of the blue-collar collective LO (Landsorganisationen i Sverige, Swedish Trade Union Confederation) are more likely to organise lower wage occupations. According to the 2024 wage report from LO, the average salary of a white-collar worker (organised by TCO – Tjänstemännens Centralorganisation, Swedish Confederation of Professional Employees – or SACO – Sveriges Akademikers Centralorganisation, Swedish Confederation of Professional Associations) was in 2023 SEK 47,000 (€ 4,095) per month, and the average salary of a blue-collar worker was SEK 30,600 (€ 2,666) per month. Within the LO-collective some unions organise more low wage occupations than others. An example of a large trade union that organises several occupations that can be considered low wage is the Swedish Municipal Workers Union (Svenska Kommunalarbetareförbundet), that organises a wide range of workers, primarily in the municipal sectors (such as assistant nurses, teacher assistants, janitors, child minders, agriculture, and bus drivers). Process of setting the minimum wage – bargaining rounds
The wage-setting process in Sweden has followed clear patterns since 1997, governed by the 'Industrial Agreement Norm'. Under this model, industrial sectors negotiate overall wage increases for the entire economy, given the crucial role of exporting industries in Sweden's economic well-being. Following the establishment of wages, other unions typically opt to coordinate their agreements.
To mitigate widening wage disparities, this coordination also establishes a benchmark for the lowest-paid workers, determining their wages as a fixed amount rather than a percentage increase. This benchmark is revisited in each bargaining round and may vary slightly across sectors.
Collective bargaining agreements are typically renegotiated on a three-year cycle, although this is not a rigid rule. Social partners have occasionally opted for shorter agreements, often in response to external factors. For instance, in 2023, a two-year agreement was reached, with initial proposals aiming for a one-year term, driven by concerns over inflation and uncertainty.
Subminima
Subminimum wages are established for specific groups, such as workers under the age of 20. One prevalent example is found in the collective agreement for unskilled hotel and restaurant workers, comprising individuals who do not require formal education or certification for their roles. These subminimum wages are categorized into four age groups: under 17 years old, 17 years old, 18 years old, and 19 years old. Each wage level is adjusted concurrently with other wage levels during negotiated increases in bargaining rounds, resulting in incremental raises annually. This model extends to various sectors beyond hospitality, including warehousing, e-commerce, retail, and others. These minimum wages apply to completely untrained workers and increase with experience and education, mirroring regular wage structures.
Additional subminimum wages are established, notably for student workers in construction and building sectors. In this context, subminimum wages are not directly tied to age but instead correspond to the number of years completed in trade school. These levels typically range from unskilled to completion of one or two years at a vocational school. Upon completing three years of schooling, students are expected to be compensated according to the standard agreement commensurate with their experience.
What counts towards the minimum wage
In Sweden, it's atypical for bonuses to be included in minimum wage calculations, and there's no legal definition for a basic rate. The basic rate is typically specified as a monthly salary for full-time work or an hourly wage. While piece wages are uncommon overall, they do appear in industries such as construction, sales, and plantation work, often in combination with an hourly wage. Collective agreements commonly regulate piece wages, but employers can also offer them outside of negotiated agreements.
Holiday compensation is always considered part of the wage, even for workers with irregular hours or short-term contracts. In such cases, paid time off is rare, and instead, workers receive a 12% addition to their salary as holiday compensation.
Deductions are permitted, such as when an employer provides food or accommodation. Regulations govern deductions for employer-provided accommodation, including limits on the maximum deduction or rental payments. In such instances, deductions are determined by comparing rent prices for similar apartments in the area.
Regular national reports or resources on minimum wage setting
The National Office of Mediation issues annual reports on overall wage trends, industrial relations, and mediation activities in Sweden, typically released around March each year. Additionally, they consistently publish an annual report on gender wage disparities, a tradition maintained since 2008.
Furthermore, the National Office of Mediation releases monthly reports on wage developments. One of these reports compares wage increases from one month to the next, segmented by blue-collar and white-collar workers as well as by employees in the private and public sectors. This report also factors in inflation, presenting both real and nominal wage changes on a monthly basis.
The other monthly report provides insights into wage developments for the current month while forecasting future trends. It conducts analyses on wage levels relative to international trends, the competitiveness of the Swedish economy, inflation rates, economic growth cycles, and currency fluctuations.
Other country resources on minimum wages
Anders Kjellberg, a sociology professor at Lund University, regularly releases reports on collective bargaining coverage rates, union density, and employer organization rates. These reports serve as invaluable resources for national assessments of labour market and industrial relations developments. In 2023, he authored a report with a specific focus on the 'white spots' of collective bargaining coverage, highlighting gaps in coverage across various sectors and company sizes.
Given their extensive access to collective agreements, peak-level social partners also conduct research on wage levels and serve as significant sources of information. The Confederation of Swedish Enterprise issues annual reports on wage levels and working hours, providing breakdowns by sector, gender, and skill level. Similar breakdowns for working hours are also available in each report.
Similarly, the peak-level blue-collar union, Landsorganisationen (LO), produces annual wage reports detailing average and minimum wages. These reports often include long-term comparisons between blue-collar and white-collar workers, as well as between genders.
Updated 20/03/2025