HR in Sweden

The big winner for the Swedish economy has been its ability to remain peaceful and neutral throughout the entire 20th century. Sweden's neutral position allowed it to export freely to all of Europe during both World Wars, building a solid economic foundation. Sweden's long-successful economic formula of high-tech capitalism and extensive welfare benefits was challenged in the 1990s by high unemployment, and in 2000-02 by the global economic downturn. However, fiscal discipline over the past several years has allowed the country to weather economic vagaries.

The Swedish economy relies heavily on foreign trade, with timber, hydropower and iron ore making up the majority of the resource base. It has a modern distribution system, excellent internal and external communications and a skilled labour force. Privately owned firms account for about 90% of industrial output, of which the engineering sector accounts for 50% of output and exports. Agriculture accounts for only 1% of GDP and 2% of employment. Eighty per cent of the workforce is organised through the trade unions, which have the right to elect two representatives to the board in all Swedish companies with more than 25 employees.

The Swedish government's active policy with respect to foreign migration has been focused on refugees. Accordingly, Sweden has one of the largest per capita intakes of asylum seekers worldwide. One in five people in Sweden are either first or second-generation immigrants, and in less than 15 years' time it is likely that one in four Swedes will have an immigrant background. Sweden now faces the challenge of integrating the new cultures into its workforce. These immigrants have come with extensive work experience and language skills, and a level of education that, on average, is comparable to that of their Swedish counterparts. In fact, among those immigrants who have arrived in Sweden in recent years, twice as many have a post-secondary education as do the corresponding age groups in the Swedish population. However, there is a problem: Sweden's ability to utilise the strengths of people from other cultures in the labour market is far from well developed, and therefore a number of workplace training initiatives have appeared in recent years.

Talent challenges and strategies
Previously the labour market in Sweden was stable and the level of gainful employment was high. However, society's development has created new demands on the individual. IT development, self-service, multicultural societies and globalisation have affected the market. Current and potential employees, including immigrants, need specialist skills and guidance; and Sweden has a number of strategic workplace initiatives in place.

· Job centres and Infotek
Primarily aimed at unemployed adults or adults who risk becoming unemployed, job centres provide vocational guidance, information on jobs and professional rehabilitation. There are 300 job centres in Sweden reporting to Länsarbetsnämnden (LAN) (employment boards) who report to Arbetsmarknadsverket (the Labour Market Administration). Immigrants with permanent residence permits can use the same services as Swedish citizens. They have access to a number of services such as language courses and assistance in translating qualifications into Sweden.

Infotek, also available at most job centres, is a free service open to all - whether they are unemployed or not. It provides information on professions, education, study support, the labour market, information about studying and jobs abroad, and free internet access.

Private vocational and study guidance services first appeared in Sweden in the last decade. Private centres offer recruiting and mediation services, vocational guidance and various online courses.

· ALT
ALT is a national, revenue-financed consultant organisation within Arbetsmarknadsverket (the Labour Market Administration), which specialises in personnel development and job-oriented rehabilitation of employees in order to assist companies to become more competitive.

· TRR (Employment Security Council)
TRR was born from a trade union agreement between the Swedish Employers' Confederation (SAF) and Negotiation Cartel for Salaried Employees in the Private Business Sector (PTK) over job rehabilitation, and its services are available to private company members. It is financed by fees calculated according to the total payroll for employees covered by the agreement. Companies can use TRR for redundant employees, those who risk becoming unemployed or those considering an offer to resign voluntarily. TRR offers support in finding new employment or starting your own business.

· Trygghetsstiftelsen (Job Foundation)
This organisation was founded by the government and the civil service trade unions, and serves to prevent civil servants faced with redundancy from becoming unemployed. The foundation aims to enable civil servants facing redundancy to continue to work with the same employer but with different duties.

· Adult education initiative
Through this initiative, adults in the greatest need of education are given the opportunity to acquire more knowledge. There is a focus on counselling in order to provide the right education/curriculum for the right individual. Foundation students can apply for special education grants equal to the unemployment benefits received by mainstream students.

Employment laws

· Contracts of employment

Swedish employment contracts are normally valid for an indefinite term. Fixed-term contracts are only allowed in certain cases, for example if the employer faces temporary demand for extra workers.

In the event of work shortage, the employer must first terminate the contract of the last employee hired. That employee must be transferred to a different part of the company if work is available and if that is not an option they are entitled to re-employment priority within the company for the next 12 months.

An employer is entitled to terminate an employee's contract on an immediate basis if the employee seriously neglects his work duties, but even then, only after all efforts to resolve the problem have been taken and official warnings given. Fixed-term contracts can be terminated without any specific grounds.

· Working hours

By law, the basic working week is 40 hours. Overtime is limited to 48 hours over a four-week period and no more than 200 hours per year. This applies to all employees, except for those in managerial positions and some other special categories - union contracts can also deviate from this law. Workers often take days off as compensation for overtime. However, employers are often flexible about working hours, particularly in smaller companies, and many employees can opt to work from home.

· Vacations and holidays

Under legislation, all employees on indefinite employment contracts are entitled to a minimum of five-weeks' paid annual leave after the first year of employment. Traditionally, most employees take four weeks off in July, which means that many companies all but close down operations in that month. However, in Sweden's much stronger international business environment, this is becoming less common.

· Parental leave

The Swedish social insurance system covers parental leave. Fathers and mothers can choose who will draw the parental allowance. Parents, combined, are entitled to 480 days of leave from work in order to care for children, starting from the child's birth. Sixty days are reserved for each parent and outside that, parents are free to decide how to arrange the remainder. The state social insurance system pays 80% (or a maximum cap) of the normal wage for the first 390 days to the parent who has decided to stay at home. After that, no matter what the parents' income, a parent will receive a set amount per day. It is not at all unusual for fathers to be on 'dad's leave'. Fathers also may take 10 days' leave in connection with the birth of a baby. Parents are entitled to take leave to care for sick children, up to a maximum of 60 days per child per year.

· Sick pay

The employer pays 80% of the total loss of income for days 2-21. From day 22 and onwards, the social insurance system pays employees a sickness benefit of 77.6% of their income. However, there are restrictions on the amount of compensation if the wage is over a certain amount.

Top 10 employers in Sweden

# Company Employees in Sweden
  1 Posten  31,861
  2 Volvo 26,722
  3 Samhall  19,769
  4 Volvo Personvagnar  19,751
 5 Ericsson  19,309
 6 Scania  12,577
 7 Nordstjernan 11,320
8 Peab  10,988
 9 Apoteket 10,914
 10 Praktikertjänst  10,000

Company profile: Volvo
The Volvo Group is the second biggest employer in Sweden and exports vehicles all over the world. During 2006, the Group's workforce rose to more than 90,000 employees in 58 countries. The majority of employees are based in Sweden, France and the US, and Volvo Group's sales increased to nearly SEK 250bn.
A key feature of the Volvo Group's growth strategy is to increase its presence in emerging markets, primarily in Asia and Eastern Europe. During 2006, the Group increased its sales in Eastern Europe by 41%. Volvo implemented investments in Japan and China during 2006. These provided a platform for increased sales and in the long term are expected to contribute to the Group's growth target.
Training and development
Volvo believes their employees are responsible for managing their own development and careers. To support this vision, Volvo has a number of education initiatives in place.
- Volvo Learning Partner is a strategic asset for the Volvo Group to achieve its desired position and business results through consistent learning solutions with a focus on leadership, corporate culture and corporate strategic issues

- Volvo HR Service Center, Competence and Leadership Development, Sweden, provides learning activities such as leadership development, project management, languages and personal training

- Volvo IT Learning Services, Sweden, provides QT-related learning solutions
Management and morale surveys
The Volvo Group has a decentralised management. For the most part, decisions are made at the level affected, provided that the long-term objectives and strategies are met. Communication and clear objectives, with follow-up and feedback, help create the common focus - at all levels. A survey of employees' attitudes is conducted annually. The Employee Satisfaction Index has increased in recent years, from 77% in 2003, to 81% in 2004, and to 83% in 2005.

Income comparisons

Tax and contributions

Sweden has a relatively high rate of personal income tax (ranging from about 30-50%) but much of this revenue goes back to tax payers in the form of transfer payments and public services. The national government assumes responsibility for a great many services such as education, labour market and industrial policies, care of the sick and elderly, pensions and other social securities and environmental protection.
Sweden also has one of the highest rates of value added tax (VAT). VAT currently accounts for 20% of total price and is charged for virtually all goods and services. The most important exception is food, on which VAT is 12%. Environmental and energy taxes are generally far higher than in comparable industrialised countries.

Income tax

Personal income tax rates, the combination of state and local rates, were 31% on the first increment of taxable income up to SEK232,600; 51% on the next increment up to SEK374,000; and 56% on increments of income above SEK374,000. Personal deductions vary between SEK8,600-18,100. A health tax is levied at 1.5%. There is also a real estate tax.

Corporate tax
Unlike most other tax rates, the Swedish corporate tax is relatively low. It amounts to 28% of profits. Companies can make pre-tax allocations to untaxed reserves, which are subject to tax only when utilised. Availability of this allocation makes Sweden's effective corporate tax rate about 26% on undistributed profits. Certain amounts of untaxed reserves may be used to cover losses.
* By law, employers must pay social security fees of 32%, consisting of statutory contributions for pensions, health insurance and other social benefits.
* Dividends paid by foreign subsidiaries (at least 25% ownership) in Sweden to their foreign parent company are not subject to Swedish taxation. Dividends distributed to other foreign shareholders are subject to a 30% withholding tax under domestic law. However, according to double-taxation agreements, this rate is normally reduced to 15%.

Facts and trivia
· Men can opt to be 'stay at home dads' and parents receive a total of 480 days of paid parental leave
· 80% of the Swedish labour force is unionised
· If you are ill during your paid leave period or holiday, you can apply for sick leave
· Day care cost is based on your family income, with a government imposed maximum

Sources:

- www.cia.gov/library/publications/the-world-factbook
- www.paraplyprojektet.se/reports-and-publications/diversity-management
- www.scandinavica.com/culture/society/working.htm
- www.volvo.com
- www.sweden.se/upload/Sweden_se/english/factsheets
- www.isa.se/upload/english/FactSheets/Taxes_in_Sweden.pdf