ABSTRACT
This chapter explores Sweden had low unemployment prior to the early 1990s, but, with some qualifications, job protection was mainly general. Every Swede had a right to work and to be retrained free of charge when necessary, but he or she usually had limited rights to a specific job, an attitude reaffirmed by the 1982 Agreement on Efficiency and Participation between labor and management. From an efficiency standpoint, the main potential advantage of centralized bargaining over industry-by-industry negotiations is that parties to the central negotiations are less likely to ignore the costs of "spillovers." Actions which raise wages and profits in one sector, at the expense of others or of the public, are less likely to be taken. Wage solidarity has increasingly been interpreted in this way, at a cost of many failures among small firms, as well as of other firms in textiles and light industries.
