Perhaps the most important element of the 1997 law, and certainly that which met with most
heated opposition from the trade unions, was the opportunity to strike collective agreements on
derogations from statutory law regarding fixed-term contracts at the local level, provided that the
parties had a central agreement in other matters. As collective agreements may lead to more
liberal regulation than in statutory law, the trade unions were presumably concerned that
employment protection rights would be eroded by bargaining at this lower level. Prior to 1997,
these agreements could only be made at the central (usually national) level.
3. An Overview of Temporary Work in Sweden
3.1 The Aggregate Picture
Total employment in Sweden fell by 13 percent - close to 600 000 persons - between the first
quarters of 1990 and 1994. This dramatic decline was due to sharply falling “permanent”
employment and not the result of a decline in the number of fixed-term contracts. In fact, the
number of workers with open-ended contracts fell by slightly more than 600 000 over the period
1990-1993 whereas the number of fixed-term contracts stood at approximately the same level in
the first quarter of 1994 as it did four years earlier. The overall decline in total employment was
marginally offset by a slight increase in self-employment.
Figure 3.1 displays the evolution of permanent and temporary employment over the period
from 1987 and onwards.4 The strikingly different developments of permanent and temporary
employment stand out. When the economy approaches the cyclical peak, i.e., in the late 1980s,
we observe rising permanent employment along with a decline in the number of fixed-term
contracts. From the early 1990s and during most of the rest of the decade there is a remarkable
increase in fixed-term contracts that amounts to roughly 50 percent. Measured relative to total
wage and salary employment, the number of temporary workers rose from 10 percent to 16