The Demand for Full Employment - The Shift in Swedish Trade Unions' Economic Thinking Since the 1980s"

Full employment has long been a central demand of trade union organizations worldwide. In Sweden, the Rehn-Meidner model served as the cornerstone for balancing full employment and inflation control during the post-war era, contributing to decades of low unemployment and a strong bargaining position for unionized workers. However, since the 1980s, structural changes—including the shift toward a service-based economy—have altered the economic conditions that once made the Rehn-Meidner model effective. Today, unemployment is persistently higher than in the 1980s, and a number of interrelated shifts have occurred, for example: 1) The link between employment levels and improved working conditions has weakened, as temporary and irregular employment now tends to increase during economic booms, rather than aligning with the business cycle or the unemployment rate (de Los Reyes & Carlén, 2021). 2) While Swedish trade union economists once assumed a reciprocal relationship between higher productivity and better wages or shorter working hours, recent empirical research reveals that the link between technological advancement and improved working conditions varies across countries and historical periods, challenging the notion of a consistent ‘productivity bandwagon’ (Johnson & Acemoglu, 2024). 3) Finally, the long-held assumption that economic growth drives job growth is increasingly outdated. As the International Labour Organization (ILO) has noted, the relationship between GDP growth and job creation is weak or even negligible in many developing countries, and it is diminishing in advanced economies as well (ILO, 2020). Few studies have analyzed how these overarching changes have been understood and strategized by the trade union organizations themselves, despite their maintained influence on labor market issues and their continued demand for full employment. This paper aims to explore the evolution of economic thought within Swedish trade unions from the 1980s onward, examining how they have adapted their economic thinking and strategies for full employment in response to the structural changes of the labor market. Sweden’s experience is unique, yet potentially instructive, particularly because of the unions’ remarkable success in making full employment the central political goal from the post-war period into the 1990s. This long-standing commitment to full employment makes the shift away from this paradigm especially radical. Additionally, the economic models developed by Swedish trade unionists such as Gösta Rehn and Rudolf Meidner have continued to influence unions globally, even as their relevance has waned in Sweden itself. For these reasons, Sweden offers a crucial case study for understanding the evolution of labor policies and union strategies worldwide.