Abstract
When changes are made to institutions in times of crisis, one can expect some sort of tripartite coordination, i.e. crisis corporatism. This is more probable in countries like the Scandinavian ones, with institutionalised relations between well-organised social partners. From an analytical framework of crisis corporatism, this article studies the role of the social partners in developing or changing job retention schemes during, and in the aftermath of, the pandemic. Furthermore, adjustments in these schemes were analysed through theories of path dependence and institutional change. Data consist of official documents, statistics and qualitative interviews. While changes in Denmark and Norway were a mixture of path-dependent adjustments and innovative measures, in Sweden there were only minor path-dependent adjustments. There were clear differences in social partner involvement, which partly followed the number of adjustments. While crisis corporatism was stronger in Denmark and Norway, the cooperation was more at arm’s length in Sweden.
Keywords
Introduction
The COVID-19 pandemic unleashed an unprecedented shock to labour markets worldwide (IMF, 2020). The disease and the lockdown measures quickly reduced economic activity in most advanced economies. Sweden stood out internationally regarding its limited use of containment measures, while the authorities in Denmark and Norway extensively closed down businesses and borders in March 2020.
Throughout Europe, one important measure to counteract the employment consequences of the Great Recession, and even more so during COVID-19, was various forms of job retention schemes (Hassel, 2014; OECD, 2021). These schemes allow companies to temporarily reduce the working time of employees for which they are unable to provide with sufficient work tasks, while the employment relationship is maintained and the employees’ incomes are mainly secured (Müller et al., 2022). Hence, companies are allowed to retain trained workers, preventing human capital losses at company level (Sacchi et al., 2011: 466). In the Scandinavian countries, as in most other countries, these schemes are based on tripartite structures. They are regulated through collective agreements in Denmark, a combination of law and centralised collective agreements in Norway, and a combination of law and central and local (collective) agreements in Sweden.
Scandinavia consists of small, open economies, often exposed to swift economic shifts. They are renowned for deeply embedded institutional relationships between the social partners and the state, aiming to reduce insecurity and legitimise quick policy adjustments during crisis (Katzenstein, 1985). Katzenstein argued that an externally imposed crisis may broaden narrow class interests and facilitate ideologies of social partnerships. When changes to key institutions are made in times of crisis, we can therefore expect some sort of coordination between the state, capital and labour, i.e. crisis corporatism, and particularly in countries, such as in Scandinavia, with institutionalised relations between well-organised social partners. Meardi and Tassinari (2022) studied the existence and form of crisis corporatism in France, Germany and Italy during the pandemic, and found that, compared to the Great Recession, production issues were higher on the agenda, providing more assertive roles for the social partners. While the social partners in Scandinavia wanted the governments to adjust or create job retention schemes during the Great Recession, the results were meagre (Dølvik et al., 2017; Mailand, 2020). In Norway, the government, in cooperation with the social partners, made some minor adjustments to the furlough scheme (Olberg, 2015). In Denmark and Sweden, however, the governments rejected the efforts of trade unions (hereafter unions) and employer organisations to adjust the existing scheme (Denmark) or create a new scheme (Sweden) together (Dølvik et al., 2017). In contrast to the Great Recession, Ibsen (2022) and a Eurofound study (2021: 21) indicate that the Danish and Swedish social partners were satisfied with the involvement in the policymaking process and its outcomes regarding employment and retention measures during the pandemic.
While Katzenstein (1985) points to smaller countries, such as the Scandinavian ones, as likely to execute corporative processes during crisis, there are limited comparative studies regarding the interaction, function and outcome of such processes. Hence, this study first aims to provide more knowledge of the degree and function of Scandinavian crisis corporatism by studying the role of the social partners in developing or changing job retention schemes during, and in the aftermath of, the pandemic (from 2020 to 2023). We study the process of developing or changing job retention schemes, as the pre-existing schemes were tripartite arrangements in all three countries under study, and as such, can be characterised as a most likely case of crisis corporatism (George and Bennett, 2005).
Furthermore, the output of the changes is essential, as actors have vested interests in the existing schemes, which may lead to reinforcing or changing them in path-dependent tracks. At the same time, facing a crisis of the magnitude seen during the pandemic opened up for new types of compromises and may move them in similar directions (Chung and Thewissen, 2011; Müller et al., 2022; Sacchi et al., 2011). Thus, a second aim of this article is to discern patterns of adjustments in job retention schemes, whether these patterns could be understood by theories of path dependence and policy learning, and how institutions and actor interests interact. Doing this, the study has a longer timespan than prior research on adjustments to such schemes during crisis, providing more knowledge on adjustments and readjustments as a crisis changes over time.
Importantly, most studies of changes to job retention schemes describe the changes made, without studying the actors involved in processes behind these choices (se for instance Chung and Thewissen, 2011; Clegg et al., 2024; Greve et al., 2021; Sacchi et al., 2011). Studying policy changes regarding job retention schemes in France, Germany, Italy, Spain and the UK during the pandemic, Clegg et al. (2024: 3533) concluded that more detailed reconstruction of the processes behind adjustments and novel solutions introduced would shed more light on how such changes were shaped by policy and power. As part of this study, we have conducted expert interviews with central actors in these processes. Hence, together the two aims of the study provide an analysis of the choices made, and the decision-making processes leading up to these choices.
This article is structured as follows. We first outline the theoretical framework and previous research before methods and data are presented. Thereafter, the design of the job retention schemes before the pandemic is presented, before we describe and analyse the role and responses of the social partners in these processes. Finally, the findings are discussed, and main conclusions are drawn.
Theoretical framework and previous research
Crisis corporatism and policy change
To analyse the role of crisis corporatism in developing job retention schemes during the crisis, we are inspired by a framework developed by Meardi and Tassinari (2022). First, they stress the form of corporatist interaction (if any), and whether it was tripartite or bipartite, formal, just informal, or both formal and informal. Second, the function of the corporation, and whether it was primarily ‘expressive’, i.e. providing legitimacy to decisions and adjustments made by the state, or ‘instrumental’, i.e. where the knowledge and insight of the social partners enhanced the government’s problem-solving capacity (Hassel, 2009: 9–13; Urban, 2012: 227). Third, the outputs and effectiveness of the social dialogue, and which interests that were mainly advanced. Hence, it is important to investigate whether or not changes were based on past compromises between the social partners and their immediate and current interest. Fourth, Meardi and Tassinari point out that to explain the function and output of crisis cooperation, it is important to understand what facilitated it. It can be facilitated by pre-existing institutions. The existence of tripartite corporation during ‘normal’ times might nurture trust and facilitate the emergence of a shared diagnosis (Baccaro and Galindo, 2017: 7). Possible opportunities for exchanges in the adjustments of schemes can provide incentives for unions and employer organisations to participate. Incentives to include social partners, such as the legitimacy of concertation during earlier crises, and the political strength of a (minority) government at the time of crisis might also be important (Hamann and Kelly, 2010).
Institutional changes during crisis
Studying crisis management from a broader view we find it useful to supplement the framework developed by Meardi and Tassinari (2022). Theories about path dependence assume that the institutional legacy influences whether and how measures are adjusted, or new ones are introduced. According to Pierson (2000), when a scheme exists, actors will largely make choices constrained by existing and self-reinforcing development tracks. If a scheme is tripartite, vested interests linked to the scheme may make new measures or radical changes harder to achieve (Chung and Thewissen, 2011; Mahoney and Thelen, 2010). Hence, in a crisis requiring swift policy changes, both the mode of cooperation, and the possible changes may be sought by leaning on ‘old habits’ regarding how it has been handled in previous crises (Chung and Thewissen, 2011; Starke et al., 2013). As such, the output of these processes may be shaped by an interaction between institutions and power dynamics (Starke et al., 2013; Clegg et al., 2024).
The pandemic, as other exogenous large crises, may also constitute a critical moment where new solutions are developed (Capoccia and Kelemen, 2007: 348). Research has shown instances of novel policy measures in the initial phase of the pandemic in the UK, Ireland and Southern European countries (Ebbinghaus and Lehner, 2022; Hick and Murphy, 2021: 316; Moreira et al., 2021). The crisis may even function as a window of opportunity, where actors can set the agenda and change policies and measures in ways otherwise impossible (Kingdon, 1964). Facing common constraints, actors involved may also learn from policy changes abroad, adopting adjustments or schemes (Dolowitz and Marsh, 2000).
While the existence of job retention schemes increases the possibility of path-dependent responses, does theory provide further guidance on when to expect path-dependent adjustments and when to expect the development of new measures? Clegg et al. (2024) assume that a scheme’s institutional heritage determines whether governments rely on existing or new measures. Adjusting – reinforcing – widely used schemes may offer an effective solution, but Clegg et al. (2024) point out that governments may fear that it would be difficult to roll back changes after the crisis. Thus, they suggest that path-dependent adjustments are only chosen when the schemes have been a central part of the income protection architecture over an extended period, and when elites across the political spectrum agree about its central role. They further assume that when a measure has low legitimacy – either because it is not a key part of the national income protection system, or because it is highly contested among political elites – new schemes can be expected to be developed instead. Furthermore, they point out that novel schemes can be easier to retract if they are temporary, with terms such as ‘crisis’ or ‘pandemic’ in their name.
Institutional context and expectations
What can we expect regarding new measures or changes to existing schemes in the Scandinavian countries? Prior to the pandemic, the organisation, design and use of these schemes varied. In ‘furlough schemes’, financial support, often in the form of unemployment benefits, is paid directly to the worker for hours not worked. In ‘short-time work schemes’, companies receive financial support to pay employees for hours not worked. Finally, in ‘wage subsidy schemes’, companies receive financial support per employee. The employees receive their normal wages, and the wage subsidy is not linked to reductions in working hours (cf. Müller et al., 2022).
While Norway had a widely used furlough scheme regulated through the basic agreement, and based on its mandatory unemployment benefit system, the furlough scheme in Denmark was based on a voluntary unemployment insurance system and regulated through collective agreements. It covered some blue-collar occupations in manufacturing and was less utilised (Svalund et al., 2013). This contrasts with Sweden, which lacked a state-subsidised scheme during the Great Recession. This prompted the main social partners in manufacturing to join forces, eventually pressuring the state to formally establish a new, partly state-financed short-time work scheme in 2014. Then, support could only be received after the government activated the system due to a nationwide crisis and after a company agreement was signed. However, it was never implemented before the pandemic (SOU 2022:65).
Thus, in Denmark and Norway, with pre-existing schemes, new innovative measures were less likely. The Norwegian scheme was a central part of income protection, as it was available across industries and had been widely used in prior crises. In prior crises rather similar temporary reinforcements were made in 2009–2010 and in 2014 (Svalund, 2024). In Denmark, the scheme is less utilised, and the social partners were unable to convince the government to reinforce it during the Great Recession (Svalund et al., 2013). Consequently, the likelihood of new scheme(s) was higher in Denmark. Finally, the Swedish scheme was relatively new, recently adjusted and had previously not been an important part of the income protection system. However, as key social partners had worked together to establish and recently adjust the system, we expect it to be supported by them. Therefore, we anticipate a path-dependent change in Norway, with the possibilities for developing new measures being equally high in Sweden and Denmark.
Methods and data sources
The three Scandinavian countries were selected based on major similarities in their institutional set-ups. We thus conducted a similar case comparison of small, open economies with inclusive labour markets and that rely on employer pattern collective bargaining with strong union counterparts (Visser, 2009). However, we expected country differences due to varied types of job retention schemes, and differing roles of social partners in these systems prior to the pandemic. Furthermore, the strict lockdown measures initially implemented in Denmark and Norway meant that a greater proportion of employees were prevented from paid employment compared to Sweden.
Data are based on several sources. First, official documents and reports on laws and regulations, as well as statistics regarding the schemes. Information from the EU Policy Watch database, as well as descriptions from the OECD and an ETUI project have also been used (Berglund, 2021; Drahokoupil and Müller, 2021; Larsen and Ilsøe, 2021; Svalund, 2021).
Second, this specific study is part of a larger research project, in which we conducted 27 qualitative interviews (face-to-face or via Teams) in the period March 2022 to May 2023 in Denmark (6), Norway (10) and Sweden (11) (cf. Bengtsson et al., 2024). Questions regarding key changes in job retention schemes were posed in most interviews, but in some, e.g. with key actors in the state apparatus and among the social partners (such as government ministers, presidents and experts of union confederations, a special investigator of public inquiry), these questions were more detailed in relation to the theme of developing and adjusting job retention schemes. The number of informants in each varied due to the number of organisations involved in the crisis concertation. In Denmark only peak organisations and two ministries negotiated the new ‘wage compensation scheme’ in a tight formal process. On the other hand, in Sweden the policy process was more ‘business as usual’ involving a broader field of stake holders.
These interviews covered the actors’ roles and choices in the adjustment of the schemes, specifically from 2020 to early 2023. In this manner, we obtained information about whether any of the parties involved cooperated to push the government into other solutions, and how this came about.
Third, we also relied on media coverage, press releases, etc., from governments and social partners regarding the cooperation and the changes to the schemes.
The data were analysed deductively using the specific theoretical concepts about crisis corporatism previously outlined in the theoretical framework of this article.
Job retention schemes before the pandemic
In addition to the differences already mentioned, the pre-COVID-19 schemes in the Scandinavian countries differed in other ways that might have a bearing on how swiftly they could be activated, whether they provided sufficient income security for workers, and whether they were easy to use for employers when COVID-19 arrived (see Table 1).
Regulations and institutional characteristics pre COVID-19; 1 January 2020.
Sources: Larsen and Ilsøe (2021); Svalund (2021); Berglund (2021); SOU (2022:65).
Regarding costs for employers and income security for workers, the income of those on furlough was partly secured through the unemployment benefit system. In Denmark, the furlough scheme is administered by the unemployment insurance system and is therefore also regulated by the Unemployment Insurance Law (DA, 2009). Besides a membership of an unemployment insurance fund there are requirements concerning the minimum income level and the minimum membership length in the insurance fund to qualify for unemployment benefits. Employers pay the unemployment benefit for the first three days (known as ‘G-days’) of the furlough before those who fulfil the eligibility requirements receive unemployment benefits. Importantly, work-sharing was only available for blue-collar workers paid by the hour and was further limited to the industry sector. In Norway, all private sector companies could utilise furlough. Membership in the unemployment insurance scheme is mandatory, but a prior minimum earning is required to be eligible. Employers paid full wages for the first 15 workdays of the furlough. After this period, those furloughed had three waiting days without income before receiving unemployment benefits. In the Swedish short-time work scheme, the state subsidy was paid to the employer (SOU 2022:65). All employees in companies participating in the scheme could be included. The cost for employers and employees varied according to the extent of the individual’s reduction in working time. However, the state only covered wage costs up to a cap (Table 1). If an employee’s wages exceeded this cap, the state’s contribution would be proportionally smaller.
Creating and adjusting job retention schemes during COVID-19
Analysing the changes made during COVID-19, we first describe the corporative interaction concerning job retention schemes. Thereafter we describe, country by country, the function and outcome of the cooperation, and what facilitated it, as these three analytical dimensions may be rather interlocked in practice.
Corporative interaction
In Denmark and Norway the government summoned the social partners as the crisis hit in March 2020. The cooperation between the state and the social partners was tight, both formal and informal, especially early on in March 2020, when the governments implemented containment measures. The discussions were on all sorts of crisis measures, thus not limited to job retention schemes. The intensity of the cooperation followed the spread of the virus, and the use of lockdown measures. In both countries the interaction took place in the ongoing, formal participatory forums, in minor meetings with key parties (e.g. ministers or political advisers, and central union and employer organisation actors), and in informal talks at different levels.
In Sweden, on the contrary, the interaction in March 2020 was rather different. The government had set up a formal, public inquiry in 2018 aiming to make the short-time work scheme more available and adjusted towards a more competitive and training-oriented scheme (SOU 2022:65). The inquiry, led by a special investigator, consisted of experts but also representatives from the state, major employer organisations and unions. These participated in the re-design of the short-time work scheme. Facing the crisis, after consulting the unions and employer organisations, a new adjusted system following the key proposals of the inquiry was proposed by the government in March 2020. However, there was no tripartite process of negotiations and coordination on the issue as in Denmark or Norway. We thus consider the process of adjusting the scheme to the pandemic as weak crisis corporatism in Sweden.
Denmark: Corporative function, output and facilitation
In early March 2020, the Danish government introduced strict COVID-19 containment measures, closing parts of the labour market. A path-dependent change was made early on as the notice period of the pre-existing furlough scheme was shortened, but more importantly, in March 2020, the minority Social Democratic government, the Danish Trade Union Confederation (FH) and the Confederation of Danish Employers (DA) presented the first (of many) tripartite agreements containing a new tool to mitigate the economic and social consequences of COVID-19. Expanding the existing furlough scheme, providing coverage for companies not covered and uninsured workers was difficult to swiftly agree on without coming into conflict with important prior compromises. Instead, the so-called wage compensation scheme was agreed upon after 48 hours of intense negotiations without any inspiration from previous crisis schemes or experiences from other countries (Table 2). The model was simply invented ‘on the fly’:
We invented the wage-compensation scheme from scratch after negotiating for some 48 hours in the Ministry of Employment. We all knew we needed something to cope with the economic and social consequences of the politically imposed restrictions and lockdowns. We simply put the Danish labour market in a deep freezer ready to be thawed when the virus got under control. (A former Minister of Employment)
Denmark: Adjustments and innovations during the crisis.
Source: Larsen and Ilsøe (2021); Greve et al. (2021).
Hence, the crisis corporatism had a strong instrumental function. The agreement followed a classic recipe for Danish tripartism, ensuring that the interests of both employers and workers were served. For the employers, the key interest was to ensure that companies survived financially as they faced a collapse in demand due to the lockdowns. Thus, cost savings were crucial for the DA. For the FH and its member unions, the key interest was to secure and protect the jobs and incomes of workers affected by the lockdowns. For the minority Social Democratic government, the tripartite agreement provided legitimacy in the Danish Parliament with no political opposition (neither left nor right) in the early stages of the pandemic. Thus, the function of the crisis corporatism was not only instrumental but also expressive (Meardi and Tassinari, 2022: 86). Sources close to the negotiations in 2020 described a sense of not only urgency but also a need to act and thereby avoid repeating the failed process in the wake of the Great Recession from 2008, where many felt too little was done, and the government’s attempt to incite a deal was aborted.
We felt a strong urgency by the government and their close staff not to repeat the mistakes of the past. They rather do too much than too little. (President of the DA)
Consequently, Danish crisis corporatism was also facilitated by a strong element of not repeating the austerity crisis management of the 2010s. Several informants also pointed to the fact that the COVID-19 tripartite dialogue process was unique due to the unprecedented circumstances brought by the virus.
This was a new scenario for all of us. We knew we had to act, and to act quickly. (President of the FH)
This too facilitated the output of the corporative interaction. None of the parties involved in the negotiations had time to prepare, so they were unable to thoroughly map and fortify their interests in the negotiations. This made a quick compromise easier. To make an agreement and thereby show social responsibility became a goal, but more importantly, the agreement put the heaviest economic burden on the state, making acceptance easier for the FH and the DA.
The wage compensation scheme provided financial support to companies in crisis by covering most of the employees’ wage costs if the workers could not perform work outside the workplace. The workers had to use some of their entitled holidays to be covered as long as the company had not agreed on other types of wage cutbacks due to COVID-19 (Greve et al., 2021; Larsen and Ilsøe, 2021). Workers included in the scheme were not allowed to carry out work for the company while being on the scheme (Table 2). It could not be combined with the use of the pre-existing furlough scheme. Companies that applied for wage compensation could not pay out dividends or bonuses while receiving the support. The scheme was far-reaching and very costly for the state and did, in practice, replace the not so central, pre-existing furlough scheme. Agreeing on this scheme was helped along by a firm belief that it would be temporary and short-lived. Multiple extensions of the scheme were made during 2020–2022, although an adjusted, more cost-friendly new version (the COVID-19 furlough scheme) of the pre-existing furlough scheme was meant to completely replace it from August 2020. While the government wanted employers to use the new COVID-19 furlough scheme, the employers were reluctant. As the Minister of Employment at the time states:
The employers were reluctant to terminate the wage compensation scheme in favour of a more financially sustainable workshare scheme [another name for the COVID-19 furlough scheme] as recommended by an independent expert group. The wage compensation scheme put the heaviest economic burden on the state. (A former Minister of Employment)
Hence, the two schemes coexisted for a long while. The more path-dependent, reinforced COVID-19 furlough scheme was also created by way of tripartism. It resembled the original furlough scheme but was accessible to workers and companies not covered in that scheme. Its rules were more flexible, and it provided workers with significantly higher unemployment benefits than the pre-existing furlough scheme (Table 2). The scheme was extended and amended in November and December 2020, allowing, by negotiations, working time reductions of up to 80%. All schemes ended 1 February 2022.
Norway: Corporative function, output and facilitation
In contrast to Denmark, the Norwegian centre-right minority government, in agreement with the social partners – the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Enterprise (NHO) being the most central actors – mainly made temporary reinforcements to the furlough scheme. This resembled the adjustments made to the scheme during the Great Recession (Olberg, 2015); it thus followed path-dependent tracks (Table 3).
Norway: Adjustments and innovations during the crisis.
Source: Svalund (2021, 2024).
As the government closed various sectors of the labour market in March 2020, the actors, as in Denmark, needed to find solutions to secure companies, jobs and incomes quickly. The significance of the cooperation with employer organisations and unions was stressed by the Minister of Employment:
It is difficult to imagine how we would have managed without having contact with the parties. They were an important source of information; they know what is going on [in small and large companies in different sectors]. (A former Minister of Employment)
Hence, the main function of the cooperation was instrumental. As in Denmark, it also had an expressive function, as the social partners participated in presenting the changes to the public in March 2020. The government and the social partners discussed, among other issues, reinforcing the furlough scheme to ensure that the conditions for businesses and employees coming out of this temporary crisis would be as similar as possible to how they were entering it. In the Norwegian adjustment process in March 2020, concerning whether the actors had discussed the Danish wage compensation scheme that had been created a few days prior, a central LO official at the time said that it was difficult to use the Danish scheme as ‘their system is built in another way, as many measures are included in the trade union membership’. Furthermore, he stated, ‘We had the furlough scheme, which functioned well.’ The central actors in the LO, the NHO and the government all stated that it made good sense to strongly reinforce the existing scheme, as a new scheme would require a whole set of regulations and more administrative capacity for its enactment.
Finally, from 20 April 2020, it was temporarily allowed for furloughed employees to participate in training or education while receiving unemployment benefits, and later, in the autumn of 2021, this was permanently allowed. This was an important institutional change that the social partners had wanted in previous crises. It had earlier been an ‘impossible’ Gordian knot to untie between the social partners (cf. Svalund, 2024). Thus, in the terms of Meardi and Tassinari (2022), the output of the interaction was effective for unions and employers. While so, the cooperation alone was not enough to change this. The topic had been discussed in several government reports in the years prior to the pandemic. The Minister of Employment had formerly been a Minister of Education but had not been able to make the change of participating in training or education happen then. Consequently, the pandemic did function as a window of opportunity.
. . . it had annoyed me that we had rigid systems for it [training while receiving unemployment benefits] . . . The pandemic opened the door. We did it temporarily during the pandemic. But it ended as a permanent change. (A former Minister of Employment)
Furthermore, there were made rather large temporary adjustments to the income security of furloughed employees in March 2020, making it more generous, with a higher compensation rate especially for those on lower incomes (Table 3). Such a change was rather rare in a European perspective; besides Norway, it was only conducted in Austria and Switzerland (Müller et al., 2022). It came about after extensive discussions, as the government initially disagreed with the unions. LO, in particular, wanted a higher income compensation for those with lower incomes to improve the social profile. The government was hesitant, fearing that it would be difficult to roll back. Within a few days, the majority in parliament passed a bill following up on their wishes. Hence, the output was facilitated by the fact that the social partners were backed by the majority in the parliament.
The furlough scheme was also made cheaper for employers, as the number of days they had to pay wages was reduced (Table 3). When first being proposed by the government, LO and other unions strongly protested, as this meant cutting the employees’ period of full pay. The social partners then separately forced both the government and the parliamentary opposition to find a solution that could satisfy both representatives of labour and capital. Again, the output of the cooperation was facilitated by actors outside the government, pushing the government to revisions of the scheme. Finally, the government covered full wages (up to the cap) from day 3 to day 20 of the furlough through a new state compensation (Table 3).
Some of the adjustments were retracted when the spread of the coronavirus was reduced. As the pandemic dragged on, and more workers risked losing their jobs, the social partners continued discussing possible adjustments. The changes made to the cost of the scheme during spring 2020 had removed employers’ incentives to bring furloughed workers back to work. The unions, especially the LO, then pushed for a wage subsidy scheme resembling the Danish scheme to be put in place, providing companies with an incentive to bring furloughed workers back to work. In the summer of 2020, a novel furlough wage subsidy scheme was introduced where companies that had furloughed employees because of COVID-19, and who met its criteria (Table 3), could receive a subsidy for the workers brought back to work.
Facing a new lockdown in December 2021, the rather new minority left-centre government wanted employers to adjust by furloughing employees. This led to major protests from both union and employers’ federations, who called for a new, general wage subsidy scheme. LO, NHO and Virke (the Federation of Norwegian Enterprise) believed that a more generous wage subsidy scheme was more appropriate, given that many had already been furloughed several times during the pandemic. The government did not want it, and at a parliamentary hearing about the lockdown, the Prime Minister stated that such a scheme was very difficult to establish quickly, and that they therefore did not suggest it as a measure. Nevertheless, relatively fast, and under strong pressure from companies, the social partners and the parliamentary opposition, the government relented and introduced a wage subsidy scheme (see Table 3 for more details). While the social partners received a scheme that they had asked for, the arrangement was difficult to access and not widely used.
Summing up, the employer organisations and unions’ power to adjust schemes to their respective interests was facilitated by support from the parliamentary opposition, as they could overthrow the minority government’s decisions if needed. While tripartite cooperation in Denmark was facilitated by lessons learned from history, i.e. the lack of crisis cooperation during the Great Recession, this was not an issue in Norway. Regarding the function of the crisis cooperation, it was expressive in both countries, and in Norway and Denmark the crisis cooperation was much broader than just the job retention schemes. The employer organisations and unions had an instrumental role in both countries. The social partners had an expressive role in Norway, but not to the extent that it did in Denmark (see Table 5).
Sweden: Corporative function, output and facilitation
In Sweden, as mentioned, a formal, public inquiry had been set up in 2018. The proposals in one of the inquiry’s interim reports (SOU 2022:65) were the basis for, with certain modifications, a second system for state support for short-time work (i.e. complementing the previous system introduced in 2014) (Table 4).
Sweden: Adjustments and innovations during the crisis.
Source: Berglund (2021: 2); SOU (2022:30).
The new law on support for short-time work was supposed to enter into force on 1 August 2020, but when COVID-19 was declared a pandemic, the government decided to bring the date forward to 7 April 2020 (and where support was paid retroactively from 16 March 2020). In this new short-time work scheme, support could be provided for a limited period for employers who needed to introduce short-time work due to temporary and severe financial difficulties caused by circumstances beyond their control, and that could not have been foreseen (SOU 2022:30). Furthermore, to meet employers’ increased needs due to the dire economic circumstances of the pandemic, the newly constructed short-time work scheme was reinforced; it was also prolonged on several occasions. Before implementation, key employer organisations and unions were consulted, thus fulfilling the expressive function of crisis corporatism (Meardi and Tassinari, 2022).
As a result of the temporary reinforcements of the scheme, the state financed more of the cost, the possible working time cut was extended, and employees’ wage cuts and employer contributions were lowered (see Table 4). The outputs of the processes of consultation advanced the interests of both capital and labour (cf. Meardi and Tassinari, 2022). This was also substantiated by the special investigator of the governmental public inquiry, as he stressed that both the major unions and employer organisations pushed with ‘one voice’ for implementing the system when facing the pandemic:
It was the social partners, both unions and employers. And it was with one voice. Quite early on, the government, the Minister for Enterprise and Innovation together with the Prime Minister, and sometimes the Minister for Education, had meetings with the social partners. And the message that the social partners gave in unison was: ‘Introduce short-time work, introduce it immediately’. (Special investigator of public inquiry for support to short-time work)
Making adjustments in the newly created scheme was considered by the special investigator to ‘make it somewhat easy for oneself, and a way to land a solution’. Thus, path-dependent choices were made in the face of a crisis. But it should also be emphasised that there existed different views to the extent to which support for short-time work should be strengthened on both the union and employer sides, revealing some cleavages within both sides. Some actors, especially within the services sectors, wanted larger changes. According to a representative of the Commercial Employees’ Union, the union tried to get a hearing for ‘that you could actually have a 100% working time cut’, but it failed to get this demand through. This failed demand was also the case for LO and employer organisations such as the Swedish Federation of Business Owners (Arevik, 2020; Foretagarna, 2020).
From 1 January 2021, minor path-dependent adjustments were made, as the system was complemented by an entitlement to reimburse some of the costs of skills training. Also, the waiting period before applying to extend the scheme was removed, providing seven extra months with short-time work (Berglund, 2021: 2). Importantly, a new, stricter statutory regulation was implemented on 15 February 2021, securing that the companies using the scheme did not issue dividends, provide compensation, buy back own shares or reduce its share capital or reserve fund for payments to shareholders before, during or after receiving support.
Furthermore, a new public inquiry with the state and the social partners represented was appointed, and the final report, published at the end of 2022 (SOU 2022:65), proposed a new law providing a single system for short-time work. The new law entered into force on 1 January 2024 and was based on the permanent system proposed just ahead of the pandemic, but with some regulatory adjustments following lessons learnt from this crisis.
Output of crisis corporatism: Institutional adjustment and innovations moving more of the burdens to the state
The crisis cooperation described above was related to the need for institutional changes. Hence, an important aspect of crisis corporatism was whether the social partners were able to influence these adjustments and changes, upholding their members’ interests. The comparative differences in outcomes, and whether the changes were path-dependent or not, seem first and foremost to be related to the pre-pandemic schemes. The pre-existing scheme in Denmark only covered blue-collar workers and those who were members of the voluntary unemployment benefit funds. Mahoney and Thelen (2010) have pointed out that when actors choose between adjusting and changing – displacing – established institutions’ inherent compromises, it may be easier to establish new layers, adding new tools and measures. That was the situation in Denmark in March 2020. It was difficult to extend the existing scheme without interfering with established compromises, such as providing benefits to uninsured workers. Thus, new schemes were negotiated. Furthermore, following Clegg et al. (2024), we expected new measures to be introduced in countries with less established or limited schemes, which was the case in Denmark. But actor interests still played an important role in the process. The Danish government was eager to make a greater effort this time, hence the lack of crisis cooperation during the Great Recession facilitated measures in the interest of unions and employer organisations. Later, as the wage compensation scheme was very costly for the state, a more path-dependent, less costly COVID-furlough measure, which avoided touching any important compromises, was eventually created. In contrast, in Norway, it was, as expected, mostly path-dependent changes made in the form of formerly used adjustments, but combined with novel changes to the furlough scheme. Furthermore, the social partners together with the parliament forced the government to implement a new wage subsidy scheme late 2021. Hence, union and employer interests won through. In both these countries, the pandemic and the governments’ use of lockdowns functioned as a critical juncture, whereby the social partners pushed for new arrangements that were more generous both for employers and employees. Thus, we find a combination of path-dependent adjustments based on ‘old habits’, as Chung and Thewissen (2011) put it, combined with novel changes. In contrast, in Sweden, the social partners had worked on their new scheme in a corporatist expert committee for years, and the scheme had comprehensive support when the pandemic struck. The corporatist interaction and its function in Sweden were partly due to the large work already done creating a new scheme. In other words, since the social partners had worked on a scheme through participating in a public inquiry, it made sense to rely on a path-dependent, still fresh solution. The measures developed and used in these countries were thus a mix of path-dependent solutions and completely new measures created for the exceptional situation, and the intensity of cooperation was related to the level of changes made.
Discussion and main conclusions
This article started out from Katzenstein’s (1985) key argument that an externally imposed crisis may facilitate crisis corporatism, and that small, open economies such as the Scandinavian countries may be particularly prone to swift corporative processes during crisis. To understand the role of contemporary forms of crisis corporatism we have studied the participation (or not) of the social partners in developing or changing job retention schemes during COVID-19. On an empirical level, this study extends prior research on crisis corporatism during crises in general, and the pandemic in particular, as we have analysed this regarding job retention schemes from a Scandinavian perspective. In Denmark and Norway, the economy-wide lockdown measures at the initial phase of the pandemic resulted in tight cooperation between the state and the social partners. In Sweden, on the contrary, crisis corporatism was weaker. There, the government built on the work of the very recent public inquiry where the social partners were represented, and consulted the social partners in March 2020 when adjusting the scheme. Hence, we can conclude that the cooperation between the state and the social partners in Sweden was more at arm’s length compared to Denmark and Norway, at least partly due to the fit of the pre-existing schemes.
Regarding the function of the cooperation, key employer organisations and unions had an instrumental role, providing know-how and legitimacy when swift adjustments were needed in Denmark and Norway. Nevertheless, the social partners also had an expressive role in all three countries, as it was important for the government to find solutions that could be supported by the social partners (Table 5). While the cooperation was more intense and informal in Denmark and Norway, the form of the cooperation followed established patterns. Meardi and Tassinari (2022: 97) found that the pandemic reinforced patterns, frictions and modes of interaction already present in France, Germany and Italy, and this study adds to this, as we can conclude that Scandinavian crisis corporatism to some degree followed earlier national scripts, with the Danes eager to not do the same as during the Great Recession (Dølvik et al., 2017).
Scandinavian crisis corporatism during COVID-19.
The article shows that the solutions were understood as highly urgent and often temporary. In all instances, the state bore a greater share of the costs. While the changes made are not indicative of new balances of interests and permanent types of compromises, they still show how Katzenstein’s (1985: 1) findings are relevant. The actors agreed on temporary changes, still these adjustments may be used also in later crises, as the repetition of former crisis adjustments to the furlough scheme in Norway show (Svalund, 2024). Furthermore, while agreeing on new temporary solutions, their use can lead to policy feedback and may initiate new institutional paths (Hogan et al., 2022; Pierson, 1993). The Norwegian and Swedish governments reinforced the existing schemes, making them (more) flexible, cheaper, long-lasting, and with better income compensation. However, the Danish case shows a strong element of policy learning, a fear of repeating past mistakes, which, combined with COVID-19 as a major exogenous shock, made crisis cooperation and swift policy change possible.
Evaluating and comparing the outcome of the crisis corporatism is not straightforward. Comparing job retention schemes in a number of European countries, Müller et al. (2022) found that the Scandinavian schemes overall were among those with the highest income security generosity. The new wage compensation scheme in Denmark was especially generous, providing full wages for those not working. Andersen et al. (2022: 45–47) found that the Norwegian system was the least generous for employees in Scandinavia. Further, they found that the Swedish scheme was the most advantageous to the employers, while the Danish system was the least advantageous (Andersen et al., 2022: 45–47). Hence, the article shows that the degree of crisis corporatism did not clearly correlate with the outcome, measuring outcome in terms of generosity towards employees or employers. Further, it shows, in line with Meardi and Tassinari (2022), that the exogenous health crisis did not have homogeneous effects. The cooperation, the changes made and the output were contingent on the pre-existing measures in each country.
While the design of the pre-existing schemes was essential, the way the authorities handled the COVID-19 crisis also seems to have been important. As the governments in Denmark and Norway used strict lockdown measures, the social partners in both countries had a common goal to ‘deep freeze’ the labour market, finding measures that would make it possible to keep the labour market as similar as possible to what it was before the pandemic when the restrictions one day would be lifted. Deep freezing the labour market made economic recovery speedy. There was a softer approach to COVID-19 containment measures in Sweden. This is reflected in the Swedish scheme, as it did not grant a 100% working time reduction. As such, the adjustments in Sweden did fit more with the nudging approach used there.
Finally, under time pressure from the fast spread of the coronavirus in early 2020, national needs and available institutional solutions were valued. There was only one case of adjustment of the schemes by way of policy learning. While the Norwegian wage compensation schemes in 2021 were influenced by LO’s desire to implement a system more like the Danish scheme, the system was not much used. As such, in Scandinavia overall, we found combinations of path-dependent changes with entirely new innovations and policy learning.
Footnotes
Acknowledgements
Our thanks to Jon Erik Dølvik and the journal’s referees for challenging and constructive comments.
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The article is part of a larger research project, ‘Nordic labour market models facing pandemic crisis: A comparative study of policy responses, actor adjustments, and social outcomes’. The project is headed by Fafo and funded by the Research Council of Norway’s programme on welfare, working life and migration (VAM), project number 315422.
