Swedish government faces battle to stay in power as labour talks fail

STOCKHOLM (Reuters) – Sweden’s minority government faces a potential rebellion by three small parties that keep it in power over plans to ease rules in the country’s rigid labour market.

Talks between trade unions and employer organisations broke down early on Thursday, handing the job of finding a solution to the Social Democrat-Green government. The government needs the backing of the Left Party as well as two small centre-right parties to pass its budgets.

Prime Minister Stefan Lofven had promised the two centre-right parties that if the unions and employers fail to agree new practices, the government would adopt proposals made by a commission to ease first-in-last-out rules, which critics say hamper companies’ ability to adapt to changing conditions.

Left Party leader Jonas Sjostedt said he would try to bring down the coalition if that plan goes ahead.

“Stefan Lofven cannot remain as prime minister if he plans to put forward the proposals… which would tear up employment security for all wage-earners in Sweden,” Left Party leader Jonas Sjostedt wrote on Twitter.

The Left Party would need the backing of the opposition Moderates, Sweden Democrats and Christian Democrats to pass a vote of no-confidence in the government – support it would be likely, though not certain, to get.

However, a vote of no-confidence could usher in a right of centre administration, something the Left Party does not want.

The government urged the unions and employers to resume talks, but Employment Minister Eva Nordmark said it would stick to its “January Agreement” with the centre-right parties and press ahead with the proposed changes if they did not.

Nordmark gave no timeframe for introducing the new rules.

Sweden’s complex political situation stems from an election in 2018, when neither the centre-left nor centre-right blocs gained enough seats in parliament to form a majority government.

To secure a second term as prime minister, Social Democrat Lofven had to cut a deal with the Centre Party and the Liberals that included a raft of business-friendly reforms, including looser labour market rules.

(Reporting by Simon Johnson; Editing by Philippa Fletcher and Gareth Jones)

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