Nordic workers took on Elon Musk in 2023. Here’s what could happen next

By CNN Newsource

Published December 29, 2023 3:26 AM

By Anna Cooban, CNN

London (CNN) — What began nine weeks ago with a group of mechanics in Sweden demanding that Tesla agree to collective bargaining has evolved into a broader fight for the Nordic region’s way of work and life.

The stakes are high, too, for the carmaker and its CEO Elon Musk, the world’s richest man.

Bowing to union pressure in Sweden could embolden Tesla (TSLA) workers in Germany — home to the company’s only European factory — who, likewise, want a collective agreement on pay and other terms of employment. It could also fire up unionization efforts by Tesla’s US workforce.

For labor unions across the Nordics — a region encompassing Sweden, Norway, Denmark, Finland and Iceland — the tussle with Tesla and Musk, a vocal critic of unions, is existential.

“If a large international company is allowed to (impose itself) on the Swedish labor market and not sign a collective agreement, then what’s to say that other companies in the future will accept this (existing) model?” Jesper Petersson, a spokesperson for IF Metall, which represents the Tesla mechanics, told CNN.

For more than a century, Nordic labor unions have helped set their members’ terms of employment by negotiating with employers and signing collective bargaining agreements.

According to the most recent data from the Paris-based Organisation for Economic Co-operation and Development (OECD), on average, 83% of all workers in the five countries are covered by such negotiations.

Governments in the Nordics prefer collective bargaining to legislating a minimum wage, which exists in most other European nations.

But a Tesla subsidiary in Sweden refused to sign a collective agreement with IF Metall. In response, some of the 120 mechanics employed by Tesla to service its cars in the country went on strike in late October and have not returned to work. The union declined to say how many mechanics were still on strike.

The role of collective agreements in Sweden’s labor market is “fundamental and profound,” according to Mikael Hansson, an associate professor specializing in labor law at the country’s Uppsala University.

So a wave of “sympathy strikes” has followed. Swedish dockworkers have blocked deliveries of Tesla cars at the country’s ports, electricians have refused to service charging stations, and postal workers have even stopped delivering license plates. “This is insane,” was Musk’s response to the latter development.

By early December, unions representing dockworkers in Denmark, Norway and Finland had announced plans to block all exports of Tesla cars to Sweden from their ports.

IF Metall is paying the striking mechanics up to 130% of their usual wages, including contributions to their pensions and vacation funds, said Petersson at the union.

“We are prepared to go on (for) as long as it takes.”

Investors back the workers

Swedish workers have fought — and won — this battle before. Toys R Us attempted to resist collective bargaining when it arrived in the country in 1995, but relented following three months of industrial action, which included sympathy strikes.

This time, Nordic investors have also joined the fray. A group of 16 institutional investors, including pension funds and asset managers, urged Tesla in a letter, sent earlier this month and seen by CNN, to respect the region’s tradition of collective bargaining and expressed “deep concern” over the company’s attitude to unions.

PensionDanmark, a Danish fund, which co-signed the letter, has voted with its feet. It announced earlier this month that it had sold its $70 million stake in the carmaker, citing Tesla’s “very categorical denial” of collective agreements.

Laura Carlson, a law professor at Stockholm University, can’t recall another case of a divestment aimed at upholding the Nordic region’s labor traditions. And she thinks Tesla is unlikely to prevail in its attempt to bypass them.

“Collective agreements are the foundation of labor law in Sweden,” she told CNN.

Hansson at Uppsala University agrees.

“I have difficulty seeing the trade unions lose. They have invested too much. They really can’t lose this battle,” he said.

Tesla told CNN in a statement that its employees “are rewarded with fair terms and working conditions.” “This is why Tesla, like many other companies, has chosen not to enter into a collective agreement,” it added, declining to answer specific questions.

Next stop Germany?

The stakes are relatively low for Tesla in Sweden.

The country represented just over 6% of Tesla’s sales in Europe in the first 10 months of the year, according to Matthias Schmidt, an independent auto market analyst.

The bigger risk to the company’s bottom line lies further south, in Germany, a country that accounted for almost 20% of its European sales over the same period, based on Schmidt’s data, and where the automaker has a factory capable of producing 375,000 cars a year for customers across the continent.

German law makes it prohibitively hard for workers to strike in solidarity with those elsewhere, but sympathy action in the Nordics “may act as a catalyst” for Tesla’s German workers to join local unions, Schmidt said.

For more than a year, workers at the Berlin plant have complained of grueling work schedules, staff shortages and strict production targets, according to Markus Sievers, a spokesperson for IG Metall, Germany’s biggest labor union.

He declined to say how many of the plant’s reported 11,000 workers had joined his union, but noted that it was adding members quickly, and that “a lot” had signed up this year.

“We are not yet at the point where we can arrange for a strike,” he told CNN. “We are still building up strength (in numbers).”

A demand on some of IG Metall members’ lips? A collective agreement, according to the union.

“The German trade unions are waiting for Tesla to give in,” said Hansson of Uppsala University. “And then they have a strong argument: If you can make an exception in Sweden, then (you can make) an exception in Germany.”

The road ahead

For Tesla and Musk, negotiating with unions would mean losing face.

The world’s biggest maker of electric cars has crushed several efforts by its US workforce to unionize. The country’s National Labor Relations Board has accused Tesla of interrogating, disciplining and discriminating against implicated workers.

Musk himself has made no secret of his disdain for unions. The federal agency has directed him to delete a 2018 tweet that hinted Tesla employees would lose their stock options if they formed a union.

More recently, he told the New York Times: “I disagree with the idea of unions,” adding that he thought they “naturally try to create negativity in a company.”

But protections for organized labor in the United States are much weaker than in Europe.

Carlson at Stockholm University said a realistic alternative to entering into a collective agreement in Sweden would be for Tesla to hire a contractor, which would then sign such an agreement. That would allow Musk to keep the union at arm’s length.

Amazon (AMZN) did something similar when it entered the Swedish market in 2020, contracting a German-Swiss logistics firm already signed up to a collective agreement with the Swedish Transport Workers’ Union to operate its warehouse in the country.

For now, Tesla has dug in. Earlier this month, it advertised for a role in Nordic legal and government affairs — specifically, someone “with a proven track record of getting regulatory changes made” in the region.

The successful candidate will help ensure “political, regulatory and fiscal frameworks” in the Nordics “support Tesla’s mission,” according to the advert posted on LinkedIn.

For Carlson, the new role shows ignorance of the Swedish context.

“That shows a complete lack of understanding with respect to what the system (of collective bargaining) is about, and with respect to how foundational it is in Swedish society — not just in the legal system,” she said.