Fintech Klarna is facing a new challenge in Sweden: a looming union strike.
For months the payments company has resisted union calls to establish a collective agreement which would mean Klarna would have to negotiate any large changes like layoffs with the unions.
And on Thursday afternoon, white-collar trade union Unionen and Engineers of Sweden, the country’s largest union for graduate engineers, opted to hold a strike on November 7.
As opposed to many other countries, many workers’ rights, including redundancies and collective pay rises, are negotiated between employers and worker unions in Sweden.
“Klarna doesn’t want this. We understand it as the questions they bring to the table is a way to stall the negotiations — then there is nothing left for us to do than to announce a strike,” says Martin Wästfelt, head of negotiations at Unionen, which has been working to introduce a collective agreement with Klarna for eight months.
Klarna did not reply to Sifted’s request to confirm how many people it employs in Sweden though unions have put the figure at 2,000; the unions have declined to say how many of the fintech’s workforce are union members. Being part of a union is not mandatory in Sweden.
Job cuts at Klarna
The unions have tried to bring Klarna to the negotiating table on the back of significant job cuts; last year about 10% of the payments giant’s workforce was made redundant.
At the time, employees received a video message from Klarna CEO Sebastian Siemiatkowski regarding the news.
“It was a trigger when Klarna made people redundant just hours after the video was sent out,” Wästfelt says.
Another example cited by Wästfelt when arguing the need for a collective agreement is when Klarna outsourced parts of its customer services staff in August this year.
Why Klarna doesn’t want a collective agreement
Those large changes would be much harder for Klarna to make with a collective agreement in place. All large changes — layoffs included — have to be negotiated with union representatives before being announced.
Klarna has been arguing this arrangement is time-consuming and difficult to introduce since the payment company is active in a large number of countries, according to Wästfelt.
“These negotiations create a slowness that Klarna doesn’t want to accept. They use the argument that it is a large company – but this is the case for many of the large companies.”
“This is the Swedish model in a nutshell and that is what Klarna does not want to submit to,” he says.
Joined by the likes of Spotify
Klarna is not the only company in Sweden that has been averse to collective agreements in the past. Wästfelt brings up companies like Microsoft and Swedish telecom company Tele2, where negotiations were intense around the turn of the millenium.
A few years ago, the unions also had difficult negotiations to introduce collective agreements at Northvolt, which were resolved before any strike actions had to be announced. In August, Spotify also turned down collective agreements for its employees.
“We’ve had many of these negotiations over the years, and I don’t think the Swedish model is threatened. But it is challenged by large companies like Klarna and Spotify.”
The unions also have a dispute with Klarna at the labour court in Stockholm due to the way the large redundancies that were made last year.
When the negotiations broke late last week, Siemiatkowski told staff that he wasn’t convinced that the collective agreement was in the best interest of the employees.
“We also addressed objections our employees have about the lack of evidence that a sufficient number of employees want this change. Unfortunately, the unions did not want to share any such information with us either”, he wrote, according to Swedish media outlet, Di.
It will be up for discussion at the same time the strike is planned to be actioned at Klarna — if a collective agreement isn’t in place before then.
When asked if there is an end date to the strike, Westfält cannot say.
“There are a lot of scenarios to take into account. But we have a large strike fund so great endurance,” he says.
Sifted has reached out to Klarna for a comment.