Unions have resorted to a strike at Klarna after 8-month long talks over a collective agreement led nowhere.

Fintech giant Klarna is currently grappling with a significant challenge in Sweden: the looming threat of a union strike. Over the past few months, the fintech has resisted union appeals to establish a collective agreement, which would require the company to engage in negotiations with unions for substantial changes, such as layoffs. On November 7, the white-collar trade union Unionen and Engineers of Sweden, the country’s largest union for graduate engineers, decided to stage a strike.

In Sweden, worker rights, including matters like redundancies and collective pay raises, are typically negotiated between employers and worker unions. Unionen has been striving for eight months to introduce a collective agreement with Klarna, but the company has been reluctant to embrace it. (Sifted)

The unions have attempted to push for negotiations due to significant job cuts at Klarna, with approximately 10% of the company’s workforce laid off last year. The company’s CEO Sebastian Siemiatkowski’s decision to make these job cuts just hours after a video message was sent to employees sparked concern.

Klarna’s resistance to a collective agreement stems from the belief that it would impede the company’s ability to make large changes swiftly. With such an agreement in place, all major changes, including layoffs, would necessitate negotiations with union representatives before they can be announced.

Despite resistance from large companies like Klarna and Spotify (NYSE: SPOT), the Swedish model of labor negotiations remains challenged but not threatened.

Klarna is also facing a dispute with the unions at the labor court in Stockholm due to last year’s significant layoffs. The outcome of this labor dispute will be discussed concurrently with the strike, the end date of which remains uncertain.

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Image by Niek Verlaan from Pixabay