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Finland: Industrial relations profile

 

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Industrial relations

Collective bargaining

Levels of collective bargaining
 

National level (intersectoral)

Sectoral level

Company level

Principal or dominant level

X

X

 
Important but not dominant level  

X

X

Existing level      

For the first time in four years, the social partners agreed a tripartite framework for a new centralised national agreement on wages and conditions in October 2011. The 25-month agreement included a 4.3% pay increase with a lump-sum payment of €150 at the beginning of 2012.

The signatory parties are the union confederations AKAVA, SAK and STTK and on the employer side the Confederation of Finnish Industries (EK) and the employer organisations of the state, municipalities and the Lutheran church.

The government supported the agreement with tax relief worth €400 million and in late November the partners concluded that support for the framework agreement was broad enough for implementation. The accord covers about 94% of the workforce, or around two million employees. Social partners have characterised the comprehensive national framework settlement as a historic achievement (FI1111011I).

The agreement also covered several substantial quality of working life issues that include:

  • the opportunity for employees to participate in paid training for three days a year to increase expertise;
  • a two-week extension of paternity leave which can be used flexibly until a child is two years old;
  • a strengthening of the status of fixed-term employees and temporary agency workers. A proposal for legislative changes concerning the grounds of temporary agency work and temporary employment will be submitted accordingly by the end of March 2013;
  • an amendment to the act on cooperation within undertakings to include flexible working hours, grounds for temporary employment and enhancement of employee vocational skills in human resources plans. The associated statutory amendment proposals were to be submitted no later than the end of November 2012;
  • a revision of labour protection legislation to focus special attention on the stress of shift work;
  • a study of the use of working time banks, with associated legislative proposals submitted no later than the end of November 2012;
  • a study of the effectiveness of pay reviews with a view to promoting equal pay, forming the basis for proposing further measures no later than the end of May 2012;
  • a cancellation of planned cuts in Finland’s job alternation scheme.

In addition to the key points of quality of work/life issues, the agreement contains initiatives concerning the harmonisation of work and family life, enhancing trust in the labour market and improving employee security in enterprise downsizing (FI1110011I).

Coverage of collective agreements

Collective agreements are of a generally binding nature. Since 1971, a principle of general applicability of collective agreements has been applied. According to the agreement, employers that are unorganised in terms of collective bargaining must also comply with the national agreements concerning their type of business. The generally binding character of a collective agreement depends on various factors, especially the organising rate of employers and employees and type of business.

Since 2001, a Commission has been in place to confirm the general applicability of collective agreements. The Commission examines the nationwide agreements made in the private sector and decides if agreements are generally applicable, based on information given by the signatory parties and statistics from Statistics Finland concerning the area. The ‘Structure of Earnings’ of Statistics Finland is used mainly as comparison material and offers information regarding employee share per sector. The statistics compile information on earnings submitted by the organised employers in the private sector. These cover most of the employees in the member companies of the Confederation of Finnish Industries (EK). The statistics are mostly from 2004.

Collective bargaining coverage describes the share of employees working for the organised employers in proportion to all employees. In Finland this share is an important criterion when deciding on general applicability. If the share is at least half of all employees in the sector, it is confirmed that the agreement is generally applicable, and that it applies to all employment relationships within the agreement sector. According to a study published by the Ministry of Employment and the Economy in 2008, the share of employees covered by collective agreements in the private sector was 85% when taking into account collective agreements that are generally binding. With the inclusion of the public sector, where collective agreements cover all employees, the average coverage of collective agreements was 89.5% of employees (FI1107011I).

Traditionally, Finland has had a highly centralised bargaining system with a national incomes policy agreement (tulopoliittinen kokonaisratkaisu, often called tupo). This is a tripartite accord drafted by the government together with trade union confederations and employer organisations. It is a policy document covering a wide range of economic and political issues, such as pay increases, taxation, pensions, unemployment benefits and housing costs, as well as a range of qualitative working life measures.

Main trends in collective bargaining

In 2008, the Confederation of Finnish Industries (EK) announced that branch, establishment and individual-level bargaining will be the negotiation models of the future. Therefore, the next bargaining round took a place at sectoral level.

However, in 2011 social partners worked out a tripartite framework for a new centralised national agreement on wages and conditions. With an uncertain economic situation in Europe and the world, wide-ranging wage coordination should benefit both employees and companies by offering stability and predictability. EK has however emphasised that the agreement is a framework agreement within which employer associations and trade unions can reach their own agreements on the size of pay increases (FI1110011I).

Within a tripartite bargaining system, local- and company-level bargaining has been increasing in Finland. Local bargaining can be seen as supplementary to sectoral and national accords. The Confederation of Finnish Industries has emphasised the importance of company-level bargaining.

Another trend can be described as ‘increased individual pay increases’. This indicates that the Finnish pay system has moved slowly from a rigid pay model to a more flexible system that takes account of local needs and facilitates wage payment based on individual and company-level performance.

Other issues in collective agreements

The Finnish government has appointed several tripartite working groups to draft proposals for pension system reforms, with the aim of persuading unions and employers to agree on ways of lengthening employees’ careers and working lives.

The issue of lengthening employees’ careers and working lives and a rise of retirement age has recently become the most challenging question. Social partners are trying to find new models to lengthen job careers and must therefore provide reforms related to studentships and retirement.

Industrial disputes

According to Statistics Finland’s industrial disputes statistics, a total of 163 industrial actions took place in 2011. The number of industrial disputes decreased from the previous year, when there were 191 actions. The number of employees involved in industrial actions in 2011 was about 59,000, less than half the figure for the previous year. The number of working days lost in 2011 was about 128,000, which means that the working days lost fell by more than half from the previous year, 2010.

Tripartite concertation

A tripartite framework for a new centralised national agreement on wages and working conditions was agreed between social partners in 2011. The agreement exists for 25 months, offering a pay increase of 4.3% by the end of the agreement period, with a first increase of 2.4% covering the first 13 months, and a further 1.9% increase for the remaining 12 months. A lump-sum payment of €150 at the beginning of 2012 was also included in the agreement. It is estimated that this agreement will raise the annual cost burden for employers by 2.05%.

Currently, the social partners have several tripartite working groups discussing, for example, the status of those working in fixed-term or otherwise atypical contracts, lengthening of working careers, secure employment and sustainable economic growth. Tripartite concertation in Finland is working well and social partners have many joint projects concerning working life issues.

Workplace representation

Main channels of employee representation
  Works council typeTrade union
1. Most important body  

X

2. Alternative body

X

 

The major channel for employee representation in Finland is trade unions operating in the workplace. Shop stewards represent the union in the workplace, ensuring both management and employees comply with collective agreements; employee representation takes place largely through this channel. The shop steward is elected by trade unionists at the workplace, normally one chief representative plus a deputy and one for each department. Works councils are cooperation committees with information and consultation rights. Most employees are union members and the representatives of the workforce are the trade union representatives. In companies with 30 or more employees and unorganised workforces, representatives can be elected. Employee representatives must form at least two-thirds of the members of this joint body.

Employee rights

The legal framework for collective bargaining is the Collective Agreements Act of 1946, which is complemented by basic agreements between union confederations and employer associations.

The Labour Court (Työtuomioistuin) monitors the implementation of collective bargaining. Under existing law the Labour Court hears and tries legal disputes arising from collective agreements or collective civil servants’ agreements. Similarly it tries matters arising from the Collective Agreements Act or the Act on Collective Civil Servant Agreements.

 

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Page last updated: 15 April, 2013