|
You are here: Eurofound > EIROnline > Comparative Information > Multinational companies and collective bargaining > Finland My Eurofound: Login or Sign Up   

Finland: Multinational companies and collective bargaining

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In 2007, the foreign affiliates located in Finland employed nearly 222,000 employees. Their turnover accounted for some 20 % of the turnover of all enterprises and their personnel for a good 14 %. In 2007, the 500 largest Finnish companies employ 0.9 million employees of which 0.4 million jobs are abroad. Particularly, the home-owned MNCs have been a driving force in the change of bargaining structure from centralized collective bargaining towards company-level bargaining. The home-owned MNCs have been forerunners in implementation of flexible working time arrangements and locally agreed pay increase models too. The MNCs in Finland are covered by sectoral collective agreements.

1. MNCs and collective bargaining: basic data

1) MNCs account for a significant proportion of private sector employment in many European countries. Please provide the following information according to availability:

In 2007, the total turnover of foreign affiliates located in Finland was approximately €79 billion and they employed nearly 222,000 employees. Their turnover accounted for some 20 % of the turnover of all enterprises and their personnel for a good 14 %. In terms of both turnover and number of persons employed, the most significant owner country was Sweden.

In 2007, a total of 2,800 foreign affiliates operated in Finland. The number of foreign-owned companies made up approximately 0.7 % of all enterprises located in Finland. Ultimate ownership of foreign affiliates was divided into 47 countries. Examined by number, Swedish affiliates (698) were the most common in Finland. U.S. affiliates (447) made up the second-highest proportion, and British affiliates (310) were on third place.

In 2007, the 500 largest Finnish companies employ 0.9 million employees of which 0.4 million jobs are abroad. A great majority of the Finnish stock exchange companies are multinational companies that have headquarter in Finland and factories and company units abroad and are operating simultaneously in Finland and in other countries. In 2007, even a majority of the 30 biggest Finnish (home-owned) companies’ personnel is working outside Finland; and in technology industry, more than a half of personnel of the home-owned companies are abroad. Thus, the Finnish manufacturing industry is highly multinational and global nowadays. During 2001–06 16 % of Finnish companies have outsourced or relocated their operation abroad. The relocation abroad has been much more common in the manufacturing than in the service sector. Table 1 shows the development of the number of employees

Table 1. The number of employees for foreign subsidiaries of companies resident in Finland (2002–06)
Year 2002 2003 2004 2005 2006
Number od employees for foreingn subsidiaties of companies resident in Finland 332 613 324 527 331 837 350 743 381 764

Source: Bank of Finland, Financial Markets and Statistics

Table 1 shows that the number of employees for foreign subsidiaries of companies resident in Finland has cleanly increased during the 2000s. In 2007, the number was about 400,000 employees.

Tables 2–6 show the proportions of employment in the foreign-owned companies in Finland which information is available from the Statistics Finland.

Table 2. Number of foreign affiliates by country, 2004–07
Foreign affiliates in Finland by country in 2004−07
Country / Year 2004 2005 2006 2007
EU-27-countries (1) 1 259 1 507 1 643 1 886
EU-15-countries 1 253 1 487 1 612 1 840
Sweden 499 563 585 698
United Kingdom 157 187 240 310
Germany 198 239 255 273
Denmark 137 161 172 162
France 75 109 110 119
Netherlands 94 96 100 107
Italy 20 33 48 51
Luxembourg 20 13 24 35
Belgium 14 29 26 26
Ireland 17 18 23 24
Austria 12 21 19 19
Other EU-15-countries 10 18 10 16
Baltic countries 4 15 27 41
Estonia 4 15 25 39
Other countries (2) 636 735 861 921
United States 340 394 438 447
Norway 88 94 104 113
Switzerland 75 72 95 93
Japan 49 66 82 84
Russian Federation 27 34 33 37
Total (1) (2) 1 895 2 242 2 504 2 807

Source: Statistics Finland, Foreign affiliates in Finland Statistics

Table 3. Personnel of foreign affiliates by country, 2004–07
Personnel in foreign affiliates in Finland by country in 2004−07
Country / Year 2004 2005 2006 2007
EU-27-countries (1) 110 916 120 282 131 247 151 372
EU-15-countries 110 763 120 043 129 423 149 037
Sweden 48 227 50 495 52 375 75 443
United Kingdom 11 577 10 382 15 122 18 716
Germany 12 372 14 279 14 717 15 405
Denmark 13 443 18 063 17 458 10 576
France 8 844 10 913 11 455 12 849
Netherlands 9 450 9 776 9 597 6 141
Italy 1 250 1 292 3 397 3 632
Luxembourg 2 085 724 942 1 654
Belgium 479 751 799 785
Ireland 1 019 1 308 1 345 1 495
Austria 1 778 1 875 1 849 1 932
Other EU-15-countries 239 184 365 409
Baltic countries 146 221 1 806 2 317
Estonia 146 221 1 722 2 243
Other countries (2) 47 753 57 285 65 034 70 150
United States 24 367 25 849 28 026 29 210
Norway 7 436 6 920 7 791 8 975
Switzerland 5 311 12 119 12 348 10 906
Japan 3 871 4 235 6 595 6 817
Russian Federation 757 1 457 1 117 1 914
Total (1) (2) 158 670 177 567 196 281 221 522

Source: Statistics Finland, Foreign affiliates in Finland Statistics

a) proportion of private sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Table 4. The proportion of private sector employment accounted for by MNCs (2003–07)
Year 2003 2004 2005 2006 2007
Foreign-owned MNCs’ proportion of private sector employment, % 11.6 12.2 13.1 13.5 14.3

Source: Statistics Finland, Foreign affiliates in Finland Statistics

Table 5. The proportion of manufacturing employment accounted for by MNCs (2003–07)
Year 2003 2004 2005 2006 2007
Foreign-owned MNCs’ proportion of private sector employment, % 14.1 13.9 16.1 17.0 18.4

Source: Statistics Finland, Foreign affiliates in Finland Statistics

c) proportion of service sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Table 6. The proportion of service sector employment accounted for by MNCs (2003–07)
Year 2003 2004 2005 2006 2007
Foreign-owned MNCs’ proportion of private sector employment, % 8.1 10.4 12.2 14.6 14.5

Source: Statistics Finland, Foreign affiliates in Finland Statistics

2) Please provide any available information on the breakdown of employment in multinationals between foreign-owned MNCs and home-based MNCs

Table 7. The proportion of foreign-owned MNC versus home-based MNCs employment (2004–07)
MNCs’ proportion of private sector employment, % 2004 2005 2006 2007
Foreign-owned 25.6 26.4 27.1 29.0
Home-based 74.4 73.6 72.9 71.0

Source: Statistics Finland, Foreign affiliates in Finland Statistics

3) What is the level of collective bargaining coverage amongst MNCs, and how does this compare with levels of collective bargaining coverage within the private sector? In the absence of precise figures, please provide an estimate of whether it is higher or lower than the average in:

i) the private sector overall

ii) manufacturing

iii) private services

The collective bargaining coverage in Finland has been about 90 % during the 2000s, and MNCs do not entail any departure from this practise.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are MNCs covered by sector agreements? What is the nature of the relationship between MNCs and sector agreements?

a) If Yes, do they mainly conform with the provisions specified in these agreements?

The collective agreements have a generally/universally binding nature. Since 1971, there has been a principle of general applicability of collective agreements in effect in Finland. According to it, unorganized employers also have to comply with the national agreements that concern the line of business they are. The generally binding character of a collective agreement depends on various factors, especially the organizing rate of employers and employees in the line of business concerned. A public authority (Commission) formally decides whether collective agreements are generally binding. The decision of this Commission may be appealed at the Labour Court, the decision of which is final. The decision regarding the general validity will be published in the Regulations Collection maintained by the authorities and agreements confirmed as generally binding are available free of charge on Internet in a list of generally binding collective agreements. In 2001, the so-called confirmation procedure of universally binding collective agreements was introduced, in which a special commission confirms the general applicability. An agreement is generally applicable, if it can be considered representative of the field in question. The criteria for being representative are evaluated based on statistics that measure the general applicability of collective agreements, the established practices of agreements in the field, and the organization rate of the negotiating parties. The aim of the system of general applicability to guarantee minimum conditions is also taken into consideration.

b) If No, do MNCs conclude their own company agreements? If so, what if any relationship do these company agreements have with the sector agreement?

5) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, to what extent are MNCs regarded by other employers as pattern setters for wage negotiations?

Not applicable

2. MNCs and change in national systems of collective bargaining

1) To what extent have MNCs been a source of recent change in the agenda and outcomes of collective bargaining in respect of any of the following issues. Please distinguish between manufacturing and private services:

a) payments systems? If so, please elaborate and give examples.

b) working time arrangements? If so, please elaborate and give examples.

c) flexibility arrangements (other than working time)? If so, please elaborate and give examples.

d) handling restructuring? If so, please elaborate and give examples.

The most important driving force towards the extension of flexible payments and flexible working time arrangements has recently been the home-based multinational companies.

2) Are any of these changes associated with MNCs headquartered in particular countries? If yes, which countries?

One obvious example comes from the financial sector where the current payroll model is so-called Nordic model. This means that the Finnish banks and insurance companies have widely incorporated the model of payroll arrangement where the company has a certain pool of money to pay increases, and the amount of pay increase in a case of an individual employee is based on individual competitiveness. The amount of pay increase is agreed after the discussion between an employee and his/her superior. The model has often the system of the sales- and productivity-based bonuses or result and profit-based bonuses.

3) Are MNCs introducing new issues onto the bargaining agenda? If so, what are these new issues? (Examples might include equality and diversity practices; environmental issues; new employee participation practices; teleworking.)

Not directly new issues onto the bargaining table, but the internationalization of business has called the need of company-level agreements. This has been the trend regardless of the fact are the company foreign-owned or is it a Finnish company that is operating in the global market.

4) Are any of these new issues associated with MNCs headquartered in particular countries? If yes, which countries?

Models of payroll system in the financial sector come from the Nordic countries (Denmark, Norway and Sweden).

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what has been the role of MNCs in opening up greater scope for company negotiations? Please distinguish between developments in manufacturing and private services.

a) are company negotiations mainly confined to issues on which sector agreements

i) provide openings and/or a framework?

ii) establish minimum standards or conditions?

b) are there company negotiations on issues which are not addressed by sector agreements? If yes, please give examples.

c) are there any instances of company negotiations resulting in breaches of provisions in sector agreements? If yes, please give examples.

The foreign-owned MNCs are essential part of the bargaining arrangements and they have adapted themselves to the normal Finnish bargaining system.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are there any recent examples of MNCs:

i) leaving a sector agreement? If yes, please give details.

ii) placing new operations or sites outside of the coverage of the sector agreement(s) which apply at existing sites? If yes, please give examples.

No, there are no examples of this kind

7) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any evidence of the practice of ‘double-breasting’ by MNCs? (Double-breasting is when companies recognise trade unions for collective bargaining purposes at longer established sites, but not at more recently opened ones.) If yes, please indicate the extent of the practice and provide examples.

3. MNCs and the cross-border dimension to collective bargaining

1) Is there evidence of MNCs using comparisons of labour costs, flexibility and performance drawn from company operations in other countries in the course of local company negotiations? If yes, please give examples when answering the following:

i) in which sectors does this typically occur?

ii) what is the geographical focus of the comparisons (e.g. western Europe, eastern Europe, Asia, worldwide)?

iii) what is the impact of these comparisons on the outcome of local negotiations?

Yes, this is a quite common situation. MNCs use widely the worldwide data concerning labour costs, flexible working time arrangements and performance drawn from company operations in other countries in course of local company negotiations. This is typical phenomenon in general, but of course more usual in sectors where companies are operating in the international market, like paper and pulp industry and technology industries. One impact of this kind of comparison has been a growth of the different flexible working time arrangements and locally agreed pay increases in the technology sector. By flexible working time arrangement the company has tried to have an influence to the company’s competitiveness; and by increasing by locally agreed pay increase models the companies can use the wage as a guidance instrument.

In Finland, MNCs have also proposed tax release to those foreign employees (typically experts) who come to Finland, due to high level of income taxation. In certain cases, foreign employees (posted workers) can have well-matched 35 % of income taxation.

2) Is there any evidence of threats to relocate operations influencing the agenda and outcomes of local company negotiations? If yes, please give examples when answering the following:

i) in which sectors has this occurred?

ii) what are the destination countries / regions of the global economy for any threatened relocations?

iii) what has been the impact on the outcome of local negotiations?

There is some evidence of threats to relocate operations depending on local company negotiations. During the paper industry conflict in 2005 (FI0507201N), there were some speculations of the threat of relocation if the negotiation result does not satisfy the employers.

This matter is very topical in Finland at the moment. Recently, the Finnish media has quoted dozens of unnamed civil servants, politicians and labour market bosses as saying that Finland-headquartered mobile phone maker Nokia had threatened to leave Finland if Parliament failed to pass a piece of legislation known as Lex Nokia. The proposed law, aimed at preventing corporate espionage, would allow employers to monitor employees’ use of company e-mail traffic; while the content of employees’ messages would remain confidential, the employer would be allowed to see who the employee has corresponded with through the company’s e-mail system, and what kind of attachment material is linked with each message.

´Nokia applied very strong pressure in order to have the government proposal approved unanimously already in the drafting stage,´ the Helsingin Sanomat quoted one civil servant as saying and adding: ´The message conveyed through the Confederation of Finnish Industry (Elinkeinoelämän keskusliitto, EK) was loud and clear: if the law is not passed Nokia will leave Finland.´

3) Is there evidence of MNCs seeking to introduce so-called ‘best’ practices and/or corporate policies from their operations in other countries in the course of local company negotiations? (This may arise through the use of benchmarking.) If yes, please give examples when answering the following:

i) in which sectors does this typically occur?

ii) is the process linked to the use of comparisons of labour costs, flexibility and performance or other Human Resouces policies (if so, please specify)?

Yes, this kind of introducing of best practices and corporate policies in other countries in the course of local company negotiations surely exists. However, the evidence how much this is used in negotiations is difficult to calculate.

4) Do MNCs employ significant numbers of posted workers (e.g. amounting to more than 5% of the workforce)? If yes,

i) in which sectors does this typically occur?

ii) are these posted workers covered by local sector and/or company agreements?

According to the wage statistics of the Confederation of Finnish Industry (EK), the number of MNCs’ posted workers does not reach more than 5 %, but posted workers are in general covered by sectoral collective agreement. The use of posted workers is quite common in technology industries and in the paper and pulp industry.

5) Are there any instances where MNCs headquartered in your country have engaged in transnational negotiations at either European or global levels? If yes, please provide details of the MNC(s) concerned and the issues addressed.

No.

4. MNCs and the social partners

4a. Employers

1) Are MNCs affiliated to the main employers’ organizations at cross-sector and sector levels?

As a general rule, foreign-owned companies operating in Finland are affiliated to the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK); and home-owned companies are affiliated to EK.

2) To what extent are MNCs regarded as key players within the main employers’ organizations at cross-sector and sector levels?

The home-owned MNCs are very important players in EK, but the importance of foreign-owned companies is not so important (anyway, they are an essential part of EK).

3) Are MNCs also organized in country-of-origin specific assocations (e.g. American or German Chambers of Commerce). If yes:

Do these associations intervene on industrial relations issues? If yes, please provide details.

As a general rule; yes. MNCs are often members in differrent country-of-origin specific associations, but not any statistics is available on this matter.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what influence do MNCs exercise over sector negotiations? For example, how far are MNC personnel involved as lead negotiators for employers’ organizations?

MNC personnel have been involved through EK-affiliated employer organisations as other companies.

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what, if any, kind of reforms to sector agreements are MNCs proposing? For example, are they pressing for:

i) limited reform, with modest extension of scope for company bargaining within sector agreements? If yes, please give examples.

ii) extensive reform, under which sector agreements are confined to establishing either minimum standards or a basic framework governing a few key issues? If yes, please give examples.

In Finland, the Confederation of Finnish Industries (EK) has long announced that sectoral, company and even individual-level bargaining will be the negotiation models of the future. EK has argued that the bargaining structure in Finland has been too centralized, and also that the ‘pay norm’ whereby the average productivity growth rate determines wage rises in all sectors should be scrapped. Instead, the employer organization has endorsed a system in which the rate of productivity growth in each sector would determine its particular level of pay increases (FI0408202F). Furthermore, more scope should be given to performance-based wages in company-level bargaining. These objectives were largely achieved during the last sectoral bargaining round in the autumn of 2007 (FI0803019I).

It is obvious that MNCs (particularly home-owned export-companies) have been forerunners in local, company-level bargaining in Finland.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any indication of the advantages or disadvantages that MNCs perceive in continuing to be party to sector agreements?

In Finland, MNCs are normal and essential part of bargaining arrangements.

4b. Trade unions

1) How have trade unions responded to the impact of MNCs on the agenda and outcomes of collective bargaining? Please give examples.

The Metalworkers’ Union (Metallityöväen Liitto) and other unions in the technology industries have been active in cooperation with employers in issues like the development of competitiveness and flexible working time arrangements.

2) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to attempts by MNCs to broaden the scope of company negotiations? Please give examples.

There is no national strategy amongst trade unions, but trade union confederations and individual trade unions have increased their international cooperation, in particular a t the European level. Finnish trade unions are working in European Works Councils; and these organisations have an important function in communication.

3) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to any attempts by MNCs to:

i) leave sector agreements? Please give examples.

ii) place new operations or sites outside of the coverage of the sector agreement which applies to existing operations? Please give examples.

4) In what ways have trade unions responded to the use by MNCs in local, company negotiations of:

i) comparisons of labour costs, flexibility and performance?

ii) threats to relocate? Please give examples.

The international cooperation between trade unions around the world is a key element in this case. Trade union side considers its own research, its own sources of information and own expertise concerning corporate analyses very important means.

5) Are there instances where trade unions have targeted specific MNCs because of public, media or political interest in their practices? If yes,

i) have they involved political exchange, involving mobilization of popular sentiment against foreign companies as political leverage to gain concessions from government (e.g. the cases of Alstom in France and Alitalia in Italy)? Please provide examples.

No.

ii) have new industrial relations actors, such as NGOs, been involved in such campaigns? Please give examples.

Some NGOs like Attac and the Friend of the Earth Finland (Maan ystävät) have organized some campaigns. FinnWatch started its activities in October 2002, to watch the Finnish companies abroad. FinnWatch collects, analyses and spreads information on Finnish companies in developing countries and economies in transition where there is reason to believe that conditions are environmentally or socially unsatisfactory. It is interested in the consequences of these companies’ operations on human and labour rights, the environment and developmental and social consequences in the South. FinnWatch cooperates with Nordic Watches and many other organizations that are working on CSR. It produces information for our network, media and the public. FinnWatch also gives direct feed-back to companies involved.

6) Are trade unions in MNCs engaged in compiling their own cross-border comparisons of working conditions etc. at sites in different countries? If yes, please give examples.

Trade unions have their own research activities, and are often engaged in compiling their own cross-border comparisons of working conditions.

7) Are national and local trade unions involved in European-level negotiations with MNCs on any issues? If yes, please give details.

There is no European level negotiation system, but cooperation and communication in these matters occur. One example is the Nokia’s Bochum-case, where trade unions from different countries (also from Romania) have close cooperation.

8) More generally, do trade unions have policies aimed at developing the cross-border and European-level dimensions to collective bargaining in MNCs?

Trade unions have social dialog policies concerning the cross-border and European-level dimensions to collective bargaining in MNCs. Herein the sector-related European-level federations are important organizations.

5. Commentary by the NC

The home-owned MNCs have been a driving force in the change of bargaining structure from centralized collective bargaining to company-level bargaining. These kinds of companies have been forerunners in implementation of flexible working time arrangements and locally agreed pay increase models too.

In Finland, the concept of the multinational company is a bit vague nowadays, because of the fact that the Finnish industrial life has been recently strongly internationalised. So, the borderline or definition between national and multinational company is not so clear than it was couple of decades ago. Equally, the concept of home-owned and foreign-owned company is not a clear concept too, because the location of headquarter or the proprietary-structure of the company offer just one indicator to make a definition. The more relevant borline (in the field of collctive bargaining) is the that if the companies are operating globally or just in the domestic internal market.

Pertti Jokivuori

Page last updated: 02 July, 2009
About this document
  • ID: FI0904049Q
  • Author: Pertti Jokivuori
  • Institution: Statistics Finland
  • Country: Finland
  • Language: EN
  • Publication date: 02-07-2009