National wage negotiations at a standstill

After the new collective agreement in the technology industry that opened the 2009 bargaining round, little progress has been made on wage negotiations. Trade unions seem to be awaiting signs concerning the direction of the economy. The employer side has offered a so-called ‘wage anchor’ model on the basis of the collective agreement in the technology field. However, trade unions have rejected this proposal, as the pay increases in 2010 and 2011 were not decided.

After the new collective agreement in the technology industry that opened the 2009 bargaining round, wage negotiations have been at a standstill. In fact, many sectors are now at a stage where no agreement is in force. Thus, there seems to be little commitment to harmony in the labour market. In mid November 2009, the Finnish Airline Pilots’ Association (Suomen Liikennelentäjäliitto, SLL) rejected a national conciliator’s settlement proposal to avert industrial action, and a strike of 800 pilots grounded the flights of the national airline carrier, Finnair.

However, in the current difficult economic situation, trade unions are not keen to start industrial action. Instead, they seem to be waiting to see the direction of the economy. If some signs of economic recovery appear, trade unions will have more scope for collective bargaining.

Trade unions reject anchor model

The employer side has offered a so-called ‘wage anchor’ model on the basis of the collective agreement concluded in the technology industry (FI0909019I). In the first year of the agreement period, pay increments will be decided at local level, leading to an increase of 0.5% in the autumn of 2009. The pay rises for the following years will be negotiated separately during April to May of each year.

However, trade unions have rejected the employers’ model, declaring that the technology industry has not actually agreed anything, because the pay increases in 2010 and 2011 have been neglected. Thus, the collective agreement does not offer any indication of the wage increases for the next two years.

Trade unions have criticised the proposal of the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK) regarding this anchor model. EK announced last year that sectoral, company and even individual-level bargaining will be the negotiation models of the future, and that the period of solidaristic wage policy offering equal pay increases to every sector of the economy and employee group has come to an end (FI0806029I).

Local government faces most difficult situation

The most difficult situation concerning wage negotiations is in the public sector at local government level. The Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) has pleaded that the municipalities are in a poor economic situation, and KT is demanding a long-term agreement with a pay freeze. KT has also indicated that there is a possibility of wage cuts in the next bargaining round. It has calculated that municipalities will experience a deficit of €800 million in 2010, which could partly be covered by a 4% pay cut.

The economy of the municipalities has crumbled due to the decline in tax revenue, the rise in unemployment and income support expenses, and the high pay increases agreed in the 2007 bargaining round.

However, the trade unions in the public sector at municipal level are demanding pay increases. The unions argue that, despite the relatively high pay increases in the public sector during the current agreement period 2007–2009, the pay gap between the public sector at municipal level and the private sector has not narrowed.

Commentary

It is evident that the pay freeze proposed by the employers is difficult for trade unions to accept (FI0901029I). A wage freeze will actually mean a drop in income level and in purchasing power. Thus, a moderate pay increase is the most likely option. The collective agreement of the technology industry offers a good basis for other accords. It means that, in 2010, the pay increase will be low and, after next year, parties will assess the situation again when it will be clearer how quickly the economy is recovering.

Pertti Jokivuori, Statistics Finland

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