Technology sector agreement first in new bargaining round

The first new collective agreement in Finland’s latest bargaining round has been negotiated in the technology industry. The three-year agreement between the Federation of Finnish Technology Industries and the Metalworkers’ Union takes effect in October 2009, covering about 125,000 employees. The social partners have widely welcomed the agreement, which provides for a moderate pay increase, viewing it as a successful opening in a difficult bargaining round.

Background

Finland’s branch-level collective agreements are set to expire by the beginning of 2010. In the spring of 2009, negotiations for a new collective agreement were initiated by the Federation of Finnish Technology Industries (Teknologiateollisuus), affiliated to the Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK), and the Metalworkers’ Union (Metallityöväen Liitto), affiliated to the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK). However, by May, the views of the bargaining parties on the pay increase level became so divided that negotiations were suspended (FI0904019I).

Details of negotiations in technology industry

Nevertheless, the parties renewed the negotiations in August 2009, securing a new collective agreement relatively quickly. The trade unions had been calling for an overall pay increase of 0.7%. However, the employer side was opposed to both the level of wage increase and the desire by the trade union side to grant all employees a general pay rise. Instead, the employers favoured a model where the level of pay increase would be specific to each company.

Agreement reached

In the end, a three-year agreement was reached between the Federation of Finnish Technology Industries and the Metalworkers’ Union. The agreement is due to take effect in October 2009 and covers about 125,000 employees. In the first year of the agreement period, pay increments will be agreed 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. These negotiations will be based on how the objectives of the collective agreement have been fulfilled and on an evaluation of the economic outlook at that time.

Both sides agreed that wage increases can be implemented on a company-by-company basis, if needed. Therefore, pay rises can be delayed or even abandoned in certain circumstances – for example, if a company’s present financial situation cannot reasonably take the strain of higher labour costs, if demand is exceptionally weak or if the wage increases would threaten jobs.

The parties also agreed to introduce some changes to the collective agreement to allow for more flexibility in the workplace. These changes concern, among other things, working time, local bargaining and the role of the shop steward.

Aims of agreement

The President of the Metalworkers’ Union, Riku Aalto, and the Deputy Director-General of the Federation of Finnish Technology Industries, Risto Alanko, summarised the outcome of the negotiations as follows:

Through this agreement, the Federation of Finnish Technology Industries and the Metalworkers’ Union are striving to secure the industry’s commercial basis and to preserve jobs despite the recession. The three-year period will stabilise the labour market, while annual salary adjustments will enable account to be taken of actual economic developments. Considering the level of uncertainty, the latter is vital to securing employment.

Second agreement reached

Soon after the collective agreement was reached, a similar agreement on new pay and conditions was secured between the Federation of Finnish Technology Industries and the Federation of Professional and Managerial Staff (Ylemmät Toimihenkilöt, YTN). YTN is the collective bargaining organisation of the Confederation of Unions for Professional and Managerial Staff (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA). This three-year agreement is also due to enter into force in October 2009, with locally agreed wage increases of up to 0.5% secured for the autumn of 2009. The collective agreement covers about 55,000 senior salaried employees in the technology industries.

Expectations for impending budget talks

Representatives of both the Metalworkers’ Union and the Federation of Finnish Technology Industries will be keeping a close eye on the government’s forthcoming budget talks. Both sides share the view that taxation and spending policies for 2010 should seek to reduce costs and boost purchasing power in a way that supports employment.

In an interview with the Finnish Broadcasting Company (YLE), Mr Alanko of the Federation of Finnish Technology Industries indicated that discussions have been held with government representatives. He highlighted that:

This is a matter of how to keep Finnish jobs in Finland and secure the requirements for companies to operate. It is extremely important that the measures that have been discussed with the state are carried out swiftly.

Social partners welcome agreement

The first of the agreements reached in the technology industry has received wide praise from the social partners. EK stated that the outcome of the negotiations represents an important opening in a difficult economic situation and that the agreement will promote economic recovery.

The President of SAK, Lauri Lyly, declared that the agreement shows that management and labour are capable of acting responsibly in a difficult economic situation. Mr Lyly said that he was hopeful that the opening of the bargaining round in a large export industry will also help other sectors to reach agreement. He added that:

From the wage earner’s point of view, it is significant that in the new technology industry contract, we managed to reject all proposals to weaken the outcome. In general terms, the content of the labour contract was developed.

Finland’s Prime Minister, Matti Vanhanen, praised the pay agreement reached in the technology industry. He highlighted that the agreement seeks to secure long-term competitiveness in the field and to promote employment. In the government’s view, the technology industry is an important sector, which will allow Finland to tap into this growing industry in the world economy. Prime Minister Vanhanen has especially welcomed the fact that the agreement was reached ahead of schedule.

Autumn bargaining round

The forthcoming autumn negotiations are likely to be a lively time for bargaining, as the sectoral collective agreements are due to expire during the autumn and at the beginning of 2010. Collective bargaining parties have already been trying to reach a new collective agreement in September in the forestry industry, as well as in the transport and financial intermediation sectors, and in information technology services.

The ongoing recession is clearly a central point of the negotiations. While the high pay increases of previous bargaining rounds are no longer on the trade unions’ agenda, they have also insisted that they will reject a zero proposal. In the summer of 2008, EK viewed the current economic crisis as being so difficult that it insisted that pay increases would not be possible in the ongoing bargaining round.

However, the parties are also preparing for better times. Therefore, it is likely that the level of pay increases in the second or third year of the agreements will be negotiated separately – as is the case regarding the collective agreement for the technology industry.

Commentary

The technology industry has traditionally been one of the first sectoral branches to open the country’s collective bargaining negotiations (FI0712049I). The industry is the most important industrial sector in Finland, accounting for 60% of total Finnish exports and 75% of total Finnish research and development (R&D) investments.

Since the autumn of 2008, Finland’s technology industry has been facing a difficult financial situation and its competitiveness has been hampered by the strength of the euro. There is a strong possibility that the new collective agreement in the industry will hasten the negotiations in other sectors. The moderate wage increases agreed may also help the government with its economic stimulation policies in the upcoming budget talks.

So far, there does not seem to be any sign of a wave of strike action arising this autumn. Instead, it is likely that the new sectoral collective agreements will be negotiated in sufficient time before the old ones expire.

Pertti Jokivuori, Statistics Finland

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