Living and working in Finland

18 October 2017

  •   Population: 5.5 million (2017)
  •   Real GDP growth: 1.9% (2016)
  •   Unemployment rate: 8.8% (2016)

Data source: Eurostat

Eurofound provides research, data and analysis on a wide range of social and work-related topics. This information is largely comparative, but also offers country-specific information for each of the 28 EU Member States. Most information is available in English but some has been translated to facilitate access at national level.

Eurofound strives to strengthen the ongoing link between its own work and national policy debates and priorities related to quality of life and work. Increasingly important in this context is the Europe 2020 growth and jobs strategy launched in 2010, which has five headline targets, covering employment through to social inclusion and poverty reduction. The strategy is implemented in the context of the European Semester process – the EU's annual cycle of economic policy guidance and surveillance – which ensures that Member States keep their budgetary and economic policies in line with their EU commitments through, in part, National Reform Programmes. These programmes form the basis for the European Commission's proposals for country-specific recommendations (CSRs) for each Member State.

European Commission: The European Semester
European Commission: The European Semester - EU country-specific recommendations
European Commission: European Semester documents for Finland

2015 Eurofound EWCS survey results in Finland: 78% of people receive the recognition they deserve for their work

Survey results

Satisfaction with quality of life
Data source: 2012 EQLS survey

Ability to choose or change
methods of work

Data source: 2015 EWCS survey

Possibility to accumulate overtime
for days off

Data source: 2013 ECS survey

News and quarterly country updates

Latest news on Finland working life

Quaterly overwievs

Eurofound contacts in Finland

Correspondents in Finland

Correspondents report on topics related to developments in the countries working life and inform Eurofound’s pan-European comparative analysis. Read more

Oxford Research AB

Eurofound governing board members from Finland

Eurofound's Governing Board represents the social partners and national governments of all Member States, as well as the European Commission. Read more

Antti Närhinen​ Ministry of Employment and the Economy

Minna Etu-Seppala Confederation of Finnish Industries (EK)

Juha Antila Central Organisation of Finnish Trade Unions (SAK)

Related content

Other country-specific information may be available in certain areas on demand. Please feel free to contact your country contact at Eurofound for this or any other information at information@eurofound.europa.eu

Working life in Finland

About

  • Author: Maija Kaartinen, Lisa Tönnes Lönnroos and Anna Savolainen
  • Institution: Oxford Research

This profile describes the key characteristics of working life in Finland. It aims to complement other EurWORK research by providing the relevant background information on the structures, institutions and relevant regulations regarding working life. This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are updated annually.

Key figures

Key figures

Comparative figures on working life in Finland

 

2011

2016

% (point) change
2011–2016

Finland

EU28

Finland

EU28

Finland

EU28

GDP per capita

35600

25800

34500

26900

-3.1%

4.3%

Unemployment rate – total

7.8

9.7

8.8

8.5

1.0

-1.2

Unemployment rate – women

7.1

9.8

8.6

8.7

1.5

-1.1

Unemployment rate – men

8.4

9.6

9.0

8.4

0.6

-1.2

Unemployment rate – youth

20.1

21.7

20.1

18.7

0.0

-3.0

Employment rate – total

74.9

71.1

75.9

73.0

1.0

1.9

Employment rate – women

72.7

64.8

74.1

67.4

1.4

2.6

Employment rate – men

77.2

77.5

77.7

78.6

0.5

1.1

Employment rate – youth

50.5

42.5

52.2

41.6

1.7

-0.9

Source: Eurostat - Real GDP per capita (chain linked volumes [2010], in EUR) and percentage change 2011-2016 (both based on tsdec100). Unemployment rate by sex and age - annual average, % [une_rt_a]; Employment rate by sex and age - annual average, % [lfsi_emp_a].

Background

Background

Economic and labour market context

Between 2011 and 2016, Finland’s GDP decreased by 3.1%, in contrast with the EU average increase of 4.3% for the same period. During this time, unemployment increased slightly, except for young people, were it remained stable. Looking at employment figures, the one for young people had the most significant increase between 2011 and 2016 (1.7 percentage points) and stood at 52.2% in 2016, well above the EU average (41.6%) for that year. 

More information on:

Legal context

The working conditions of employees are determined on the basis of legislation and collective agreements. The most important legislation regarding employment relationships in Finland includes the Employment Contracts Act, the Working Hours Act and the Annual Holidays Act. Several acts safeguard non-discrimination and diversity at work. These laws apply to all employees working for Finnish employers, regardless of their nationality.

The most important laws governing labour market organisations and collective bargaining include the Collective Agreements Act, which sets the framework for the agreement system as well as the Act on Mediation in Labour Disputes and the Act on the Labour Court designed for settling of disputes in relation to the collective agreements. Labour market legislature is drafted in a tripartite manner, including trade unions and employers’ organisations in the process.

Industrial relations context

Finnish industrial relations are highly centralised: the trade union density was 76% in 2015 (according to the national survey-based Working Life Barometer) and the various trade unions and employers’ organisations cooperate closely in peak-level organisations. The collective bargaining coverage is approximately 89% (Ahtiainen, 2016). The Finnish system of collective bargaining started in 1940 as the labour market organisations recognised each other as negotiating partners while the process of tripartite cooperation started fully in 1968. In addition to employment issues, the Finnish labour market organisations are also key actors in developing other policy areas, such as the pension scheme. With a tradition of consensus, the government consults the social partners in detail over any proposed amendments to the laws that affect working life.

Finland has traditionally had a three-tier system, with collective bargaining normally taking place at national, sectoral and local level. In 2007, no central level agreement was concluded due to the employers’ organisations’ demands for decentralisation. With the constraints of the financial crisis, however, a national framework agreement was again signed in 2011. In 2016, most social partners both at central and sectoral levels signed a major tripartite labour market agreement, the Competitiveness Pact, entailing a wage freeze for 2017 and a 24-hour extension of annual working time, among other things. The Pact may have been the last of big centralised agreements: following a change in its internal rules, the peak-level Confederation of Finnish Industries (EK) prohibits itself from participating in central level collective bargaining in the future. The decision has been effective since May 2016.

In addition to the formally negotiated collective agreements, the social partners engage in mutual working life discussions during the agreement period through the so-called ‘continuous negotiation system’. This practice has grown increasingly common during the last decade.

Actors and institutions

Actors and institutions

Trade unions, employers’ organisations and public institutions play a key role in the governance of the employment relationship, working conditions and industrial relations structures. They are interlocking parts in a multilevel system of governance that includes the European, national, sectoral, regional (provincial or local) and company levels. This section looks into the main actors and institutions and their role in Finland.

Public authorities involved in regulating working life

The Ministry of Economic Affairs and Employment is responsible for securing the functioning of the labour market through creating a favourable environment for industrial activities and employment. It drafts and monitors labour legislation. The Ministry of Social Affairs and Health is responsible for the legislation on occupational safety and health as well as equality issues. The Regional State Administrative Agencies' divisions of occupational safety and health are responsible for regional supervision of occupational safety.

The National Conciliator’s Office assists the social partners in disputes concerning collective agreements, facilitating mutual agreements, while the Labour Court deals with cases between employers’ and employees’ organisations related to alleged violations of collective agreements and can order compensatory fines. Legal cases concerning employment legislature which are not related to the collective bargaining agreements are settled by general courts. The Co-Operation Ombudsman monitors compliance with laws related to personnel representation, such as the Act on Cooperation within Undertakings.

Representativeness

There are no statutory regulations regarding representativeness, except for the central principles of collective bargaining in the Collective Agreements Act. The Act sets out the principles as follows:

A collective agreement within the meaning of this Act is any agreement concluded by one or more employers or registered associations of employers and one or more registered associations of employees, concerning the conditions to be complied with in contracts of employment or in employment generally. For the purposes of this Act, ‘association of employers’ means any association whose specific objectives include that of safeguarding the employers’ interest in the matter of employment; and ‘association of employees’ means any association whose specific objectives include that of safeguarding the employees’ interests in the matter of employment.

The strong role of the peak-level social partners is based on the tripartite consensus tradition, which gives the employers’ and employees’ central organisations a central position not only in the drafting of national-level collective agreements on wages and working conditions, but also in the drafting of employment legislature and economic policy. The power of the social partners in designing the pension reforms in 2014 provide an example of the importance of tripartite cooperation in Finland. These lawmaking activities will presumably not be affected by the seemingly changing role of the peak-level employers’ organisation (see the section ‘Industrial relations context’ above).

More information on representativeness of the main social partner organisations can be found in Eurofound’s representativeness study of the cross-industry social partners or in Eurofound’s sectoral representativeness studies.

Trade unions

About trade union representation

According to the Employment Contracts Act, all workers, regardless of the sector they are employed in, have the right to join trade unions. The membership in trade unions in Finland is high, the trade union density having remained around 70% during the last 10 years. Explanatory factors for the popularity of trade unions include their involvement in pensions and unemployment schemes which make them a provider of individual security, even though other institutions providing similar services exist. The Finnish history of trade union prominence in working life and politics may also be a reason for the normalisation of membership in trade unions.

Trade union membership and trade union density

 

2010

2011

2012

2013

2014

2015

Source

Trade union density in terms of active employees

72%

68%

75%

75%

73%

76%

Ministry of Employment and the Economy 2016: Työolobarometri (Working Life Barometer)

Trade union membership in 1000

1,448

1,484

1,491

1,462

No data

No data

OECD/Visser (2014), based on administrative data

Main trade union confederations and federations

The three peak-level trade union confederations are: the Central Organisation of Finnish Trade Unions SAK; the Finnish Confederation of Professionals STTK and the Confederation of Unions for Professional and Managerial Staff in Finland (Akava). SAK represents mostly blue-collar occupations, while STTK represents officials and clerks (mostly white-collar workers) and Akava is the trade union confederation for those with university, professional or other high-level education.

Main trade union confederations and federations

Long name

Abbreviation

Members

Involved in collective bargaining?

The Central Organisation of Finnish Trade Unions

SAK

992,716

(2016)

Yes

The Finnish Confederation of Professionals

STTK

552,400

(2015)

Yes

The Confederation of Unions for Professional and Managerial Staff in Finland

Akava

596,947

(2015)

Yes

In 2014, the two biggest peak-level trade unions, SAK (the Central Organisation of Finnish Trade Unions) and STTK (the Finnish Confederation of Professionals), started a process towards a merger that was planned to take place in 2016. The aim of this merger was to increase the centralisation and potential bargaining power of the employees’ organisations. However, the project was abandoned in June 2016 after several STTK member unions and some SAK member unions decided to withdraw from it.

Employers’ organisations

About employers’ representation

All employers have the right of association and the membership in employers’ associations is voluntary in the private sector. The employers’ organisation density has been very stable during the 2000s, and was around 65% in 2013. There is a marked trend of organisations merging, and this is expected to continue. The comparably high density is likely related to the power that labour organisations have in the collective agreements.

Employers’ organisations – membership and density

 

2012

2013

2014

Source

Employers’ organisation density in private sector establishments*

n.a.

65%

n.a.

European company survey 2013

*Percentage of employees working in an establishment which is member of any employer organisation that is involved in collective bargaining.

The report of the Ministry of Economic Affairs and Employment, ‘Coverage of collective agreements in 2014’ (Ahtiainen, 2016), is a relevant national source. The report provides a different calculation of employers’ organisational density, ranging from 73% (2008) and 75% (2014) to 62.6% (2008) and 66.2% (2014). The latter figures are comparable to those reported by the ECS in the above table.

Main employers’ organisations

The Confederation of Finnish Industries (EK) is the leading business organisation and represents the entire private sector and companies of all sizes.

Local government employers (KT) is an interest organisation for local government employers representing all Finnish local and joint authorities. It negotiates and concludes collective agreements for municipalities and federations of municipalities employing 422,000 people.

The State Employer’s Office (VTML) negotiates and concludes collective agreements for the 74,000 employees working for the state.

The Church Employers (KiT) represents the Lutheran Church of Finland as an employer and negotiated a collective agreement for about 20,000 employees working for the parishes in 2014.

The Federation of Finnish Enterprises (SY) has the largest membership of all business-related federations in Finland. The membership consists of more than 115,000 enterprises of all sizes (although half of the members are solo-entrepreneurs), from all over the country, and encompasses the entire business spectrum. SY was founded in 1996. It is not a negotiating party in collective bargaining.

Main employers’ organisations and confederations

Long name

Abbreviation

Members

Year

Involved in collective bargaining

Confederation of Finnish Industries

EK

16,000 companies, employing 980,000 people

2016

Yes

Local Government Employers

KT

All local and joint government employers, employing 422,000 people

2015

Yes

State Employer’s Office

VTML

State employers, employing 73,700 people

2015

Yes

Church Employers

KiT

The Evangelical Lutheran Church of Finland as an employer, employing 20,300 people

2015

Yes

The Federation of Finnish Enterprises

SY

115,000 member companies, employing 650,000 people.

2015

No

Tripartite and bipartite bodies and concentration

Due to a strong tradition of tripartite cooperation there are various bipartite and especially tripartite working groups in Finland. While some are of a more permanent nature, others are established ad hoc, by the government or based on the national level agreements, to investigate a certain issue. The most important ones are the national level tripartite bodies listed below, although smaller discussion groups and regional tripartite forums also exist. The national working groups are highly influential as they participate in policy-making in various areas in co-operation with the government or other public actors. These include issues connected to collective bargaining, such as wage and cost developments, in which the government aims for contracts that suit the overall situation of the economy. Other important issues include competitiveness and employment, as well as unemployment and pension schemes. For permanent bodies, there are often fixed consultation mechanisms, while ad hoc groups’ processes vary on a case-by-case basis.

In addition to political negotiations, the tripartite and bipartite bodies are discussion forums for developing Finnish working life and enhancing international competitiveness.

Main tripartite and bipartite bodies

Name

Type

Level

Issues covered

Information Committee on Cost and Income Developments (TUKUSETO)

Tripartite

National

Cost and income developments and how they relate to collective agreements.

Economic Council of Finland

Tripartite

National

Facilitating co-operation between the Government, the Bank of Finland and major interest groups. Economic and social issues of key importance to Finland’s prosperity.

Centre for Occupational Safety

Occupational Safety Sector Groups and Committees

Tripartite

Sectoral

Sector groups and Occupational Safety Committees plan training courses and carry out campaigns related to occupational safety.

National Education and Training Committees

Tripartite

Sectoral

The 26 sectoral committees monitor, evaluate and anticipate the development of education and training and working life skills needs and make proposals on related initiatives.

Workplace-level employee representation

Finland has a high rate of workplace-based employee representation, with the incidence of different sorts of employee representation in about 60% of the establishments (ECS). Employee representation is essentially characterised by single-channel representation based on trade union representatives or shop stewards (luottamusmies or luottamusvaltuutettu). If the employees have not elected a shop steward, or if some employees are not entitled to participate in the shop steward election, they can instead elect a cooperation representative. The duties and scope of competence of elected representatives are determined in the manner laid down separately in the Employment Contracts Act as well as in other labour legislation.

Shop stewards are the leading partners for information and consultation procedures as well as for collective bargaining at establishment level. Collective agreements provide for shop stewards to be present at workplaces in all branches of the economy. The election of the shop steward and the terms of office are regulated by internal statutes of the unions.

The Act on Co-operation in Undertakings defines subjects for information and consultation of employee representatives, including issues such as the economic situation of the company and the outlook for production and employment, statistics on pay for different categories of employees, and consultation on changes in the organisation of work and cases of restructuring.

Regulation, composition and competences of the representative bodies

 

Regulation

Composition

Competences of the body

Involved in company level collective bargaining?

Thresholds/rules when they need to be/can be set up

Trade union shop stewards

Luottamusmies / luottamusvaltuutettu – Förtroendeman / förtroendeombud

Act on Co-operation Within Undertakings, internal statutes of the unions and collective agreements

Trade union represented at the establishment, the representative chosen by election.

Company-level collective bargaining, information, consultation and legal advice for employees.

No threshold

Works Councils (Yhteistoimintaedustaja – Samarbetsombud)

Act on Co-operation Within Undertakings

Employees of the establishment, chosen by election.

Information and consultation.

Minimum of 20 employees required.

Ad hoc forms of employee representation, such as spokespersons or round tables

No

Employees in co-operation with employers’ representatives

Information and consultations in cases of changes in organisation or working conditions

None

Employee representation at establishment level

In the figure, we see a comparison between Finland and European Union for the people with 'Establishment size : All' when asked 'Official structure of employee representation present at establishment'. For the 'Yes' answer, Finland's score is higher than the European Union score. For the 'No' answer, Finland's score is lower than the European Union score. The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: ECS 2013. Private sector establishments with more than 10 employees. Eurofound data visualisation.

Collective bargaining

Collective bargaining

Bargaining system

Collective bargaining in Finland has usually taken place at three levels; national, industry and company. As part of a tripartite tradition, the peak-level social partners in dialogue with the government negotiate national framework agreements on wages and employment conditions. The national central level agreement is then the basis for bargaining followed at sectoral level – the predominant level in the sense that sectoral agreements are the legally enforceable basis of employment contracts. Sectoral agreements may transfer some issues to be negotiated locally, in company-level agreements. In recent years there has been a tendency towards more local bargaining, although the decentralisation is taking place within the limits predefined by national and sectoral bargaining. (Asplund, 2007; Sippola, 2012). As the main peak-level employer organisation withdrew from central level bargaining in 2016, this will presumably increase the degree of decentralisation.

Wage bargaining coverage

The Finnish collective bargaining system is characterised by a principle of general applicability, which has been in force since the 1970s. According to this principle, employers that are not involved in collective bargaining or are not signatories to a collective agreement must comply with the nation-wide sectoral level collective agreement considered representative in their sector. In 2001, the so-called confirmation procedure for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question. The employer side has in recent years been promoting the dilution of general applicability.

Due to general applicability, the level of collective wage bargaining coverage is substantially high, the coverage rate of all levels being around 98% according to the European Company Survey.

Collective wage bargaining coverage of employees at different levels

Level

 

Source

Comments

All levels

98%

2013 – ECS

 

All, excluding national level

89%

2013 – ECS

 

All levels

89%

2016 – Ahtiainen (2016)

Share of employees covered by collective agreements

Sources: Eurofound, European Company Survey 2013 (ECS), private sector companies with establishments >10 employees (NACE B-S) – multiple answers possible; Eurostat, Structure of Earnings survey, companies >10 employees (NACE B-S), single answer: more than 50% of employees covered by such an agreement.

Bargaining levels

As the Finnish collective bargaining system is traditionally strongly centralised, the national level has been the most important in setting the framework for changes in wages and working time. However, the withdrawal of the main peak-level employer organisation from central level bargaining in 2016 will presumably have an effect on bargaining levels. Details concerning wages and working time are worked out in lower level agreements. Sectoral agreements constitute the legally enforceable basis of employment contracts (Asplund, 2007).

Levels of collective bargaining 2016

 

National level (Intersectoral)

Sectoral level

Company level

 

Wages

Working time

Wages

Working time

Wages

Working time

Principal or dominant level

x

x

x

x

   

Important but not dominant level

           

Existing level

       

x

x

Articulation

The national level agreement, after having been approved by a sufficient number of sectoral organisations, sets the minimum conditions for pay changes and working time. These guidelines must then be followed in the sectoral agreements. Company level contracts in their turn must be designed according to the sectoral level agreements, so that their demands are fulfilled.

Timing of the bargaining rounds

The autumn is the busiest time for bargaining for new collective agreements in Finland. This is because the turn of the year (at the end or beginning of the year) is a typical time for the start of new collective agreements. Traditionally, the bargaining round starts with the collective agreement for the technology sector (including metalworking) which to some extent serves as a pace-setting agreement for other sectors. The latest collective agreements negotiated within the framework of the tripartite Competitiveness Pact have been set for only one year, instead of the previously more usual two or three years.

Coordination

When it comes to the trade unions, the collective bargaining system is coordinated both across different bargaining levels and horizontally: the actors within the same sector communicate between the company-level, sectoral and central organisations to promote their industry-related interests. Horizontal coordination is, however, also strong: the cooperation between different sectors is strong in the highly centralised national-level organisations.

Although the employers are represented by different interest organisations, their collective bargaining action has hitherto been substantially coordinated by the Confederation of Finnish Industries (EK). However, this coordination function is likely to change or expire along with EK stepping away from central-level bargaining as of 2016. As the employers mostly act in a united manner regardless of sector, their bargaining is horizontally coordinated.

Extension mechanisms

According to the principle of general applicability, which has been in force since the 1970s, sectoral level collective agreements are generally binding and thus apply also to unorganised employers and employees in the sector. In 2001, the so-called confirmation procedure for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question.

Derogation mechanisms

Overall derogation from collective agreements is not possible. However, it is not uncommon for sectoral level agreements to include opening clauses for agreeing on certain matters such as working time arrangements or wages at local level, usually within given limits.

Expiry of collective agreements

When collective agreements expire without new agreements being in place, the regulations of the old contract are observed until a new agreement is negotiated. According to the Employment Contracts Act, strikes are legal solely in this situation when the agreement period has elapsed.

Other aspects of working life addressed in collective agreements

The Finnish collective bargaining agenda includes a wide set of issues connected to working life. In the latest central level agreement, the Competitiveness Pact, the peak-level organisations agreed to promote the following provisions in the sectoral level negotiations of their members:

  • the transfer of part of the liability for social security contributions from employers to employees;
  • a 30% cutback in holiday bonuses of public sector workers for the period 2017–2019;
  • greater employer responsibility for dismissed employees, including providing access to occupational health care for a period of up to six months after the dismissal;
  • greater local bargaining opportunities.

Industrial action and disputes

Industrial action and disputes

Legal aspects

The Finnish constitution guarantees the right to strike, but under the legislation in the Employment Contracts Act and the Act on Mediation in Labour Disputes, strikes are only allowed when an employment contract has expired and a new contract is yet to be established or when the reason for the strike is something unrelated to the employment conditions, as is the case for political strikes and solidarity actions. The right to strike is also restricted in some sectors, such as health care, whose functioning is vital to the safety of the society. A strike must also be announced to the national conciliator in advance to be legal. The legal types of industrial actions therefore include the strikes taking place during a period when no agreement is in force and strikes for political and sympathy reasons.

Industrial action developments 2012–2015

 

2012

2013

2014

2015

2016

Working days lost per 1000 employees

6.9

10.6

17.8

n.a.

n.a.

Number of strikes

86

121

128

163

n.a.

Number of participants

14,984

19,567

69,248

134,427

n.a.

Source: Official Statistics of Finland (OSF): Statistics on labour disputes [e-publication]. Helsinki: Statistics Finland.

Note: The numbers provided include all types of industrial action, including not only strikes (the most common form of industrial action), but also threats, embargos, etc.

Dispute resolution mechanisms

Collective dispute resolution mechanisms

The mediation system is based on Finland’s Act on Mediation in Labour Disputes. The National Conciliator and the Conciliators assist the negotiating partners if a collective agreement cannot be reached without outside help. The central labour market organisations can also be assisted by the National Conciliator when drawing up comprehensive incomes policy agreements. It is compulsory to participate in the mediation of labour disputes, but the different sides do not have to accept the Conciliator’s proposal. The Labour Court handles cases related to violations of the collective agreements and can issue fines in cases of illegal industrial action.

Individual dispute resolution mechanisms

Individual labour disputes arising out of individual employment contracts concluded between a single employer and a single employee or out of the legislation regarding employment relationships – and indeed any labour dispute not falling within the scope of the Labour Court or Civil Service Committee – are dealt with as ordinary civil cases, in the first instance by the district courts (Alioikeus). There are 51 district courts, made up of professional judges plus, in certain cases, lay judges. The decision of a district court can normally be appealed against in a court of appeal (Hovioikeus), and a decision of the latter in the Supreme Court (Korkein oikeus). The individual employment disputes referred to the district courts typically relate to matters such as pay and termination of employment contracts. In individual employment law cases before the civil courts, there is no direct involvement of trade unions and such cases cannot be brought by unions without the worker’s consent. The district courts and courts of appeal can impose fines in employment-related cases.

Individual employment relations

Individual employment relations

Individual employment relations are the relationship between the individual worker and their employer. This relationship is shaped by legal regulation and by the outcomes of social partner negotiations over the terms and conditions governing the employment relationship. This section looks into the start and termination of the employment relationship and entitlements and obligations in Finland.

Start and termination of the employment relationship

Requirements regarding an employment contract

The minimum working age in Finland is 15, although 14-year-olds can be employed with special provisions that take into account their education. The employment of minors also includes other restrictions on matters such as dangerous work. Non-EU citizens normally need a work-based residence permit to start working in Finland. Exceptions to this would be work of short duration within certain occupations, asylum seekers, etc.

An employment contract must be issued whenever a paid employment relationship begins. Such a contract can be either oral or written. The provisions regarding employment are laid down in the Employment Contracts Act.

Dismissal and termination procedures

Fixed-term contracts are ended without notice at the end of the pre-specified employment period. Indefinitely valid employment relationships end either by mutual agreement between the employer and the employee or by a unilateral act of termination (giving notice). If the employer terminates the contract, this must be based on weighty grounds, meaning serious transgressions on the employee’s side or a change in circumstances that makes the employee unable to cope with his or her duties. Financial or production-related reasons are also acceptable. The employee does not need a specific reason to terminate the contract. Both sides must respect the notice period at the termination of the contract, the length of which is related to the length of the employment period. Employees whose contract has been terminated due to financial reasons are also entitled to a period of paid re-employment leave. The views of both parties must be heard in the process of terminating the employment contract and the employer must explain the possible financial reasons for the termination.

See also further information on unemployment benefit provisions in Finland.

Entitlements and obligations

Parental, maternity and paternity leave

The parental, maternity and paternity leave policies in Finland are generous, although the duration of the leaves is not among the longest in Europe. Although most fathers use at least a part of the paternal leave days they are entitled to, women still use the big majority of the gender-neutral parental leave.

Statutory leave arrangements

Maternity leave

Maximum duration

105 working days divided into prenatal leave of 30–50 working days and post-natal leave of 55–75 working days according to the mother’s decision.

Reimbursement

Minimum €23.93 per working day, maximum 90% of labour income for the first 56 days, after that maximum 70%.

Who pays?

The Social Insurance Institution of Finland (Kela) or the employer, in which case Kela pays the reimbursement to the employer.

Legal basis

Employment Contracts Act

Parental leave

Maximum duration

158 working days after the maternal leave has ended, to be taken by either the mother or father or divided between them.

Reimbursement

Minimum €23.93 per working day, maximum 70% of labour income.

Who pays?

The Social Insurance Institution of Finland (Kela) or the employer, in which case Kela pays the reimbursement to the employer.

Legal basis

Employment Contracts Act

Paternity leave

Maximum duration

54 working days of which 18 working days can be used at the same time as the maternity leave.

Reimbursement

Minimum €23.93 per working day, maximum 70% of labour income.

Who pays?

The Social Insurance Institution of Finland (Kela) or the employer, in which case Kela pays the reimbursement to the employer.

Legal basis

Employment Contracts Act

Sick leave

The Employment Contracts Act provides the legislation related to sick leave. The sick leave allowance is paid by the Social Insurance Institution of Finland (Kela). The re-imbursement rate depends on the income level so that the minimum amount paid is €23.93 per working day and the maximum 70% of salary. The maximum duration of sick allowance is 300 days, after which disability pension is considered if necessary. Rehabilitation programmes are also offered in cases of long-term illness. The employer has the right to terminate the employment contract only if the condition of the worker makes him or her permanently disabled for the work and no other suitable work can be offered.

Retirement age

According to the National Pensions Act, the general retirement age is 65 years and early retirement can be granted from the age of 63. In the case of early retirement, the amount of pension will be reduced. Recipients of extended unemployment allowance can apply for old-age pension at the age of 62. According to the pension reform agreed upon by the central labour market organisations in 2014 and entering into force in 2017, the earliest eligibility age for old-age pension will be raised gradually to 65 years by 2025. After 2025, the retirement age will be tied to life expectancy.

Pay

Pay

Pay: For workers, the reward for work and main source of income; for employers, a cost of production and focus of bargaining and legislation. This section looks into minimum wage setting in Finland and guides the reader to further material on collective wage bargaining.

Minimum wages

Finland does not have a statutory minimum wage but de facto minimum wages are determined separately for each sector in generally applicable collective agreements. The principle of general applicability of collective agreements ensures that also employers that are unorganised in terms of collective bargaining must comply with the nation-wide agreements that concern their field of economic activity.

For more information regarding the level and development of minimum wages, please see Eurofound’s topical update on statutory minimum wage in the EU 2017 or visit Eurostat.

Collectively agreed pay outcomes

For more detailed information on the most recent outcomes in terms of collectively agreed pay, please consult Eurofound’s collectively wage bargaining portal.

Working time

Working time

Working time: ‘Any period during which the worker is working, at the employer’s disposal and carrying out his activities or duties, in accordance with national laws and/or practice’ (Directive 2003/88/EC). This section briefly summarises regulation and issues regarding working time, overtime, part-time work as well as working time flexibility in Finland.

Working time regulation

Working time is primarily regulated by the The Working Hours Act and the Annual Holidays Act. The Young Workers' Act includes special provisions on working times of underage workers. Following the legislature and the guidelines set in national framework agreements, more detailed frameworks for working times in each sector are determined in collective agreements through sectoral bargaining between the social partners. The specifics of the working times in individual employment contracts are then negotiated at company level according to the regulations of the collective agreements.

For more detailed information on working time (including annual leave, statutory and collectively agreed working time), please consult Eurofound’s report on Working time developments in the 21st century: Work duration and its regulation.

Overtime regulation

The Working Hours Act regulates overtime working and how it should be compensated, defining overtime as ‘work carried out on the employer's initiative in addition to the regular working hours’ (The Working Hours Act, 2011). The maximum amount of overtime allowed is 138 hours per four months, with the provision that it should not exceed 250 hours per year. The social partners are allowed to make exception to these regulations in collective agreements, provided that these exceptional periods do not exceed 12 months and that the annual limit on overtime is observed.

According to the act, the two first overtime hours of a working day must be compensated with the regular wage plus 50% and the additional hours with regular wage plus 100%. Sector specific provisions can be negotiated provided that they fulfil the conditions set by the law and these must be followed in the company level.

Part-time work

Part-time work is defined as work in which the employee’s working time is less than the sectorally-determined regular working hours of a worker in a regular employment contract. Part-time work is regulated by the Working Hours Act and the Employment Contracts Act. Looking at the statistics in the Labour Force Survey by Eurostat, the prevalence of part-time work in Finland in 2016, at 13.4%, has been lower than the levels for the EU average in the same year, 18.9. A large proportion of part-time employees are students and older workers.

Part-time work is relatively uncommon in Finland, as full-time employment has traditionally been the standard in the country. Women’s full-time work in particular has been more widespread than in many other countries in Europe, due to policies such as free school lunches and subsidised daycare for children. However, the uneven distribution of care responsibilities are nevertheless the main reason for women working part time more often than men. In addition, part-time work has been more common in female-dominated sectors such as retail trade.

Persons employed part time in Finland and EU28 (% of total employment)

 

2011

2012

2013

2014

2015

2016

Total – EU28

18.2

18.6

19.0

19.0

19.0

18.9

Total – FI

12.7

12.7

12.5

12.7

12.7

13.4

Women – EU28

31.0

31.4

31.8

31.7

31.5

31.4

Women – FI

17.5

17.6

17.6

17.5

17.0

18.4

Men – EU28

7.4

7.7

8.1

8.2

8.2

8.2

Men – FI

8.3

8.1

7.8

8.1

8.6

8.9

Source: Eurostat Labour Force Survey [lfsi_pt_a] – Persons employed part-time (20 to 64 years of age) – total and by sex.

Night work

The Working Hours Act defines night work as ‘work carried out between 23.00 and 06.00’. A night shift is a work shift whereby at least three hours take place between these hours.

Shift work

Shift work has not been defined in legislation. It is nevertheless regulated in the Working Hours Act: shifts in shift work ‘must change regularly and at intervals agreed upon in advance. Change is considered regular when a shift does not coincide for more than an hour with the immediately following shift or the shifts are no more than an hour apart’. Special permits to diverge from these directives may be granted by the Office of the Regional State Administrative Agency.

Weekend work

There is no legal definition of weekend work. According to the Working Hours Act, employees must normally have at least 35 hours of uninterrupted free time per week, and these hours should preferably be arranged around a Sunday. Work on Sundays or on church holidays can only occur when the work concerned ‘is regularly carried out on the said days due to its nature, or when agreed upon in the employment contract, or with the separate consent of the employees’. Sunday wages are twice the regular wage. There are no special provisions for Saturday work.

Rest and breaks

There is no explicit legal definition for rest periods, but it can be derived from the definition of ‘working hours’ in the Working Hours Act. Accordingly, rest periods can be defined as time not spent on work and when the employee is not required to be present at the workplace at the employer’s disposal. Rest periods include travel time, unless the travel time constitutes work performance. Stand-by time during which the employee has agreed to stay at home or to be otherwise available for being called to work also qualifies as rest, but it must not ‘excessively disrupt’ the employee’s free time and must be reasonably reimbursed. There are also more detailed provisions concerning the length and frequency of breaks and rest periods.

Working time flexibility

Working time flexibility is primarily regulated by the Working Hours Act which has to be followed when specifying sectoral conditions in collective agreements. The sectoral agreements must then be taken into consideration in company-level contracts in addition to national legislation. According to the act, the flexible working times have to be specified by mutual agreement in the employment contract so that the daily regular working hours can only be extended or reduced by a maximum period of three hours and so that the maximum amount of working hours remains at 40 hours per week.

According to EWCS statistics, less than half of the Finnish employed work the same number of hours every day. This is clearly below the EU28 average, although the proportion of those working the same number of days per week is above the EU28 average. The opportunity to bank whole days is more than twice as common in Finland (women 15.4%, men 16.6%) as the EU average. The opportunity to bank hours is also slightly more common in Finland (women 7.6%, men 6.6%) than in the EU on average. The table below is in line with these findings, as it shows that over 56% of Finnish workers have the possibility of adapting their working hours.

Do you have fixed start and finishing time in your work?

In the figure, we see a comparison between Finland and European Union for the workers with 'Age : All' when asked 'Do you have fixed starting and finishing times in your work?'. For the 'No' answer, Finland's score is higher than the European Union score. For the 'Yes' answer, Finland's score is lower than the European Union score. Data is based on question 39d from the sixth "European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: European Working conditions survey 2015.

Health and well-being

Health and well-being

Maintaining health and well-being should be a high priority for workers and employers alike. Health is an asset closely associated with a person’s quality of life and longevity, as well as their ability to work. A healthy economy depends on a healthy workforce: organisations can experience loss of productivity through the ill-health of their workers. This section looks into psychosocial risks and health and safety in Finland.

Health and safety at work

The Occupational Safety and Health Act and the Occupational Health Care Act require the employer to protect the employees’ safety and health and provide the health care and expert services needed for this. Compliance with the law is overseen by the Department for Occupational Safety and Health of the Ministry of Social Affairs and Health and the district administration for occupational safety and health.

Accidents at work, with four days’ absence or more – working days lost

 

2008

2009

2010

2011

2012

2013

2014

All accidents

44,737

34,316

35,741

40,302

34,821

35,532

n.a.

Percentage change on previous year

n.a.

-23.3

4.2

12.8

-13.6

2.0

n.a.

Per 1,000 employees

20.3

16.2

16.9

18.8

16.2

16.7

n.a.

Source: Eurostat, [hsw_mi01] and [lfsa_eegaed]

Psychosocial risks

The main regulations concerning psychosocial risks at work is covered by the Occupational Safety and Health Act, which is related to occupational risks to both physical and mental health. The vulnerability of young workers is taken into consideration in the additional regulations provided by the Young Workers’ Act. The Non-Discrimination Act prohibits discrimination related to all aspects of working life and the Working Hours Act protects workers against excessive amounts of work. The Act on Occupational Safety and Health Enforcement and Cooperation on Occupational Safety and Health at Workplaces regulates the conduct of the occupational safety and health authorities.

The statistics below show that around 71% of Finnish workers work in conditions of tight deadlines at least a quarter of their working time, which may cause stress-related problems. This is higher than the European average, which was 63.6% in 2010. Around half of the workers are also regularly subjected to long working hours, the second highest share in the EU. 9.2% of respondents (12.6% among women) reported having experienced discrimination at work during the 12 last months in 2010, which also exceeds the EU average.

Work intensity: Do you have enough time to get the job done?

In the figure, we see a comparison between Finland and European Union for the workers with 'Age : All' when asked 'Do you have enough time to get the job done?'. For the 'Always or most of the time' answer, Finland's score is higher than the European Union score. For the 'Rarely or never' answer, Finland's score is lower than the European Union score. For the 'Sometimes' answer, Finland's score is lower than the European Union score. Data is based on question 61g from the sixth European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Skills, learning and employability

Skills, learning and employability

Skills are the passport to employment; the better skilled an individual, the more employable they are. Good skills also tend to secure better-quality jobs and better earnings. This section briefly summarises the Finnish system for ensuring skills and employability and looks into the extent of training.

National system for ensuring skills and employability

Skills identification, development, validation and recognition are conducted by both public institutions and labour market organisations. The Public employment and business services agencies (TE-Agencies) organise Labour Market Training Programmes to enhance the skills and employability of the unemployed. They also provide personal guidance and information on vacancies and education to jobseekers.

Trade unions provide their own training programmes for both employed and unemployed members as well as activation schemes for ageing workers and the long-term unemployed. Both sectoral unions and the central organisations provide different training options. The unions also provide career planning and employment services. The employers’ organisations organise training courses for their member companies on for example legal issues and business management.

Since 2014, employers with 20 people or more may claim the cost of employees’ training as tax deductible. In order to make tax deductions, companies have to create individual professional development plan.

Training

The Ministry of Economic Affairs and Employment is responsible for designing the policies related to training and skills development. The Centres for Economic Development, Transport and the Environment (ELY Centres) are responsible for regional implementation and development tasks plan. They allocate training programmes together with the Public employment and business services agencies. According to the European Company Survey, the proportion of workers receiving paid time off for training is greatest in establishments with over 250 employees in which around half of the workers have received paid training.

Training: Have you had any on the job training in the past year?

In the figure, we see a comparison between Austria and European Union for the workers with 'Age : All' when asked 'Have you had on-the-job training in the last 12 months?'. For the 'No' answer, Austria's score is higher than the European Union score. For the 'Yes' answer, Austria's score is lower than the European Union score. Data is based on question 65c from the sixth "European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: Eurofound’s European Working Conditions Survey 2015.

More detailed figures are available from Eurofound’s European Working conditions survey.

Work organisation

Work organisation

Work organisation underpins economic and business development and has important consequences for productivity, innovation and working conditions. Eurofound research finds that some types of work organisation are associated with a better quality of work and employment. Therefore, developing or introducing different forms of work organisation are of particular interest because of the expected effects on productivity, efficiency and competitiveness of companies, as well as on workers’ working conditions. Ongoing research by Eurofound, based on EurWORK, the European Working Conditions Survey and the European Company Survey, monitors developments in work organisation.

For Finland the European Company Survey 2013 shows that between 2010 and 2013 53.4% of establishments with 10 or more employees reported changes in the use of technology, 47.9% introduced changes in ways to coordinate and allocate the work to workers and 25.9%% saw changes in their working time arrangements.

Work organisation: Are you able to choose or change your methods of work?

In the figure, we see a comparison between Finland and European Union for the workers with 'Age : All' when asked 'Are you able to choose or change your methods of work?'. For the 'No' answer, Finland's score is lower than the European Union score. For the 'Yes' answer, Finland's score is higher than the European Union score. Data is based on question 54b from the sixth "European Working Conditions Survey (2015). The National comparisons visualisation presents a comparative overview for the values of all answers between two selected countries.

Source: Eurofound’s European Working Conditions Survey 2015.

More detailed figures are available from Eurofound’s European Working conditions survey.

Equality and non-discrimination at work

Equality and non-discrimination at work

As of 1 January 2015, the new Act on Non-discrimination together with amendments of the Act on Equality between Women and Men entered into force. Both acts increase the employer's obligation to promote equality and to eliminate discrimination. Among other things, the acts set out new rules on mandatory plans for promoting equality at the workplaces, and strengthen the shop stewards and other personnel representatives’ roles with regard to non-discrimination. According to the new legislation, employers are obliged to investigate and follow-up on gender pay gaps at the individual workplaces. The two Acts complement each other and together they include all grounds of discrimination.

Compliance with anti-discrimination in employment is monitored by the Occupational Safety and Health authorities connected to the Ministry of Social Affairs and Health and the Regional State Administrative Offices. Gender equality is overseen by the Ombudsman for Equality under the Ministry of Social Affairs and Health.

Equal pay and gender pay gap

The Employment Contracts Act and the Non-Discrimination Act demand equal treatment of workers in all aspects of working life, including wages. The Act on Equality between Women and Men specifically prohibits wage discrimination based on gender. The collective agreements set the framework for wages in different occupations which must be observed for all workers. In Finland the gender pay gap was around 20% during the 20th century, but has decreased slightly and as of 2016 is approximately 17% (Ministry of Social Affairs and Health, 2016).

The Ministry of Social Affairs and Health is responsible for monitoring compliance with the Finnish non-discrimination legislation related to working life. It coordinates the tripartite Equal Pay Programme with the aim of narrowing the gender based pay gap to 15% by 2015 by means of contract policy, decreasing the gender-based segregation of occupations, development of pay systems and supporting women's career development. In cases of suspected pay discrimination the employee and the trade union shop steward of the establishment have the right to hear the grounds for the wage level by the employer. The employee can appeal to the general court which can order the employer to pay compensation to the employee. The Ombudsman for Equality and the labour maker organisations can also bring cases to the Finnish Equality Board which can impose fines if necessary.

Quota regulations

The only quota regulation regarding employment is the decree in the Act on Equality between Women and Men that the proportion of both men and women in public administration bodies must be at least 40%. This applies to public authorities at both state and municipal level.

Bibliography

Bibliography

All Eurofound publications can be found at www.eurofound.europa.eu

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Ahtiainen, L. (2016), Työehtosopimusten kattavuus Suomessa vuonna 2014, Ministry of Employment and the Economy, Helsinki.

Akava (2016), Akavan jäsenliittojen jäsenmäärät, web page, accessed 7 December 2016.

Asplund, R. (2007), Finland: Decentralisation Tendencies Within a Collective Wage, Working papers No. 1077, the Research Institute of the Finnish Economy, Helsinki.

Eurofound (2009), Employee representation at establishment level in Europe, Dublin.

Eurofound (2010), Finland: Individual disputes at the workplace – alternative disputes resolution, Dublin.

Eurofound (2014), Finland: Representativeness of the European social partner organisations in the cross-industry social dialogue, Dublin.

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Helsingin Sanomat (2013), Tulosopu syntyi, palkat nousevat hyvin vähän, 30 August.

Lyly-Yrjänäinen, M. (2016), Työolobarometri – syksy 2015, Ministry of Employment and the Economy, Helsinki.

Ministry of Social Affairs and Health of Finland (2016), Samapalkkaisuus, web page, last accessed 7 December 2016.

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Sippola, M. (2012), ’Local bargaining and codetermination: Finnish experience in comparative perspective’, European Journal of Industrial Relations, Vol. 18, No. 1, pp. 53–69

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