New government's programme largely welcomed by social partners

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Following elections in March 1999, a new government was formed in Finland in April. It continues the previous "rainbow "coalition, consisting of the Social Democratic Party, the conservative National Coalition Party, the Left-Wing Alliance, the Greens and the Swedish People's Party. The social partners reacted positively, in the main, to the government's political programme

The parliamentary elections held on 21 March 1999 resulted in losses for the left-wing parties in the previous "rainbow" coalition government. However, the Social Democratic Party (Suomen Sosiaalidemokraattinen Puolue, SDP) remained the largest party and its chair, Paavo Lipponen, was given the task of forming the new government. In April, Mr Lipponen, who was elected as Prime Minister, decided to reform the previous coalition, bringing together the SDP, the conservative National Coalition Party (Kansallinen Kokoomus), the Left-Wing Alliance (Vasemmistoliitto), the Greens (Vihreä Liitto) and the Swedish People's Party (Svenska Folkpartiet).

The new government's political programme aims to achieve solid growth and to boost employment. These goals can be considered beneficial for both employers and employees, and the social partners announced that they were mainly satisfied with the government's programme. Below, we outline the parts of the programme with industrial relations relevance, focusing mainly on those proposals which are to be carried out in cooperation with the social partners.

Economy and employment

The main goal of the government's economic policy is to boost employment, which will require that stable economic growth is ensured. The government's objective is that the number of new jobs will increase rapidly and that the proportion of the working-age population who are employed will approach the 70% goal set in the Finnish National Action Plan (NAP) for employment (FI9805161F), in response to the EU Employment Guidelines. In order to achieve this, the government's programme states that:

  • to ensure competitiveness and to cut unemployment, the government will engage in cooperation with the social partners and other interest groups - "this, in turn, will support stable growth and low inflation as well as the goal of ensuring a steady growth in the purchasing power of wage-earners";
  • flexibility of wages and terms of employment - including local-level agreements - in line with sectoral and local conditions and with the trade cycle, can best be promoted in Finnish conditions within the framework of generally valid national collective agreements (ie applying to all employers and employees in a sector, whether or not they are members of the signatory organisations) that guarantee minimum employment conditions for wage earners;
  • the government will seek to implement tax reforms that encourage moderate wage agreements. It aims to create a common growth and employment strategy, together with the social partners;
  • taxation, social security and service payments will be better coordinated so that the economic incentives for job-seeking will be improved. Active employment policy measures to encourage people to seek work will be intensified; and
  • through the government's industrial policy measures, entrepreneurship and the growth and competitiveness of small and medium-sized enterprises will be strengthened.

Pensions policy

Finland' early average age of retirement, which is seen as a severe national problem, will be addressed by the following means:

  • a number of changes will be introduced, aimed at encouraging employers to recruit and retain older workers, and at helping older people to stay at work and in the labour market. These changes will involve working life, measures to maintain people's capacity to work, educational policy and the pension and unemployment insurance system. The aim is to increase the proportion of the working-age population who are employed and, in the long run, to postpone the average age of exit from the labour market by two to three years, bringing it nearer to the normal pension age (65), and thus reducing the pressure to increase pension contributions;
  • measures will be agreed with the social partners with the aim of "promoting the skills of the working population, its ability to cope with work as well as its general well-being". Efforts will be made to develop voluntary vocational adult education; and
  • the development of social insurance legislation will be continued in close cooperation with the social partners.

Development of working life and active labour market policy

The programme sets out a number of measures aimed at the development of working life, including the following:

  • labour legislation will be developed so that the security of employees and the flexibility required by companies will be "moulded into a balanced entity". The Employment Contracts Act will be revised once the committee examining it has completed its work (FI9810179F) and the system of guaranteeing a minimum level of employment conditions will be maintained. Studies will be conducted on the need to revise the Annual Holidays Act, while a Data Protection Act concerning working life will be prepared in collaboration with the social partners. The flexibility and practicability of the current system of employee funds will be increased;
  • working life development and productivity programmes will be continued and further upgraded, and additional resources will be provided;
  • the government will, together with the social partners, prepare a comprehensive programme of research and measures concentrating on practical steps to address the issues concerned with coping with working life. Further, the government will promote the introduction of "personnel accounting" on a voluntary basis;
  • the government will will seek to promote" the protection of working hours, employment and a flexible system of working time". It will also promote "cooperation of work communities" in questions related to work organisation;
  • in order to address problems of labour quality and availability, cooperation with enterprises will be increased. Training will be developed in order to correspond better to the needs of employment and to improve employees? general capacity to seek and gain employment;
  • the need for services of unemployed people will be evaluated through regular interviews; and
  • after 12 months of unemployment - or six months for young people - unemployed people will be offered work, a traineeship or other measures to support job-seeking.

Other issues

In the area of equality, the programme states that the central issues are to safeguard welfare services and to implement the principle of equal pay for equal work. The government will seek, together with the social partners, to share between employers the costs of the various types of parental leave, within the framework of the present sickness insurance system. Obstacles to women's entrepreneurship will be removed and the granting of loans to women entrepreneurs will be continued. More generally, the government will take measures to advance equality in working life and the implementation of good practice in this area: the division of parental leave on a more equitable basis between men and women will be promoted; the possibility of giving fathers the right to a whole month of paternity leave will be clarified; and the possibility of taking maternity and parental leave on a part-time basis will also be examined. Furthermore, initiatives are to be put forward on strengthening gender equality in EU policy.

Among the programme's goals is an educational policy that meets the needs of working life. The development of vocational education is identified as a matter of current interest and an important task, and the government will support actions to improve its status. Periods of on-the-job learning will be implemented in cooperation with the social partners.

Finland will take part in the development of the European Union's "set of norms concerning work and social issues" as well as its national application, "with regard to an increased level of protection throughout the whole Community and in Finland". On a specific issues, at EU level, the government will "urge the approval of regulations concerning the right of personnel to participate in company decision-making". At national level, it will make every effort to ensure that in companies in which the state has a major shareholding, the personnel are represented on the board of directors and supervisory board.

Social partners' reactions

According to the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT), the government's programme establishes a foundation for continued efforts toward reform of working life, and ensures that the necessary reforms can be prepared, unhindered, by the Employment Contracts Act committee and other working groups. TT has expressed regret that the government could not - despite underlining the importance of labour market policy - approve the inclusion of reform of the labour market's "rules of the game" in its programme. TT believes that in order to ensure employment, growth and purchasing power, it is important that the social partners can agree on a national incomes policy agreement of a type that will not accelerate inflation and will increase the chances for flexible company-level agreements.

For the Employers' Confederation of Service Industries (Palvelutyönantajat, PT), a perceived shortcoming of the programme is that development of labour market peace is not mentioned. PT believes that the problems in that area should have been taken into consideration.

The Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) considers that the programme contains numerous positive aspects, from tripartite cooperation to reduction in the taxation of wage earners.

The Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) approves of the government's guidelines for promoting stable growth, employment and justice, and states that the programme lays emphasis on broad tripartite cooperation in reaching these goals. SAK believes that the guidelines on working life issues are well balanced, which makes it possible to achieve equality in development. The programme is seen to include many positive reforms, such as measures related to coping with work, the prominence given to improving know-how, and the promotion of the use of personnel funds and personnel accounting. SAK considers it important that the programme guarantees a minimum level of employment conditions, and believes that the discussion of the general validity of collective agreements shows that gaps in the coverage of this minimum be must be covered through legislative changes without delay. SAK views positively the fact that employers' proposals on a restriction of the right to strike (FI9902194F) were clearly turned down.

According to the Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK), the social partners are prepared to engage in tripartite cooperation toward a common growth and employment strategy. The organisation appreciates the guidelines on working life: "It is important that confidence and cooperation with the government should be strengthened further, so that we can move into the next millennium in a positive spirit."

The Commission for Local Authority Employers (Kunnallinen Ty|markkinalaitos, KT) has states that the government programme is a good starting point for the cooperation between state and municipalities, because the quality and availability of country-wide municipal services (like education and health) are guaranteed.


In the area of industrial relations, the new government is aiming to continue the existing policy of consensus, and its new programme reflects its goal of ensuring that employees and employers benefit equally. For unemployed people, the government's goal of boosting employment will mean a further extension of active labour market policy measures, in line with the EU Guidelines.

During the negotiations over forming the government, the question of extending the general validity of collective agreements was discussed. The SDP, which is near close to the labour movement, and the conservative Kokoomus, which sympathises with entrepreneurs, disagreed on this issue. To resolve the dispute, the problem was referred to a working group. This indicates that the new government will not operate without disputes. It is likely that the development of economic growth will influence the government's ability to cooperate: if growth slows down and unemployment starts to rise, the focus will move towards structural problems, which are politically very sensitive. The struggle against long-term unemployment seems to be especially difficult, even during very rapid economic growth. (Juha Hietanen, Ministry of Labour)

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