Finland: Latest working life developments Q4 2018

Industrial action over a proposal affecting dismissal protection, discussions on the future of the industrial relations landscape and social dialogue structures, and two announcements of trade union mergers are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the fourth quarter of 2018.

Long-running conflict over dismissal law

The beginning of the fourth quarter was marked by an escalation in the conflict between trade unions and the centre-right government of Prime Minister Juha Sipilä about a proposal that would affect dismissal protection. The initial proposal included an amendment to the Employment Contracts Act that made it easier for companies with up to 20 workers to dismiss employees on individual grounds. Through this measure, the government wished to lower the threshold for hiring new employees in small and medium-sized enterprises (SMEs).

During October, a growing number of unions engaged in industrial action to put pressure on the government to drop the proposal, which they regarded as an unacceptable weakening of employment security. In addition to overtime bans and shift swap bans, several 24-hour and 2-day political strikes affected sectors such as public transportation, healthcare, schools, day-care, and retail. [1]

A solution was found when the government presented a compromise proposal in late October. In the final bill, the initial 20-employee dismissal threshold was no longer mentioned. Instead, in the future, the number of employees at a company will be one aspect taken into consideration when assessing the grounds for individual dismissal. In addition, the qualifying period for unemployment benefits in cases of individual dismissal was lowered from 90 to 60 days. The government also set up tripartite working groups to address another controversial labour market policy measure, the so-called ‘Active Model’, which links unemployment benefits more directly to the labour market activity of the unemployed person. [2]

The unions accepted the compromise, and industrial action was suspended. According to the Central Organisation of Finnish Trade Unions (SAK), the new proposal is better than the initial one. However, SAK still doubts that the measure will have any effect on employment rates. The organisation believes that the amendments will not make any significant difference to the current situation, as the law already stipulates that ‘the employer’s and the employee’s overall circumstances’ must be taken into account when assessing termination grounds related to an individual. [3]

The final bill was approved by parliament in mid-December, and the amendments will enter into force on 1 July 2019. [4]

Future of social dialogue in Finland

The conflict triggered major discussions on the future of the Finnish industrial relations landscape and social dialogue structures, including the scope of political strikes. For instance, the Confederation of Finnish Industries (EK) criticised the unions for ‘not using their right to strike in a responsible way’, suggesting that Finnish unions engage too readily in political strikes. As the protests were directed at the government rather than employers, EK criticised the unions for the harmful effects industrial action has on companies. EK said that the right to political strikes in Finland should be curtailed and adjusted to a ‘Nordic level’, which would mean that only short and ‘reasonable’ political strikes would be allowed. [5]

The autumn’s power conflict shows that trade unions’ trust in the Sipilä government is at a very low level. Analysts suggest that the conflict was essentially about the future of Finnish social dialogue structures and the answer to key questions.

  • What is the role of tripartite cooperation in the drafting of working life and employment legislation, and what does tripartite social dialogue mean in practice?
  • What is the role and mandate of the peak-level organisations in the future as globalisation drives wage setting at a more local level to increase companies’ flexibility and their ability to respond to international competition? [6] , [7]
  • Ministry of Economic Affairs and Employment: Työnantajan henkilöstömäärä huomioitava työntekijästä johtuvaa irtisanomista arvioitaessa

Trade union mergers in the salaried employees and railway sectors

Two trade union mergers were signed in the fourth quarter of 2018. The move towards further concentration and larger entities seems set to continue on the trade union side in Finland.

The merger of the Salaried Employees’ Trade Union (Pro) and the Federation of Salaried Employees (Pardia) was signed in November after two years of discussions on closer cooperation. The merger will take effect on 1 January 2019 when the member associations of Pardia will join Pro.

With a total of some 110,000 members working as clerical employees, experts, supervisory staff and managerial staff in the private sector, Pro is one of the largest unions in Finland. After the merger, the new union will cover both private and public sector employees, as most of Pardia’s 30,000 or so members work in public sector institutions and authorities such as universities and the Social Insurance Institution of Finland. Both unions are members of the Finnish Confederation of Professionals (STTK).

The second merger was also signed in November, when two affiliates of SAK (Rautatievirkailijoiden liitto and Veturimiesten liitto) formed a new organisation, the Railway Union. The new union covers some 4,000 employees working in the railways sector. [8]

Outlook

The beginning of 2019 will be dominated by the upcoming parliamentary elections in April. Political parties and social partners have already started positioning themselves and taking stances on major issues such as social security, education, and healthcare reforms.

A key issue for the current government has been tackling the protracted economic downturn after the crisis in 2008. Since 2016, positive signs have been seen in the Finnish economy, with annual GDP growth rates of 2–3% and a rising employment rate. However, unemployment seems to be decreasing slowly and compared to the other Nordic countries, Finland lags behind in both employment and unemployment rates. Given the strained relations between unions and the Sipilä government, it is also likely that the future of the tripartite cooperation model and wage formation will be key topics in the elections.


Footnotes

  1. ^ HS (Helsingin Sanomat) (2018), Kiista irtisanomisista johtaa uusiin lakkoihin, ja näin sopua haetaan – HS kokosi tietopaketin työmarkkinakiistan tämän hetken tilanteesta , 24 October
  2. ^ HS (2018), Hallitus on valmis luopumaan kymmenen työntekijän rajasta irtisanomiskiistassa – julkaisi neljän kohdan ratkaisuehdotuksen työmarkkinoiden kriisiin , 25 October
  3. ^ SAK (2018), Irtisanomislain muutos lähinnä vahvistaa nykytilan – Hallituksen esitys on etenemässä eduskuntaan , 11 November
  4. ^ HS (2018), Eduskunta hyväksyi kiistellyn irtisanomislain äänin 102–72 , 18 December
  5. ^ EK (2018), EK: Oikeus poliittisiin työtaisteluihin on rajattava pohjoismaiselle tasolle , 5 October
  6. ^ Yle (2018), Analyysi: Pääministeri Sipilä näyttää vedättävän ay-liikettä – onko irtisanomissuojan heikentäminen vain harhautus? , 23 October
  7. ^ HS (2018), Miksi ay-liike voi Suomessa uhmata vaaleilla valittuja päättäjiä? Selitys löytyy vuosikymmenten takaa , 21 October
  8. ^ SAK (2018), Rautatiealan Unioni on uusi SAK:lainen ammattiliitto , 16 November

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