Equality pay increment included in national wage agreement

The current national incomes policy agreement includes an ‘equality increment’ for 2006, the distribution of which is calculated so that low-wage and female-dominated sectors are most likely to gain from it. However, some areas of the private sector have already agreed to pass the equality increment on to all wage earners. The agreement also includes a provision for implementing gender equality plans in the workplace.

The current national incomes policy agreement, which was signed in December 2004 for two and a half years (2005–2007), continued a policy of solidarity and includes measures to promote gender equality at work, such as:

  • the setting up of a working group to prepare an equal pay programme aimed at promoting equal pay for women and men, encompassing the entire labour market. A tripartite group was established to monitor the performance of the equal pay programme;
  • guidelines to implement gender equality plans in the workplace.

Pay increase structure

The negotiated settlement provided for a 2.5% average wage increase in 2005, while the pay rise in 2006 will be a 2.1% increase on average. The structure of pay increases was based on a compromise between the aims of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) and the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK), on the one hand, and the central employer organisations, Finnish Industries (Elinkeinoelämän keskusliitto, EK) and the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), on the other. The solidarity pay rise was advocated by the unions, SAK and STTK, whereas the employer organisations, EK and AKAVA, supported a pay increase model that would have widened the wage gap by applying only percentage wage increases and by rejecting equality increments (FI0501203F).

Elements of the solidarity pay policy have been included in pay increases for 2005 and 2006. In 2005, the general pay increase was higher (as a percentage share) for low-wage earners than for others. This year, the agreement includes an equality increment, which is designed to favour low-wage and female-dominated sectors. The proposed gender equality increment of a 0.3% average increase is due on 1 June 2006. In practice, the structure of pay increases (general increase, union increment and equality increment) means, for instance, that cleaning workers receive a higher pay increase (5.1%) than employees in technology industry sectors (4.5%) during the agreement period of 2005–2007.

Equality increment

As noted, the equality increment is aimed at low-wage and female-dominated workplaces. The current minimum wage is €10.67 per hour or €1,782 per month. The level of increment depends on how female-dominated and low-waged the sector is. Thus, the theoretical maximum is 0.6% in cases where all employees in the sector are women on a low wage (female wage coefficient 0.45% plus low wage coefficient 0.15%). For example, in the female-dominated municipal sector, the equality increment is 0.5%. The increment could be agreed at union level or at company level, through local bargaining between employer and employees. If the increment is used to address unequal payment systems, it is allocated to all employees in the sector, including men. The equality increment has usually been included in the incomes policy agreement since 1977.

However, it seems that, in some sectors, the gender equality increment is not used for its intended purpose, but as a general wage increase. Several areas in the private sector have already agreed to pass the equality increment on to all wage earners. In the largely female-dominated sectors, such as retail trade, postal sorting and hotel and catering, negotiations on how to use the equality increment have not yet been concluded. Nevertheless, female-dominated sectors will have slightly higher pay increases than average, even if the equality increment may be distributed among all wage earners.

Gender equality plans at workplace level

Under the new Act on equality between women and men, which came into force on 1 June 2005, an employer must draw up a gender equality plan in cooperation with staff when employing at least 30 workers on a regular basis. The content of the gender equality plan primarily concerns pay and other terms of employment.

The Office of the Ombudsman for Equality commissioned Statistics Finland to conduct a survey on gender equality planning in the public sector. According to data from 2005, approximately every second workplace in the public sector has implemented such planning, covering about two thirds of employees. Gender equality planning is most common in the central government sector, and is least common in regional authorities and in joint municipal boards for health and social services. In accordance with the Act, the gender equality plan should be updated each year, and workplaces without a plan may be fined.

According to Marja Erkkilä, Development Manager at SAK, many good examples of gender equality plans exist in various workplaces. For example, at the food processing company, Cloetta Fazer Suklaa, in south Finland, women used to earn less than men, because women’s work was considered easier than men’s work: the company differentiated between so-called women’s and men’s machines. The company solved the problem by training every worker to use all kinds of machines. Women’s wages could thus be raised once their skills were developed.

Pertti Jokivouri, Statistics Finland, University of Jyväskylä

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