Finland: Latest working life developments - Q3 2016

A trial of a new basic income, budgetary proposals to reduce unemployment, and conflicts between Akava and other trade union confederations are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the third quarter of 2016.

Basic income trial

The Ministry of Social Affairs and Health is planning a two-year trial of a basic income from January 2017. The trial will involve 2,000 randomly chosen recipients of unemployment benefit. During the trial, they will receive €560 per month tax-free from the Social Insurance Institution (Kela). The aim of the project is to eliminate disincentives to work.

Budget proposals to promote employment

The government’s budget proposal for 2017 included plans to modify the earnings-related unemployment security system and so encourage more unemployed people to look for work. The proposed reforms include deductions to unemployment benefits for apparently inactive job-seekers and a shorter duration of earnings-related unemployment benefits.

The proposals have been submitted to a tripartite committee for negotiation and development. Committee members have not reached an agreement: the employers viewed the proposals as too soft and the trade unions saw them as too harsh. However, all social partners accepted the government’s decision to continue pursuing the measures, despite reservations.

Other proposed initiatives include a lump sum of €2,500 to be paid to employers for each employee taking maternity leave and an early retirement option for those over 60 who have been unemployed for more than five years. These changes are intended to come into force between late 2017 and early 2018.

Competitiveness Pact reaches more employees

Trade unions in the finance and information and communication technology (ICT) sectors joined in the tripartite Competitiveness Pact just before the deadline set by the Prime Minister, Juha Sipilä. The Pact is a labour market agreement, signed in June 2016, which makes changes to working arrangements – including reduced pay for public sector employees and increased working hours without additional compensation. The Pact now covers more than 90% of the country’s employees, which bolsters the government’s pledge to reduce income taxes by a total of €515 million in 2017.

Akava steps away from other trade union confederations

Industrial relations were shaken in late September by the decision of the Confederation of Unions for Professional and Managerial Staff in Finland (Akava) to limit its cooperation with two other peak-level Finnish trade union confederations – the Central Organisation of Finnish Trade Unions (SAK) and the Finnish Confederation of Professionals (STTK). Akava announced that it will quit FinUnions (the three confederations’ common lobbying office in Brussels) by the end of the year, stating that the office is no longer helpful in promoting the interests of its members. It plans to continue to cooperate on EU-related matters through direct contacts and with international organisations.

Akava is also considering stopping its funding of the Labour Institute for Economic Research (PT), an independent non-profit organisation funded by the three confederations. Akava is reportedly displeased with PT’s long-term research focus on income gaps.

Both SAK and STTK, as well as some of Akava’s member organisations, are disappointed with Akava’s decision and have stated that cooperation cannot continue as unilaterally dictated by Akava. Some see Akava’s move as part of a long-term project to overthrow STTK and establish an industrial relations landscape with only two central-level employee organisations – SAK and Akava. Relations between Akava and STTK have long been strained due to Akava’s perceived vying for STTK’s members.

EK and SAK to dismiss staff

On the employers' side, the Confederation of Finnish Industries (EK) is reorganising its functions and has begun negotiations to reduce staff numbers significantly, with the dismissal of up to 30 of its current employees. These decisions are in accordance with EK’s new strategy to eliminate central-level bargaining and to move negotiations to sectoral and local levels. And trade union confderation SAK is also negotiating to dismiss up to 10 of its 90 employees for economic reasons.