Finland: EIRO Annual Review 2009

  • Observatory: EurWORK
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  • Published on: 10 Januar 2011



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In 2009, three themes dominated the discussion in Finnish industrial relations: the sectoral bargaining round, the pensions’ reform and lenghtening of career and the controversy over the funding of the election campaigns of the political parties where both trade unions and employers organisation had a notable role.

1. Political developments

Prime Minister Matti Vanhanen’s second cabinet, formed in 2007, continued in 2009. The government is a majority coalition formed by the Centre Party, the National Coalition Party, the Green League and the Swedish People’s Party of Finland.

In the European Parliament election 2009, the True Finns won one seat and the party’s leader Timo Soini was the biggest winner with 130,715 votes. The Greens gained a seat, and the Christian Democrats restored their seat that had been previously lost. Compared to the 2004 European Parliament election in Finland, the three major parties National Coalition Party, Centre Party, and Social Democrats each lost a seat. The Left Alliance lost their only seat.

In 2009, the controversy over the funding of the election campaigns of Finland’s political parties resulted in a serious political crisis. The major right-wing political parties have received notable donations from the TT Foundation of the Confederation of Finnish Industry, whereas the left-wing parties received substantial funding from the trade unions.

2. Collective bargaining developments

In autumn 2009, the first branch-level new collective agreement was negotiated in the technology industry. The three-year agreement between the Federation of Finnish Technology Industries and the Metalworkers’ Union takes effect in October 2009, covering about 125,000 employees. The social partners have widely welcomed the agreement, which provides for a moderate pay increase, viewing it as a successful opening in a difficult bargaining round.

However, after the new collective agreement in the technology industry that opened the 2009 bargaining round, little progress took place on wage negotiations in 2009. Trade unions seem to be awaiting signs concerning the direction of the economy. The employer side has offered a so-called ‘wage anchor’ model on the basis of the collective agreement in the technology field. However, trade unions have rejected this proposal, as the pay increases in 2010 and 2011 were not decided.

The employer side has offered a so-called ‘wage anchor’ model on the basis of the collective agreement concluded in the technology industry (FI0909019I). In the first year of the agreement period, pay increments will be decided at local level, leading to an increase of 0.5% in the autumn of 2009. The pay rises for the following years will be negotiated separately during April to May of each year (2010 and 2011).

Trade unions have criticized the employers’ model, declaring that the technology industry has not actually agreed anything, because the pay increases in 2010 and 2011 have been neglected. Thus, the collective agreement does not offer any indication of the wage increases for the next two years. So, in the late of 2009, around many negotiation tables both parties followed a "wait and see" tactic.

3. Legislative developments

In February 2009, the Finnish government reduced income tax rates and increased various social security entitlements. The tax credit for domestic costs and daily allowances for sickness, maternity and paternity leave, and rehabilitation measures was extended. Moreover, unemployment benefit increased slightly. According to the Taxpayers’ Association of Finland, the purchasing power of an average wage earner rised by up to 4.6% in 2009, three times more than the 1.5% increase in 2008.

Income tax reduction

In 2009, employees’ income tax lowered. From the beginning of February 2009, an employee who earns €1,926 a month received an additional €15 a month and €185 annually, compared with 2008. Similarly, an employee who earns €2,889 a month received an additional €23 monthly and €277 annually, and an employee who earns €4,814 a month received an additional €39 monthly and €462 annually.

One of the most important changes concerning employees’ taxation was the rise in the maximum amount of the employee tax credit for domestic costs. In 2009, the maximum amount of this tax credit increased from €1,150 to €3,000. This tax credit for domestic costs is granted towards costs incurred by the taxpayer in a residential apartment or house that is not used for commercial purposes. The benefit is granted for different kinds of household jobs such as cleaning and repairs, day care and longer-term care, information technology (IT) work carried out at home and also repair work on a holiday home.

Changes in daily allowances and employee contributions

The minimum level of daily allowances for sickness, maternity and paternity leave, and rehabilitation measures raised to the level of unemployment benefit, equivalent to €22.04 a day. Some small changes in employees’ shares of social costs were also introduced in 2009.

Employees’ social insurance contributions in 2009 were as follows:

  • employment pension insurance contribution of 4.3% for employees aged under 53 years – corresponding to an increase of 0.2%;
  • employment pension insurance contribution of 5.4% for employees aged 53 years or older – an increase of 0.2%;
  • unemployment insurance contribution of 0.2% – a decline of 0.14%;
  • contribution for earned income insurance of 0.7% – an increase of 0.03%;
  • contribution for medical care insurance as part of health insurance of 1.28% – an increase of 0.04%.

Slight rise in unemployment benefits

Unemployment security allowances was also raised accordingly to the cost-of-living index. Basic unemployment benefit from the Social Insurance Institution of Finland (Elämässä mukana - muutoksissa tukena, Kela) and a basic element of the earnings-related allowance from an unemployment fund rised to €23.63 a day – amounting to €551 a month in 2009 compared with €527 a month in 2008. Child benefits increased in relation to every form of unemployment allowance to €4.86 for one child, €7.13 for two children and €9.19 for three children.

The Finnish parliament has approved the controversial ‘Lex Nokia’ bill, allowing employers to view employees’ email metadata if they suspect corporate secrets are being leaked. The bill has sparked controversy after claims that the Confederation of Finnish Industries had pressurised the Confederation of Unions for Professional and Managerial Staff to support the legislation. It also seems that the Finnish mobile phone company Nokia was involved in the act’s preparation from the outset.

The Finnish parliament has approved the controversial bill – called ‘Lex Nokia’ (FI0902059I) – that gives employers the right to view employees’ email metadata. The bill was approved by a majority of 96 to 56 votes, with 47 members of parliament abstaining from the vote. The Act on the Protection of Privacy in Electronic Communications has been heavily debated in the run-up to the parliamentary proceedings.

The act would amend legislation on the confidentiality of electronic communications, thus giving employers the right to access information on senders and recipients of employees’ emails if they suspect that corporate secrets are being leaked.

4. Organisation and role of the social partners

The Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) has appointed the Director of its collective bargaining department, Lauri Lyly, as the organisation’s new President. The outgoing president, Lauri Ihalainen, was SAK’s longest-serving president, having led the organisation since 1990. Mr Lyly will initially be appointed for two years or until the SAK Congress in June 2011. He has already called for greater consensus among the national trade union organisations.

Team for Professionals in Technology

An ambitious great project for a merger of six industrial unions affiliated to the Central Organisation of Finnish Trade Unions (SAK) did not come true as planned. Instead of six merger unions only two SAK-affiliated unions form a new TEAM.

A new industrial union TEAM started on 1 January 2010. The TEAM is a merger of only two unions: the Chemical Workers’ Union (Kemianliitto) and the Finnish Media Union (Viestintäalan ammattiliitto). Thus, the merger is a truncated merger of a larger, six industrial unions merger that failed to materialize.

Otherwise, the year 2009 did not offer major changes in the organisation and role of the social partners.

5. Industrial action

Table 1. Industrial actions in 2009
Number of industrial actions, employees involved and working day lost quarterly in 2009
Quarter Number of industrial actions Employees involved Working days lost
2009 I 42 7,750 7,546
2009 II 38 4,555 6,560
2009 III 21 2,565 3,101
2009 IV 72 33,474 64,738
2009 Total 172 48,344 81,945

Source: Two first quarters Statistics Finland, two last quarters: a foreknowledge of the Confederation of Finnish Industries (EK)

6. Restructuring

Restructuring and lay-offs were the main reason for industrial actions in 2009. According to SAK, in 2009 almost 20,000 employees were given notice in Finland. This was double that of year 2008. The number of employees whose jobs were under threat in company-based mandatory consultations between employer and employee representatives had even trebled.

7. Impact of economic downturn

In January 2009, the government announced €45 billion economic stimulation package. The package was aimed largely at banks, with the hope that this will unclench the credit market and get money flowing to other areas of the economy.

In spring 2009, social partner organisations reached an agreement on welfare and unemployment issues. The agreement provides for an increase in the national pension contribution, which raised criticism among the employers. However, this measure is to be linked to an increase in contributions to regular pension plans, of which employers and employees will share the costs. Access to unemployment benefits is also to be increased, as is the minimum age for receipt of unemployment pensions.

The agreement was reached between the trade union confederations – namely, the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) – along with employers affiliated to the Confederation of Finnish Industry (Elinkeinoelämän Keskusliitto, EK) and the public sector employer organisations, notably the Commission of Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) and the State Employer’s Office (Valtion Työmarkkinalaitos, VTML).

In August 2009, the Finnish Ministry of Finance unveiled the country’s draft 2010 budget, which includes a separate stimulus package with the aim of preventing an economic recession. With this budget, the government hopes to foster employment in 2010. However, both the trade union and employer sides criticised the stimulus package as they believe that it will not have a significant impact on boosting employment.

The proposal of the Ministry of Finance not to raise income tax, if trade unions accept moderate pay increases, has gained conditional support from the trade union confederations. However, trade unions representing the public sector have not been enthusiastic about the offer. Some unions expressed scepticism about whether the employer organisations will agree to any pay increases, while others have criticised the finance minister’s proposal as being insufficient.

8. Other relevant developments

The need of reform of retirement and lenghtening of career was one of the most important issues in Finland during the year 2009. The governmant appointed two tripartite working groups to make proposals how to lenghten the careers. The raising of retirement age was very controversial issue where the stands of the government and employers differs from the trade unions, who are warning that the country could face a ‘pension war’ if employers try to raise the retirement age (FI0911029I, FI1002019I).

Pertti Jokivuori, Statistics Finland

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