Collective bargaining in Finland

Collective bargaining in Finland has usually taken place at three levels: national, industry and company. As part of the country’s tripartite tradition, the peak-level social partners have engaged in dialogue with the government to negotiate national framework agreements on wages and employment conditions. The national central-level agreements have then been the basis for bargaining at sectoral level – the predominant level in the sense that sectoral agreements are the legally enforceable basis of employment contracts. Sectoral agreements may transfer some issues to be negotiated locally, in company-level agreements. In recent years, there has been a tendency towards more local bargaining, although this decentralisation is taking place within the limits set by national and sectoral bargaining (Asplund, 2007; Sippola, 2012). As the main peak-level employer organisation, the EK, withdrew from central-level bargaining in 2016, decentralisation will probably increase in the future. The collective bargaining rounds of 2017–2018 and 2019–2020 were thus carried out directly at sectoral level, without a preceding central-level agreement.

Wage bargaining coverage

The Finnish collective bargaining system is characterised by a principle of general applicability, which has been in force since the 1970s. According to this principle, employers that are not involved in collective bargaining or are not signatories to a collective agreement must comply with the nationwide sectoral-level collective agreement considered representative in their sector. In 2001, the ‘confirmation procedure’ for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question. The employer side has, in recent years, been promoting the dilution of general applicability.

Owing to general applicability, the degree of coverage of collective wage bargaining in Finland is high, with the coverage rate of all levels being around 89%, according to the latest available data (Ahtiainen, 2019).

Collective wage bargaining coverage of employees at all levels

Notes: * Percentage of employees working in local units where more than 50% of the employees are covered under a collective pay agreement against the total number of employees who participated in the survey. ** Proportion of employees covered by collective agreements.

Sources: Eurofound, European Company Survey 2013 and 2019 (including private sector companies with establishments with >10 employees ((NACE codes B–S), the question in the survey was a multiple choice question and multiple answers were possible); Eurostat [earn_ses10_01], [earn_ses14_01], [earn_ses18_01], Structure of Earnings Survey 2010, 2014 and 2018 (including companies with >10 employees (NACE codes B–S, excluding O), with a single answer for each local unit)

As the Finnish collective bargaining system is traditionally strongly centralised, national-level bargaining has been the most important level in setting the framework for changes in wages and working time. However, the withdrawal of the main peak-level employer organisation from central-level bargaining in 2016 will presumably affect bargaining levels. Details concerning wages and working time are worked out in lower-level agreements. Sectoral agreements constitute the legally enforceable basis of employment contracts (Asplund, 2007).

One of the measures included in the Sanna Marin government programme is to increase local collective bargaining (Finnish Government, 2019). So far, the announcement in 2020 of the Finnish Forest Industries Federation’s shift to local-level bargaining has been the most significant indication of the increasing decentralisation of the Finnish collective bargaining system.

Levels of collective bargaining, 2022

Traditionally, a national-level agreement, after having been approved by a sufficient number of sectoral organisations, sets the minimum conditions for pay changes and working time. These guidelines must then be followed in the sectoral agreements. Company-level contracts in turn must be designed according to sectoral-level agreements so that their demands are fulfilled. Since 2017, no national-level agreements have been negotiated and bargaining has been initiated directly at sectoral level.

The autumn is the busiest time for bargaining for new collective agreements in Finland. This is because the turn of the year (at the end or beginning of the year) is a typical time for the start of new collective agreements. Traditionally, the bargaining round starts with the collective agreement for the technology sector (including metalworking), which to some extent serves as a pace-setting agreement for other sectors. The collective agreements negotiated within the framework of the tripartite Competitiveness Pact in 2016 were set for only one year, instead of the previously more usual two or three years. In the negotiations of 2017–2018 and 2019–2020, two or three years seem once again to have been the standard. In 2022, the standard duration of validity of generally binding collective agreements was two years (Finlex, undated).

When it comes to the trade unions, the collective bargaining system is coordinated both across different bargaining levels and horizontally: the actors within the same sector communicate at company, sector and central organisation level to promote their industry-related interests. Horizontal coordination is also significant: the cooperation between different sectors is strong in the highly centralised national-level organisations. However, in the collective bargaining round of 2017–2018, cross-sectoral coordination was more challenging, as no central-level agreement was negotiated prior to the sectoral negotiations.

Although the employers are represented by different interest organisations, their collective bargaining action was hitherto substantially coordinated by the EK. However, with the EK stepping away from central-level bargaining in 2016, it no longer has such a strong role in coordination and instead acts more as a platform and provides support for the member organisations.

According to the principle of general applicability, which has been in force since the 1970s, sectoral-level collective agreements are generally binding and thus apply also to unorganised employers and employees in the sector. In 2001, the confirmation procedure for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question. Representativeness in this regard entails that, as an estimate, more than half of the employees in the sector work for employers that are signatories of the agreement.

Overall, derogation from collective agreements is not possible. However, it is not uncommon for sectoral-level agreements to include opening clauses for agreeing on certain matters such as working time arrangements or wages at local level, usually within given limits.

When collective agreements expire without new agreements being in place, the regulations of the old contract are observed until a new agreement is negotiated. According to the Employment Contracts Act, strikes are legal only when the agreement period has elapsed.

According to the Employment Contracts Act and the Act on Mediation in Labour Disputes, industrial action is allowed only when a collective agreement has expired and a new agreement is yet to be established or when the reason for the action is something unrelated to the employment conditions, as is the case for political strikes and solidarity actions. The peace clause in a collective agreement may also be unconditional and, in such cases, solidarity actions are also prohibited. Peace clauses apply to trade unions, employer organisations and members of employer organisations. Peace clauses do not formally apply to individual employees or trade union members, but non-compliance of individual trade union members may have repercussions for the union.

A distinction can be made between an active and a passive peace obligation. A passive peace obligation prohibits trade unions and employer organisations from taking up industrial action, while an active peace obligation compels the organisations to monitor the peace and to take measures to prevent and halt illegal industrial action.

Peace clauses do not apply when the employer is bound by the general applicability of the collective agreement, without being a member of a signatory employer organisation.

The Finnish collective bargaining agenda includes a wide range of issues connected to working life. A recent issue highlighted by the two sides of industry is the topic of equality regarding family leave. An equal number of paid parental leave days for both parents has, for example, been negotiated for university employees, in line with the Family Leave Reform (Perhevapaauudistus) in 2022. This has also been an objective of collective agreement negotiations for other white-collar workers (Insinööriliitto, 2021).

In the latest central-level agreement (the Competitiveness Pact), the peak-level organisations agreed to promote the following provisions in the sectoral-level negotiations of their members:

• the transfer of part of the liability for social security contributions from employers to employees

• a 30% cutback in holiday bonuses of public sector workers for 2017–2019

• greater employer responsibility for dismissed employees, including providing access to occupational healthcare for a period of up to six months after the dismissal

• greater local bargaining opportunities