Social dialogue & conflict resolution mechanisms

Social Dialogue and Conflict Resolution Mechanisms: conciliation, mediation, arbitration in Estonia, Hungary, Malta, Poland and Slovenia - Workshop

Prague, 29-31 October 2003

Speech abstract - Martti Kairinen

Professor of Labour Law,
University of Turky, Finland

THE FINNISH MODEL OF CONFLICT RESOLUTION

1. Social dialogue

General picture
The basis of the present-day industrial relations model in Finland may be described as a consensual one. The first general agreement made in 1946 between the SAK (Central Organization of Finnish Trade Unions) and the employers` confederation ( nowadays TT, Confederation of Finnish Industry and Employers) has been the axis of the whole negotiation and bargaining system. Similar general agreements between the confederations make up the core of the negotiating and collective bargaining system.

The last 34 years period of incomes policy has enhanced the status of the central confederations. The main aim of incomes-policy has been to co-ordinate the different sectors in the light of the principles of economic policy. The principle of tripartism holds that the state, the representatives of the employers and the representatives of the employees should work together in mutually balanced co-operation. The state has to negotiate with a view to reaching agreement on labour-market issues and to be an equal negotiating partner with respect to the organizations of either side. The employers’ and trade-union organizations are also represented in committees, working groups, and advisory bodies of various kinds. It has also been typical of Finnish labour legislation that it has originated from bargaining between the parties and often also constitutes “agreed legislation”.

Actors and Acts
The present-day Constitution (2000) provides the legal framework for the functioning of industrial relations and social dialogue. Fundamental rights include, among other things, freedom of association and the right to organize. Employees and their employers are organized with the principle of industry-based unionism. The manual workers in a particular industry form a federation for that industry and the employers do likewise. For professional employees, academics, unionization follows the principle of occupation-based unionism to some extent. Federations are further the members of confederations.

Average union density has risen to a significantly high level. Membership rose steeply in the period when incomes-policy agreements began at the end of the sixties. At that time it was also agreed that employers could deduct union dues (1.5-2%) from employees’ pay and the union dues became tax-deductible. It has been estimated that four out of every five employees are members of a trade union or comparable body. Particularly the unemployment benefits linked to the union memberships have been instrumental in boosting union membership.

The legal status of collective agreements is determined in the Collective Agreements Act (1946). A specialized Labour Court for the resolution of disputes about collective agreements, composed on the tripartite principle, began its work in 1947. In addition to the impartial members of the court, there are also members who represent the employers` side and the employees` side. When the collective bargaining mechanism began to function, also a union representatives system grew up.

National collective agreements are concluded between respective federations in a given industry. There are more than 200 of these national sectoral agreements. Employees who work for member enterprises of employers’ federation, fall within their scope of application. Federation level agreements determine the main labour costs and employees’ social benefits as well as their working hours. The system of collective bargaining is based on collective agreements with normal applicability. The normative effect derives from membership of the federation. In practice, the binding effect on the employer is of key significance. Collective agreements prescribe only minimum terms and conditions of employment. Collective agreements cover about 90% of working employees since the level of union density is hig

In practice, very few agreements are concluded directly between one employer and a union representing the company’s employees. On the other hand, the opportunities for concluding agreements at local level have been extended both by statutes and by federation-level collective agreements. It constitutes an organized decentralization of the bargaining process. Local bargaining at enterprise level concerns, above all, working hours, performance-based payment systems and changes in working conditions.

About half of the federation-level collective agreements have erga omnes applicability on the basis of the Employment Contracts Act (2001). This means that also non-organized employers are obliged to observe the terms and conditions laid down in collective agreements. To have erga omnes applicability, an agreement must have national coverage and quality to be deemed representative for the relevant branch of activity. The general rule is that an agreement covering about 50% of all employees in the branch concerned may be considered as a representative. A special Board for confirmation of erga omnes applicability makes a decision on the question of the representativeness. In practice, the significance of erga omnes applicable collective agreement is primarily in respect of the minimum wage.

Grievance procedure
In the case of differences of opinion about the application of provisions in a normal applicable collective agreement, the agreements themselves also contain provisions specifying a grievance procedure in the form of rules on negotiation. The starting-point is that if a difference of opinion between the union representative and the employer cannot be resolved at the workplace, a memorandum of disagreement is drawn up and the dispute is referred to the relevant national federations for negotiation. If the negotiation route fails to yield a result the matter may be taken to the Labour Court, whose ruling is final.

2. Dispute resolution

Strike actions
Finland has endured many strikes and other forms of industrial actions. During recent years, however, the number of working days lost through industrial action has shown a considerable decrease. The nature of industrial action has also changed somewhat, episodes have become shorter and much more of the nature of demonstrations. It has been typical of the strikes that trade unions back each other up by different kind secondary/sympathy industrial actions.

Peace obligation
The organizations bound by their collective agreement are also obliged to ensure that their members observe it. During the period of its validity a collective agreement imposes a peace obligation with respect the issues it covers. Industrial actions which contravene particular stipulations in the agreement or the agreement as a whole are prohibited. The Labour Court is empowered to impose a compensatory fine as a sanction. Forms of political and secondary/sympathy actions are generally allowed since they are not directed against collective agreement applicable to those taking the action.

Mediation on collective interest disputes
The system for mediation/conciliation of labour disputes has been a factor in improving relations between the collective organizations and promoting the peaceful solution of disputes of interest. The present legislation on the mediation of labour disputes ( Labour Disputes Act1962), lays down provisions on the activity of conciliation organs, obligations on the party initiating a work stoppage and the right of the Ministry of Labour, in certain circumstances, to have the intended stoppage postponed. The Act imposes on the parties to a dispute an obligation to give advance notification, whereby notice of a work stoppage must be communicated two weeks before it is due to occur. Participation in mediation proceedings is compulsory, but there is no compulsory resolution of the dispute.

The machinery of mediation comprises, in addition to a national conciliator, five part-time district conciliators. In particular situations an ac hoc conciliation board may be set up or a temporary conciliator appointed. National industrial disputes are a matter for the national conciliator. The conciliator’s duty is to take appropriate measures after receiving information of a work stoppage.

Disputes over rights Disputes over legal rights and obligations cannot be resolved on the initiative of conciliators since they fall within the province of the Labour Court or civil courts. The division of jurisdiction between these courts depends from the fact whether the legal norm in case is in a collective agreement or in a statute.