2001 Annual Review for Finland

This record reviews 2001's main developments in industrial relations in Finland.

Political developments

The 'rainbow' coalition government of left- and right-wing parties - the Social Democratic Party (Suomen Sosiaalidemokraattinen Puolue), the conservative National Coalition Party (Kansallinen Kokoomus), the Left-Wing Alliance (Vasemmistoliitto), the Greens (Vihreä Liitto) and the Swedish People's Party (Svenska Folkpartiet) - remained in power during 2001 as no elections took place during the year. The next parliamentary elections will be held in 2003 and this is expected to dominate the political debate during 2002.

Collective bargaining

A new comprehensive incomes policy agreement, which will run until January 2003, was signed on 15 December 2000 (FI0012170F), after most member organisations of the signatory confederations concluded agreements in line with a text agreed in November (FI0011167F).The agreement thus covers some 2 million employees, comprising 90% of the Finnish workforce. The new agreement was signed by all the central employers' organisations - the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT), the Employers' Confederation of Service Industries (Palvelutyönantajat, PT), the Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) and the State Employers' Office (Valtion Työmarkkinalaitos, VTML) - and two trade union confederations - the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) and the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK).

The Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) did not sign the agreement. However, despite the failure of their confederation to sign, individual unions representing a large proportion of AKAVA's membership negotiated collective agreements that were in line with the overall agreement.

Pay

The 2001-2 central agreement provided for the following pay increases:

• a general pay rise of EUR 0.20 per hour or EUR 33.6 per month in 2001, with a minimum increase of 2.1%. An additional 0.5% of paybill was to be distributed in subsequent sectoral negotiations in line with particular circumstances, and an 'equality allowance' of 0.4% was to be used at sector level to improve the position of women and lower-paid workers. The overall effect was a 3.1% increase in labour costs (including a new paid holiday on Ascension Day);

• a general pay rise of EUR 0.18 per hour or EUR 30.1 per month in 2002, with a minimum increase of 1.9%, plus an additional 0.3% for sector-level distribution. The overall effect should be a 2.3% increase in labour costs;

• an indexation clause was introduced whereby, if inflation exceeded 2.6% over the period from January 2001 to December 2001, pay would be increased by the corresponding percentage. However, minor increases in prices of up to 0.4 points over 2.6% would not result in pay increases. Thus, in practice, if inflation reaches 3.1%, this triggers a pay increase of 0.5%; and

• an 'incomes progression' clause was introduced, aimed at ensuring an equal wage development for those sectors that fall behind the average wage development for all workers. A special committee, consisting of the national conciliator and one representative each from a sector's employer and trade union organisations, are to monitor developments over the period April 2000-April 2002 and decide on any possible additional pay increase by 30 August 2002.

The general impact of the accord on costs was estimated at about 3.1% in 2001 and 2.3% in 2002. More than 10,000 employees in unions affiliated to SAK - dockworkers, electricians in the energy sector and train drivers - were to remain outside the new accord for one year. The aviation and food sectors also remained outside the new deal, but were covered by existing long-term agreements of broadly similar content. The coverage of the new agreement in the industries organised by SAK is as high as 97%. A number of trade unions representing public sector occupations dominated by women employees - such as kindergarten teachers and social workers - did not initially sign up to the central incomes policy agreement and some threatened strike action in order to obtain additional pay increases. However, in January 2001, these groups signed up to agreements providing for the same increases as other workers (FI0103179N).

The incomes policy agreement is a framework accord, which was subsequently implemented by sectoral negotiations. In 2001, some 300 such agreements were signed. Independent company-specific agreements are very rare. It is also possible to agree locally deviations from the sectoral agreements if the agreement in question allows this. However, the number of such agreements is impossible to count.

Working time

The 2001-2 national incomes policy agreement provided that Ascension Day will become a national paid public holiday in 2002, for those employees who do not already have a holiday on this day. This does not include shiftworkers. The agreement contained no other concrete provisions on working time issues. However, the parties did discuss the creation of working time accounts, whereby overtime worked may be saved and taken at a later date in the form of time off. Progress was made, although no provisions were included in the accord. The parties also signed a recommendation on avoiding inappropriately short work shifts. In 2001, average regular working hours including regular overtime stood at 39.3 hours.

Pay inequalities

The gender pay gap is acknowledged to be a continuing problem in Finland. The 2001-2 central agreement contains an 'equality allowance' of 0.4% to be used at sector level to improve the position of women and lower-paid workers, and an 'incomes progression' clause which aims to ensure an equal wage development for those sectors that fall behind the average wage development for all workers (see above under 'Pay').

A study analysing statistics on wage differences between the sexes was published by the Ministry of Social Affairs and Health during 2001. This was the outcome of a tripartite project on gender pay issues, which for the first time in Finland identified factors behind the pay gap, and in particular the extent to which this gap can and cannot be explained by objective factors such as work experience, sector and position. The main purpose of the project was to determine the proportion of the pay gap unexplained by objective factors, which can thus be ascribed to gender discrimination. The social partners were involved in the project's follow-up group. The goal was to find a model whereby the development of wage differentials between the sexes could be followed constantly and reliably.

Job security

There were a number of company restructuring measures taken during the course of 2001. One example of a situation where jobs were saved following negotiations with employee representatives was at the Finnish telecommunications operator Sonera (see below under 'Company restructuring'). In October, the company announced that, as a result of cooperation talks with workers' representatives, the number of employees affected by planned job cuts would be reduced from 1,000 to 500. Nevertheless, the Communications Union (Tietoliikenneliitto, TLL) did not accept the outcome of the talks, and called for the job losses to be further decreased through redeployment (FI0110102N).

Training and skills development

The 2001-2 national incomes policy agreement contained a number of provisions relating to training and skills development. It stated that measures will be taken to promote training, and that the government will play a particular part in this, specifically by increasing further education allowances by EUR 13.5 million. Further, the current 'job rotation' sabbatical leave scheme (FI9704110F) has been continued for two years.

Legislative developments

Several items of new legislation were adopted or implemented in Finland during 2001. In June, a revised Employment Contracts Act came into force (FI0107193F). The Act, over 30 years old, was reformed in its entirety. The main aims of the reform were to improve the position of fixed-term and part-time employees (see below under 'New forms of work'), to define more precisely the system of 'general validity' of collective agreements, and to clarify provisions concerning employment security.

The Employment Contracts Act - known as the 'constitution for working life'- is a cornerstone of Finnish employment law, and governs such basic issues as drawing up contracts of employment, the rights and duties of employers and employees, terms and conditions of employment, the grounds for termination of employment, the procedure to be observed on termination, and rules on the application of collective agreements.

Also in June, a new Act on Protection of Privacy in Working Life was adopted, regulating issues such as the testing of employees, the handling of information concerning their health, and rules on monitoring the workforce. A basic principle is that the employer is permitted to collect only information relevant to the employment relationship. The legislation came into force in October (FI0106191F).

A tripartite working group set up by the government to examine the reconciliation of work and family life, including reforms of parental leave, suggested in November 2001 that statutory paternity leave be lengthened from 18 to 25 days (FI0111101N). At present, a father has the right to take paternity leave during the maternity or parental leave period. The maternity leave period is at present 105 days and the parental leave period, when either the mother or the father can stay at home, is 158 days. It was also proposed that parents should be able to take their parental leave on a part-time basis. Both parents could thus be in part-time work and on partial parental leave at the same time.

The organisation and role of the social partners

In May, four member trade unions of the white-collar STTK confederation - the Union of Technical Employees (Teknisten Liitto, TL), the Union of Salaried Employees (Suomen Teollisuustoimihenkilöiden Liitto, STL), the Federation of Private Building Employees (RAL) and the Swedish Association of Technicians and Foremen (Svenska Tekniska Funktionärsförbundet, STAF) - merged to form the Union of Salaried Employees (Toimihenkilöunioni, TU). This new union, with 130,000 members, is the country's fourth largest union and STTK's largest affiliate (FI0106189N). A further development in 2001 was that a merger of the three union confederations - SAK, STTK and AKAVA - was discussed, without any conclusions being reached.

On 28-30 May 2001, SAK held its 16th five-yearly congress. Lauri Ihalainen, who has headed the organisation since 1990 - the longest continuous period in its history - was, as expected, re-elected as SAK's president. For the first time a woman, Tuire Santamäki-Vuori, was elected as president of the SAK general council. In addition to the elections of central officials, the congress discussed globalisation issues and future policy orientations, and approved three new policy documents (FI0106190F).

Industrial action

In the first six months of 2001, a total of 26 strikes took place, involving 9,684 employees. The number of working days lost was 4,418. These statistics do not include the major doctors' strike (see below).

The Finnish Medical Association (Suomen Lääkäriliitto, SLL) decided not to sign up to the two-year national incomes policy agreement concluded in December 2000 (see above under 'Collective bargaining'). The main reasons stated for the decision were the wage increase - the incomes policy agreement would have given increases of just over 5%, while the doctors were seeking increases of over 20% - along with serious 'qualitative' working conditions problems in the healthcare sector. Instead, SLL started negotiations with the Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) over a separate collective agreement (FI0102176N). The talks failed and the doctors began strike action in March 2001 (FI0103182F).

The doctors' strike lasted 20 weeks, the longest ever strike in Finland. The strike was conducted in such a way that there was an effort to treat only emergency patients, in the manner required by the law. The strike alternated between doctors in hospitals in different municipalities and in different specialist fields. It ended when SLL and KT decided to approve a unanimous proposal for a two-year deal made by a special conciliation board which had been set up to broker a deal (FI0108195N). The cost effect of the two-year deal is about 10.5%. SLL also obtained some 'qualitative' improvements in working conditions, especially concerning working time arrangements in order to reduce onerous emergency duties. The agreement will expire at the same time as Finland's other collective agreements, in January 2003.

Another notable strike occurred in September 2001, when the Finnish Transport Workers' Union (Auto-ja Kuljetusalan Työntekijäliitto, AKT) participated in a Europe-wide dockworkers' day of action by organising a two-hour work stoppage (FI0109102N). The action was in protest over a proposed EU Directive on market access to port services, which as well as opening up competition would permit ship's crews to perform work hitherto done by dockers. In January, AKT had called a strike in cargo ports, in a dispute over redundancies among dockers at the Steveco port operating company (FI0101175N). After one day of strike action, a settlement was reached through conciliation, whereby the pay of the redundant workers was guaranteed for 12 months.

National Action Plan (NAP) for employment

In general, employers were satisfied with most aspects of the drawing up and implementation of the 2001 Finnish National Action Plan (NAP) for employment in response to the EU Employment Guidelines - which focused on bolstering economic growth and employment (FI0107194F). However, they express greater levels of dissatisfaction with the general way in which the NAPs are handling labour market issues in general in the country. Trade union representatives did not feel that they were consulted particularly early in the process of drawing up the 2001 Plan, although they were relatively happy with the extent to which their views were taken on board (less so about the issues covered). They were more satisfied with their general involvement in the implementation of the NAP.

Company restructuring

During 2001, the information technology sector underwent major restructuring, resulting in large-scale redundancies. The Sonera telecommunications company was one of the companies which announced major job cuts, in a context of heavy debts linked to the overall downturn in the sector and its participation in the auctions of expensive 'third-generation' mobile telecommunications licences in spring 2000. (FI0108100F). The job cuts were reduced following cooperation negotiations with employee representatives.

However, the economic downturn has not yet led to any attempts to tighten up legislation in the areas of collective redundancies and severance payments. However, following the reform of Employment Contracts Act in 2001 (see above under 'Legislative developments'), renewal of the legislation concerning employee participation is being planned.

The legal ramifications of earlier restructuring continued in one case in 2001. In August, the public prosecutor decided not to bring charges against the Finnish managers of Fujitsu-Siemens concerning intentional or negligent violation of the Cooperation Act's provisions on negotiations with workers' representatives (FI0108196F). He could not find enough evidence that they could have known of the group management's aims to close down a computer factory in Finland before the personnel were informed of the decision in December 1999. Even though the criminal proceedings failed, a civil action brought by trade unions continued in the courts (FI0102177F).

Employee participation

As Finnish legislation governing information and consultation of employees is thought to fulfil all the requirements of the new EU Directive establishing a general framework for informing and consulting workers (adopted in February 2002), there was not much debate on this issue during 2001 However, there was considerable interest, particularly from trade unions, in amending the Directive on European Works Councils (94/45/EC), as they feel that the Directive does not offer sufficient coverage in the light of structural changes to transnational companies.

With regard to the EU European Company Statute and its employee involvement provisions (adopted in October 2002 - EU0110203N), it is too early to estimate the effects of this measure in Finland.

A reform of Finland's domestic legislation on employee participation was being planned at the end of 2001

New forms of work

The main legislative changes made in the regulation of 'atypical' work during 2001 were contained in the new Employment Contracts Act, which came into force in June 2001 (see above under 'Legislative developments'). The new Act provides for employees on successive fixed-term contracts with the same employer to benefit from a range of employment benefits. The new Act obliges employers to inform workers on part-time and fixed-term contracts of any vacancies arising. In the event of employers needing extra staff, the Act obliges them to offer the extra work first to part-time employees. The new Act also ensures that Finnish legislation complies with the EU Directives on part-time and fixed-term work, by stating that there should be equal treatment between these workers and those on full-time, open-ended contracts.

Other relevant developments

Tripartite working groups - involving representatives of the social partners, pension institutions and government - which had been considering the reform of state pensions and unemployment insurance (FI0109101F) reached an agreement on 12 November 2001 (FI0112170F). Some details remain to be finalised, with the method of calculating future pension entitlements to be decided by the end of 2008 - the choice is between using employees' last 10 years at work or their whole working history as the basis. The benefits of people who have already retired will remain intact, as will that part of current employees' future pension entitlement earned before the pension reform takes effect in 2005. Unemployment benefits will be improved or cut from the beginning of 2003, depending on the age and work history of the individual employee.

After deliberations lasting throughout the spring, the government decided in May 2001 that it would grant new subsidies for Finnish merchant shipping (FI0105187F), as demanded by the sector's social partners. In late 2001, parliament decided that owners of passenger ships will be subsidised by refunding 97% of their taxes and social security contributions from the beginning of 2002 - a sum of EUR 28 million. The decision was made after a long period of conflict over the issue. A strike broke out in late 2001 over the use of non-Finnish labour on ships, and it seemed clear that such developments will continue.

Outlook

Possible changes to the law concerning employee participation will be a major legislative task in 2002. The prospect of negotiations over a new incomes policy agreement to apply from 2003 will dominate the social dialogue as 2002 progresses. Debate on privatising state-owned companies will also continue during 2002. Finally, the next parliamentary elections, to be held in 2003, will be the central focus in terms of political developments.