Working time 'banks' proposed to increase flexibility

In February 2004, Finnish employers’ organisations and white-collar trade union confederations issued proposals for the establishment of working time 'banks', with aim of increasing flexibility. SAK, the blue-collar trade union confederation, has rejected the plans, arguing that the needs of employers are prioritised over the needs of workers. The role of trade unions in the determination of working time has been reduced markedly over the past decade as decision-making has increasingly moved to the workplace level.

The Finnish social partners have for some time agreed that there is a need for more flexible working time arrangements. To this end, a working party made up of representatives of the partners was set up in December 2002 as part of the central incomes policy agreement for 2003-4 (FI0212103F). The party finished its work in February 2004. It recommends the establishment of working time 'banks' in which extra hours worked and holiday entitlement could be stored. These deposits could be taken out in the form of free time or could be compensated financially. Furthermore, the working party recommends that specific arrangements for the hours banks should be established at workplace level and based on voluntary agreement between the worker and the employer.

The Working Hours Act of 1996 is relatively flexible and largely makes the suggested hours bank arrangements possible. In fact, various companies have already experimented with working time banks. According to the working party, some legislative changes would, however, be needed in order to make the use of working time more flexible. These relate mainly to the working party’s view that it should be possible to decide locally about the period over which the working time may be saved. The Working Hours Act does not allow for the saving period to be over 12 months. Furthermore, contrary to the working party's proposal, under current legislation taxation of benefits drawn from the 'bank' takes place in the year the benefits accrue and not when they are used. Finally, the party recommends that collective agreements and contracts should be increasingly formulated so as to render possible the adoption and formulation of flexible working time arrangements at company or workplace level.

Mixed responses

The recommendations on increasing working time flexibility have been endorsed by both central employers’ organisations - the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) and the Employers’ Confederation of Service Industries (Palvelutyönantajat, PT) - and by two of the three trade union confederations - the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals in Finland (AKAVA).

The only central organisation opposing the proposals is the confederation representing blue-collar unions, the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK). It has protested against the recommendations on several accounts. Above all, SAK opposes the fact that workers would not be given any workplace-level autonomy over the timing of the deposits and withdrawals of working time to and from the 'bank'. SAK argues that working time flexibility would thus be mainly determined by the employers in accordance with the objectives of production, instead of being directed towards the individual needs of workers. The autonomy of workers would be further undermined, according to SAK, if basic principles behind the flexible use of working time were not laid down in sectoral agreements but only determined at local level. SAK is, furthermore, against any amendments to the Working Hours Act and insists that such changes could jeopardise occupational safety and health.

More working time regulation at workplace level

The introduction of flexibility into working time happened late in Finland compared with much of the rest of western Europe. The decisive breakthrough took place in the industry-level bargaining rounds of 1993 and 1994 during a period of severe economic depression. Following employer demands for flexible working hours, agreements were reached in many branches of industry in which 'opening clauses' were included, allowing bargaining over working time issues at workplace level. Since the early 1990s, the possibilities of local bargaining have been further extended (FI9803153F). The Working Time Act of 1996 was the most significant development in this respect as it allowed for an increasing number of issues to be agreed by the social partners at sector level. As such, it gave them the right to decide upon the limits of local bargaining.

The consequences of the regulatory changes have differed widely between branches. Collectively agreed normal annual working hours varied in the late 1990s between 1,529 (in some services) and 1,746 (in transport). Maximum daily hours have been set at nine, 10 or 12 hours or have not been limited at all, as has been the case in blue-collar metalworking, public administration and services. The reference period during which working time may be varied around an average has been typically set at 12 months. The Working Time Act, on the other hand, permits a maximum of nine working hours per day and 45 hours per week, with a reference period of four weeks. Thus, the social partners have used their right to depart from the Act extensively. Furthermore, they have widely granted these rights further to workplaces. According to a recent study, local agreements are used in the establishment of working time norms in 86% of private sector organisations. Largely as a consequence of the increases in working time flexibility, the share of employees doing overtime work has fallen to a level considerably below the EU average. This can be seen as being indicative of the effective use of the workforce.

Commentary

The granting of rights over working time issues to the workplace level has been an ongoing trend in Finland since the early 1990s. The new proposals of the social partners concerning working time 'banks' represent a continuation of this development, as their adoption would decrease the influence of industry-level bargaining on working time. Furthermore, no increased autonomy over the determination of working time would be granted to workers under the proposals. This is more problematic for blue-collar workers than for white-collar workers, since the latter tend to have more autonomy over the work process in the first place. This existing autonomy combined with flexibility may result in individual workers’ needs being taken more fully into account. Therefore, it is understandable that SAK reacted so strongly to the proposals and the white-collar union confederations did not. Salaried employees, especially highly educated ones, also do a lot of overtime work that is not accounted for, which partly explains the support of AKAVA and STTK for the plan, as they hope to get these hours compensated.

The general process of increasing the scope of workplace-level decision-making is of benefit to companies. Increased flexibility of working time results in decreased spending on overtime premia, increased productivity and less need for lay-offs. These factors in turn contribute to the profitability of the undertakings, which could in the long term have the end effect of job creation. For trade unions, however, such increases in employment represent a mixed blessing, because trade union power can be undermined in the process of introducing flexibility through the decentralisation of decision making. Furthermore, for individual workers employer-induced flexibility often means a heavier workload. (Aleksi Kuusisto, Labour Institute for Economic Research)