Agreement in metalworking sets trend for bargaining round

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In January 2000, a new one-year collective agreement was signed in the Finnish metalworking sector, which will increase labour costs by 3.1%. Similar pay agreements were subsequently concluded in other sectors such as construction and commerce.

In 2000, collective bargaining in Finland is occurring at sector level, as a central incomes policy agreement proved impossible to reach (FI9910124N). The metalworking sector, which is taking the lead in the bargaining round, reached an settlement 16 January 2000, and a few days later, the executive committee of the Metalworkers' Union (Metallityöväen Liitto, Metalli) recommended unanimously that its central council approve the deal. The council did so, and a new, one-year collective agreement thus entered into force. The government's tax-cut proposals gave a fresh boost to the negotiations, which had been suspended, with the possibility of a strike (FI0001130N): it decided on a cut of 1% from June 2000.

No cuts in working time

The new metalworking agreement provides for a wage increase amounting to 3.1% of labour costs. The general wage increase will be FIM 1.50 per hour or FIM 264 per month. There will be minimum hourly increase of FIM 1.50 for those on the lowest wage, and the minimum monthly salary will be FIM 6,435.

The union had pushed for a cut in annual working time by one day, though without success. The Federation of Finnish Metal, Engineering and Electrotechnical Industries (Metalliteollisuuden Keskusliitto, MET) considered the issue of working time as a matter of principle, and ruled it out as a subject of bargaining. It was not desired, however, that the conclusion of a new agreement should fail on this point, and the working time issue was thus postponed to the next round. The chair of Metalli, Per-Erik Lundh, stated after the agreement was reached that working time reduction would be possible only in connection with a centralised incomes policy agreement. He further admitted the truth of the employers' statement that annual working time in Finland is already at the lower end of the scale by international comparison, and stated that European-level actions would be needed in order to proceed on this issue.

Other sectors follow

The metalworking agreement is considered to have set the wage trend for the 2000 bargaining round, and it has been followed in a number of other sectors. Agreements providing for the same increases in labour costs have so far been concluded in sectors such as construction - involving the Construction Workers' Union affiliated to the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) and the Confederation of Finnish Construction Industries affiliated to the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) - and commerce - involving the SAK-affiliated Trade Union of Commercial Employees (Liikealan Ammattiliitto) and the Commercial Employers' Association (Kaupan Työnantajaliitto, KTL) affiliated to the Employers' Confederation of Service Industries (Palvelutyönantajat, PT).

At the moment, it seems that the increase set by metalworking will be difficult to exceed. The bargaining round has been called a "mini-centralised incomes policy round", in that a majority of the wage earners will be covered by a first wave of agreements based on the metalworking settlement.

The wage increase of 3.1% is generally held to be moderate in relation to the national economy as a whole. However, the employers have expressed their concern about the development of costs, stating that despite significant sectoral productivity differences, lower-productivity sectors will also achieve the 3.1% increase - which is high in comparison with other countries in the EU Economic and Monetary Union (EMU). According to estimates from the EU, the Union of Industrial and Employers' Confederations of Europe (UNICE) and the Organisation for Economic Cooperation and Development (OECD), labour costs in these countries will increase by 2.3%-2.5% on average in 2000.

Important sectors still without agreement

The sector-level bargaining round is far from complete, as important industries such as paper and chemicals are still at the starting-point. In the food industry, the atmosphere has become so tense that the Food Workers' Union (Elintarviketyöläisten Liitto, SEL) has ordered an overtime ban by its members, which is a normal procedure during a period without an agreement. The Financial Sector Union (Suomen Rahoitus- ja Erityisalojen Ammattijärjestö, Suora) decided to start a limited payment-transfer boycott on 31 January in order to speed up the negotiations with the Bank Employers' Association (Pankkialan Työnantajaliito, PATO). However, only a few unions, like the Paper Workers' Union (Paperiliitto) are believed to have realistic chances of gaining higher raises than those agreed in metalworking.

The largest employee group, municipal and state officials (totalling 500,000 employees represented by different unions) is about to join the general trend despite the public sector unions' goal of closing the gap between the public and the private sector. During the 1990s, the public sector is estimated to have lagged behind the private sector in wage development by about 5%. The public sector is burdened by the massive outstanding public debt, which does not give much room to manoeuvre. In fact, resources for wage increases have not been budgeted for - although the state budget has begun to show a surplus, this margin will not readily be used for employees' wage increases. According to estimates, if wages are raised too much, then this will have to be financed by cuts in other areas of the public sector.

Commentary

Employees and the entire Finnish economy have benefited from the centralised incomes policy agreements in 1995-9 (FI9801145F). Much-discussed sectoral problems (FI9910124N) spoiled the chances of achieving the same type of agreement in 2000. The sectoral bargaining round means that a majority of workers will receive a 3.1% increase, which matches the general increase in productivity. The most significant difference between a sectoral bargaining round and a centralised incomes policy round is that in the former case "qualitative" problems cannot be solved in the same way as they would if the agreement were negotiated between the central organisations. The new agreements concentrate more on wage issues than on the qualitative side. From the perspective of companies, one-year agreements are awkward in the sense that strategic planning is made more difficult. On the other hand, it seems clear already that the EMU growth and stability pact will force wage demands down within a restrictive framework in the future, which will improve the possibilities of future planning from the perspective of the companies.

In autumn 1999, trade union leaders were still criticising executives' share options (FI9804158F). Now that the bargaining round has started, these comments have disappeared. Generally speaking, the sector-level bargaining round is revealing much about the attitude that prevails in the Finnish labour market today. EMU criteria have to be taken seriously, and the employers' talk of competitiveness being endangered to the detriment of employment has softened the unions' position. The shock effects of the recession of the early 1990s are still fresh in people's minds, and there is no intention of deliberately putting at risk the preconditions for economic growth. It is believed that moderate wage increases will bring about the best results. Nevertheless, some unions may be dissatisfied with the relatively low level of pay increases, because there already exist considerable differences in productivity within the metalworking sector, for example - where the productivity of the electronics industry has been much higher than in the traditional engineering industry.

The formerly central debate on working time has lost momentum in the 2000 bargaining round. The issue has not, for the moment, been highlighted as crucial. This debate seems to divide the social partners more sharply than do wage disputes, for instance. The unions may find support in the general European developments, which will influence Finnish working time policy more than before. On the other hand, if unions (as in metalworking) admit that annual working time in Finland is already short by international comparison, any hope of achieving further reductions may be mere wishful thinking.

To conclude, at this stage of the bargaining round it can be forecast that despite all the tension built up in the talks, no great drama will be seen: on the contrary, bargaining will proceed in the spirit of the new "EMU realism". Some unions, however, may resort to more radical action - though at present that seems very unlikely. (Juha Hietanen, Ministry of Labour)