Social partners preparing for next incomes policy agreement

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Discussions on Finland's next incomes policy agreement started in late summer 2002, with formal negotiations to be held before the current deal expires at the end of the year. The central social partner organisations have announced their aim to conclude a two-year agreement which would support employment. The present economic recession is likely to dampen the trade unions' wage demands.

In late summer 2002, the central social partner organisations started to examine the possibilities for the next national incomes policy agreement, to replace the current two-year central deal which expires at the end of the year (FI0012170F). The organisations have stated that their aim is a new two-year agreement which would support employment, as earlier agreements have done (FI0011167F and FI9801145F)

SAK's views

According to the chair of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), Lauri Ihalainen, the present poor economic situation, which may get worse, favours a centralised agreement. He believes that a central agreement could carry Finland through recession. SAK has appealed to the employers to keep the 'threshold' for layoffs and redundancies high - ie cutting jobs only as last resort. The experience of the present agreement, under which the development of purchasing power has been favourable, is another argument for a new central deal, in SAK's view. In 2002, the purchasing power of workers' pay increased by about 3.1% and in 2003 the increase will be around 2.3%. According to Mr Ihalainen, the agreement currently being prepared would support employment and stability and thus make possible to withstand recession.

In Mr Ihalainen's view, the present development of purchasing power should be maintained in the coming incomes policy round. This would mean wage increases significantly higher than in the present agreement, as tax cuts will have a notably lesser effect than over the past two years. The increase of purchasing power will thus be dependent on wage increases.

The government has promised to back up a new agreement through additional decisions connected to taxation. This could mean targeted measures, eg for the public sector and house-building. According to Mr Ihalainen, the possibility of tax cuts will be decreased, and it will thus not be possible to rely on such measures too much over the next few years

The goal of SAK is to achieve a two-year agreement, in which wage increases would be agreed on for both years. An indexation clause should be included in the agreement. The blue-collar confederation would like to have a general pay rise based on flat-rate cash increase, because a percentage increase would be 'unsolidaristic' and would increase wage differentials between men and women. Mr Ihalainen foresees that the wage negotiations will be difficult. The employers do not promote a solidaristic wage policy and, on the trade union side, the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) is seeking percentage increases. Agreement on the 'rules of the game' for result-based pay and bonuses was on the agenda in the last round of negotiations, but failed to progress because of employer resistance. SAK is again trying to set the rules of the game in the coming talks (FI0208101F).

SAK also aims to achieve in the next agreement measures to: reconcile work and family life; improve employment security; ensure a minimum daily working time of four hours; and introduce working time accounts (in which working time can be saved). Finally, before negotiations start, SAK states that the prolongation of the current sabbatical leave scheme (FI0206102N) must be agreed on. The employers have opposed the continuation of the scheme and its fixed-term trial period will terminate by the end of 2002.

Special programme for municipalities

To address wage problems in the municipal sector, SAK supports a long-term programme. According to recent research, wages in the municipal sector are 7%-8% behind the corresponding figures in the private sector. The chair of the SAK-affiliated Trade Union for the Municipal Sector (Kunta-Alan Ammattiliitto, KTV), Tuire Santamäki-Vuori, has stated that all the unions must make resolving these problems a condition for the new incomes policy agreement. According to Ms Santamäki-Vuori, the issue must not necessarily be resolved in the incomes policy agreement itself, where all the increases should be the same for all. Instead, a special programme to redress the municipal wages problem over several years should be agreed in addition to the central incomes policy agreement.

STTK seeks agreement focusing on employment and family

The Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) has set out its preconditions for an incomes policy agreement running for several years, which would support employment and the welfare of families. The white-collar union confederation is seeking a model whereby wage increases are agreed only for the first year, and the parties could give notice to terminate the agreement after the first year. The organisation is also seeking an extended equality-oriented wage programme, which would reduce groundless wage differentials between men and women. According to STTK, the agreement should also include: a certain sum set aside for improving women' wages; the development of research and wage statistics; and measures in order to prevent marginalisation from the labour market.

AKAVA public sector unions create tension

Some public sector member groups of AKAVA, such as teachers, have spoken out loudly in favour of high wage increases in the coming negotiations. In the last bargaining round in 1999, AKAVA did not sign the centralised deal. The unions affiliated to AKAVA later joined the agreement (FI0103179N), but the pressures for higher pay increases have remained, and they loom over the negotiations due to start later in 2002.

In the forthcoming incomes policy round, the union confederation for professionals aims to achieve a wage 'pot', with the cost effect for each sector being equal. However, within each sector the distribution of the wage sum could be dealt with freely. This would give more flexibility to each sector. Concerning 'qualitative' goals, AKAVA is aiming for a wide-ranging 'working life development' package, including working time arrangements - eg working time 'banks' and monitoring of actual working time.

Employers seek long-term moderate agreement

According to Risto Alanko, head of department at the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT), TT is seeking an agreement which would support the conditions for growth and employment. The possibilities to achieve the goal of an extensive incomes policy agreement should be clarified carefully. TT has criticised trade unions for proposing demands which would make it more difficult to conclude an agreement, such as setting different wage increases for different groups.

The Employers’ Confederation of Service Industries (Palvelutyönantajat, PT) aims to obtain an extensive agreement lasting at least two years. According to PT, the agreement must support: the competitiveness and profitability of companies; the positive development of the purchasing power of citizens; employment; and the stability and predictability of the economy. PT does not support a general cut in working time or union demands for minimum working hours. Further, it believes that result-based merit pay is not a matter for the negotiating table, as it should serve as a tool for managing companies.

The Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) is aiming for a moderate agreement, as this would best guarantee the operational preconditions of the national economy and a stable economic development. According to KT's labour market manager, Jouni Ekuri, a moderate incomes policy agreement would be the best option for the municipal employers, whose potential to employ crucially depends on how the national economy is functioning in general. The municipalities will need to hire more workers in the near future, and Mr Ekuri believes that the municipal sector may face an unstable situation if the incomes policy agreement can not secure the steady development of municipal finances.

Commentary

The social partners have started preparations for the next incomes policy round. Concluding an agreement may prove more difficult than for many years. The high public sector wage demands, which would require a separate programme, could add fuel to other sectors' wage demands, which would make the negotiations very problematic. In terms of qualitative issues, the unions' demands on extending the sabbatical leave scheme and introducing minimum working hours are making the preparations complicated.

The economic recession is known clearly and, if employment is to be the goal, the unions' demands will quite certainly be on the moderate side. The central organisations are calling for an extensive incomes policy agreement and want their member unions to be closely involved in its preparation. The central social partner organisations and the government have committed themselves to concluding a new agreement. For the whole national economy, this could be a desirable solution at a time of recession. (Juha Hietanen, Ministry of Labour)