Trade unions worried about EU enlargement

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At a seminar held in February 2002, Finnish trade unions expressed their concerns about the forthcoming enlargement of the EU to the east. They are worried that tax competition may be caused by the different taxation practice in the candidate countries, which might be a threat to the welfare state. The unions also fear that the EU decision-making process may be paralysed. For their part, the employers do not see any major threats in connection with enlargement.

The forthcoming eastward enlargement of the European Union is giving rise to a number of concerns among Finnish trade unions, which were voiced in February 2002 at a joint seminar organised by the Finnish Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) and the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK).

In April 2001, all the top-level social partner organisations had taken a stand on the enlargement issue in a joint statement demanding transition periods for the introduction of free movement of labour within the enlarged EU. At the same time, they called for Finnish terms of employment to be applied to employees from new Member States who work in Finland, and stressed that the opening of borders should not mean the importation of cheap labour (FI0105185N).

Disadvantageous tax competition may increase

At the seminar, the chair of the SAK council, Tuire Santamäki-Vuori, stated that it is realistic to acknowledge that, while EU enlargement is necessary and reasonable for political and economic reasons, it has associated problems that Finland must be prepared for. 'Disadvantageous tax competition is one of [these problems]. In the discussion on the future of the EU, measures should be considered in order to prevent tax competition which would erode the taxation basis of welfare services. Establishment of basic taxation and minimum company taxation by means of majority decisions looks more necessary than before,' she said.

Ms Santamäki-Vuori also called for the incoming Member States to develop in the direction of welfare states: 'Membership of the Union will no doubt advance the development of new member countries in the direction of the European welfare model. The change will, however, take time and require considerable improvements in those countries' labour, social and taxation legislation.' As to Finland's role, she stated: 'The Finnish labour movement must be prepared to support the unions [in the new Member States] even more than at present in order to raise membership levels. It would also be desirable that the employers could - through training, for instance - help the newcomers to embrace good labour market practices.'

Reform of decision-making

The chair of AKAVA, Risto Piekka, stated at the seminar that wage earners must support the enlargement of EU towards the east: 'It will guarantee the political and economical stability of our neighbouring areas and cause the candidate countries to undergo large-scale societal renovation, because the accession requirements have to be fulfilled.' However, he was worried about the future functioning of the EU decision-making system. 'In any event, the enlargement will be followed by a 'paralysis' of EU decision-making, if this is not radically reformed. One of the most important reforms would be decision-making between the member countries by means of majority decisions instead of unanimity. Only in matters like the constitution should unanimity be retained as an exception,' he said.

According to Mr Piekka, it is especially important that the enlargement should be accompanied by a move towards majority decision-making in issues like working life, equal opportunities, taxation and environmental protection. 'The common labour and internal markets, the implementation of the euro, the threat of distortions of competition and, for instance, the tax havens that can function within the EU's own territory, will require Union decisions in these fields in the future too.'

Minimum standards important

According to the chair of STTK, Mikko Mäenpää, enlargement will affect the development of labour market models and Nordic welfare policy. He considered that it would be good for the EU if current development projects concerning economic, tax and social policy could be finalised before accepting new members. He gave special importance to the creation of minimum standards for terms of employment in the EU.

Concerning industrial relations, Mr Mäenpää stated that basing these on agreement and open dialogue would provide good support for achieving the goals of both employees and employers in the enlarged EU. The EU's 'development goals for working life were also based on this', he noted.

In Mr Mäenpää's view, it would be good for Finland if there were new EU Member States around the Baltic Sea. According to him, this must influence the traditional goals and content of Nordic cooperation: 'The Nordic unions must support the development of such labour market models in the Baltic area which give the wage earners good opportunities for participation and influence.'

Employers do not see enlargement as problematic

The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) expressed its positive attitude towards enlargement in April 2001. TT's managing director, Johannes Koroma, considered that enlargement would strengthen the position of the EU in the world economy and politics, and would open up new opportunities for Finland too. In his view, the addition of new Member States would have a positive influence on the economic growth of the Union and - through structural changes - also on world trade, investment activity, competitiveness and employment. As to taxation, he stated that company taxation must be internationally competitive, and also predictable, so that employment and company head offices would be encouraged to stay in Finland. Finland must be a competitive location for business in future (FI0201142N).

The Employers' Confederation of Service Industries (Palvelutyönantajat, PT) believes that EU enlargement will increase price competition in the near future. According to its managing director, Arto Ojala, the companies must be prepared for this situation and develop better business processes than at present.

Commentary

The enlargement of the EU towards the east is an important issue of debate in Finland, though the issue has not been politicised as it has in Austria or Ireland. The Finnish parliament has already accepted the Nice Treaty agreed in December 2000 (EU0012288F) and, with it, enlargement. Recently, debate on issues related to enlargement and the consequences for Finland has been initiated by the executives of major companies, who consider Finnish taxation to be too high. Now the labour movement has started a defence of the welfare state in connection with taxation policy and EU enlargement. The unions' position was given support by the Finnish President, Tarja Halonen, on the occasion of the opening of parliament at the beginning of February 2002. In her speech, the President gave a reminder of what had been achieved with tax revenues in the fields of education and healthcare, for example.

Trade unions are now bringing to the fore the opinions of Finnish employees. Many, fearing for their jobs and income, have doubts about enlargement. Enlargement will mean big challenges, to which the social partners will have to try and adapt. In order to allay fears that a lower quality of working life will be imported to Finland, there is need for more time, both for the reform of the Finnish welfare model and for development of the working life in the candidate countries. (Juha Hietanen, Ministry of Labour)