2003 Annual Review for Finland

A new centre-left government led by Prime Minister Anneli Jäätteenmäki (Centre Party) subsequently took office in the form of a three-party coalition, comprising ministers from the Centre Party, the SDP, and the Swedish People's Party. It replaced the former 'rainbow' coalition of left- and right-wing parties.

The new government was appointed on 17 April, with Ms Jäätteenmäki becoming the first female Prime Minister of Finland. However, soon after the appointment of the new government she was accused of having used illegal material (confidential Foreign Ministry documents on policy towards Iraq) in the parliamentary campaign and the allegations led to a loss of confidence, especially on the part of the SDP and finally even within her own party. Ms Jäätteenmäki eventually had to leave the government in June, and her whole government formally left office. A new government was appointed on 24 June, with a composition almost identical to that of its short-lived predecessor. The previous Minister of Defence, Matti Vanhanen (Centre Party) became the new Prime Minister.

Local elections will take place on 24 October 2004.

Collective bargaining

A two-year central incomes policy agreement for 2003 and 2004 was negotiated during the autumn of 2002 and came into force on 1 February 2003 (FI0211102F and FI0212103F). In February and early March 2003, new collective agreements were signed for a number of sectors and employee groups which chose not to be part of the central incomes policy agreement. However, these groups are small (FI0303202N) and the central agreement covers over 90% of all Finnish employees.

Pay

The 2003-4 incomes policy agreement provides for wages and salaries to be increased in the spring of 2003 and again in the spring of 2004. Accordingly, on 1 March 2003, pay rose by EUR 0.17 per hour or EUR 23.39 per month, subject to a minimum rise of at least 1.8%. In addition to the general increase, wages and salaries were increased by a 'sectoral allowance' of 0.8%. The sectoral bargaining parties were allowed to agree that this allowance or a part of it could be transferred for the use of local bargaining parties at the level of company, office, municipality or place of business. The agreement also included an equality allowance, the cost effect of which was around 0.3% (see below under 'Equal opportunities and diversity issues' ).

From 1 March 2004, there will be a general increase of EUR 0 .16 per hour or EUR 26.72 per month, subject to an increase of at least 1.7%. In addition, there will again be a sectoral allowance, worth 0.5%.

The total cost effect of these pay increases was 2.9% for 2003 and will be 2.2% for 2004. The agreement also contains a pay indexation clause and an 'evaluation' clause. This means that pay must be increased by up to 0.4% if the rise in the consumer prices index from November 2002 to October 2003 exceeds 2.7%

Working time

It was decided in the incomes policy agreement that the possibility of increasing working time flexibility should be further examined. It is mentioned in the agreement that more flexibility could be reached by using long-term working time accounts or working time banks. Furthermore, it is stated that blocks of working time that are too short, which is a problem in jobs where working time is divided into several parts during the day, should be avoided. The minimum proposed length of a block of working time is four hours, except in some special cases.

It was agreed that a tripartite working group would start preparing a change in the Employment Contracts Act, so that the existing right to partial childcare leave - whereby parents of young children may reduce their working hours - could be widened. This reform took place in November 2003. Previously, employees were entitled to take partial childcare leave in order to care of a child up to the end of the first term (December) of the child's first school year. In the reformed scheme, the entitlement lasts until the child ends the second school year (in May or June).

Job security

A central goal of the trade unions in the talks over the 2003-4 incomes policy agreement was to obtain greater financial compensation for employees who are made redundant ( FI0209102F ). They were not successful, but instead it was agreed that an 'employment programme' for workers threatened by redundancy should in future be prepared in cooperation between employers, employees and public authorities. The aim is to ensure that redundant employees will be able to find a job quickly, either with the same or another employer. Employees should also be offered the chance to participate in the negotiations that concern them. In addition, the period of increased income-related unemployment benefit will be extended from 130 to 150 days for employees with 20 years’ employment. The incomes policy agreement states also states that the Act on Cooperation within Undertakings should be reformed and developed (see below under 'Employee participation' ).

Equal opportunities and diversity issues

The 2003-4 incomes policy agreement includes a special equality allowance, which the sectoral bargaining parties could use from the beginning of the 'pay period' starting on 1 March 2003 or the first pay period starting after this date. The amount of the allowance is defined as follows: the proportion of women (for example 50% = 0.50) among all the employees covered by the sectoral collective agreement in question is multiplied by a coefficient of 0.45; then the proportion of employees covered by the collective agreement who earn less than EUR 9.88 per hour or EUR 1,650 per month is multiplied by a coefficient of 0.15. The results of these two calculations is added together to determine the amount of the allowance.

It was also agreed in the central agreement that projects for promoting equal pay will be continued and strengthened. There is also a recommendation to examine gender effects in sectoral bargaining.

In the insurance sector, gender wage gaps and equality plans are systematically monitored by the social partners. In May 2003, the Insurance Employers’ Association ( Vakuutusalan Työnantajayhdistys ) and the Union of Insurance Employees in Finland ( Vakuutusväen Liitto , VvL) published their third joint report on gender equality, which found that female clerical employees’ monthly wages were 25% lower on average than those of their male colleagues in the sector ( FI0306201N ).

Training and skills development

The central agreement for 2003-4 includes annexes on the development of working life and the maintenance and development of knowledge and competences. These include measures relating to adult training programmes, and resources for funding a programme to raise the level of knowledge among adult employees were agreed for 2003. Some 10,000 people a year will be involved in such programmes from the beginning of 2004. Further, the basic level of adult training benefit will be increased from EUR 440 to EUR 500 per month. Vocational training will be made more effective, learning at work will be developed on a tripartite basis and adult training will be covered by extra financing.

Legislative developments

Several legislative reforms concerning the labour market came into force in 2003. A new Occupational Safety Act came into force on 1 January (FI0303203F). According to the Act, employers are obliged to apply safety management methods in all operations, including planning and organising work. Employers are responsible for matching human resources with the volume of work, as well as arranging monitoring of workloads and the way that these relate to employees' capacity. They also need to take action to prevent harassment at the workplace. The new legislation seeks to address persistent safety problems in areas such as work-related accidents.

There were also legislative changes relating to job security. The system of compensation in the case of redundancy (FI0311203T) expired on 1 January 2003. The same amount of money is now paid to the employee as an increase in unemployment benefit if the dismissal has taken place due to economic or production-related reasons and if the employee has belonged to an unemployment insurance fund for at least five years or has been working in the job for at least 20 years.

There were also changes in a range of laws relating to the balance between family life and working life. In addition to the partial childcare leave mentioned above (under working time), there were also improvements to leave for family reasons, giving the father 12 more days of leave, under certain conditions.

Amendments were made to legislation concerning early retirement. The lower age limit for eligibility for a part-time pension was reduced to 58 for those who were born in 1947 or later. For this group, receipt of a part-time pension reduces the subsequent old-age pension, because the acccrual rate for the difference between full-time and part-time work is 0.75% instead of 1.5%. These changes do not apply to those born in 1946 or earlier. Further, people born in 1944 or later will have no longer have an individual right to an early retirement pension. On the other hand, in the new legislation the criteria for disability pensions emphasise to a greater extent than before occupational factors when evaluating the disability of those aged 60 or over. Those born in 1950 or later are no longer eligible for an unemployment pension, as this has been replaced by improvements to unemployment benefit as well as by the right to an early old-age pension.

Legislation providing a right to sabbatical leave was continued for five years. It is possible to take sabbatical leave once every five years, and the minimum requirement is overall employment service of at least 10 years before taking the leave and at least 12 months’ employment in the same job (with the same employer). Enhanced benefit is paid during sabbatical leave for those who have at least 25 years' service.

In June 2003, a working group set up by the Ministry of Labour issued a proposal for new legislation defining and limiting employers’ rights to use drug tests and video surveillance and to read employees' e-mails (FI0307203F). The proposed new rules are intended to complete a law on workplace privacy which was adopted in 2001.

The organisation and role of the social partners

The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) and the Employers’ Federation of Service Industries (Palvelutyönantajat, PT) announced in mid-September 2003 that they had launched a joint project to study the possibilities of merging (FI0310201N). According to the timetable, the new organisation will start operations at the beginning of 2005.

Six public sector trade unions launched a merger process in spring 2003, with the aim that the new merged organisation should be in operation at the beginning of 2006 (FI0402201N). The unions involved are: the Trade Union for the Municipal Sector (Kunta-alan ammattiliitto, KTV); the Finnish National Union of State Employees and Special Services (Valtion ja erityispalvelujen ammattiliitto, VAL); the Organisation of State Employees (Valtion yhteisjärjestö, VTY); the Finnish Customs Officers' Union (Tulliliitto); the Finnish Prison Officers' Union (Vankilavirkailijoiden liitto); and the Coastguard Union (Merivartioliitto). All six unions are members of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK). They have a joint membership of about 250,000, so the new organisation will be one of the largest unions in Finland. The largest of the merging unions is KTV, which has over 200,000 members, mainly health and social service workers, with almost 73% of all members being women. This means that membership of the new organisation will be female-dominated.

According to a study published in February 2003 (FI0302204F), the total number of members of Finnish trade unions increased by 18,000 over 1994-2001, but the number of potential members rose considerably more, by 161,000, leading to a fall in union density of 7.3 percentage points (from 78.5% to 71.2%). The fall in density was more marked among men than among women. The reasons behind this decline in union density include factors related to the business cycle and changes in the structure of the labour force.

Industrial action

On 12 December, the three trade union confederations - SAK, the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and and the Confederation of Unions for Academic Professionals (AKAVA) - organised a joint day of action to express their concerns about large-scale redundancies that had recently taken place in Finnish companies. (FI0312203F) The action included 15-minute work stoppages, street events and the collection of signatures on an appeal to the government and employers.

A one-day strike also hit the paper industry in December in protest against employers' plans for job cuts. The strike affected about 28,000 employees at 20 pulp mills and 40 paper mills. Finland's paper manufacturers plan to eliminate about 2,000 jobs in the pulp and paper field - 5% of the total.

March and April saw industrial action on both the employees’ and employers’ side prior to the conclusion of new collective agreements for the food industry, cargo and passenger ships operating in foreign traffic, and forestry experts (FI0305201N). On 10 June, there was a strike at the Finnair airline. The longest strike of 2003 took place among nurses on the island of Åland, lasting for three and a half months, from 2 June to 22 September. As a result, the nurses’ monthly pay was increased by EUR 86.

Employee participation

The central incomes policy agreement for 2003-4 provides for the start of negotiations over a reform of the Act on Cooperation within Undertakings (FI0309203T), which lays down rules for the information process and negotiations between employers and employees, notably in situations when staff cuts are planned. The Act is widely thought not to be working as planned and has been criticised by both employers and trade unions. Reform of the Act is included in the present government's programme, and in 2003 the Ministry of Labour established a committee to prepare this reform. The work of this committee will also take into account the changes required by the EU information and consultation Directive (2002/14/EC) (EU0204207F).

Stress at work

The government that left office in 2003 had established a special programme to improve 'wellbeing at work', and the new government is continuing this work. The new Occupational Safety Act that came into force at the beginning of 2003 (see above under Legislative developments) includes several measures to decrease stress at work. For instance, all workplaces must now draw up a risk analysis on stress and other psychological factors causing health problems.

A National Programme on Older Workers ran from 1988 to 2002. The programme, directed by the Ministry of Social Affairs and Health, included a reform of working life structures and legislation as well as various surveys, training and pilot projects. One of its aims was to promote active debate on the issue of ageing. A new programme, entitled Veto, is continuing this work. This began its work in 2003 and will continue until 2007. Veto aims to enhance wellbeing at work and extend working life, aiming to maintain and promote the attractiveness of work and working life. The practical issues are maintenance and promotion of individual's ability to work, prevention of marginalisation from working life, prevention of premature incapacity to work and improvement of the opportunities to return to work.

According to a survey carried out in 2003 by the Finnish Institute for Occupational Health and Safety, work is not as psychologically stressful as before. Work-related stress has decreased, especially among men. The proportion of men stating that they feel stress at work sometimes or very often has declined from 49% in 1997 to 43% in 2000 and 38% in 2003. In the 2003 survey, 13% of respondents experienced symptoms of stress, compared with 16% in 1997. However, women tend to suffer stress more often than men. This positive development is thought to be due to the efforts to develop 'working communities' made by various projects aimed at improving wellbeing at work.

However, considerable differences remain between the various branches of the economy. Wellbeing at work has increased most significantly in the public sector, which might be the result of structural and organisational reforms, in addition the recruitment of new employees, which might have eased the burden. Negative change has taken place in agriculture, particularly among farmers. The greatest amount of stress continues to be experienced in the social and healthcare sector and in education. The effect of computer technology has been complicated, as it has eased the workload of some, but increased the stress on older workers in particular, as they often find it more difficult to learn to use the technology

Another study has found that that over half of disability pensions awarded to those under the age of 55 result from poor mental health. Mental health issues are becoming an increasingly serious occupational health concern in Finland.

Undeclared work

Undeclared work is not a major problem in Finland compared with many other EU countries. It is mainly concentrated in the hotel and restaurant sector, the construction industry and private households. Estimations of the level of undeclared work across the whole economy vary, but it is thought to account for around 4.5% of GDP. According to a 2002 study by Pekka Lith, the level of undeclared work equals on average the annual work of 17,000-23,000 people (9%-16 % of sectoral production) in the construction sector, and of 18,000 people (21% of sectoral output) in restaurants.

There is continuous cooperation between the various authorities in order to prevent undeclared work, to inform employers about their duties and to convert illegal work into legal work by making it subject to social security and taxation. Special projects are in place to analyse the main problems relating to taxation, legislation and official practices that tend to promote illegal work.

New forms of work

Temporary agency work has been expanding rapidly in Finland in recent years. This has manifested itself through an increase in the number agency workers and the number of user firms. The use of temporary agency work is concentrated in services, clerical work and industry (including transport). The service sector is by far the biggest user of temporary agency work: over 60% of all temporary agency workers are employed in this sector. Temporary agency employment relationships are based predominantly on fixed-term contracts. Agency work is regulated by a general agreement between the social partners, dating from 1997, as well as by the Employment Contracts Act that came into force in June 2001. In the Act, the employment conditions of temporary agency workers are safeguarded in that they are to be defined on the same basis as those for workers on open-ended contracts in the user enterprise. The law defines one exception: if a special collective agreement exists for temporary agency workers, then the temporary agency is obliged to apply this collective agreement.

Turning to other forms of 'atypical' work, fixed-term work is widespread among young people, whereas part-time work is widespread among women - see table 2 below. A total of 17.6% of young female workers have jobs that are both part time and fixed term. The same figure for the whole labour force is only 4%.