Unions defend local government job security

A long-running debate in Finland has centred on the reform of local government. The current municipality system means a large number of local authorities have autonomous control in areas of health, education and social care, and the right to levy taxes. A restructuring process is currently under way to simplify the system by cutting the number of municipalities. In June, trade unions stressed the importance of the government’s commitment to safeguarding local government jobs.

Background

The status of municipal administration as the local government in Finland has been guaranteed in its constitution. The municipalities represent the local level of administration in the country and act as fundamental, self-governing administrative units.

Municipalities have control in a large number of areas, such as the provision of health and social care, education and public transport, so the overall economic importance of the municipal sector is considerable. Municipality spending as a share of GDP is around 18% and municipalities employ roughly 20% of the total Finnish workforce.

The municipalities provide basic public services for their inhabitants. They may provide statutory services themselves, either through co-operation in the form of joint authorities made up of a number of municipalities or by outsourcing services to other local government or private sector operators.

The Finnish government launched a local government restructuring project in 2005. The main goal of the project was to create bigger municipalities or enhanced co-operation between municipalities. The project aimed to achieve economies of scale and competency in the provision of services by Finland’s municipalities. In practice, the project has meant a significant decrease in the number of municipalities by means of mergers, but without downsizing.

The programme of the current government, led by Prime Minister Jyrki Katainen, offers strong job security guarantees to municipal employees who will be affected by the broad and radical municipal reform under way.

A recent study, made by Keva, the former Local Government Pensions Institution, revealed that about half of the municipalities and joint municipal authorities had either already replaced some of their outsourced services with their own service provision or were considering doing so. The most common reason has been cost and the quality of services.

Job security

Job security regulations negotiated by social partners in the local government sector mean that employees are protected against the termination of their employment following an operational restructuring. This five-year protection deal was agreed in 2008 and is due to end in 2013.

Markku Jalonen, Director of local government employers’ association KT, has recently criticised the job security rule, saying it restricts the reform of municipal structures, is expensive and inflexible. His views have been interpreted as meaning that employers are in favour of cutting local government staffing levels.

Trade unions representing municipal employees do not agree with Jalonen’s opinions. They say the five-year job security rule makes it easier to implement and usher in the demanding reform process. They believe it helps municipalities to cope with the challenges raised by the expected retirement of thousands of municipal employees in the near future. In a joint statement the municipal organisations said:

The job security rule increases trust and motivates personnel to become more involved in developing municipal services. Municipalities are not challenged by excess personnel but by difficulties in finding and employing qualified labour adequately.

Trade unions also point out that the number of employees retiring will increase steeply over the next few years and will peak between 2013 and 2017. Almost 150,000 municipal employees – more than a third of the current over 430,000 municipal employees – are expected to retire by 2020.

Commentary

The economic situation has long been poor in many Finnish municipalities. Mergers and enhanced co-operation between municipalities has been a way to make savings. A special job security model has been a key element in winning the commitment of employees and trade unions in the local government sector restructuring process.

Of course, the guarantee that restructuring does not mean staff cutbacks has also meant that there have been overlaps in duties, and this has brought a lower level of savings than the employers’ association is trying to achieve by combining municipal operations.

However, the Finnish local government sector is facing an intense phase of retirement, so the need for a skilful and experienced workforce is unquestioned.

Pertti Jokivuori, University of Jyväskylä