Information for this page was compiled during December 2023 and January 2024. As Member States are currently transposing the EU minimum wage directive, national legislation can be subject to change. Eurofound intends to update these profiles in early 2025. Users are invited to contact Eurofound if they are aware of changes.
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In Finland, minimum wages are negotiated in collective bargaining rounds, which is regulated through the Collective Agreements Act (Työehtopsopimuslaki) 436/1946, the Act on Mediation in Labour Disputes (Laki työriitojen sovittelusta) 420/1962 and the Act on the Labour Court (Laki oikeudenkäynnistä työtuomioistuimessa) 646/1974. The latest is designed for settling of disputes in relation to collective agreements.
Collective agreements can be made generally binding (yleissitova työehtosopimus), by application of the following mechanism. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of collective agreements by considering the number of employees represented by both employers’ organisations and trade unions in the sector. In general, a collective agreement becomes generally binding when more than half of a sector’s employees work in the companies organised by the negotiating employer organisation. An employer must comply with the provisions of at least a generally binding collective agreement, as stipulated in the Employment Contracts Act (Työsopimuslaki) 55/2001, if there is one applicable to the employer’s sector. When an employer is bound to apply a collective agreement, they must do so towards all their employees, irrespective of them being members of a signatory trade union. If a sector is neither covered by a generally binding collective agreement nor by a sectoral collective agreement, an employee has the right to a salary considered usual and reasonable within the sector, as according to the Employment Contracts Act.
The general degree of collective bargaining coverage in Finland is high, much due to the general applicability mechanism. According to the latest study by Ahtiainen (2019), based on statistics from 2017, coverage was 88.8%. In the private sector, 65.2% of employees work in organised companies. Due to general applicability of collective agreements, coverage increases to 83.8% of all employees in the private sector. In the public sector all employees are covered by collective agreements.
Gaps in bargaining coverage can be found between sectors and ranged between 57% to 98% on a general sectoral level in the 2017/2018 collective agreements, when excluding the general applicability mechanism. Significant gaps can however be found within sectors that include employee groups with especially low-paid workers, such as the healthcare and social services sector, other social and personal services, and other business services such as real estate services.
Some low-paid segments have high bargaining coverage even when a coverage gap is considered, such as accommodation and food services (around 82-98%), and postal and delivery services (around 74-100%).
Gaps in bargaining coverage can be found in sectors with substantial shares of self-employed and small companies, such as the road transport sector, and where seasonal work is prevalent, such as the agriculture sector and other rural industries (Ahtiainen, 2019).
Wage setting is carried out by sectoral trade unions and employers’ organisations. The export driven industrial sector, with the technology industry in the lead, begins the collective bargaining and wage negotiation rounds. In praxis, wages increases in these sectors then set a minimum for the rest of the labour market. However, social partners in other sectors can negotiate different wage increases than the export driven industrial sector. Despite the industrial minima not being compulsory, it is common that social partners in other sectors set similar increase rates. A setting of lower or higher wage increase rates is however also possible. Employees with low wages are to a large degree organised by trade unions under the peak-level Central Organisation of Finnish Trade Unions (SAK). Examples of such trade unions are Service Union United (PAM), organising private sector service employees, and Trade Union for the Public and Welfare Sectors (JHL), organising social welfare professionals. Several low-income occupations are also organised by the Industrial Union, such as footwear and leatherwork, agriculture, and delivery personnel. Employers’ organisations representing employers in the same sectors are Real Estate Employers, The Finnish Hospitality Association (MaRa), the Finnish Association of Private Care Providers (HALI), and Technology Industries in Finland, to mention a few. These and many more are organised under the peak-level Confederation of Finnish Industries (EK).
Collective bargaining rounds begin while existing collective agreements are still in force. If a new agreement has not been made before the existing collective agreement expires, a period of no agreement commences. The provisions of the former collective agreement still apply during negotiations. A new collective agreement is reached when both parties have come to an agreement on the full collective agreement text and signed the negotiation results (PAM, 2023).
The technology industry has in practice been setting a norm for wage increases since 2017/2018 (Kjellberg, 2023). Social partners representing generally lower income occupational groups have voiced concerns regarding the pattern bargaining system since it can uphold and increase wage disparity. Systems for increasing wages of specifically low-income groups do exist and are commonly used. In some sectors, occupations, or employee groups where wages are lagging behind the general trend or where wage gaps are significant, a specific wage increase (kuoppakorotus/matalapalkkaerä/naispalkkaerä) can be agreed upon by social partners, aimed at relevant groups of employees.
Collective bargaining agreements can also result in yearly top-ups (either in percentages or absolute numbers) and one-time payments in addition to the general wage increases in the sector. These are however not solely aimed at low-income occupations. A wage increase, top-up, or one-time payment in absolute numbers is often preferred by social partners in sectors with low-paid workers, as it is of more value to the low-income segment and prevents an increase in wage disparity.
Social partners can also carry out negotiations at local level (paikallinen erä). This can be done instead of collectively agreed wage increases, or on top of them, depending on the flexibility allowed to local wage negotiation by the applicable national agreement. For example, in the public sector collective agreements, wage increases are dominated by the generally agreed increase, not the locally divided wage pots (Kauhanen, 2023).
The norm for the length of a collective agreement is two-years, but longer agreements can be (and have been) negotiated. In addition, wage increases can sometimes be negotiated only for the first year of the collective agreement. In such cases, the inclusion of a clause makes the second year an option contract (optiovuosi), meaning that the agreement can be unvalidated if a new agreement on minimum wages and wage increases for the second year has not been reached before a predetermined date. Thus, in addition to collective bargaining rounds, the social partners engage in so-called wage-rounds, which are additional bargaining rounds.
For trade unions, sectoral economic forecasts as well as sectoral profit margins in the preceding year matter in collective bargaining, as it indicates the employers’ payment capacity. In times of financial turmoil, trade unions under SAK have sought coordinated collective bargaining solutions in order to uphold the purchasing power of wage earners. Likewise, it is the employer’s sides interest too, since consumers in domestic markets matter for the continuity of many industries.
Collective agreements related to low-paid workers do contain subminimum rates for certain categories of workers. Examples can be found in the collective agreements covering the facilities support sector, the commerce sector, tourism, restaurant and leisure industry, and private sector social services.
Subminima can, for example, be based on age, training and previous experience level, work tasks, or employment of long-term unemployed people on wage subsidy. For instance, trainees receive 80%-90% of a regular minimum wage, whilst pupils and under 18-25-year-olds, between 70 and 80%.
The definition of basic pay is not defined by law but describes a task-specific minimum pay and excluding personal bonuses, supplements, and benefits. Wages and salaries can be paid on a monthly, weekly, or hourly basis. In addition to the basic pay, an employee can receive supplements, meaning compensation for overtime, work done in the evenings, weekends, or at night, for example. Employees may also receive payment in the form of so-called fringe benefits (luontoisetu), such as food, a mobile phone, sports benefits, housing, or a car. Fringe benefits are considered as part of an employee’s salary. Deductions made from wages are income tax, pension insurance contribution, unemployment insurance contribution, and in some cases health insurance daily allowance contribution, and if agreed upon with employer, trade union membership fee for union members (SAK, 2021). Holiday allowances are always counted towards the wage, independent of an employee’s contract form or duration of employment (Digital and Population Data Services Agency, 2022).
Piece rate wages exist in some occupations, such as sales and legal services. There are however no legal provisions of a minimum rate for piece wages. Piece wages can be included as a part of one's salary, or make up the full salary, in an employment contract. Piece wages can also be regulated in collective agreements, and the remuneration for piece rate work depends – in this case – on the provisions of the applicable collective agreement. According to the Employment Contract Act (Chapter 2, § 10), in the absence of a collective agreement and if the employer and the employee have not agreed on the remuneration to be paid for the work, ‘the employee must be paid a customary and reasonable salary for the work performed’. This, being a general rule, applies also to piece rate work.
There are no national reports on minimum wages or minimum wage setting available. Regular reporting of wages and wage setting is done by peak-level social partner organisations, such as Central Organisation of Finnish Trade Unions (SAK), Confederation of Finnish Industries (EK) and the Local Government and County Employers (KT), as well as individual trade unions and the media. However, their gathered statistics focus mainly on median wages and wage increases in different sectors and occupations, not specifically on minimum wages.
Finland’s national statistical institute Statistics Finland publishes sector specific statistics of the earning structure of the Finnish labour force. These statistics describe hourly and monthly earnings, as well as formation and distribution of wages and salaries in all sectors. Information on minimum wages is however not available.