Future of tripartite bargaining called into question

The Managing Director of the Finnish Business and Policy Forum, [Sixten Korkman](http://www.hs.fi/haku/?haku=Sixten Korkman), has published a report assessing tripartite cooperation. He states that, instead of an overall national pay increase, companies should have more leeway to agree on wages at individual workplaces, and even on a personal level with individual employees. However, this proposal has been sharply criticised by the trade unions. All three trade union confederations have given their reaction to the report.

On 23 March 2007, the Finnish Business and Policy Forum (Elinkeinoelämän Valtuuskunta, EVA) published a report written by their Managing Director, Sixten Korkman, entitled Do incomes policies in Finland have a future? (in Finnish, 340Kb PDF) (report summary (in English, 18.5Kb PDF)). In the report, Mr Korkman emphasises that the views expressed are his own and that the board of EVA is not involved. The study assesses collective bargaining between the social partners as well as incomes policies and tripartite agreements. It concludes that, instead of an overall national pay increase, companies should have more leeway to agree on wages at individual workplaces, and even on a personal level with individual employees. According to Mr Korkman, the system of tripartite collective agreements could become obsolete. He envisages that the role of labour market organisations would be mainly to agree on the basic rules for local negotiations. The report has immediately become a topic for debate among the social partners.

Performance-based wages

Mr Korkman considers that the current incomes policy system underlines wage moderation, even though wages and salaries should be more than just an expense for the employer. He believes that wages should serve as an incentive for employees. This means that working harder or more efficiently should allow an employee to earn more money. ‘This requires a readiness for a possibly greater number of variations in income,’ Mr Korkman states. He feels that, while national incomes agreements have focused on the needs of the Finnish economy, the needs of companies have not been considered. In his view, wages should fluctuate, depending on which sectors have shortages of labour and which have a surplus. He also emphasises that the next government should be allowed to either reduce taxes or refrain from doing so regardless of the incomes agreements. In his opinion, political commitments to tax decisions based on collective agreements could excessively tie the government’s hands in financial policy decision making.

Agreements preferable to legislation

In addition to the criticism, Mr Korkman also praises the system of collective bargaining. He notes that in countries with strong labour movements, such as Finland, legislation on job security is not as strict as in countries with weak trade unions. In Finland, such issues are dealt with in collective bargaining: ‘Contract negotiations with organisations are more sensible than strict legislation.’ As he sees it, the collective bargaining system between trade unions and employers generally works well. Moreover, Mr Korkman commends the role that the unions play in maintaining industrial peace. However, he feels that the right to strike is currently too extensive. He is especially critical of the practice of solidarity strikes and the occasional illegal strikes, and suggests that the possibility of compulsory arbitration should be considered.

Trade union response

Mr Korkman’s vision has been met with sharp criticism from the trade union side. All three trade union confederations have responded to the report.

The President of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), Lauri Ihalainen, rejects the opinions put forward on the incomes policy agreements and tripartite system. According to Mr Ihalainen, the vision of EVA’s managing director is that pay differentials should be increased, employment security should be decreased and decision-making should be transferred to the company level where the negotiating position of employees is weaker. A leading economist of SAK, Pertti Parmanne, noted that, if collective negotiations take place entirely at company level, ensuring industrial peace would also be company-specific; such a situation may lead to more strike action. Mr Parmanne emphasises that the current collective agreements do not hinder company-level bargaining of bonuses and developments in relation to the payroll system.

The President of the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), Risto Piekka, stated that the tripartite system has been shown to be necessary, particularly with regard to the wide-ranging reforms that have taken place in working life. According to Mr Piekka, the Korkman report ignored the recent reforms and innovations achieved by the tripartite cooperation.

The President of the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK), Mikko Mäenpää, welcomes the discussion on the development of the tripartite system, but he does not concur with Mr Korkman’s criticism: ‘Quite the contrary. The future challenges, in particular the ageing population and the pressure of increased costs for the public economy due to this ageing demographic profile, demand better and more intensified cooperation between the social partners.’

Pertti Jokivuori, Statistics Finland