Finnish response to the EU Employment Guidelines

Finland published its National Action Plan on employment, in response to the EU Employment Guidelines, in April 1998. The tight time constraints for preparing the Plan aroused criticism from the social partners, who were involved in its preparation. Despite this, the trade unions seem to be quite satisfied with the results. Employers would have stressed more the effectiveness of the measures than quantitative goals.

Along with all the other EU Member States, Finland has drawn up a National Action Plan (NAP) on employment in response to the EU Guidelines for Member States' employment policies 1998, following the Luxembourg"Employment Summit" in November 1997 (EU9711168F). The plans are to be submitted to the Cardiff European Council in June 1998.

The context of the Finnish NAP is outlined in the table below, which sets out the key challenges for the Finnish labour market in the near future and the demands they make on labour market policy, as perceived by the Ministry of Labour.

The Finnish labour market - problems and possible solutions
Labour market and employment problems Ways of improving employment
Low labour demand • Sustaining the stability of structurally balanced economic growth and reinforcing its positive impact on employment. • Increasing labour demand by, for instance, coordinating economic, labour and business policies.
Increasing structural problems of unemployment and the threat of exclusion from the labour market Ageing of the work force • Directing labour market policy measures equally at women and men. • Improving the status of ageing workers in working life. • Developing the functioning of work organisations.
Labour bottlenecks • Improving the forecasting of labour market needs. • Training oriented to actual working life. • Improving public employment services, especially those aimed at employers.
Increasing regional differences in labour markets and employment • Regional labour strategies. • Regional and local partnerships.
Difficulties in remaining permanently in the labour market • Improving the quality and effectiveness of labour market policy.
Low proportion of active compared with passive measures • Labour market policy reform to activate measures and customers.

Source: Finnish NAP, Ministry of Labour.

Key points of the National Action Plan

The Finnish National Action Plan was published in April 1998 The key decisions and the measures requiring further preparation are set out below, under the four "pillars" of the Employment Guidelines.

Improving employability (pillar I)

The following measures have already been decided.

  • All job-seekers registering as unemployed are to be offered a new opportunity to return to the labour market, by providing them with an individual employability and job-seeking plan before they have been unemployed for six months. This system will be implemented gradually during 1998-9.
  • The right of every young unemployed person without a vocational skill to undergo basic vocational training is upheld. At the same time, the young people concerned are obliged to participate in such training in order to remain eligible for labour market support during unemployment.
  • The proportion of unemployed persons offered training and corresponding services will be kept at a minimum of 20% of unemployed job-seekers during 1999.
  • The number of persons beginning apprenticeship training will be increased gradually to approximately 20% of all the starter places available to young people in"post-comprehensive level" vocational training.
  • The targeted duration for attaining post-comprehensive qualifications will be raised to three years in line with the overall strategy for training and education policy.
  • A period of on-the-job training will be included in all qualifications in the next few years.

Finland has added a new element to the employability pillar - "securing the availability of labour". This means that:

  • an efficient system for analysing and monitoring recruitment problems will be prepared in cooperation with the social partners. Systems of predicting labour demand will be set up at regional Employment and Economic Development Centres; and
  • an action programme will be launched to expand training and research needed in the information industry and adjustment training will be arranged for sectors of that industry.

Promoting entrepreneurship (pillar II)

The following measure have already been decided.

  • Information and related services and advice offered to businesses and employers will be improved in connection with development of the business services offered by regional Employment and Economic Development Centres.
  • Rural and urban programmes launched by the Government will be implemented.
  • "Third-sector" (ie "social economy") projects are to be encouraged by, for example, developing new cooperative activities and labour market policy support measures to create jobs for long-term unemployed people, in particular.
  • Implementation and government and private funding will be secured in 1998-2000 for the PuunAika("Time for wood") campaign and the PuuSuomi("Wood Finland") action programme.
  • To reduce structural unemployment, various forms of labour taxation relief should continue, focusing on low-income workers, in order to build incentives to work. During spring 1998, the Government issued proposals - pertaining to the 1999 comprehensive incomes and economic policy settlement (FI9801145F) - for amending the legislation concerning income tax and charges. The relief will correspond to about 3.5% of the total paybill.
  • Finland is in favour of trials with lower value added tax rates in labour-intensive service sectors (EU9803195N). The Government will decide later whether it will participate and what service sectors should be included.

A number of other measures will have to be prepared for a government decision, as follows.

  • The various notifications needed when setting up a business are to be combined into a single basic notification and the corporate codes used by various authorities and the required financial statement data will be harmonised.
  • The payment of employer's contributions will be made easier and more flexible for small enterprises by harmonising terms and periods of payment.

Encouraging adaptability in businesses and among their employees (pillar III)

The following measures have already been decided.

  • In the income policy settlement for 1998-9 (FI9801145F), the social partners have agreed the following:
  • businesses and employees are to be provided with joint training concerning local collective agreements;
  • by the end of 2000, the social partners will carry out a study on local bargaining and on the duties and status of employees' representatives and changes thereto;
  • by October 31, 1998, the social partners will prepare a report on issues to be addressed when assessing workloads and on the opportunities for improving ways to monitor the well-being of personnel and its development, such as personnel accounting.
  • The number of projects in the "national working life development programme" (FI9707122F) will be increased to cover roughly 400 workplaces by the year 2000.
  • Working time policies will be developed in the Ministry of Labour working time working group and in another group formed by the social partners. Information is to be disseminated on good practice concerning flexible working hours.
  • A comprehensive overhaul of the Employment Contracts Act, which covers employment relationships, will be prepared by a tripartite committee fi9706116F.
  • In 1998, the Ministry of Labour will initiate a study on non-standard work and the drafting of new legal provisions in this area.
  • The social partners will continue preparatory work on the basis of proposals made in the personnel training development report, and implementation of the proposals outlined in the strategy for lifelong learning.
  • An operating model based on a lifelong learning strategy will be developed and set up on the basis of existing systems by 2000.

Finland has added a new element to the adaptability pillar - "helping older workers to remain in work":

  • Within the "national programme for older workers" (FI9803155N), an extensive information campaign will be undertaken concerning older workers' strengths on the labour market and the economic impact of their continuing ability to work and improvements in their employment situation.
  • As signalled in the current incomes policy agreement (FI9801145F) a special item of legislation will be enacted to make part-time work easier for those who want to retire on a part-time pension. It will be in force until the end of 2000, and will also lower the minimum age for entitlement to a part-time pension to 56 years. The act will come into force on 1 July 1998.
  • On a tripartite basis, changes will be prepared in the law on unemployment and disability pensions that make retirement on such pensions more difficult and also increase employers' willingness to engage older workers.

Strengthening policies for equal opportunities (pillar IV)

The following measures have already been decided.

  • In 1998, a project will be implemented in the public administration to "create models for Government proposals, budget control and information control, with the aim of implementing equality in working life using an integrated approach".
  • Women entrepreneurs are to be supported and encouraged by further developing training services and extending the availability of a special loan scheme for them in 1998 and 1999.
  • Work is continuing on developing methods to assess the difficulty of work assignments in order to implement the equal pay for equal work principle.
  • In 1998, the Ministry of Labour and the social partners will initiate the "equality in the work community" project.
  • People with disabilities are to be provided with support in entering working life following training and rehabilitation by expanding the selection of help available to them when they are in the process of entering the job market.
  • Support is being provided for the dissemination of information on the subsidies available to disabled entrepreneurs. A study on disabled people's opportunities as entrepreneurs will be carried out in 1998.

A number of other measures will have to be prepared for a government decision, as follows.

  • In spring 1998, a Government proposal prepared through tripartite cooperation will be placed before Parliament. The objective is to increase the flexibility of rights related to parental leave and to give workers the opportunity of temporary absence from work when their presence is needed elsewhere for some temporary and compelling reason.
  • Ways to distribute more evenly among all employers the expenses they incur through various leaves related to childbirth and childcare, will be investigated and a report completed in cooperation with the social partners by 31 May 1998.
  • People with disabilities are to be provided with the opportunity to set their disability pension benefits aside for a given period while they "test their wings" in working life. During such periods, they would be paid an incentive subsidy which is lower than the pension.

Consultations with the social partners and their reactions

In January 1998, the Ministry of Labour appointed a working group to prepare the NAP. It was chaired by the general director of the Ministry and the members were senior officials from six other ministries. The group was instructed to work in close cooperation with the central labour market organisations. The Ministry asked the social partners to nominate liaison persons for this cooperation, and the liaison persons were invited to meetings with the working group six times over February and March. The social partners had the opportunity to comment on the draft texts which had been prepared in the various ministries.

Employers' views

A few changes in the formulations of targets and the text were suggested by the employer's liaison persons - representing the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT) and the Employers' Confederation of Service Industries (Palvelutyönantajat, PT) - but they were not adopted, either because the matters were already decided upon, or because they were considered to differ too much from the EU guidelines. On the other hand, two national additions were made to the Finnish guidelines, namely "securing the availability of labour" under pillar I and "helping older workers to remain in work" under pillar III. These were based on earlier tripartite discussions on the main labour market problems in Finland during the remainder of the 1990s. For the employers, a large majority of the measures and programmes included in the NAP had already been decided upon either by the Government in the state Budget for 1998, or in the previous employment policy programme. Furthermore, in the newly signed central income policy agreement for 1999-2001 the central labour market organisations had already set up joint working groups to prepare certain employment and training programmes.

Trade unions' views

For the trade unions - the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) and the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) - the NAP presents the main goals and basic strategy of both macroeconomic and employment policy and attempts to establish some links between them, though not very clear ones. Nevertheless, these links should always be taken into consideration. The current central incomes policy agreement contains a long agenda for the development of employment conditions and the working environment. The preparation and negotiation processes under this agreement mainly concern the same issues as the central content of the third pillar of the NAP. In connection with the NAP, it was not agreed to start any new negotiation or preparation processes between the labour market organisations.

Concerning the NAP's targets on "access to training" and "lifelong learning", the unions are seeking a reform of unemployment insurance by widening the use of earnings-related unemployment benefit as an active support measure (a so-called education and training insurance) for wage-earners, both employed and unemployed, to maintain and develop their skills, qualifications and capacities to work, and to offer unemployed people opportunities to substitute for workers undergoing training. Although the Government has committed itself to this reform, there is no mention of it in the NAP. According to the unions, another weakness is that the wide-ranging nature of the NAP and its numerous details may make it a little difficult to distinguish what is more and what is less important in the Plan.

Reactions

Some criticism has been voiced by the social partners due to the tight time constraints of preparing the NAP document. The employers' organisations, TT and PT, state that the discussions on the text can hardly be called "negotiations" or "cooperation". However, the union confederations, SAK, AKAVA and STTK, state that the opportunity to influence the NAP process was a satisfactory one, which led to some extent to outcomes in line with union opinions.

One of the changes suggested by TT - which was not adopted, although seconded by AKAVA - is perhaps of more general interest. The EU Guidelines, notably under the "employability" pillar, define goals in terms of the numbers of unemployed people to be offered various "active" measures. According to TT, this is just one example of old-fashioned, top-down, management-by-objectives thinking which it sees as typical of the Guidelines. It is essential, says TT, that quantitative targets - if they are used at all - are defined in terms of the correct variables. The volumes of various types of measures or the numbers of unemployed people being placed in the programmes are not good goals. Instead, targets should be set for the numbers of successful placements, on their own merits, in the open labour market. Defining targets for this kind of results would be possible, although it would require undertaking much more thorough research than is conducted at present.

Commentary

The preparation of the Finnish NAP proceeded on a tripartite basis. Generally, the NAP follows the Government's policy guidelines, while the social partners will try to agree on various measures within the working groups which were established by the recent central incomes policy agreement. The best outcome would be that the NAP and the results of these groups' work can complement each other and cut unemployment successfully. (Juha Hietanen, Ministry of Labour)

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