Outside labour dispute leads to strikes in paper mills

A long-running disagreement between the Finnish Paperworkers' Union and the forestry industry employers about the use of outside labour led in September 1997 to a strike of maintenance personnel at Nokia Paper Ltd, and later on to a series of support strikes. A last-minute agreement prevented the spread of the industrial action to all 27,000 members of the Paperworkers' Union. This article examines the background to the dispute and the solution.

A decision was recently made to change the collective agreement applicable to maintenance personnel employed by ABB Service and subcontracted to work at the Nokia Paper Ltd tissue paper factory. They were to be switched from the coverage of the paper industry collective agreement to the metalworking industry agreement, after a transition period. The maintenance personnel did not approve of the changes and went on strike on 4 September 1997. The situation became acute when ABB, a member of the metalworking employers' organisation, was not willing to negotiate over the dispute with the Paperworkers' Union. The entire Nokia factory went on strike in support of the maintenance workers and, with no negotiations in sight, the union decided to launch a series of support strikes. Finally, the union brought its most powerful weapon into play and threatened to call a strike involving all its 27,000 members. This would have affected many factories important to Finnish exports, and the dispute was thus about to become a national conflict.

Juhani Salonius, a national conciliator, was appointed to resolve the dispute, even though the case did not fall within his purview. Both the Finnish President, Martti Ahtisaari, and Prime Minister, Paavo Lipponen, appealed for the parties to solve the dispute at local level. The employers' organisations considered themselves outsiders in the dispute, which they saw as a battle over union territories.

The dispute could not be solved at local level and negotiators on both the company and the employees' side transferred their operations to Helsinki. The main employers' organisations - the Confederation of Finnish Industry and Employers (TT), the Finnish Forest Industries' Federation and the Central Union of the Metal Industry- and the employee' organisations - the Central Organisation of Finnish Trade Unions (SAK) and the Paperworkers' Union - worked actively behind the scenes of the negotiations. On the night of 14 September, on the eve of the threatened major strike, the working committee of TT, consisting of 12 members of the highest echelons of large-scale industry, held a meeting. They reached an agreement at the last minute. In some factories, work had already been stopped before the solution was found.

The settlement

In the early hours of 15 September, after long negotiations, an agreement which satisfied the employees was reached. According to estimates, the strike brought about the most expensive local agreement in Finnish history. The new agreement consists of the best parts of the previous agreements negotiated in both the metalworking and the paper industry. The maintenance workers are covered either by the collective agreement of the paper industry or by company-specific applications based on it. The agreement runs until the end of January 1998 - ie until the end of the period of validity of the present national incomes policy agreement. Consequently, the question of principle concerning the use of outside labour has not been addressed. However, the parties have called a truce.

Jarmo Lähteenmäki, the chair of the Paperworkers' Union, has estimated that the solution to the ABB/Nokia dispute will not anticipate in any way what will happen on the issue of the use of labour force in the paper industry (quoted in the Helsingin Sanomat newspaper on 16 September). According to Mauri Moren, the deputy managing director of the Forest Industries' Federation, the solution means that the problems have only been pushed aside. According to his view, "there is a threat that the unworthy play will be repeated".

Before the strike, the Paperworkers' Union and the Forest Industries' Federation had begun negotiations (FI9708126N) to solve the problems concerning the use of outside labour and other sector-specific problems (working hours, lay-off benefit security, scope of application of the collective agreement, and personnel funds). Now the negotiations have been suspended and the dispute concerning these matters has not been settled.

Paperworkers' Union fined

A case against the Paperworkers' Union was brought in the Labour Court by the Finnish Forest Industries' Federation during the dispute, claiming that the support strikes were illegal. The court found in the employers' favour, ruling that the strike of the maintenance workers was not illegal but that the support strikes were. The Paperworkers' Union was ordered by the Labour Court to pay a fine amounting to several hundred thousand FIM. In spite of this, the union decided to continue with the strikes. According to some estimates, the total cost of the strikes to the paper mills was FIM 200 million.

The deputy managing director of the Forest Industries' Federation demanded reform of the legislation concerning "labour market peace" and announced that the union will bring more cases against the Paperworkers' Union, because it did not cancel the strike warnings despite the two judgments (quoted in Helsingin Sanomat on 16 September)

According to the conservative Minister of Justice, Kari Häkämies, the industrial action is a reminder of the fact that Finnish labour legislation needs to be renewed. As one possible solution, Mr Häkämies proposes that the Labour Court would be given the right to order a temporary prohibition on industrial action under certain circumstances. Mr Häkämies says that the general interest of society cannot be put in jeopardy, even though a constitutional state cannot deny legal rights to industrial action. In this case, the general interest of the society was represented by the exports of the paper industry which are of vital importance to the Finnish economy.

A reverse for local bargaining

The labour market parties had been starting to take a more positive view of local collective bargaining, but this suffered a reverse in the strike. The parties have very mixed attitudes towards local bargaining: the metalworking industry has accepted the use of outside labour long ago, and the terms of employment of the workers concerned can be negotiated at local level; the Paperworkers' Union is against this kind of development.

During the strike, Lauri Ihalainen, the chair of SAK, gave his view on the use of outside labour. The use of outside labour, hired labour and subcontracted labour needs clear rules, and a successful outcome to the forthcoming incomes policy negotiations requires a solution to this question. This means that the strike in the Nokia tissue paper factory has had a wider significance.

The Paperworkers' Union can be seen to have been looking after the interests of the entire trade union movement. It is in the interests of the employers to make more use of outside labour, because it is cheaper and more flexible, as a whole. The employers have justified their actions on the grounds of competitiveness. Usually the sectors in which the problems are greatest are those where unions are not powerful enough to pressure the employers and the government to reform the rules.

In a joint briefing by Mr Ihalainen of SAK and Mr Lähteenmäki of the Paperworkers' Union concerning the strike, Mr Ihalainen stated that the dispute at the Nokia tissue factory revealed only the tip of the iceberg, and that it was only one example of the present problems of working life: " When the situation changes in companies as certain tasks are being incorporated, the weakening of terms of employment affects all sectors, most unions and hundreds of thousands of employees now and in the future" (quoted in the Demari newspaper on 10 September). According to SAK, the problem of changes in working life is usually a lack of rules, which makes it possible to use loopholes in labour legislation and collective agreements to change employees' status and terms of employment. Furthermore, according to SAK, the use of outside labour has exacerbated the problems of the "concealed" economy - subcontracting companies, it is claimed, do not always follow the collective agreement negotiated in the sector, and part of the work is totally unaccounted for in the bookkeeping. This is considered to be a problem common to all sectors and unions.


The strike by the Paperworkers' Union has brought to light the problems of the use of outside labour which have been smouldering under the surface for a long time. The use of outside labour in certain tasks has become more widespread in Finland, in line with international practice. In the metalworking industry, subcontracting has become part of the production activities without any conflicts - subcontractors usually follow the collective agreement negotiated in the industry and therefore the Metalworkers' Union is not under any threat of losing its members or influence. The operating models of the sector have been used as examples of local bargaining.

The Paperworkers' Union's strike has made SAK and other organisations take a stand on the question of the use of outside labour, a problem which concerns the entire union movement. SAK has expressed its concern over the lack of rules in this area. The industrial sector has already agreed on certain rules, but the problem is getting worse in sectors where local bargaining has made significant progress due to the lack of a powerful sectoral interest group. These developments mean a lessening of the power of the trade unions, and therefore the powerful Paperworkers' Union is trying to resist this kind of move.

The employers explain the growing use of outside labour with reference to the fact that the economy is becoming globalised, with the results that competition has become more intense and that Finland cannot maintain operating models which are abandoned by its competitors.

The process of solving the sector-specific problems between the Paperworkers' Union and the Forest Industries' Federation has become more difficult and the interest of the union in participating in a centralised incomes policy agreement is weak unless the employers are willing to make compromises in this matter. If the Paperworkers' Union makes the decision to stay outside the incomes policy agreement, it may give an impetus to the other unions to draw up sector-specific agreements as well. (Juha Hietanen, Ministry of Labour)

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