2001 NAP focuses on growth and employment
In May 2001, the Finnish National Action Plan (NAP) for employment was published. It focuses on bolstering economic growth and employment. The social partners are mainly satisfied with the preparation process and the results.
According to the NAP, the main aim of the economic policy of Prime Minister Paavo Lipponen's second "rainbow" coalition government is to raise the employment rate, which in turn means ensuring steady economic growth. The aim of the government is to bring the employment rate close to 70% by 2003 and - in the long term - to bring the average age of retirement from the labour market about two to three years closer to the official retirement age (65) (FI9908114F).
Economic and employment policy
In its economic and employment policy, states the NAP, the government takes into account the effects of the ageing population structure on the balance of the labour market and the conditions for economic growth generally. Actions which encourage lifelong learning and employment will be continued as a way of improving the adaptability and flexibility of both workers and companies. In order to ensure full use of the economic growth potential, the aim is also to secure a regional balance between labour supply and demand. In order to safeguard sustainable public finances, the government will continue with its present disciplined fiscal policy.
The government seeks to increase further the average age of leaving the labour market by emphasising the "primary nature" of work and the economic incentive of accepting work, and by encouraging employers to retain and recruit older workers. To this end, changes have been made in the tax, pension and social security systems. Incentives are also being created for people on social assistance to seek work. The incentives and benefit systems will be boosted even further in 2001, under the new NAP.
The government is reducing the tax burden on labour and harmonising taxation, social security and service charges, with the aim of improving the economic incentives for finding employment. The government seeks to ease the tax burden on labour by between FIM 10 billion and FIM 11 billion (1.5% of GDP) during the term 1999-2003 (FI0011167F). The main measure is reducing taxation on earned income in 2001 by over FIM 6.7 billion - FIM 5.3 billion of this being taxes on labour. Furthermore, the employer's and employee's pension contribution and unemployment insurance contribution will be reduced, with a net effect of FIM 1.5 billion on taxes on labour. During 2001, the government will submit new changes for 2002 to parliament, cutting taxation on earned income by a total of FIM 4 billion (0.5% of GDP), of which FIM 3.5 billion will affect wage earners.
The NAP outlines a comprehensive and unified lifelong learning strategy. All citizens should possess the basic knowledge and skills needed to function at work and in society at large, and they should also possess the ability further to increase their skills and knowledge. This aim will require further development of the educational system and the use of unofficial learning forums, as well as cooperation between the authorities, social partner organisations and non-governmental organisations (NGO s). The strategic aims for promoting lifelong learning are to:
- raise the level of expertise in small and medium-sized enterprises;
- secure the availability of skilled labour;
- prevent long-term unemployment due to lack of skills;
- reinforce the "information society; and"
- improve the organisation of work and encourage the adaptability of businesses.
Adult vocational training (including information society skills) and national workplace development programmes (FI9707122F) will be targeted more at the over-40s and training will be developed individually, corresponding better to the needs and requirements of adult learners. In order to improve training opportunities, the government is introducing a new training allowance for adults who have been working for more than 10 years. A cooperation project between ministries and social partners will be launched, with the aim of significantly increasing the use of "job rotation" (sabbatical leave) as a way of responding to the training needs of older people (FI9704110F). NGOs are involved in a cooperation project to improve the information society skills of middle-aged people. The focus of public employment services will be shifted to upgrading the skills of adult jobseekers, mainly by: increasing the provision of joint activities such as jobseeker groups; the acquisition of outsourced employment services for particularly problematic jobseekers; and increasing practical training for long-term unemployed adults.
Availability of skilled labour
In securing the availability of skilled labour, the focus will be both on short-term concerns and long-term solutions. The labour shortage resulting from the retirement of the post-war "baby-boom" generation will be analysed for each sector, occupational group and region. The policy alternatives will be assessed in cooperation among ministries in the fields of labour and education policy, pension and taxation policy and immigration policy. In order to increase international mobility, a strategy will be prepared with the aim of safeguarding the long-term functioning of the labour market.
Improving skills is to be used both to prevent labour supply bottlenecks and unemployment and also to help unemployed people to find work. Long-term unemployment is to be reduced by coordinating active labour market policy more effectively and by linking measures to action in order to prevent bottlenecks on the labour market. Labour demand will be met by stepping up the provision of training based on labour market needs, and by shifting the emphasis of employment services towards services to employers and the improvement of jobseekers' qualifications.
The anticipation of skills and labour needs will be developed in broad cooperation at regional and national level. The targeting of education and training provision will be improved by giving educational institutions information on the success of their students in finding work - the purpose of this service is to help to focus vocational education according to the needs of the labour market. Each university will produce a strategy for the development of teaching, study counselling and degree structures in order to make academic studies more efficient.
Prevention of exclusion
The government seeks to prevent labour market exclusion by reducing structural unemployment and helping those in the weakest labour market position to return to the labour market. The risk of exclusion is highest among older people, people with disabilities and immigrants. These groups account for a much higher percentage of participants in active labour market measures than their share of the workforce as a whole. The main new measures against exclusion include increasing on-the-job training and jobseeker training for people over the age of 25 and the extension to two years of the maximum period of the so-called "combined subsidy" for those who have the greatest problems in finding work. The employment services will be tailored to meet individual needs with individual paths back to employment. "Rehabilitation" experiments will be launched for long-term unemployed people aged over 45 and for young people aged 15-17 in danger of exclusion. In order to increase cooperation at local and regional level, an action plan or project to prevent long-term unemployment and exclusion will be drawn up for each region in cooperation with the authorities and other actors.
The gender divide
A major project entitled Equality on the labour market was launched in 2000 in cooperation between the relevant ministries and the social partners. The project studies the negative effects of gender segregation for the functioning of the labour market and for labour supply and, consequently, for economic growth as a whole. In addition to solutions which target working life, actions to reduce segregation are also being introduced in schools and other educational institutions and in active labour market policy measures. The project will continue until 2003.
Cooperation between the state and social partners
Strategic cooperation between the state and the social partners in the NAP process has been extensive and well-established, states the NAP. The social partners are involved in the formulation of general economic policy in the Economic Council chaired by the Prime Minister. There is extensive cooperation between the ministries and social partners in a number of tripartite advisory bodies dealing with issues related to employment, education and social protection. The cooperation is close on the regional and local level as well. The NAP refers to the social partners' national incomes policy agreement for 2001-2, which also covers action in support of workplace development, lifelong learning and state action like taxation. The aim is to promote employment, control inflation and promote international competitiveness (FI0011167F).
The participation of the social partners in drafting the NAP has been placed on a solid foundation through a permanent national committee for this purpose, the NAP states. The partners support the implementation of local and regional projects by, for instance, providing information on the aims and actions of the NAP. Actions in support of the NAP — for instance, various wage and working time arrangements — are also included in the collective agreements of individual sectors or companies.
The social partners' views
The main trade union organisations - the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) and the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) - take a generally positive view of the contents of Finnish NAP, but less so of their implementation. According to the Finnish unions' recent response to a European Trade Union Confederation (ETUC) examination of the Employment Guidelines/NAP process:
The preparation of NAP 2000 was successful. The social partners were properly included. The implementation stage, however, was less successful. The eight multiannual and local projects were only partly launched, and the role given to social partners was very limited. It follows that there is no proper tripartite cooperation in regional employment and economic development centres.
Pillar III ["Encouraging adaptability of businesses and their employees"] is still project-orientated and unambitious, although the Cooperation act of 1978 gives both legal context and operational instruments for adaptation-orientated activities in workplaces with more than 29 persons. The employers, however, are not willing to go any further in utilising those possibilities.
In order to alleviate bottleneck problems, the employee confederations have pressed for work organisation changes designed to improve training and the availability of labour. Although success this far has been limited, the importance of their effect should receive greater recognition as bottleneck problems get worse. Signs of this are already being seen. The incomes policy solution for 2001-2 includes state action on matters such as taxation and bipartite action for workplace development and lifelong learning. The aim is to promote employment and competitiveness without extra inflation. The incomes policy solution also includes an agreement on a continuous negotiation procedure, which enables the labour market organisations to initiate projects for gender equality, maintenance of working ability and well-being at work, various wage and working time arrangements, and other relevant matters mentioned in pillar III.
The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT), the Employers' Confederation of Service Industries Palvelutyönantajat, PT), the State Employer's Office (Valtion Työmarkkinalaitos, VTML) and the Commission for Local Authority Employers (Kunnallinen Työmarkkinalaitos, KT) find the NAP process a little laborious. However, in their view the effectiveness of the measures has improved over the years. Overall, they evaluate the NAP positively.
High unemployment is still a very severe problem in Finland. The new NAP seeks to fight this through training measures and economic growth. However, it is questionable what the real, practical influence of this sort of plan is. The role of the NAP is more or less to be an forum for discussion. The NAP process is laborious and there may be too many issues to be dealt with. In the implementation of the NAP, they key issue is how different ministries can cooperate. There seems still to be much to learn. The social partners have had a good opportunity to take part in the preparation work and it is good that they have been able to air their views together. It depends heavily on the organisations themselves how actively they interact. One major problem is that the EU Employment Guidelines behind the NAP are meant mainly for other countries than Finland. (Juha Hietanen, Ministry of Labour)