Finland: Latest working life developments – Q1 2017
The effects of the decision by the Confederation of Finnish Industries EK to terminate most peak-level agreements with trade unions and a setback for employment policy reforms are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the first quarter of 2017.
Unions outraged as employer organisations abandon peak-level agreements
The Confederation of Finnish Industries (EK) announced in mid-February that it would terminate most peak-level agreements with trade unions. This follows a change in EK's internal rules, which came into force in May 2016. The 22 agreements to be ended include provisions on holiday pay and the position of employee representatives. Similar provisions are included in many sectoral collective agreements, but small sectors especially have often relied on peak-level agreements on such matters. Trade unions were outraged by EK’s announcement, but EK argued that the measure could not have come as a surprise, as the intention had been made public at the time of the rule change. The unions stressed that the decision is likely to complicate the sectoral collective agreement negotiations at the end of 2017. They urge that sectoral negotiations exclusively on the contents of the peak-level agreements should be carried out in spring 2017.
On the same day that EK made its announcement, the Finnish Forest Industries Federation (Metsäteollisuus) declared its withdrawal from negotiations on the Finnish wage model. The preliminary agreement of the model, signed alongside the tripartite Competitiveness Pact in June 2016, said that the industrial sectors, and other sectors sensitive to competition, would set the limits for wage raises. Metsäteollisuus, however, claimed that collective agreements in the paper industry are too rigid and could only be renegotiated bilaterally. Trade unions and EK (which Metsäteollisuus quit in January 2017) were disappointed with the withdrawal. In response, the Finnish Metalworkers’ Union (Metalli) and the Industrial Union (TEAM) also left the negotiation table, which effectively meant the end of the negotiations. Prime Minister Juha Sipilä did not give up hope of achieving the wage model, as the sectoral collective agreements could achieve the intended results even without a common framework agreement.
Industrial relations were further strained in mid-March when Veli-Matti Mattila, the new chair of EK, said that Finnish salaries are still 10%–15% too high for the country to be truly competitive, despite the wage freeze agreed in the Competitiveness Pact. He called for more flexibility in wages and stated that the best long-term labour market solution is the abolition of collective agreements. Trade unions were upset about this, stating that employers have been using the same figures for years, while the gap between Finnish and competitor wages has, in fact, been narrowing since 2014.
Decisions on employment policy expected later in spring
Employment policy remains a priority of the Sipilä government, and reforms are expected in both its contents and its structures. Decisions on employment measures and policies will be taken at the government’s mid-term review session, which was postponed until late April to accommodate the local government elections on 9 April. Several proposals have already been made, including improved conditions for the self-employed and dismantling welfare traps.
The Ministry of Economic Affairs and Employment is also preparing a reform of the Working Hours Act in a tripartite working group. The current act, which dates back to 1996, is considered inadequate for newer aspects of working life such as:
- digitalised specialist work
- new forms of work
- periodic shift work (in, for instance, care facilities).
The government also wishes to adapt the act to local bargaining needs.
The citizens' initiative to ban zero-hour contracts was rejected by Parliament in March. The Minister of Justice and Employment, Jari Lindström, nevertheless stated that the government will introduce legislation to regulate zero-hour contracts and that such regulations will be discussed at the mid-term review.
Analysts are puzzled by the recent actions of employer organisation EK. Its withdrawal from peak-level agreements can be explained by the organisation’s rule change and the six-month notice period of the agreements. However, the motive for Mr Mattila’s statement on wages is unclear and its factual basis controversial. The centre-right Sipilä government, while agreeing that more labour market flexibility is needed, said Mattila’s statement was confrontational. It has been seen as a bad move strategically, angering trade unions, complicating cooperation and jeopardising the sectoral collective bargaining round.