Finland: latest working life developments Q2 2018

Controversy over the government’s proposed employment policies, stakeholder reactions to these policies and the ongoing challenge of labour shortages are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the second quarter of 2018.

Government announces divisive employment policies

In April, following talks on the general fiscal plan for 2019–2022, the government of Prime Minister Juha Sipilä announced further measures to promote growth and employment. The measures include some adjustments to the controversial ‘Active Model’ (the government’s unemployment benefits reform), and two proposed amendments to the Employment Contracts Act.

Firstly, the government wants to boost youth employment by making it easier for companies to hire unemployed young people on a fixed-term contract.¹ Today, companies have to justify any fixed-term contracts and the amendment seeks to abolish this requirement for people under the age of 30 who have been unemployed for at least three months. Secondly, the government wants to lower the SME threshold for hiring new employees by making it easier for companies with up to 20 workers to dismiss employees on individual grounds.

Both proposals have been criticised for discriminating against youth, increasing job insecurity and having a negative impact on young people’s hopes for the future. In late April, four opposition parties (the Social Democratic Party, the Green League, the Left Alliance and the Finns Party) called for a parliamentary vote on the government’s youth employment policies, which the government won by a majority of 99 to 79. The cancellation of the proposed amendments has also been called upon by prominent trade unions and NGOs.²

An informal tripartite working group has reportedly been having difficulties drafting the legislation. The level of scientific evidence supporting the measures’ effects on employment rates has also been brought into question. Commentators have noted that the bill is at risk of being watered down following the gathering of stakeholder comments.³

Lack of skilled workers viewed as obstacle to growth

Following the positive economic outlook in Finland, the government may reach some of its strategic goals on job creation and an increased employment rate. Meanwhile, the Finnish labour market is facing labour shortages in sectors such as construction, social services and healthcare due to a lack of skilled workers. In a company survey conducted by the Confederation of Finnish Industries (EK) in April 2018, almost one-third of companies reported that recruitment problems are an obstacle to company growth. This is the highest number since 2017, according to EK.

Experts cite the high cost of accommodation in the large cities where the jobs are as one of the reasons behind the labour shortages. Trade unions take the view that education is the best way to address the labour shortages, while employer organisations usually point to increasing flexibility and local agreements. Some stakeholders have also suggested that more flexible immigration rules would help not only to ease the labour shortage problems but also to address the challenges arising from Finland’s ageing population and historically low birth rate.

• EK: Suhdannebarometri: Kärjistyneet rekrytointivaikeudet varjostavat hyvää suhdannekuvaa , 2 May 2018
• Ministry of Economic Affairs and Employment: Ammattibarometri 2018: työvoimapula laajenee uusiin ammatteihin , 28 March 2018
• Yleisradio: Finland's birth rate falls again in 2017 – likely lowest in 150 years , 21 June 2018

Commentary

The major social services and healthcare reform⁴ still remains the main political topic in Finland and is likely to dominate Prime Minister Sipilä’s time in office until the parliamentary elections in April 2019. The final vote on the reform has been postponed several times and on 26 June 2018 Prime Minister Sipilä announced that the reform would be delayed by another year and come into force in 2021. He also announced that the regional elections – originally scheduled for October 2018 – would ‘probably’ be held in May 2019.

¹ Finnish Government, Government press release: General Government Fiscal Plan for 2019–2022: Government to boost growth, employment and social justice , 11 April 2018.

² Joint statement from trade unions and NGOs: Järjestöt vastustavat nuorten työsuhdeturvan heikentämistä , 29 May 2018.

³ Helsingin Sanomat: Hallituksen linjaama irti­sanomisten helpottaminen pien­yrityksissä uhkaa vesittyä – työ­ryhmän kokousta kuvaillaan ‘kaoottiseksi ’, 14 June 2018.

⁴ Eurofound (2017), Finland: Major reform in healthcare and social services underway , 4 October.