Finland: Latest working life developments – Q1 2018

Collective agreement negotiations, opposition to the government’s labour market policies and a decision to opt out of parental leave reform 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 2018.

Negotiations continue over sectoral collective agreement

Collective agreements for more than one million employees in low-income sectors such as the commerce, service and health care sectors expired at the end of January 2018. According to a Bank of Finland forecast, the Finnish economy will grow 2.5% in 2018, and GDP will increase 1.5–2.5% annually until 2020. After years of limited pay rises, the trade unions want this positive economic outlook to be reflected in higher wages for employees. One of the most difficult negotiation issues for the public sector has been the reduction of holiday bonuses as agreed in the 2016 tripartite Competitiveness Pact, which the trade unions now want to see compensated.

The most important new collective agreements include the commerce sector, covering approximately 250,000 employees, and a series of public sector agreements covering in total more than 400,000 employees, including nurses, school and kindergarten teachers working in the municipal sector. Most agreements are in force until early 2020 and so far, pay rises seem to be largely in line with the rate agreed by the export industry sector in autumn 2017 (3.2% within two years). This implies that the so-called Finnish wage model has been put into practice.

Negotiations for many of the agreements were difficult and resulted in industrial action. However, any strikes were relatively short and, in many cases, agreements were reached before strikes even began. As of the end of March, negotiations in sectors such as construction remain open.

Opposition to unemployment benefit policies 

Both trade unions and the government opposition parties continue to oppose the government’s efforts to reform unemployment benefits (known as the 'Active Model'). On 2 February, the Central Organisation of Finnish Trade Unions (SAK) organised a demonstration against the Active Model in Helsinki, accompanied by 7,000-10,000 protestors. In addition, several unions organised political strikes during the day, which affected public transport in the capital and ports across Finland.

SAK claimed the reforms were unfair and went against what was agreed in the Competitiveness Pact. Prime Minister Juha Sipilä rejected this interpretation, declaring that the laws were part of a larger effort to increase labour market participation. In a joint statement, the Technology Industries of Finland, the Chemical Industry Federation of Finland and the Finnish Forest Industries Federation criticised the unions for the harmful effects the strikes had on the export industry.

More than 140,000 people signed a citizen's initiative calling for the cancellation of the Active Model, which was handed over to parliament in March. 

Government opts out of parental leave reform

In mid-February, the government withdrew its plans to reform the parental leave system. The reform, which was supported by the social partners on both sides and had been prepared since autumn 2017, aimed at increasing gender equality and especially the labour market participation of mothers. While the three members of the coalition government – the Centre Party, the centre-right National Coalition Party and the populist Blue Reform – agreed that reform was needed, they could not agree on the final model. The government said the reform failed because it could not be implemented in a ‘cost-neutral way’. Political commentators suggested that the upcoming elections and the Centre Party’s unwillingness to reduce the homecare subsidy played a key role in the decision.

Commentary

The major regional government, health and social services reform continues to dominate political debate and is one of the priorities of Prime Minister Sipilä’s government. The proposed reform includes the introduction of regional governments as a new level of administration and a ‘freedom of choice’ principle, making it possible for patients to choose between public or private service providers¬. Submitted to parliament in March 2018, the final vote on the reform is due in June and is expected to provoke an intense debate. As breaks in the party line of the National Coalition Party have emerged, the government may now struggle to reach the majority needed to pass the reform.

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