Widespread opposition to government plan to raise retirement age

The government’s proposal to raise the retirement age without consulting the social partners generated massive trade union mobilisation against the reforms. The presidents of three trade union confederations accused the government of abandoning the traditional Finnish tripartite process, and the possibility of a general strike was threatened. As a result, the government started negotiations with the social partners and subsequently withdrew its earlier plans.

In February 2009, the government announced a plan to gradually increase the retirement age to 65 years from the present 63 years of age. The government made the decision at a meeting which sought to devise ways to maintain the sustainability of pension funds even after the current economic crisis, which is set to increase the state’s debt.

The decision immediately generated strong criticisms, particularly from the trade union side. The presidents of three trade union confederations accused the government of totally abandoning the Finnish tripartite tradition through this reform.

Trade union mobilisation against plan

Finland’s trade union confederations were particularly critical of the fact that the government made the decision without the customary consultation with the social partner organisations. The President of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), Lauri Ihalainen, stated: ‘It is the first time in which the government makes unilateral decisions on such a significant issue of the work pension system and benefits, without listening to us’.

The President of the Finnish Confederation of Professionals (Toimihenkilökeskusjärjestö, STTK), Mikko Mäenpää, remarked that he had never received as much negative feedback from member unions and members of the public as he had over the retirement age proposal. Mr Mäenpää insisted that STTK had no intention of agreeing to a retirement age increase in its forthcoming negotiations with the government.

Meanwhile, after a meeting with the executive committee, the President of the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), Matti Viljanen, argued that: ‘The hike in the retirement age was simply a wrong decision by the government’.

A number of affiliated trade unions expressed their readiness to resort to strike action against the plan. The Metalworkers’ Union (Metallityöväen Liitto) indicated that it was ready to contest the proposal, while the Union of Salaried Employees (Toimihenkilöunioni, TU) warned that it was prepared to defend the current pension system ‘with all available means’. The Finnish Food Workers’ Union (Suomen Elintarviketyöläisten Liitto, SEL) urged SAK to take action to prevent the retirement age increase.

The Chair of the Federation of Professional and Managerial Staff (Ylempien Toimihenkilöiden Neuvottelujärjestö, YTN), Sture Fjäder, outlined that the union was considering the option of staging a walkout. Mr Fjäder added that YTN and other AKAVA-affiliated unions were planning ‘possible offensives’.

Threat of general strike

The government’s plan to raise the retirement age therefore generated a massive dispute, with the trade unions even hinting the possibility of a general strike. As the Vice-President of SAK, Matti Huutola, explained: ‘A general strike is a huge weapon and nobody wants to use it. Anyway, it is among the expedient selection, like other expedients. Wage earners have to defend their interests. We should not be afraid to use any kind of industrial action.’

Furthermore, all of the Finnish political opposition parties signalled their willingness to support further discussion and a possible change in relation to the centre-right government’s proposal to increase the retirement age. Opposition party leaders agreed, at a joint press conference, that the government had picked the wrong means for tackling the economic downturn. They added that the government had made a mistake by failing to consult with the opposition parties or the trade unions over its plans.

President supports trade unions

The President of Finland, Tarja Halonen, joined in the dispute by stating that the government’s plan to raise the retirement age by two years to 65 years of age was ‘less than encouraging news’ given the current economic crisis.

President Halonen added that the government’s proposal risked exacerbating the sense of uncertainty about the future that pervades at present. She also expressed sympathy for the trade unions’ outrage over the government’s decision to break with tradition by not consulting them over the matter.

Government backs down

In light of the widespread criticisms, the government started negotiations with the social partner organisations. After two weeks, the government announced on 11 March that it had reached agreement with the various organisations over the dispute about the proposed increase in the retirement age. Under the new agreement, the government withdrew its earlier plans to gradually increase the retirement age from 63 to 65 years from 2011 onwards. Instead, the trade unions, employer organisations and government have committed themselves to raising the average age at which people leave the workplace – which currently stands at 59.4 years – by three years between now and 2025.

The more specific details of the amended plan will be prepared by the end of 2009 by a working group chaired by the Managing Director of the Finnish Centre for Pensions (Eläketurvakeskus, ETK), Jukka Rantala. The parties involved in the dispute met on the evening before the decision was made. The meeting was attended by the country’s Prime Minister, Matti Vanhanen, the Minister of Finance, Jyrki Katainen, and the leaders of the three trade union confederations SAK, STTK and AKAVA.

Prime Minister Vanhanen described the amended plan as a win-win situation for all of the parties concerned, rather than a defeat for the government. SAK’s President, Mr Ihalainen, outlined that he preferred not to look for winners and losers in this case and that the government’s decision to abandon its retirement-age increase was a positive development; however, he added that the entire ‘episode’ between the government and the trade unions had been completely unnecessary.

Under the revised plan, the parties also agreed that the new deal will not affect the so-called ‘social collective agreement’ regarding the financing of social welfare and unemployment benefits. The latter had been agreed in January 2009 by the trade unions and the Confederation of Finnish Industry (Elinkeinoelämän keskusliitto, EK).

Necessity of raising the retirement age

The government believes that, in the long term, it will be necessary to increase the country’s retirement age because of Finland’s rising debt as a result of the ongoing recession. Thus, without a greater labour input in the years when the economy begins to grow again, recovery will inevitably be slow and difficult, and many of those from the so-called ‘baby-boomer generation’ will be approaching retirement at the very time when their contribution is most needed.

Notwithstanding such justifications, the trade union confederations have been particularly angered by the government’s unilateral decision in this respect. They insist that any issues of this magnitude should always be discussed first – as has traditionally been the case in previous tripartite negotiations involving the trade unions, employers and government.

Parliamentary debate

In parliament, the opposition parties decided to issue an interpellation measure over the matter, despite the fact that the government had already withdrawn its original plan. The measure, which was brought before parliament at the end of an interpellation debate concerning the country’s pension policy, was rejected by a majority of 108 to 59 votes. The government parties remained united in their vote. However, a division arose among the opposition parties when four members of the Christian Democrats (Suomen Kristillisdemokraatit, KD) voted with the government, while three other members abstained from voting. The other opposition parties – the Social Democratic Party (Suomen Sosiaalidemokraattinen Puolue, SDP), the Left Alliance (Vasemmistoliitto) and the True Finns (Perussuomalaiset) – voted against the government.

The original intention of the opposition parties was to propose a motion of ‘no confidence’ in government over its plans to raise the minimum retirement age from 63 to 65 years of age. However, the government had already backed down on the matter and agreed to adopt a different approach in its talks with the social partner organisations before the interpellation was brought before parliament. Consequently, the main aim of the debate was to criticise the government for making its initial decision without first discussing the matter with the relevant social partner organisations.

Pertti Jokivuori, Statistics Finland

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment