Finland: Latest working life developments – Q3 2017

The start of the autumn round of collective bargaining, proposals for a new working time regulation, and a reform of the parental leave system are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the third quarter of 2017.

New round of collective bargaining

Several major collective agreements are due for renewal this autumn. Since the Confederation of Finnish Industries (EK) withdrew from central-level bargaining, there is no national-level framework agreement on pay rises and other major issues, as has usually been the case in Finland. While the peak-level organisations, in different ways, still coordinate and support the bargaining rounds, they lack the formal mandate to intervene in negotiations at sectoral level. Hence this round of negotiations constitutes an opportunity for developing and coordinating the bargaining system in new ways.

Social partner relations are however strained and negotiations are likely to become arduous. Negotiations between the Finnish Forest Industries Federation (FFIF) and the Finnish Paper Workers’ Union (Paperiliitto) – traditionally the first sectoral agreement to be negotiated due to its significance for the Finnish economy – have so far been unproductive, with the union preparing for industrial action. This comes after the FFIF initially proposed lifting a ban on subcontracting, which it said would lead to improved productivity. When the union rejected this, the FFIF suggested a pay freeze.

Controversial proposal for new working time regulations

In June 2017, a tripartite working group presented its proposal for a reform of the Finnish working time regulations. Its objective was to adapt the current Working Hours Act, passed in 1996, as well as the 2005 Annual Holidays Act, to ‘the needs of the 2020s’. The working group proposed replacing the current Working Hours Act with one which will secure flexible working time arrangements to meet the needs of different kind of businesses employers, as well as facilitating a good work–life balance for employees.

The new act would, among other things, include provisions for a working time model for flexi-work arrangements where employees work at a time and place of their choosing. Such arrangements would primarily be based on mutual trust between the employer and employee.

The working group was, however, far from reaching consensus in its conclusions, as the report included opposition on different points from all the peak-level organisations. While EK did not find the proposals flexible enough, the Central Organisation of Finnish Trade Unions (SAK) and the Finnish Confederation of Professionals (STTK), found the proposals precarious from the employees’ point of view. The government’s objective is to present a proposal to parliament for a new act in the spring of 2018,but given the level of disagreement, the process is likely to be lengthy.

Government budget proposal

In August 2017, the government presented to parliament its budget proposal for 2018. The main objective of the government is to close a gap in general government finances and to increase the employment rate. The economy is experiencing an upswing and the employment situation is projected to recover moderately, but the government is fighting a long-term imbalance between revenue and expenditure due to population ageing.

The social partners have, in general, been satisfied with the budget proposal. All peak-level organisations welcomed the proposed cuts in income tax, introduced to compensate the increase in wage and salary earners contributions in the government’s hard-won competitiveness pact.

The budget proposal also included an envisaged reform of the parental leave system endorsed by the peak-level organisations. SAK, STTK, the Confederation of Unions for Academic Professionals in Finland (Akava) and EK recently produced a joint statement calling for a speedy renewal of the system. The reform is expected to be implemented in January 2019. The aim is to reach a more balanced distribution of family leave and responsibilities, improve the labour market position of women and the overall employment rate, and to facilitate the reconciliation of work and family life. The government will prepare the reform in cooperation with the social partners.


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