Finland: Latest working life developments – Q4 2016

Reforms to employment law, structural changes to the peak-level social partners and problems facing industrial unions' plans to merge are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the fourth quarter of 2016.

Stricter legislation on unemployment

Labour market policy in late 2016 concentrated strongly on a series of employment reforms and unemployment legislation that, following their passage through Parliament, will come into force in 2017. The reforms include:

  • lowered unemployment benefits and a shortened period of earnings-related unemployment allowance;
  • restricted right to unemployment benefit when quitting a full-time job;
  • tightened requirements on accepting work – after three months of unemployment, a person  cannot refuse the offer of full-time work without losing unemployment benefit;
  • scaling down of the level and/or duration of measures such as wage subsidies and start-up grant support;
  • more Public Employment Service (PES) interviews with the unemployed to update individual employment plans, plus stricter sanctions for deviations from the plan;
  • introduction of short, optional, unsalaried work trials;
  • introduction of an early retirement scheme for those aged over 60 who have been unemployed for more than five years;
  • employers being allowed to hire long-term unemployed people on fixed-term employment contracts without having to justify the fixed-term duration;
  • extension of the maximum duration of qualifying periods for new employees;
  • shortening of employers’ re-employment obligation.

The measures build on the final report of the inconclusive tripartite negotiations of September 2016. The reforms are part of the main overall objective of the centre-right government of Prime Minister Juha Sipilä to raise the national employment rate from the current approximate of 69% to 72%. Further reforms to employment legislation and services are still being prepared.

Employer organisations mostly supported the measures, with trade unions largely opposing them, claiming they breached the tripartite Competitiveness Pact signed in June. The peak-level Central Organisation of Finnish Trade Unions (SAK) also argued that the changes are a waste of resources due to the upcoming health, social services and regional government reform. This major reform will be implemented in 2019 and will entail the dismantling of the Centres for Public Employment and Business Services, and Centres for Economic Development, Transport and the Environment. The new regional governments will then be responsible for organising public employment services, while private actors will increasingly provide such services.

Peak-level organisations finalise restructuring plans

The Confederation of Finnish Industries (EK) finalised its employer–employee negotiations in November. As a consequence, and because of the overall structural reform and changing focus of the organisation, 26 out of EK’s 110 employees were dismissed. Another three employees left the organisation during the negotiations. SAK also completed its economy-driven staff cuts. Five of its 90 employees were dismissed, and 15 will leave through other arrangements.

Union walks out of merger plans

The planned merger of the four blue-collar industrial trade unions, Industrial Union TEAM, the Metalworkers’ Union, the Paper Workers’ Union and the Woodworkers’ Union, ran into difficulties in late December when the Paper Workers’ Union decided to withdraw from the project, after the union’s left wing withdrew its support, without explanation, for the merger. A common interim report on the merger was published in October and discussed in the councils of each union in November and December. A final report and formal merger proposal will be presented in January 2017, and the boards of the three remaining unions will have to decide whether to continue with their merger plans. Without the Paper Workers’ Union, the new organisation would have approximately 230,000 members, a number comparable to that of the country’s currently largest union, the Service Union United (PAM). The merger is intended to take effect at the end of 2017.

Commentary

The employment legislation amendments were not entirely without problems. As part of the Sipilä government’s privatisation and corporatisation efforts, the reformed PES interviews with the unemployed were originally to be conducted by private sector organisations. However, this plan was cancelled after such outsourcing was discovered to be very difficult and, potentially, against the Constitution. Another intended measure would have entailed decreasing the unemployment benefit of refugees below that of other unemployed people, which was also found unconstitutional. The government has recently been mired in poor legislative preparation, a serious problem raised by the Chancellor of Justice in December.

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