Finland: Latest working life developments Q3 2018

Industrial action and trade union opposition to a proposed government bill, the appointment of a new National Conciliator, and the general applicability principle 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 2018.

Tensions between the social partners intensify

Industrial relations in Finland continued to be strained during the third quarter of 2018. Many trade unions, particularly the peak-level Central Organisation of Finnish Trade Unions (SAK), have raised serious concerns about the functioning of social dialogue following some of Prime Minister Juha Sipilä’s policy initiatives. During summer and autumn, the discussion focused on two proposed amendments to the Employment Contracts Act, introduced by the government in April 2018.

Firstly, the controversial planned proposal to abolish the requirement to justify fixed-term contracts for unemployed young people was withdrawn. The government had announced in early June that it would not continue to draft the reform, which was aimed at making it easier for companies to hire young people. According to Minister of Employment Jari Lindström, the impact of the reform would have been weak, and the model very bureaucratic.[1] Several trade unions expressed their satisfaction with the decision.

Secondly, the government’s proposal to reform dismissal protection by making it easier for companies with up to 20 employees to dismiss employees on individual grounds continues to be a source of conflict. During September, several trade unions announced they would engage in industrial action to put pressure on the government to drop the proposal. By 25 September, the list of trade unions imposing overtime and shift swap bans included major blue- and white-collar unions such as Trade Union Pro, the Industrial Union, the Union of Health and Social Care Professionals in Finland (Tehy) and the Trade Union for the Public and Welfare Sectors (JHL). [2]

This was followed by the announcement of a 24-hour strike on 3 October by Service Union United (PAM), Trade Union Pro, the Finnish Food Workers’ Union (SEL), the Finnish Electrical Workers’ Union and the Industrial Union.

Much of the criticism centres on three issues: the level of scientific evidence supporting the measures’ effects on employment rates, that company size in the future would determine employees’ dismissal protection, and – most notably – a general lack of trust in the government following a number of measures seen as unfair by the trade unions.

Employer organisations such as the Technology Industries of Finland have criticised the unions for the harmful effects the protests have had on production and exports in the middle of an economic boom.[3] Others, such as KT Local Government Employers, claim that it is unfair that a disagreement between the unions and the government is taking its toll on employers.[4] Unions have also been accused of exaggerating the negative implications of the model, most notably in a controversial campaign by SAK.

The situation remained deadlocked at the end of Q3. The government announced that it would not withdraw the proposal, but might be willing to lower the 20-employee threshold.

New National Conciliator takes up office

Vuokko Piekkala, former Labour Market Director at the Commission for Church Employers (KiT), was appointed National Conciliator for a four-year term beginning in August 2018.

The former National Conciliator, Minna Helle, decided to leave the post to take up the post of Executive Director (industrial relations) for employer organisation Technology Industries of Finland in June 2018. The career move provoked controversy and resulted in trade union claims about Ms Helle being biased during the 2017–2018 collective agreement negotiation round.[5] In September, SAK suggested that two national conciliators should be appointed in the future in order to avoid conflicts of interest.[6] Traditionally, the National Conciliator has been nominated in rotation by either the employer or trade union side.

General applicability principle questioned

The Finnish collective bargaining system, characterised by the principle of general applicability, has been criticised by both politicians and employer organisations in recent years. Trade unions support the system, stating that it guarantees minimum conditions for employees and provides predictability and long-term stability on the labour market. Critics argue that the principle of general applicability hinders the flexibility and competitiveness of the Finnish labour market, and that the system makes it harder for companies to recruit new employees because of high labour costs.

In late September, the market-liberal think tank Libera reportedly submitted a complaint to the European Commission, arguing that the general applicability principle breaches union law.[7] According to the think tank, the system infringes on, among other things, competition law and business freedom. This is because employers that are unorganised in terms of collective bargaining must comply with the national agreements relevant for their type of business. In a reply from SAK, the arguments for the complaint were deemed weak.[8]

 

[3] Technology Industries of Finland (2018), Ylityökielto alkoi – merkittäviä vaikutuksia vientiin ja tuotantoon , 17 September.

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