Finland: Latest working life developments – Q4 2017

The ongoing sectoral collective bargaining round, the government’s controversial active labour market policy, and proposed regulations on zero-hour contracts 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 2017.

Uniform wage agreements across sectors

Several collective agreements were negotiated in the first months of the autumn 2017 – spring 2018 sectoral bargaining round. The most significant agreement was signed in early November by the Technology Industries of Finland and the Finnish Industrial Union (a recent merger of three unions: the Industrial Union TEAM; the Woodworkers’ Union; and the former Metal Workers’ Union).

The agreement, which covers around 100,000 employees and is the most important collective agreement for the export industry, has served as a guideline for agreements in many other sectors. In particular, its agreement of a maximum wage rise of 3.2% within two years (allowing for deviations at local level) has apparently been accepted throughout all the sectors so far, as employer organisations have stuck firmly to the agreed limit. This implies that the so-called Finnish wage model, whereby export industry sectors would set the limits for pay raises in all sectors, should materialise despite the failure of the social partners to reach a framework agreement for the model in early 2017.

The negotiations have, overall, run more smoothly than expected. Industrial action has occurred, including strikes and a lockout, but active conflicts during the bargaining round have been relatively short-lived. However, negotiations in many service sectors and in the public sector, which will take place in January 2018, may turn out to be difficult. The improvement in public finances lags behind that of the economy at large, and while the Local Government Employers organisation (KT) has stated that it will be impossible to put public sector wage rises on a par with those in industry, many large public sector trade unions are demanding significant rises, as their members generally have lower wages than industrial sector employees. Additional pressure for wage rises in the public sector is also caused by the temporary 30% reduction in holiday bonuses laid down in the Tripartite Competitiveness Pact of 2016.

Opposition to new active labour market policy 

Labour market policies announced by the government in April 2017 have moved forward. Parliament passed the proposal on an active unemployment model in mid-December, which came into force at the beginning of January 2018. The model comprises deductible unemployment benefit days and lowered unemployment benefit if, within three months, the unemployed person has not:

  • had at least 18 hours of paid employment;
  • made a profit through entrepreneurial activity;
  • or participated in at least five days of active public employment service measures.

The centre-right Government of Prime Minister Juha Sipilä argues that the policy will encourage the unemployed to take up part-time and short-term jobs, which will counteract inaction and exclusion.

However, employer organisations, while supportive of active employment policies in general, find the model an administrative burden and relatively inefficient. Trade unions and the opposition parties say the policy is unfair, especially as it does not recognise the uneven availability of work and of public employment services (PES) across the country. Some trade unions are considering protest strikes against the model, and a citizens’ initiative calling for its cancellation gathered, in one week, the 50,000 supporters required for the initiative to be passed on to parliament.

Proposed regulations on zero-hour contracts

The government also introduced, in December, proposals for a law to regulate zero-hour contracts. It includes provisions on pay during sick leave and during a notice period, and limits the right to use zero-hour contracts by requiring employers to better anticipate their labour needs. Rules for zero-hour contracts were promised by the government after the parliament rejected a citizens’ initiative to ban such contracts in March 2017.

Outlook

Other changes to labour market policies to be implemented in January 2018 include:

  • increased support for long-distance commuters;
  • sustained unemployment benefit for an unemployed person starting out as an entrepreneur (for the first four months);
  • a comprehensive reform of vocational education and training, and of adult education.
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