Federation of Finnish Enterprises aims to participate in incomes policy negotiations

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In June 1999, the Federation of Finnish Enterprises, representing small and medium-sized enterprises (SMEs), was given a mandate by four of its affiliates to participate in national incomes policy negotiations. The organisation thus aims to achieve the status of a central social partner organisation with negotiation rights. The existing central organisations are unsympathetic toward such a move and would like to maintain the status quo

Until now, the centralised Finnish bargaining system has not included any specific representation of small and medium-sized enterprises (SME s) (TN9905201S). Instead, many SMEs have been organised in the Federation of Finnish Enterprises (Suomen Yrittäjät, SY), which has no negotiation rights in bargaining over national incomes policy agreements (FI9801145F). However, SY's members have been forced to obey national-level collective agreements because of the principle of general validity (the application of collective agreements to all employers and employees in a sector, whether or not they are members of the signatory organisations). As well as incomes policy, bipartite processes between organisations representing include dealing with other issues of great importance that directly affect all workplaces in Finland. SY has consistently criticised this situation, and has made efforts to change it.

Now, in June 1999, SY has announced its aim of becoming a central organisation with the right to sit at the same negotiating table as other social partners. A direct bargaining mandate has now been accorded to SY by four affiliated employers' organisations that themselves have the right to conclude collective agreements. These are the Association of Finnish Dental Laboratories (Hammaslaboratorioliitto), the Finnish Wood Industry Entrepreneurs (Puuteollisuusyrittäjät, PTY), the Finnish Hairdressers' Association (Suomen Hiusyrittäjät) and the Finnish Glaziers' Association (Suomen Lasitus- ja Hiomoliitto). Altogether, these organisations represent nearly 1,300 employing enterprises with a total of 7,000 employees. SY represents about 34,900 employing enterprises which are not members of the currently recognised central employer organisations. These enterprises, employing over 200,000 persons in all, comply with national sectoral collective agreements through the general validity principle. SY also has some 5,000 member companies that also belong to either the Employers' Confederation of Service Industries (Palvelutyönantajat, PT) or the Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT). Overall, there are some 300,000 workers employed by SY member enterprises, in addition to about 105,000 entrepreneurs and their family members.

Objectives of SY

As a general goal for incomes policy, SY favours safeguarding of steady economic growth and maintenance of national competitiveness in rapidly changing markets. According to the organisation, this requires continued moderate wage increases, a lightening of taxation, and decision-making that motivates all workers, as well as a widening of company-level collective bargaining in a way that guarantees legal protection of the parties to agreements and also juridical balance.

When deciding to seek the status of a negotiating party in incomes policy discussions, the board of SY admitted that the approval of the other central organisations involved is required. Furthermore, it was stated that the conclusion of collective agreements would not be the role of SY, even as a potential central organisation, but rather, as before, the task of its sectoral affiliates. The chair of SY, Risto Heikkilä, argued that, from a general point of view, entrepreneurs with employees should bear a wider responsibility than at present, and that they should participate in developing incomes policy as well as the tax and social policy often connected with it.

Other social partners reluctant

The initial reactions from other social partners have been reluctant. The largest trade union organisation, the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK), appreciates the fact that SY is now showing a positive attitude towards incomes policy and sees it as being of central importance to successful economic policy. Furthermore, SAK regards SY as having accepted the centralised incomes policy system and the general validity of collective agreements as a part of the Finnish bargaining system. However, SAK considers that the mandate now given to SY is of minor importance, and recommends that SMEs improve their opportunities to exert influence by directly joining their own general employers' organisation. In this way, companies would be committed to their sectoral collective agreements and have greater control of them.

The management of the Confederation of Unions for Academic Professionals in Finland (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), which represents 360,000 employees, does not support the strengthening of SY's negotiating role, on the grounds that time is not right and that the organisation does not have sufficient machinery to monitor the activity of member organisations.

Even the central employers' organisations are sceptical of the aims of SY. PT and TT, which are the current employers' representatives in negotiations, consider that the mandate of a few affiliates is not sufficient to justify admission to the negotiation table.

Change in SY's policy

SY, having previously criticised Finland's centralised incomes policy, is now willing to participate in shaping it. Lying behind this change is apparently an assessment that Finland remains a strongly agreement-based society, where the only way to exert influence is to aim for access to all forums where important decisions are made. Until now, SY has deemed the principle of general validity of collective agreements as unjust, because it applies to its members even though the organisation cannot negotiate over the agreements' contents.

The trade unions, for their part, see SY in an unfavourable light because it has in the past tried to break the general validity principle. However, during the 1990s, local agreement and flexibility have been increased - which has been the goal of SY. Against this background, the goals of the SMEs are not in great conflict with those of other employer organisations (FI9708127N).

On the other hand, SY has many members companies - in the transport sector, for example - which do not belong to the employer organisations that can sign collective agreements. In such sectors, SY has an opportunity to become the main player in defining whether a given agreement is generally valid or not. This increases the unions' interest in the organisation. However, both SAK and the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) have expressed their desire to change the law in such a way that general validity would be strengthened. At present, there is a 50% rule: before an agreement can cover all employers in a sector, half the employers in the area it covers have to belong to the signatory employers' organisation.


The Finnish incomes policy system has functioned for a long time with the present central organisations. The fact that SY now wishes to be included is causing some disquiet among them, for several reasons. SY is demanding the status of an incomes policy negotiator on the formal grounds that four of its affiliates have given it a mandate to represent them in the negotiations. The enterprises belonging to these affiliates employ about 7,000 persons - a diminutive number compared with the 800,000 wage earners employed in TT and PT member companies. Also, it must be remembered that 5,000 SY members already belong to TT or PT. Furthermore, the present central organisations have been able to control the observance of collective agreements quite efficiently. There exists some scepticism among the unions as to whether SY has the will and the ability to control the agreements in the same way.

The situation can also be seen in terms of power politics. The present central organisations are defending their dominance and they do not want to "rock the boat". Letting SY sit at the negotiating table might lead to competition for members, if this organisation were to appear able to advocate the employers' cause better than the existing central organisations. Finally, views on general validity are still far apart, as the trade unions want to extend it and the SMEs desire the opposite. With this kind of central principle at stake, the current disagreement is so serious that the objectives of SY may take quite a long time to be realised. In practice, access for SY to the negotiations depends on the approval of other central organisations. Based on the initial reactions, there are a lot of barriers to overcome before the organisation can be accepted as an equal negotiating party. (Juha Hietanen, Ministry of Labour)

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