Finland: Developments in working life – Q1 2016

Talks on the Competitiveness Pact, threats tothe formation of a new peak-level organisation, and an agreement on a wage freeze are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the first quarter of 2016. 

Negotiations ongoing on the Competitiveness Pact

Continuing negotiations between the peak-level organisations on the Competitiveness Pact have dominated labour market developments during the first quarter of 2016, although they have been more muted than last year. The negotiations were reopened in January for the fifth time, after the fourth attempt failed in December. Once the negotiations began, the government announced it would put preparations of the so-called competitiveness package (or ‘coercive laws’) on hold while waiting for results of the negotiations. The highly disputed laws were intended as an alternative way to lower Finnish labour unit costs if the social partners could not agree a solution. Halting the preparations reduced the tension between the trade unions and the government and employer organisations, and may have signalled a generally more conciliatory approach by the government of Prime Minister Juha Sipilä, which had previously been somewhat brusque towards the unions.

Social partner agreement

A preliminary agreement between the peak-level partners was found at the end of February, and the pact was finally sealed in mid-March. Its terms include a wage freeze, an annual working-time extension of 24 hours without additional compensation, and the transfer of part of the social security contributions liability from employers to employees. It also contains a preliminary proposal for a ‘Finnish wage model' whereby export industries and other sectors sensitive to international competition would set the limits for pay rises. The model is, in fact, based on the Swedish wage model. Sectoral level collective bargaining rounds will now start, based on the terms and conditions of the pact. The government is due to review the new collective agreements in early June and, if satisfied, is expected to cancel the threatened €1.5 billion of budgetary cuts and tax increases and to lower income tax.

The refugee crisis has put additional strain on the state budget and subsequently on the Competitiveness Pact. Before the negotiations reopened, the Minister of the Interior, Petteri Orpo of the centre–right National Coalition Party, proposed that unqualified immigrants be paid lower salaries than set out in collective agreements. The proposal was promptly rejected by peak-level trade unions, opposition parties and the government coalition partner Finns Party.

Merger of trade unions in the balance

The difficult negotiations on the Competitiveness Pact have undermined the proposed merger of the Central Organisation of Finnish Trade Unions (SAK) and the Finnish Confederation of Professionals (STTK) into a new peak-level trade union. SAK has been much less willing than STTK to cooperate with the Sipilä Government, and many within STTK may find SAK too openly leftist. STTK is also increasingly worried that SAK – a much bigger organisation – will dominate the new organisation. Some of STTK’s unions have already chosen not to join the new organisation. Meanwhile, the amalgamation of four SAK member unions – the Finnish Metalworkers’ Union (Metalli), the Paper Workers’ Union (Paperiliitto), the Industrial Union (TEAM) and the Woodworkers’ Union –  is making more progress. If the merger is successful, this new union would have 270,000 members and be the largest in the country.

The Finnish people seem more inclined to accept the tightening of labour market terms and conditions than unions do. A study by the Finnish Business and Policy Forum EVA and a poll by the country’s biggest newspaper Helsingin Sanomat both suggest that at least half of the population supports labour market austerity measures.


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