Finland: Latest developments in working life Q2 2019

The launch of the new government’s policy programme, the reaction of social partners to the programme and an increase in industrial action events in 2018 are the main topics of interest in this article. This country update reports on the latest developments in working life in Finland in the second quarter of 2019.

New government in place after parliamentary elections

On 6 June 2019, Antti Rinne, leader of the Social Democratic Party and former leader of several trade unions, was sworn in as Prime Minister of Finland. After a narrow victory in the parliamentary elections in April, Prime Minister Rinne formed a centre-left government together with the Centre Party, the Green League, the Left Alliance and the Swedish People's Party. The five-party coalition has a majority of 117 seats in the 200-seat parliament.

Employment policy is a priority for the Rinne government. Due to an ageing population, higher levels of labour market participation are needed to secure sustainable public finances. A key target is to raise the employment rate to 75% by the end of 2023. Currently, Finland’s employment rate stands at 72.6% [1] – the highest in a decade – but the employment growth of recent years is expected to slow down. [2]

Measures addressing both the supply of, and demand for, labour are proposed in Rinne’s government programme. Among other things, the government proposes the following labour market reforms to be carried out during the cabinet period:

  • reforming the services provided for unemployed people and the unemployment benefits system, including dismantling the controversial ‘Active Model’
  • increasing active labour market policy measures and developing the administrative capacity and remit of the public employment service
  • increasing the use of wage subsidies to support employment in companies
  • increasing company-level collective bargaining, based on mutual trust between the parties
  • promoting gender equality by increasing pay transparency, promoting pay equality, preventing discrimination and implementing a parental leave reform
  • supporting the employment of people with poor employment prospects

Other major planned reforms include a comprehensive social security reform and a raise in the compulsory education age. In addition, a social and health care reform – which several previous governments attempted to implement but were unable to – is finally due to be carried out.

Government liaises with social partners on employment measures

The starting point for most of the new government’s labour market policy reforms (including the parental leave reform) is that they are drafted in a tripartite setting and involve proposals from social partners.

In general, the social partners have been satisfied with the fact that they are expected to play a key role in achieving the objective of a 75% employment rate. [3] Trade unions, in particular, have welcomed the government’s commitment to tripartite cooperation, especially after a period of strained industrial relations during the previous government.

In April, all peak-level social partners signed a joint proposal on how to develop working life in times of technological change,[4] and the Central Organisation of Finnish Trade Unions (SAK) was pleased to see a commitment to address challenges arising from new forms of work in the government programme. [5]

However, critical remarks have been made by several stakeholders including the Confederation of Finnish Industries (EK) and the Confederation of Unions for Professional and Managerial Staff in Finland (Akava). According to them, the government is relying too heavily on two premises: firstly, that new effective employment measures will be found and the employment rate in effect will be raised ‘under normal international and related domestic economic circumstances’; and secondly, that there will be ‘normal GDP growth’, which is being called into question as new forecasts show that Finnish economic growth is expected to slow down over the coming years. [6]

Increase in industrial conflicts in 2018

The number of industrial action events, participants and lost working days all increased compared to previous years, according to figures recently published by Statistics Finland on industrial action events in 2018. [7] More than 282,000 employees – the highest number in the 2000s – participated in 166 industrial conflicts in 2018. The number of working days lost in the process was 214,428, the fourth highest number since 2000. Approximately half of the conflicts were about collective agreements. In terms of the number of participants and the number of lost working days, the majority of the events (85% and 79%) were initiated for ‘other reasons’. This category includes the large-scale political strikes that took place during 2018 in response to the government’s labour market policy measures.

Commentary

One of the main goals of Rinne’s government is to create 60,000 more jobs during the next four years, and the social partners are being invited to play a major role in this process through tripartite dialogue. The first set of proposals from the social partners is expected in advance of the government budget session in autumn 2019, with a second set to follow before discussions relating to the General Government Fiscal Plan take place in spring 2020. Social partners on both sides have their preferred measures, but finding common ground might be difficult. It is especially challenging given the timeframe – the attainment of the employment goal will be continuously evaluated – and because of the slowing economic growth in Finland due to uncertainties in the global economy.


Footnotes

  1. ^ Statistics Finland (2019), Labour force survey 2019, May , 25 June.
  2. ^ Ministry of Economic Affairs and Employment (2019), Työmarkkinaennuste: Suhdanne kääntyy ja työmarkkinat hiipuvat , 14 May.
  3. ^ Yle (2019), Näin hallitusohjelma on otettu vastaan: Enteilee konkurssia, on hiekalle rakennettu huvila – toisaalta auttaa Suomen yli laskusuhdanteen , 3 June.
  4. ^ SAK (2019), Työmarkkinoiden keskusjärjestöiltä yhteinen ehdotus työelämän kehittämiseksi työn ja teknologian murroksessa , 2 April.
  5. ^ SAK (2019), SAK:n hallitus: Muuttuvan työelämän haasteet kiitettävästi hallituksen asialistalla , 3 June.
  6. ^ Bank of Finland (2019), Finland’s growth too slow – contributing factors both international and domestic , Bank of Finland Bulletin 3/2019, 11 June.   Yle (2019), Suomen talouden tahti hidastuu odotettuakin nopeammin – Kolme kuvaa kertoo paljon, 17 June.
  7. ^ Statistics Finland (2019), Työtaistelujen lukumäärä nousi edellisvuodesta , 29 April.

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