Finland: Annual Review 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012



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Year 2011 meant a return of the tripartite pay bargaining structure in the field of Finnish industrial relations. For the first time in four years, social partners worked out a tripartite framework for a new centralised national agreement on wages and conditions in October 2011. The 25-month agreement offers a 4.3% pay increase with a lump sum payment of €150 at the beginning of 2012. In June 2011, a new six-party government was formed, headed by Prime Minister Katainen. From the beginning, the new government has emphasised good relations with social partners, and the new Minister of Labour, Lauri Ihalainen, is a former President of the Central Organisation of Finnish Trade Unions (SAK).

1. Political and economic developments (200 words)

Two governments were in office during 2011 under Prime ministers Mari Kiviniemi (Centre) and Jyrki Katainen (National Coalition). Kiviniemis's outgoing centre-right government consisted of Centre, National Coalition, Greens, and Swedish People's Party.

Parliamentary elections were held in April. Opinion polls indicated that True Finns party was expected grow significantly and it did, in fact, increase its number of seats from 5 to 39 (out of 200), becoming third largest. National Coalition received most seats, 44, whereas Social Democrats came second (42 seats). Other five parties receiving seats were Centre, Left Alliance, Greens, Swedish People's Party, and Christian Democrats.

Negotiations to form a majority government were unusually difficult. It was largely assumed that True Finns would be part of any coalition, but they eventually remained in opposition. Program negotiations started with six parties (all except True Finns and Centre). Negotiations then broke off, but were eventually continued. They were concluded in June, when a new six-party government was formed.

The new government, headed by Prime Minister Katainen, covers a broad political spectrum from left to right. Finance minister is Jutta Urpilainen (Social Democrats). Other key ministers in the area of economy and labour are Jyri Häkämies (National Coalition) and Lauri Ihalainen (Social Democrats). The government places a lot of emphasis on maintaining high employment rate and developing work life, but is watchful of the tightening financial situation.

After the formation of the government, Prime Minister Katainen told Parliament that he would invite labour market leaders for talks on the state of the economy in August. He said the aim would be to find ways to create jobs and to safeguard the Finnish economy’s competitiveness.

From the beginning, the new government has emphasised good relations with social partners, and the new Minister of Labour, Lauri Ihalainen, is a former President of the Central Organisation of Finnish Trade Unions (SAK).

2. Legislative developments (300 words)

The law covering employment contracts was amended to allow employees to take an unpaid leave in order to take care of a family member or another close person. The statute refers to "special care" and leaves the details to be decided jointly by the employee and the employer. If requested, the employee must officially state the need for a leave.

The law covering employment contracts was also amended to improve the opportunities of employment agency workers. The law has previously required that open positions are advertised in such a way that the employer's part-time and fixed-term workers have equal chances of applying for those positions as full-time and permanent workers. The amendment extends this requirement to workers placed by an employment agency. Second, the amendment also states that employer's collective agreement or other agreements and practices apply to the placed workers if they are not covered by another collective agreement. Third, absent an objective reason the placed workers must be provided the same services and arrangements as employer's own workers, although the employer is not required to subsidise any services used by placed workers.

3. Organisation and role of the social partners (300 words)

Four EK-affiliated employer associations representing service industry employers, namely the Employers’ Association for Special Services (Erityispalvelujen Työnantajaliitto ry), the Employers’ Association for Transport and Special Services (Liikenne- ja Erityisalojen Työnantajat ry), the Association of Support Service Industries (Palvelualojen Toimialaliitto ry) and the Employers’ Association TIKLI (Tieto- ja tekniikka-alojen työnantajaliitto TIKLI ry), merged on 1 January 2011 to form the Service Sector Employers PALTA (Palvelualojen työnantajat PALTA), a member association of the Confederation of Finnish Industries EK. A CEO of Finnish telecom operator DNA, Riitta Tiuraniemi, was appointed the first President of PALTA.

From the beginning of 2011, trade union Suora representing employees in the finance and insurance industries (as well as white-collar workers in the gaming business and alcohol trades) and the Union of Salaried Employees (Toimihenkilöunioni, TU) merged and formed Trade Union Pro (Ammattiliitto Pro). Antti Rinne, the President of the TU, was unanimously elected President of Pro; and President of Suora, Riitta Suonpää, started as First Vice President.

On the trade union side, a hard competition for the membership of IT sector employees took place. The association of information technology (IT) sector employees in the Federation of Special Service and Clerical Employees (ERTO), affiliated to the Finnish Confederation of Salaried Employees (STTK), has decided to leave ERTO and join the Union of Professional Engineers in Finland (UIL), which is affiliated to the Confederation of Unions for Professional and Managerial Staff in Finland (AKAVA). (FI1108011I)

Year 2011 means a return to a tripartite negotiation structures concerning pay. The previous national centralised incomes policy settlement was last applied in Finland in 2005–2007. In 2008, the Confederation of Finnish Industries (EK) announced that sectoral, company and even individual-level bargaining would be the negotiation models of the future. In 2009 and 2010 the collective bargaining took place at the sectoral- and company-level. (See section 4 below.)

4. Developments in collective bargaining and social dialogue (350 words)

For the first time in four years, social partners worked out a tripartite framework for a new centralised national agreement on wages and conditions in October 2011. The 25-month agreement offers a 4.3% pay increase with a lump sum payment of €150 at the beginning of 2012.

The signatory parties are the union confederations Akava, SAK and STTK and the Confederation of Finnish Industries (EK) and the employer organs of the State, municipalities and the Lutheran church.

The government is supporting the agreement with tax reliefs worth €400 million. In late November the partners concluded that support for the framework agreement was broad enough for it to take effect. The accord covers about 94% of the workforce, or around two million employees. Social partners have characterised the comprehensive national framework settlement as a historic achievement. (FI1111011I)

The agreement also includes several substantial quality of working life issues that include:

  • the opportunity for employees to participate in paid training of three days per year to increase their expertise;
  • a two-week extension of paternity leave which can be used flexibly until a child is two years old;
  • the status of fixed-term employees and temporary agency workers is being strengthened. A proposal for legislative changes concerning the grounds of temporary agency work and temporary employment will be submitted accordingly by the end of March 2013;
  • an amendment to the act on cooperation within undertakings to include flexible working hours, grounds for temporary employment and enhancement of employee vocational skills in human resources plans. The associated statutory amendment proposals will be submitted no later than the end of November 2012;
  • a revision of labour protection legislation to focus special attention on the strain imposed by shift work;
  • a study of the use of working time banks, with associated legislative proposals submitted no later than the end of November 2012;
  • a study of the effectiveness of pay reviews with a view to promoting equal pay, forming the basis for proposing further measures no later than the end of May 2012;
  • planned cuts in Finland’s job alternation scheme will be cancelled.

In addition to the key points of quality of work/life issues, the agreement contains initiatives concerning the harmonisation of work and family life, enhancing trust in the labour market and improving employee security in enterprise downsizing. (FI1110011I)

5. Responses to the economic situation (200 words)

The deteriorating economic situation in Europe was expected to make contract negotiations difficult in 2011. There was, however, significant political pressure in 2011 to settle collective agreements with a larger agreement in order to avoid disruptive industrial action and inflationary salary increases. (See section 4 above.)

6. Developments in working conditions (550 words)

The main annual source for the development of working conditions has been the Working Condition Barometer by commissioned by the Ministry of Employment and the Economy (previously Ministry of Labour). The Barometer is a computer-assisted telephone survey conducted by Statistics Finland during its regular Labour Force Survey wave in September-October of each year. At the time of this report's writing, only a preliminary report is available for the 2011 Working Condition Barometer. The preliminary report and the upcoming final report have been prepared by researchers from University of Tampere: Simo Aho and Ari Mäkiaho.

According to the 2011 Working Condition Barometer, the overall assessment of quality of work life did not change significantly from 2010. Among the components of the overall quality job certainty clearly worsened from 2010, although it remained the best component. Three other components—equal treatment, resources as well as innovativeness, encouragement, and trust—remained steady. Assessments of job certainty decreased most among those over 55 years of age and central government employees.

Another measure in the Working Condition Barometer that has been under scrutiny recently is the so-called balance measure of meaningfulness of working. This is the difference of two percentages: those who think that meaningfulness has improved and those who think meaningfulness has deteriorated. The balance has remained negative since 2001, but fluctuated according to general economic conditions. Consequently, it decreased again in 2011 when compared with 2010. The assessments were lowest in the public sector, although the decline was most striking in manufacturing.

Reported presence of bullying at workplace (not necessarily directed at the respondent) increased from 24% in 2010 to 29% in 2011 according to the Barometer. Women (36%) reported bullying more often than men (22%), and the increase was also larger among women. Bullying was more common in the public than the private sector and most notable in municipal employment.

The 2011 Barometer included questions regarding employer's willingness to make accommodations based on employee's needs. Accommodations in working hours were most common: 28% of employees reported that their needs had a lot of influence on working hours and 54% reported some influence (81% altogether). Similarly, 72% and 66% reported that their needs had at least some influence on work load and career development, respectively.

Training and skills development was addressed by the 2011 Working Conditions Barometer as well and for the first time the survey included a question about unpaid training. Overall, 14% of employees had participated in training on their own, and the share was largest among public sector employees. About half had participated in training paid by the employer. There, too, participation was most common among public sector employees.

7. Industrial action (200 words)

According to the statistics compiled by Statistics Finland, there were 163 instances of industrial action during 2011. This was 28 fewer than 2010 (191). The number of employees involved was 59,000 and the number of lost working day 128,000. Both the number of employees involved and the days lost were less than half of respective numbers in 2010.

Clerical staff at Finnish paper industry corporations Stora Enso, Metsaliitto and UPM announced two-week strikes in the end of April to press their demand for a pay negotiation. The strike by 2,000 Proliitto union members ended when the parties – the Trade Union Pro and the Finnish Forest Industries Federation - agreed a new collective agreement on 18th of May by the conciliation led by National Conciliator Esa Lonka.

A strike in technology sector took place in late October in the midst of so called framework agreement negotiations (see section 5). The strike covered 40 companies and 30,000 employees (blue-collar and lower white-collar) in metal and electronics manufacturing. It was resolved in only four days with an agreement that was within the framework agreement. A strike by 10,000 upper white-collar employees in the same sector occurred in early November, but it was also resolved within a week.

In 2011, the Finnish Labour Court imposed fines on two trade unions for industrial action taken in spring 2010. During the past decade and also in 2011, the curbing of illegal strikes has been an important issue for employers and the Confederation of Finnish Industries (EK). The employers’ side believes that fines should be larger to deter illegal strikes and to reflect the heavy financial losses caused by illegal strikes. So far, attempts to amend strike legislation have proved very difficult. (FI1105011I)

8. Restructuring (250 words)

The most important restructuring event of 2011 was that of mobile phone maker Nokia. Following declining market share Nokia decided to enter into strategic partnership with software company Microsoft and substitute its own Symbian operating system with Microsoft's Windows Phone. This led to a decision to gradually bring down Symbian development. Consequently, Nokia decided to dismiss 1,400 employees and outsource 1,200 to software consultant Accenture. Nokia's decision also influenced several subcontractors, and it later announced another 300 redundancies in service development.

Another traditionally strong sector, forestry industry, was also struck by large restructuring as UPM cut about 600 employees from sawmills and paper mills. Redundancies of similar magnitude were carried out by airline Finnair, which first decided to reduce maintenance services offered to other airlines and later reduce staff in administration and marketing.

Other large redundancies included logistics and delivery company Itella (formerly Finnish Post), which decided to cut 500 positions from mail sorting as well as its own stores. Itella's traditional business of mail delivery has been under pressure from increased electronic communications. Nordea Bank, which announced job cuts 450 employees, cited as the cause anticipated banking regulation which is expected to increase costs.

Some job expansion was also seen in 2011. Valmet Automotive, a contract manufacturer of electric cars, announced an additional 200 jobs as did consulting company Capgemini. Swedish home store chain Ikea started recruitment for its new store (250 jobs upon opening).

9. Other relevant developments (150 words)

Employment agency work is rare in Finland: only about 1% is employed through agencies. According to 2011 Working Condition Barometer (see section 6 for description), the proportion of employees reporting presence of employment agency workers at workplace did increase to 24% from 19% in 2010.

Working Condition Barometer 2011 also reports a decline union membership (4%-points from 2010), although it still remains at a relatively high level (68%). In contrast, the proportion of those who belong to an unemployment fund without being union members has increased. In Finland, basic unemployment allowance applies to everyone, but earnings-related allowance is only paid to members of unemployment funds. Most such funds are union-affiliated.

Pertti Jokivuori, University of Jyväskylä, and Simo Virtanen, Finnish Institute of Occupational Health

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