Centralised incomes policy deal fails - sectoral bargaining to follow

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A new centralised incomes policy agreement seems unlikely to materialise in Finland, after the board of the SAK trade union confederation stated on 27 September 1999 that the preconditions for such an agreement are lacking. This was because 10 SAK affiliates announced that they wanted a sector-level bargaining round, in order to address sector-specific problems (such as outsourcing) that have accumulated under previous centralised agreements. The employers, on the other hand, see no need for this.

After two central national incomes policy agreements in a row, covering 1995-9 (FI9801145F), it now seems that the next bargaining round will take place at sector level. The current national deal (FI9801145F) expires in January 2000 and, before the start of the negotiations proper, the board of the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK) announced on 27 September 1999 its unwillingness to conclude a centralised agreement. This was because 10 SAK affiliates declared that they were first and foremost seeking a union-specific sectoral solution. This decision was interpreted as meaning that no broad-based agreement is possible this time around. The statement by the SAK board was concise: "The council of SAK required that the board should find out by early autumn the chances of a wide-ranging incomes policy agreement. On the basis of the fact-finding carried out, it has to be stated in conclusion that many SAK affiliates have announced that they are aiming primarily for a union-level bargaining round, so in these circumstances the preconditions for a joint, centralised and all-embracing agreement are lacking."

Those unions advocating a sectoral bargaining round represent 250,000 members, about a quarter of the SAK total. The more important organisations taking this position include the Paperworkers' Union (Paperiliitto), Chemical Workers' Union (Kemianliitto), Finnish Transport Workers' Union (Auto- ja Kuljetusalan liitto, AKT) and Finnish Foodstuff Workers' Union (Elintarviketyöläisten liitto, SEL). Some union organisations - such as the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA) (FI9909119N) and the SAK-affiliated Metalworkers' Union (Metalliliitto) (FI9909120N) - had earlier stated their wish for a centralised agreement, and are now expressing disappointment at the prospect of a decentralised sectoral bargaining round.

The unions accuse the employers of not leaving room for the resolution of sector-specific problems (like outsourcing) alongside centralised agreements. An additional reason for some unions to prefer sectoral bargaining seems to be that the government has discussed a weakening of the general validity rule, whereby agreements are extended to cover a whole sector (FI9906109N). The share option and bonus arrangements made recently for senior management by some large companies, at the same time as announcing redundancies and demanding moderation in employees' pay rise expectations (FI9804158F), may also have led some unions to aim for a sectoral bargaining round.

The Confederation of Finnish Industry and Employers (Teollisuuden ja Työnantajain Keskusliitto, TT), like other employers' confederations, has stated that the basic condition for a centralised agreement is that it should cover as wide an area as possible. Now, following the SAK decision, there is no chance of this. Among its objectives for sectoral bargaining, TT has identified respect of the inflation target linked to EU Economic and Monetary Union. According to TT, this context does not accommodate sector-specific demands.

According to the Prime Minister, Paavo Lipponen, the government and the social partners have the same goals for the coming sector-level bargaining round: continuation of employment growth, safeguarding competitiveness and increasing purchasing power. A sectoral round will make the government's tax decisions more difficult, since the level of future wage increases cannot be decided definitively until the beginning of 2000. Tax reductions are likely to be postponed till 2001. Mr Lipponen hopes that the organisations will coordinate the general level of pay increases as well as the duration of the agreements, so that it will be possible to try to conclude a centralised agreement in the subsequent round. The chair of the Metalworker's Union, Per-Erik Lundh, has also expressed a wish for the coordination of the duration of agreements.