Myth busting 20 + 1 falsehoods used to justify reductions in working conditions

The Finnish Government is pursuing an unprecedented programme of major cuts in employee working conditions, rights and social welfare. One justification given for these cuts is a need to boost employment, but no thorough employment impact assessments have been conducted, and instead we are merely hearing that the cuts are based on common sense and on a membership survey of the Federation of Finnish Enterprises.

The Orpo-Purra Government has simply chosen to take sides, and it is not on the side of employees. The Government claims that everyone will be equally involved in rescuing the Finnish economy, while simultaneously granting tax breaks to the wealthy and cutting public expenditure. This government policy will hit the poorly paid and the unemployed. While the cuts are allegedly bringing public finances into balance, the tax rate will actually decrease. There is a mismatch between words and deeds.

A furious round of public debate is currently ongoing, with all manner of claims and beliefs being aired. We would like to correct the following 20+1 falsehoods.

1) "Government cuts in working conditions will not affect the everyday lives of employees"

Absolutely everyone working in Finland will be affected in one way or another by these changes.

The impacts for every employee include a loss of job security and the right to sick leave pay for the first day of illness, even though many collective agreements currently provide for paid sick leave.  Many of the cuts will affect employees in various ways, depending on such circumstances as the form of employment, the industry concerned, working duties, gender and age.

2) "The Government measures will not reduce anyone’s wages"

The Government cannot promise this.

Its measures threaten the minimum working conditions of employees, because they can lead to a breakdown of the system of universally binding collective agreements. An enlargement of local collective bargaining to all businesses will also allow employers to agree on night and evening work allowances, working time arrangements, holiday periods and family leave that fall below the standard of the national collective agreement.

3) "The law is enough to ensure adequate wages for everyone"

There are no statutory minimum working conditions in Finland.

Instead of a statutory minimum wage, Finland generally relies on collective agreements in the same way as other Nordic countries. The Government has listened to the long-term wishes of employer organisations, and is now seeking to weaken the obligation to comply with universally binding collective agreements. The expansion of local collective bargaining, for example, is not about enabling employees to agree pay rises (which they already can), but about letting wages sink below the collective agreement level.

4) "Unemployment benefit in Finland is needlessly generous and makes people passive"

The level of unemployment benefit in Finland is not high by Nordic standards, nor is it a significant obstacle to employment.

An SAK comparison (link in Finnish only) shows that unemployment benefit in Finland is no higher than in Denmark and Sweden. The OECD Faces of Joblessness in Finland study and a report commissioned by SAK (link in Finnish only) indicate that the most common obstacles to employment are poor health, age issues and a lack of suitable full-time work.

5) "Reductions in job security are only a problem for lazy and incompetent employees"

Loss of job security increases the uncertainty experienced by all employees.

The Government is seeking to make it easier to fire employees by removing the legal requirement of serious grounds for dismissal. This waters down the justifications required to fire an employee in practice. Nobody can guarantee that you could not lose your job due to a minor infraction, such as incorrect logbook entries or misunderstood instructions.

It should not be possible to fire employees on flimsy grounds. Employees rightly prefer a high threshold for dismissal, as this really is a huge issue in everyday life entailing a loss of livelihood and confidence in the future. The impacts of dismissal are also redoubled when the Government simultaneously cuts unemployment benefit and waters down the employer’s obligation to re-engage redundant staff.

6) "The sickness sanction, meaning the loss of pay for the first day of illness, will not really affect anyone – it just means that fewer employees will be recovering from a hangover on Monday"

The sickness sanction will immediately affect hundreds of thousands of employees and, indeed, all employees in the longer term.

While many employees will initially enjoy protection under a collective agreement negotiated by their union, the change makes it likely that the employers will raise this issue in collective bargaining.

The most common working day lost to illness is a Wednesday. Tales of Monday “hangover episodes” are simply a myth. The fear of lost pay would still make it more likely that sick employees turned up for work.

7) "Improved employee purchasing power is entirely due to government policy"

Changes in purchasing power are mainly caused by factors that have nothing to do with government policy.

Collective agreements negotiated by trade unions will raise wages in most sectors by over two per cent in 2024. Government decisions will in turn, for example, reduce the tax rate for employees earning EUR 2,400 per month by 0.7 percentage points. This means that most of the purchasing power increase comes from pay settlements negotiated by the unions. Neither did the Government play any role in the reduction of the unemployment insurance contribution that was enabled by rapid employment growth in previous years. This also improves employee purchasing power.

8) "Pay differentials would narrow, even without limiting the powers of the National Conciliator"

Restricting official settlement proposals will make it difficult to eliminate pay differentials.

Industrial action seeking pay increases that exceed the general policy line will be hampered when the National Conciliator is no longer permitted to propose such settlements. The ambition or funds required to address lower pay in the public and female-dominated sectors have been largely lacking so far, with employers now given an even greater ability to resist such pay rises in future.

9) "The trade union movement does not represent Finnish workers and does not respect democratically elected policymakers"

We represent employees in Finland, who are also entitled to lobby for their interests between elections.

There are 1.5 million trade union members in Finland, including fitters, specialists, sales staff, construction workers, cleaners and industrial kitchen employees. If the proposed employment measures actually increased employment and everyone was involved in rebalancing public finances, then employees would also accept them. The government cuts now proposed in working conditions and social welfare are unfairly targeted and unprecedented in their harshness.

Democracy also includes lobbying between elections. This is particularly important now, as the governing parties are pursuing a policy that is at variance with their pre-election promises. People in Finland expect reasonableness, equality and justice. They are ready to take extensive measures in pursuit of these goals, and they are entitled to defend their own interests - even through strike action.

10) "Employee concerns have also been carefully heard in tripartite working groups of social partners"

The fact is that these decisions had already been made before the working groups met.

The Government Programme sets out the details of cuts to both employment legislation and social welfare. Though employee representatives have delivered their speeches, the eventual findings of the working groups have merely echoed the policies of the Government Programme. The working groups have provided no real channel of influence.

New legislation has been drafted in great haste, with no proper impact assessments prepared. Observations concerning the lack of employment impacts have also been ignored. Even the Chancellor of Justice has expressed concern at the manner in which the Government is pressing ahead with its legislative amendments.

11) "A government-led labour market policy is better for both employees and businesses"

Politicising labour market issues invites uncertainty and greater rigidity.

Amendments in working conditions that are primarily driven by legislation will lead to pendulum shifts in the law when the colour of government changes. Growing labour market uncertainty destabilises operating conditions, which is bad for businesses and their employees.

12) "Adult education subsidies benefit nobody"

Adult education subsidies are very useful.

They enable employees to update their skills and change their occupations. Most beneficiaries of an adult education subsidy study at vocational schools or universities of applied sciences. The median pay of these beneficiaries is lower than the average for employees. Some nursing students, for example, are practical nurses who rely on adult education subsidies to update their skills.

Employees changing occupation are an important source of new labour among machinist and construction sector occupations. A change of occupation is only possible in many such cases thanks to the adult education subsidy.

Opposition to the abolition of adult education subsidy has been widespread. Adult education subsidy is a flexible solution for combining work and study that benefits employees, employers, and the self-employed.

13) "Cutting the livelihoods of part-time workers automatically leads to getting full-time work"

There is no automatic access to full-time work.

Full-time work is not available to everyone who wants it. Involuntary part-time work is commonplace in the private service sectors, for example, because employers do not offer full working hours.

Reducing adjusted unemployment benefit will not increase the supply of full-time jobs. It will only impoverish part-time workers. The Government is not increasing the obligation of employers to provide full-time work, nor is it tightening the requirements that determine when they may engage part-time employees. It is making life difficult for employees while imposing no new obligations on businesses.

14) "Cutting housing allowance will boost incentives to work in the Helsinki region"

Cuts in housing allowance damage incentives for part-time work. Even when working full-time or part-time, many people living in the Helsinki region and major cities receive housing allowance. The damage caused by cutting housing allowance will include an increase in poverty among families with children. A recommendation of the UN Committee on the Rights of the Child also included a warning on this very subject. Even though the justification given for these cuts is that housing allowance affects the level of rents, studies such as those conducted by the VATT Institute for Economic Research show that housing allowance has no effect on rent.

15) "Halving the layoff notice or restructuring negotiation period will not reduce pay"

The government cuts will mean a more rapid interruption of pay when staff are laid off.

The restructuring negotiation period will be entirely abolished at workplaces with fewer than 50 employees. This represents a loss of pay for up to 1.5 months when an employee is dismissed.

Halving the restructuring negotiation period in larger undertakings will reduce the number of paid working days for affected employees by the reduction in negotiating time. The same applies to layoff notice periods.

16) "Freeing smaller business from cooperation requirements will boost employment"

Exempting smaller businesses from the duty of cooperation will undermine bargaining relations at workplaces without increasing employment.

The Government is seeking to restrict application of the Cooperation Act to undertakings with at least 50 employees instead of the current 20 employees. This amendment will not improve dialogue at workplaces, and will even tend to damage productivity through deteriorating conditions for cooperation and bargaining in businesses.

17) "The government measures will not affect the universally binding character of collective agreements"

This government policy jeopardises the universally binding character of collective agreements in the long term.

The Government will give unorganised businesses the same bargaining opportunities and privileges as organised businesses, thereby reducing the incentive for employers to organise. This will directly affect the universally binding character of collective agreements, as the employer organising rate is the most important criterion for determining that a collective agreement is universally binding.

The Government will also make it easier to conclude collective agreements for individual undertakings. This will also affect the institution of universally binding agreements, as only a national collective agreement can be universally binding. Any shift from national agreements to individual business-specific agreements will leave some employees entirely excluded from the scope of collective agreements.

18) "An employer may ask whether an employee will take part in a demonstration or strike"

The employer may not pry into whether an employee will take part in a demonstration or strike, but may only ask whether someone will be at work for the purpose of work shift planning or wage payment. An employee is nevertheless not required to tell the employer about any private intention to take part in a strike.

19) "Finland has a lot of political strikes, causing huge losses even for businesses that are not involved in the causes of those strikes"

Political strikes were very rare in Finland before the current Government took office.

There have been only a handful of political demonstrations in Finland involving even a one day work stoppage in the last 20 years. The Orpo-Purra Government has caused more political strikes through its own measures than all of the governments that served between 1991 and 2023 combined.

The policies of the Government Programme on cuts in working conditions and social welfare are taken directly from the lobbying objectives of organisations that represent business interests, meaning that these undertakings are far from disinterested bystanders.

20) "Political strikes are completely banned in Sweden"

There is no legislation in Sweden restricting political labour disputes.

The Swedish Labour Court has even upheld the legality of a political labour dispute that continued for two weeks. The reason for fewer political strikes in Sweden is not because they are banned, but because working conditions and the labour market are based on collective bargaining and mutual agreement.

21) "The Government is taking working conditions in Finland in a Nordic direction"

Government measures to cut social welfare and weaken labour legislation represent a divergence by Finland from the policies of other Nordic countries.

Comprehensive sectoral collective agreements and an adequate standard of social welfare are cornerstones of a Nordic model based on dialogue that has achieved good results from the perspective of both businesses and their employees.

Government cuts to unemployment benefit and housing allowance will damage the social safety net. Changes in local negotiation, collective agreements for individual undertakings and the right to take industrial action will likewise damage collective bargaining.