National labour negotiations stall in Finland

Negotiations were terminated after the Confederation of Finnish Industries (EK) and the Commission for Local Authority Employers (KT) withdrew from the process. EK and KT had insisted on the commitment of the Finnish Transport Workers’ Union (AKT) to a negotiated settlement.

AKT announced at the end of November that it would withdraw from any comprehensive labour market agreement and prepare for a separate round of collective bargaining with its own counterpart employers’ federation in 2017. This announcement followed a policy decision by EK to discontinue involvement in national comprehensive incomes policy settlements after spring 2016.

On the employee side of the negotiating table the Central Organisation of Finnish Trade Unions (SAK) and the Finnish Confederation of Professionals (STTK) were willing to continue the collective bargaining process. SAK President Lauri Lyly is astonished at the grounds given by EK for breaking off negotiations:

“The coverage of a national settlement can never be gauged in advance. Each union makes its own decision to abide by the outcome of the national process when bargaining terms and conditions of employment.

Even without AKT, the coverage of a comprehensive labour market agreement could be as high as 97 per cent of the bargaining workforce, and the coverage of previous successfully negotiated comprehensive agreements has only been just over 90 per cent, so we could have achieved adequate coverage this time too.”

Lauri Lyly feels that lack of political will is the real reason why EK has withdrawn from the process:

“From the outset the employers had no real ambition to negotiate a labour market settlement that would improve the national economy and the employment situation. Instead EK simply followed the lead of the Finnish government throughout the collective bargaining process.”

Government seeks deterioration in working conditions enforced by law

The latest round of collective bargaining originally began in response to a demand by the Finnish government for the social partners to conclude an agreement that would improve national competitiveness by a total of ten per cent.

The government has threatened to enforce a five per cent cut in unit labour costs through mandatory legislation if no such agreement emerges. This legislation is due to take effect in summer 2016, with the associated cuts in working conditions to be implemented in each industry when new collective agreements enter into force. Most of these new collective agreements will be negotiated during the latter part of 2016.

The government has proposed the following mandatory legal provisions:

• the first day of sickness will be unpaid, with only 80 per cent of the normal wage paid for the following eight days
• 30 per cent will be cut from holiday bonuses
• Epiphany and Ascension Day will become unpaid public holidays
• annual holiday will be capped at six weeks.

Implementing the government’s mandatory legal proposals would substantially reduce the incomes of all employees. SAK also believes that the legislative package constitutes interference in the free collective bargaining rights of labour market organisations that are guaranteed under conventions of the International Labour Organisation (ILO) and under the European Convention on Human Rights.

The negotiating position of SAK in the recent process envisaged no pay rises at all in 2017, with increases in 2018 determined by the performance of export sectors. SAK was also willing to see cuts in employer contributions, coupled with a moderate increase in the contribution share of employees.

As the negotiations progressed SAK also proposed a more flexible model for employee holiday bonuses based on fixed currency conditions. This would have reduced holiday bonuses as unemployment rose, while increasing them at times of high employment.