Until recently, collective bargaining in Finland was predominantly centralised with a national agreement setting the framework for pay increases at lower levels. In the 2007 pay round bargaining appeared to have permanently shifted to industry level with increasing room for company level bargaining on top. However, in both 2011 and 2013, national agreements were again signed, marking a return to centralised bargaining, for the time being at least.
Collective bargaining in Finland used to take place at three levels, national, industry and company. The national level agreements (the general incomes policy settlements), covered the whole economy, and normally produced recommendations to negotiators at industry level. The government often played a key role in these negotiations, for example making changes in taxation or social security, dependent on their outcome. (The system did not work every time; sometimes the negotiators could not agree at national level and there were only industry level agreements.)
However, in 2007 this system of centralised agreements, which had begun in 1968, appeared to have ended when the private sector employers’ association EK refused to negotiate a new national agreement, insisting that negotiations should be at industry level. It argued that there was a need for greater flexibility in negotiations to take account of the specific situations of different industries and companies.
The 2007 round of negotiations was conducted locally and in May 2008 EK issued new guidelines saying it would not return to national pay negotiations in the future. The negotiations in the 2009 and 2010 pay rounds were also at industry level, although EK retained a coordinating role.
However, in 2011, in light of the economic crisis, the employers indicated that they would again be willing to sign a national framework agreement. This was duly signed in October 2011, marking a return to more centralised bargaining in Finland after a gap of six years. It set guidelines for industry-level negotiators to follow, although unlike the earlier general incomes policy settlements, which covered all workers, the 2011 framework agreement only applied to industries with existing collective agreements. As in the past, it also covered a range of non-pay issues (see The subject of the negotiations).
Two years later, in October 2013, a second central agreement, the Pact for Employment and Growth, was signed. It provides for very modest increases and also covers non-pay issues, such as changes in social insurance contributions and unemployment benefit rules. However, as with the 2011 settlement, it only covers areas where there are collective agreements rather than all workers.
Otherwise, industry level negotiations set rates and basic conditions for each industry, providing a minimum standard, which in most cases is binding on all employers in that industry, whether or not they are members of the employers’ organisation which agreed the settlement. (An independent commission formally decides whether an agreement should be generally binding, largely based on whether it covers more than half the employees in the industry – calculated on the numbers employed by the members of the signatory employers’ association – or is well established, although disputes can be taken to the labour court.) As a result, the collective bargaining coverage in Finland is very high. A study published by the Finnish Ministry of Labour (now the Ministry of Employment and the Economy) in 2007 found that 87.4% of all private sector employees were covered by collective agreements in 2004, and, that when the public sector, where all employees were covered, was included, the proportion of all employees covered by collective agreements rose to 91.4%.1
Below the industry level there are company negotiations, which have become more important in recent years. Company level negotiations, which take place with the framework of industry level agreements, can produce improvements on the industry settlement, but may also involve other changes. Employers have for some time pressed for greater flexibility, and in the 2010 and 2013 negotiating rounds a number of settlements allowed individual companies to adjust the increase agreed for the industry as a whole to reflect their own financial circumstances. The main agreement in the technology industry, for example, provides for company negotiations on the appropriate pay increase. Only if these fail are the terms of the national agreement applied – the so-called fallback rule.
Who negotiates and when?
Negotiations at national level, now apparently restored, at least for the present (see above), take place between the national union confederations and the national employers’ associations – primarily EK. Negotiations at industry level take place between the unions and the industry federation for that industry, although in some cases groups of unions, “cartels”, are involved. At company level individual employers bargain with their local union organisations.
Negotiations used to set terms and conditions for between two and a half and three years. However, from 2009 onwards this appeared to have changed, with the pay element of the deals set for a shorter period of around one year. The national agreement signed in 2011 was for 25 months, and the pact signed in 2013 is formally for three years, starting from November 2013, but pay increases have only been agreed for the first two years. The agreement in relation to the third year is, therefore, little more than an agreement to talk again in June 2015.
The subject of the negotiations
At national level, negotiations have again, at least on a temporary basis, returned to the subject of pay increases. The 2011 and 2013 agreements also covered a range of other issues, including an extension of paternity leave, health and safety improvements and a right to three days training leave per year. Both also involved government action, including cuts in corporation tax and changes to social security (unemployment) arrangements. In the past, some of the key developments in Finnish industrial relations, such as rights for trade union representatives, or protection against dismissal, as well as broader labour market issues, like training rights, have been the subject of national negotiations.
Industry and company level agreements cover normal pay and conditions issues, and, in some cases, incorporate wider issues.
There is no system in Finland for setting a single national minimum wage, although the pay rates set in legally binding industry level agreements fix the minimum rates for each industry.
L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.