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Collective Bargaining

Until recently, collectiveCollective bargaining covers almost all Finnish employees and until recently it was largely 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  permanently 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,the economic crises that have hit Finland since then have led to a  marking a return to centralised bargaining, for the time beingsome periods at least.

The framework


CollectiveFor almost 40 years up to 2007 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., who then implemented them, with the possibility for some improvements at company level. The government often played a key role in these national-level negotiations, for example making changes in taxation or social security, dependent on their outcome. (TheAlthough the system did not work every time; – sometimes the negotiators could not agree at national level and there were only industry level agreements  – and although there was no legal requirement to negotiate in this way, from 1968 to 2006 .)national bargainingwas central to pay setting.


However, insince 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, insistingthis system has broken down. At the time, the employers insisted that negotiations should be at industry level. It argued that there was a need for greater flexibility in negotiations to take account of thetheir specific situations of different industries and companies.


The 2007 round of negotiations was conducted locally, and in May 2008 EK, the main employers’ association, 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 coordinatingBut in fact, since the publication of those guidelines, there have been long periods when national-level bargaining has resumed its central role.


However,These include in 2011, in light of the economic crisis, the employers indicated that they would again be willing to sign a national two-year framework agreement. This, which was duly signed in October 2011 as a response to the economic crisis, the three-year , marking a return to more centralised bargaining in Finland after a gap of six years. Pact for Employment and Growth in 2013 which was also . It provides signed in a period of economic difficult for Finland, and the one-year Competitiveness Pact, signed in February 2016 in response to a governmentplan to cut public spending and raise taxes.All of these settlements followed the traditional pattern of involving government measures, generally in return to union concessions on pay, as well as negotiations between the national union confederations and the main employers’ association.

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.


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).Since the ending of the Competitiveness Pact in 2017 – the precise date varied betweenagreements –subsequent negotiations have seen a return to industry-level rather than national bargaining. However, recent experience suggests that there is no guarantee that this will continue indefinitely


Two years later, in October 2013, a second central agreement, the Pact for Employment and Growth, was signedWhether the overall level of pay increases is set nationally or in individual industries, it is industry level agreements which set the rates paid and basic conditions. These rates and conditions apply to employers who are members of the employers’ association which has signed the agreement and there is also a mechanism to extend the agreement to all employers in the industry concerned. Since 2001 this has involved an independent commission, which formally decides whether an agreement should be generally binding on all employers (and employees) in the industry. The decision is largely based on whether the agreement covers more than half the employees in the industry concerned – calculated on the numbers employed by the members of the signatory employers’ association – or whether it is well-established in some other way. Disputes over the commission’s decisions can be taken to the labour court.


A study of the collective agreements signed in 2013-14 carried out for the Finnish Ministry of Employment and the Economy found that, of the 198 industry-level agreements in the private sector and for state-owned companies, 165 had been extended to all employers in the industry concerned.[1] Making agreements generally binding increased the number of employees covered by these agreements from 922,997 to 1,175,285, and raised the collective bargaining coverage of employees in the private sector and state-owned companies from 75.5% (based just on employers belonging to signatory employers’ associations) to 84.3% (once employers covered by the generally binding declarations are added in).  


As all employees of central government and the municipalities are covered by collective bargaining, this increases the overall coverage of collective agreements to 89.3% of employees in 2014. . 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%.This is a slightly higher figure than 2008 when, using the same basis for calculation, collective bargaining coverage was 87.5%.


Below the industry level there are company negotiations, which have become more important in recent years, and are. Company level negotiations, which take place withgenerally  conducted within the framework of industry level agreements rather than as stand-alone settlements. , They can produce improvements on the industry settlement, but may also involve other changes. Employers have for some time pressed for greater flexibility at company level, and this has been accepted in some cases. For example, , and in the 2010 and 2013 negotiating rounds a number of 2018 and 2019 settlements, including the key agreement covering 100,000 in the technology industries,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.allowed the distribution of part of the increase to be negotiatedlocally.


As well as periodic national-level bargaining in the context of pay increases, unions and employers are also involved in the tripartite Economic Council of Finland. This is chaired by the Prime Minister and composed of key government ministers, the chief of the Bank of Finland, the heads of the main union confederations andrepresentatives of the main employers’ associations and the agricultural and forestry producers. It meets more or less monthly, other than in the summer, and, among other things, it discusses the country’s economic development, use of national resources and competiveness, employment policy, the role of the public sector and welfare.


Who negotiates and when?


Negotiations at national level, now apparently restored, at least for the presentwhen they take place (see above), take placeare  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. They are normally negotiated by the affiliates of each confederation separately – for example, the study on the 2013-14 bargaining round found that, in the private and state-owned company sector, SAK affiliates had signed 114 agreements, STTKaffiliates 49 and AKVA affiliates 13. Only 17 agreements had been signed jointly by unions from more than one confederation.[2], 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, this is not fixed and,from since 2009,onwards this appeared to have changed, with the pay element of the deals set for a agreements have been signed for shorter periods. For example, the Competiveness Pact signed in 2016 was for a year. The agreements signed in 2017-18 have mostly been for two or three years and this pattern may again be returning. 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, nNegotiations at national level typically 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 involvedcommitments from the government, as well as agreements on pay and conditions between the unions and the employers. Recent national-level negotiations have produced  action, including cuts in corporation tax and changes in tax and to social security (unemployment)  arrangements and had an impact on government spending plans. 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. However, most employees are covered by the rates set out in the collective agreement covering the industry in which they work, either because their employer is a member of the employers’ associations that has signed it, or because the agreement has been made binding on to all employers in the industry under the extension procedure (see above). For those without an agreement, the Employment Contracts Act provides that employees must receive “normal and reasonable pay” for the work performed., although the pay rates set in legally binding industry level agreements fix the minimum rates for each industry.

[1] Työehtosopimusten kattavuus vuonna 2014 (2016) by Lasse Ahtiainen, Työ- ja elinkeinoministeriön julkaisuja 11/2016 https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/74850/TEMjul_11_2016_web_22032016.pdf (Accessed 20.12.2018) and Coverage of collective agreements (2016) by Lasse Ahtiainen, Ministry of Employment and the Economy, Employment and entrepreneurship 11/2016 (English summary) in Finnish Labour Review 2 / 2016 https://tem.fi/documents/1410877/2874993/tak022016.pdf/d5a4e2d6-93c8-4d78-a757-cd28b3c35c24 (Accessed 28.07.2019)

[2] Työehtosopimusten kattavuus vuonna 2014 (2016) by Lasse Ahtiainen, Työ- ja elinkeinoministeriön julkaisuja 11/2016. There were also five agreements signed by other unions, including the Finnish journalists union SJL. https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/74850/TEMjul_11_2016_web_22032016.pdf (Accessed 28.07.2019)

L. Fulton (2020) National Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.