Minimum wages defined by collective agreements

For many low paid jobs that means around EUR8 per hour

(Helsinki 4.5.2007 - Juhani Artto) In Finland, there is no minimum wage legislation. Thus Finland is one of seven EU Member States where the legislation does not define or set out any standard for the lowest legal pay.

In the absence of such legislation, the Finnish trade union movement has long placed its faith in the time-trusted efficacy of collective agreements. The latter, including their pay standards, cover a large majority of the about two million wage and salary earners.

Crucially, most national collective agreements are of a generally binding character. This means that in most cases unorganised employers also have to apply collective agreements in their own industries.

Low basic wages also in several industrial jobs

There are low pay jobs both in the service sector and in various industrial sectors.

The Service Union United PAM has several agreements that cover low wage jobs. As things now stand the lowest hourly rate for cleaners is EUR7.02. A security guard's minimum is EUR7.94. Shop assistants should not be paid below EUR8.18 and employees in the catering and hotel sector not below EUR8.36

The Chemical Workers' Union represents several low wage job categories in the industry. The lowest of them are to be found in the shoe and leather industry (EUR7.04) and textile and garment industry (EUR7.06). Other low basic wages are applied in the tyre service business (EUR7.54), glass and ceramics industry (EUR7.73) and textile services (EUR7.96).

The collective agreement in the electronic industry, signed by the Metal Workers' Union, has a pay scale that begins from EUR7.45 per hour.

However, it is important to bear in mind that in regard to industrial work employees regularly earn more than the basic wage rate, guaranteed in the collective agreements. Often piece work or shift work or their combination raises pay by 10 to 20 per cent or more.

In the municipal sector the collective agreement gives at least EUR8.19 to each and one of the 290 000 employees, covered by the agreement. That is the minimum for couriers. Municipal doormen are guaranteed at least EUR8.43 an hour, municipal cleaners EUR8.49. In many jobs in the municipal units of social and health care and food services basic pay is below EUR9.00.

Finnish minimum standards comparable with Western European legislation

In six EU Member States, in Western Europe, the minimum wage legislation defines the minimum standards approximately equal to that which has been won by collective agreements in Finland.

The top six countries are Luxembourg (EUR9.08), Ireland (EUR8.30), France (EUR8.27), Netherlands (EUR8.13), United Kingdom (EUR7.96) and Belgium (EUR7.93).

In Germany, the trade union movement fights for minimum pay legislation and demands the minimum wage to be set at EUR7.50. According to union sources 4.6 million employees earn less than that per hour.

The legal minimum wages in five EU Member States in Southern Europe represent the next level. They are Greece (EUR4.22), Spain (EUR3.99), Malta (EUR3.47), Slovenia (EUR3.02) and Portugal (EUR2.82).

In Finland, there are employees who are paid above these Southern European minimum norms but still clearly below the minimums in the collective agreements of the Service Union United PAM and the Chemical Workers' Union. Those employees have jobs that are not covered by any collective agreement.

For their pay the Employment Contracts Act (2001) paragraph that advices to pay wages or salaries that are both customary and moderate should be applied. The authorities have interpreted this to presently mean at least EUR956 per month (about EUR6 per hour) and announced it as their recommendation for minimum pay.

At the same time the authorities openly admit they do not have the resources to monitor how respective employers respond to or accommodate this recommendation.

Soon a new round of collective bargaining

The bulk of collective agreements are valid until 30 September 2007. From all the available signs it is unlikely the unions are going to strongly emphasise demands to raise the lowest wages and salaries. There is pressure to raise wages and salaries all round by several percentages as both the national economy and a large majority of enterprises have performed well in the last few years.

This article was first published in Trade Union News from Finland.