Matti Huutola: Transnational rules are needed to prevent negative pay competition

Matti Huutola, the Vice President of SAK, talked about the various aspects of labour market models in his presentation, on Monday afternoon, at the SAK 18th Congress.

"Up until recently our labour market model has been a national model. Its basis was created after the war and its Golden Era was experienced in the 1970s."

Since then employers have pushed hard to add flexibility as a cure "for almost all and any economic disturbances", such as the oil crisis of the 1970s, inflation and unemployment, Huutola outlined.

One by one these "national compromises" broke down, he said. "But less attention has been paid to the (employers') slow but persistent efforts that have qualitatively changed other national models also. Nowadays entireties are not coordinated, as was done in the past. If something is coordinated it is conditioned by industry-specific competitiveness demands."

This is what happens in the Nordic countries too, Huutola said.

"In the course of time our labour market model has crumbled. The pay policy is no longer based on a degree of solidarity."

"Each union has its own starting points, behaving as if there were no common labour market model. If this spiral of differentiation continues, soon we will not recognise each other even in basic respects", Huutola ventured.

"One of the lessons of the recession was that one should not abandon national labour market models. They offer security to small countries especially, such as Finland where the ability to agree (on labour market issues) has been consistently and considerably better than in big countries."

"There is no labour market model that fits all EU Member States."

Huutola warned of the risk of negative pay competition where each and everyone endeavours to settle for smaller pay rises than their neighbours. "It is clear that transnational rules are needed to prevent negative pay competition."

Photos from SAK's Congress (Flickr)