Comprehensive incomes policy settlement reached in Finland

The boards of Finland's national labour confederations SAK, STTK and AKAVA today approved a comprehensive incomes policy settlement finalised in the early afternoon. The settlement will improve the situation of employees threatened with redundancy due to enterprise restructuring, and will strengthen the status of shop stewards and labour protection delegates. The settlement also includes provisions on the liability of parties that subscribe to labour without becoming employers and an entry on the independent right of trade unions to file civil actions on behalf of employees against their employers. The overall impact of the settlement on payroll costs will be 2.5 per cent in 2005 and 2.1 per cent in 2006.

Wage solidarity to continue

The principle of solidarity in wage rises was retained despite long-sustained resistance from the employers' confederation EK, which favoured percentage pay rises across the board, an end to the gender equality allowance and devolution of union sector allowances to local collective bargaining. According to SAK President Lauri Ihalainen, the principled stand taken by the employers made negotiations on the pay structure and on the level of wage rises particularly difficult.

The negotiated settlement envisages an agreement period of about two and a half years, beginning on 16 February 2005 and ending on 30 September 2007. The pay rises would take effect on 1 March 2005 and 1 June 2006.

The proposed pay rise comprises mixed increases in the first year followed by a flat-rate increase in the second year. A union sector allowance will be paid in both years and a gender equality allowance in the second year of the agreement. This wage increase structure retains the traditional solidarity of the Finnish system, as it will provide proportionally higher pay rises to employees earning the lowest pay rates. This solidarity is reflected in the mixed increases of the first year and the gender equality allowance of the second year.

The wage increases

2005: payroll costs impact of 2.5 per cent

• 18 cents per hour or 30.06 euros per month, but no less than 1.9 per cent
• union sector allowance of 0.6 per cent

2006: payroll costs impact of 2.1 per cent

• increase of 1.4 per cent across the board
• union sector allowance of 0.4 per cent
• gender equality allowance of 0.3 per cent

Indexation clause and guarantee of increased earnings

The settlement includes an entry on guideline pay rates and use of the union sector allowance, together with an indexation clause and a provision on earnings growth. According to the settlement, the union sector allowance may be used to reform and maintain sectoral wage systems.

The negotiations laid the basis for ground rules on the introduction of productivity bonuses as part of the evolution of local collective bargaining.

Improvements in employee security during restructuring of working life

The negotiated accord includes a significant enhancement in the security of workers threatened with unemployment due to enterprise restructuring. In the codetermination negotiations that precede such dismissals the employer will agree with workforce representatives on a plan to promote re-employment of dismissed employees during the period of notice.

Any employee who is dismissed for reasons of finance or production and has been working for at least three years will have the option of embarking on an individual employment programme. This right will also cover any temporary employees who have been working for the same employer for a total of not less than three years, either in a single stretch of employment or in several shorter, but successive periods of work separated only by brief intervals.

A programme of employment prepared by the local employment authorities will investigate the employee's job prospects and support active job-seeking and vocational skills development. Depending on the length of the paid period of notice, the employee will be entitled to use between 5 and 20 days of this period for measures under this programme.

After the employment ends an employee who participates in the employment programme will be entitled, in addition to unemployment benefit, to a higher rate of retraining allowance lasting for 185 days. Dismissed employees who do not take part in measures arranged under the employment programme but who are actively seeking work will be entitled to this allowance for 20 days.

For a worker earning 2,000 euros a month, this increased retraining allowance will be 13 euros per day or a total of 280 euros per month. A redundancy allowance was previously payable in Finland for 150 days in addition to normal unemployment benefit to workers of at least 20 years of employment history who had lost their jobs for reasons of enterprise finance or production. Anyone entitled to both increased retraining allowance and redundancy allowance will not lose the latter.

The employers will finance the increased retraining allowance collectively.

Enlargement of subscriber liability

The liability of parties that subscribe to labour without becoming employers will be extended through agreements and new legislation. The necessary legislative amendments will be prepared by a Ministry of Labour task force including representatives of both sides of industry. The confederations will also set up a working group to prepare procedures for tackling the grey economy in situations involving the use of leased labour and subcontractors.

The negotiations also agreed to place the Central Criminal Police grey economy monitoring unit on a permanent footing and to improve the co-ordination of government agencies in combating such unlawful economic activities. In line with Conventions of the International Labour Organisation, terms of employment will be a factor in the reform of public procurement legislation.

Task force to investigate independent right to sue

A task force of government, employer and employee representatives will be appointed to examine the terms of employment of foreign workers and to review such aspects as legislation within the European Union and experiences of the independent right of trade unions to bring civil actions against employers on behalf of their employees. This investigative work will form the basis for assessing any need for amendments to legislation.

Improvements in the status of elected employee representatives

Access of shop stewards and labour protection delegates to information and training opportunities will improve, with greater equality between the positions of various elected representatives. This equality will apply to training opportunities, use of time and financial compensation.

Access to information on the use of labour will improve in such areas as pay and remuneration systems, staff groups and the manner in which labour is used. A task force with representatives of the government, employers and employees will be appointed to consider these amendments.

Training opportunities will be improved by preparing common training materials for both employer and employee representatives. Networked training will also become part of educational programmes for elected representatives.

Improvements in local collective bargaining

The negotiated accord also includes an understanding on improving local collective bargaining to meet the needs of both employers and the workforce. The labour and employer confederations will study the prospects for local collective bargaining in each industry on such issues as hours of work, ground rules for the use of subcontractors, joint evaluation of the state of the market, and improvements in systems of remuneration and collective bargaining.

This local partnership package signifies a new departure in Finnish incomes policy settlements. It means that alongside the processes of bargaining between central confederations, aspects to be adapted and confirmed at individual trade union level and "continuous" collective bargaining, there will now be an agenda of issues for the unions and their counterpart employers' federations to work on together during the lifetime of pending agreements.

A boost for gender equality and training

The negotiated settlement also includes measures to promote gender equality at work: equal pay programmes will be encouraged, remuneration systems based on a job requirement evaluation will be developed and a recommendation will be prepared for assessing the gender equality impact of collective agreements. Implementation of gender equality plans will also be promoted through a joint information project of labour market organisations and the Ministry of Social Affairs and Health.

In addition to this, the new settlement incorporates certain measures to promote training, skills and workforce development, together with recommendations clarifying the introduction of working hour accounts.

Busy fortnight ahead for employers and trade unions

The trade unions and their counterpart employers' federations now have two weeks to renegotiate the country's private and public sector collective agreements on the basis of the new accord. The central labour market confederations plan to sign the final comprehensive incomes policy settlement on 15 December, provided that a sufficiently large number of industry-specific agreements can be revised within the framework that the settlement provides.

More information about the incomes policy settlement in Finnish:
www.sak.fi/tupo.