Public confidence in corporate social responsibility declines

(Helsinki 25.10.2004 - Juhani Artto) In April 2001 almost half (46 per cent) of the Finnish public entirely or at least broadly accepted the claim that "enterprises feel genuine responsibility for employees and their jobs". This is no longer the case. By September 2004 only just under one third (31 per cent) of survey respondents in Finland were still of this opinion.

This dramatic change was one finding of a Gallup Finland survey commissioned by SAK, the largest central trade union organisation in Finland. 1,000 people aged 15 years and over were interviewed in Finland for this survey.

A similar negative trend was shown in attitudes to the claim that "nowadays enterprises only defend their own interests without concern for the public interest". Almost three out of four (72 per cent) interviewees agreed either wholly or partially with this claim in 2004, compared to two thirds (66 per cent) of respondents in April 2001.

There was a clear fall in the proportion accepting that enterprises are rendering just reward to employees for their efforts to increase productivity. In April 2001 this proportion stood at 40 per cent, but by September 2004 it had shrunk to only 34 per cent.

The reasons underlying these trends are not difficult to identify. As enterprise strategy has focused on increasing shareholder value, it has increasingly been perceived as avaricious. While in bygone days profitable enterprises did not regularly announce mass redundancies, this has become commonplace over the last few years.

One important factor in this change has been the increased anonymity of enterprise ownership. In contrast to the situation as little as ten years ago, foreign institutional investors now occupy a strong position in several of Finland's leading listed companies. Foreign investors own about 90 per cent of the capital stock in the Finnish industry flagship Nokia plc. An overwhelming proportion of these shares are held by U.S.-based institutional investors.

While almost half of Nokia's employees remain in Finland, their jobs are no safer than those of their colleagues in China, the USA, Brazil, Hungaryor any other foreign country.

The forest industry giant UPM (UPM-Kymmene) is in a similar situation. Traditionally its operations involve a strong element of positive patronage, whereby the enterprise has treated its Finnish wage earners and salaried employees in a socially responsible manner. Recently UPM, which was performing well despite the rather weak economic cycle, nevertheless announced a cut of 800 jobs in Finland and 400 jobs in Canada.

Hundreds of workers in UPM's Finnish mechanical wood processing facilities will lose their jobs simply because production in Russia may, at the current business stage, prove more profitable than in Finland.

With this kind of news it is no wonder the Finnish public increasingly feels that enterprises have abandoned their social responsibility towards their employees.

On the threshold of a new bargaining round the Finnish trade unions have emphasised the need to improve job security in order to curtail the turmoil in business and working life. If enterprise managers had any concern for their public image, then they would comment and react favourably to this initiative by the labour movement. By contrast, their reaction has been negative.

While tough opposition to improved job security for working men and women may make a favourable impression on the market analysts who advise overseas institutional investors, it will only entail a further slump in social attitudes towards enterprise responsibility in Finland.

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