Industrial relations and

labour legislation in Finland

8 May 2007

8.5.2007 Anu Sajavaara

Finnish industrial relations model: typical features

• High rate of organization – both employers and employees (70 % of employees are trade union members)

• 90 % of employees are covered by collective agreements• Social partners play an important role in reforming society and working life• Social partners are involved in:

– collective bargaining• Central labour market organisations negotiate incomes policy agreements covering the

general framework for wages and questions relating to labour law and working life• trade unions and employer organisations negotiate sectoral level collective agreements

covering eg. working conditions, wages and working-time arrangements

– drafting of labour and social legislation in tripartite co-operation

– management and revision of social security schemes in tripartite co-operation

• Long traditions: employer and employee confederations established 100 years ago, first centralised incomes policy agreements concluded in 1968

• The Finnish negotiation system has had a strong impact on economic growth, competitiveness, productivity, employment rate and standard of living

8.5.2007 Anu Sajavaara

0 10 20 30 40 50 60 70 80 90 100

Denmark

Sweden

FINLANDCyprus

Belgium

MaltaLuxembourg

IrelandSlovenia

Austria

Italy

Slovakia

Greece

PortugalEU-15

Germany

Czech Republic

Latvia

EU-25

United KingdomNetherlands

EU-10Hungary

Spain

Poland

Lithuania

Estonia

France

Per cent of total work force

Trade union densityCollective bargaining coverage

Trade union density and collective bargaining coverage in the EU

Source: Industrial relations in the EU, USA and Japan 2002 (EIRO)

Työmarkkinat\Kv. työmarkkinaseuranta

Seppo Saukkonen

17.6.2005

8.5.2007 Anu Sajavaara

Employers’ central organisations in Finland

570 000 employees

State, municipality and church

State 120 000Municipality 430 000Church 20 000

930 000 employees

Confederationof Finnish Industries

EK

35 branch associations16 000 member companies

8.5.2007 Anu Sajavaara

Employees’ central organisations in Finland

STTKThe Finnish Confederation

of Salaried Employees

white-collar workers,20 member unions

650 000 employees

AKAVAThe Confederation of Unions for Academic

Professionals in Finland

academic professionals,32 member unions

430 000 employees

1 100 000 employees

SAKThe Central Organisation of

Finnish Trade Unions

blue-collar workers,22 member unions

8.5.2007 Anu Sajavaara

Social dialogue at European level: European social partners

• For the Employers: – BUSINESSEUROPE/UEAPME – CEEP

• For the Employees: – ETUC, Eurocadres

• Overall co-ordination for cross-industry social dialogue is provided by the Social Dialogue Committee consisting of Commission representatives and the Social Partners

8.5.2007 Anu Sajavaara

Types of collective agreements in Finland

• Comprehensive incomes policy agreements– central organisations agree on wages and other benefits– government agrees on certain legislative measures (eg. taxes, social

benefits)

• Sectoral agreements– branch organisations– separately for blue collar and white collar workers

• Company agreements– only few

• Local agreements (bargaining at workplace level)

About 250 collective agreements in EK’s member companies

8.5.2007 Anu Sajavaara

Collective bargaining system in Finland

Sectoral agreements• branch-specific and binding agreements about all conditions of employment• possibility to agree on certain issues at local level • commitment to industrial peace

Conciliation in labour disputes• national Government conciliator• obligation to take part in conciliation• conciliator can not force industrial peace

Central organisations’ framework agreement• frame wage settlement• other labour market issues (working time, social policy, training)• possible Government involvement (legislative measures, taxation)• variation in coverage

Procedure 1

No central organisations’ framework agreement• no willingness or• no prerequisites for an agreement

Procedure 2

8.5.2007 Anu Sajavaara

Finnish labour legislation: typical features

• Highly detailed• Mandatory provisions• Possibility to derogate from some provisions by collective

agreements• Legislative acts drafted in tripartite cooperation (committees)• Strongly influenced by EU legislation

8.5.2007 Anu Sajavaara

Labour legislation by issues

Traditional legislation– Employment Contracts Act (reformed in 2001)

– Collective Agreements Act (from 1946; general principles for collective bargaining)

– Working Hours Act

– Annual Holidays Act

– Occupational Health and Safety Act

Information and consultation– Act on Cooperation within Undertakings

– Personnel representation in the administration of undertakings

New issues– data protection and privacy in working life

– atypical work (eg. temporary agency work)

8.5.2007 Anu Sajavaara

Main features of the Finnish labour market model

• Responsibility, general commitment to agreements• Predictability and stability • Pragmatism and willingness to negotiate on both sides• Success in getting results, solution-orientated processes• Flexibility and adaptability of the model: common interest

to find new solutions in problematic situations – e.g. Act on Cooperation within Undertakings and the Finnish

model for dealing with industrial changes (“change security”)

8.5.2007 Anu Sajavaara

Future challenges of the social dialogue

• Facing demographic change: ageing population and its consequences– how to finance the maintenance of welfare (public services, pensions etc.)

– how to maintain growth and employment

– how to ensure a sufficient supply of skilled workforce • Maintaining competitiveness in global competition

– how to combine flexibility and security (flexicurity)

• employers’ growing need to shift more decision-making to the company level (eg. wage formation and pay increases, working time)

• from job security to employment security

• Increasing occupational and geographical mobility

• continuous negotiations in all major sectors of the economy

• Ensuring industrial peace (most strikes in Finland are illegal)• Tackling the rigidities of the negotiation system – how do we move towards

more flexible framework agreements and local/workplace bargaining?