Industrial relations and labour legislation in Finland 8 May 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

Anu Sajavaara

Anu Sajavaara Employers’ central organisations in Finland employees State, municipality and church State Municipality Church employees Confederation of Finnish Industries EK 35 branch associations member companies

Anu Sajavaara Employees’ central organisations in Finland STTK The Finnish Confederation of Salaried Employees white-collar workers, 20 member unions employees AKAVA The Confederation of Unions for Academic Professionals in Finland academic professionals, 32 member unions employees employees SAK The Central Organisation of Finnish Trade Unions blue-collar workers, 22 member unions

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

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

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

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

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)

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”)

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?