Actions of the Finnish Government to weaken working life

image002By Matti Koskinen, Head of International Affairs, Trade Union Pro

Finland’s right-wing Government is about to implement various actions to worsen working conditions and weaken the authority of the trade union movement. One of these actions is initiative to make binding measures to decrees the labour unit costs. These binding laws was introduced by the Government in September 2015 and issued for consultation in November. Government’s aim is that collective agreements can’t define terms and conditions that are better than those defined in legislation in these four issues:

  • two public days off (Epiphany and Ascension Day) would be unpaid without reducing annual working days
  • level of compensation paid for sick days will be reduced
  • The maximum duration of the annual holiday will be reduced
  • Holiday bonuses will be prescribed by laws so that it can be reduced by 30%.

According to the Government, we have fallen behind in international competition due to Finland’s weak cost structure and, therefore, “the objective of this Government proposal is to improve Finland’s competitiveness by having an impact on unit labour costs.”

The trade union movement doesn’t see the situation as pessimistic as the Government. Yes, there has been and still is a depression. Still Finland is one of the most competitiveness country. The answer to this problem is not Finland’s price competitiveness; instead, it will only reduce domestic demand and take us deeper into recession. In the long term, the trade union movement is ready to accept moderate pay increases that help to increase the level of employment.

The Government’s proposal would be valid as imperative laws for a predefined period of three years from 2017 to 2019 but would remain valid until further notice as non-imperative laws. The Government states that: “It is essential that regulations are imposed to temporarily restrict the rights of national employer and employee associations to use collective agreements to define better benefits for employees.” Furthermore, the Government sees that “this is a relatively minor intervention concerning the level of salaries. Therefore, this is not a specific action associated with the current time period. The actions planned would only restrict the collective negotiating right to a small extent, while most terms and conditions of employment could still be defined in collective agreements.”

According to the trade union movement, the Government is using this procedure to cover up the fact that these regulations actually are contrary to ILO’s convention 87 (convention on the freedom of association and the right to organise) and convention 98 (convention on the right to organise and collective bargaining).

The Government would regulate that two public days off (Epiphany anAscension Day) would be unpaid without reducing annual working days, and it would discontinue the Sunday supplement for these two days.

According to the proposal, “Epiphany and Ascension Day will be unpaid days off without reducing annual working days. If no work is done on these days, the corresponding hours can be performed on other days, in which case work is compensated for according to the work performed. In business fields where work is performed on every day of the week, Epiphany and Ascension Day will no longer be working days entitling a Sunday supplement; instead, the normal wage will be paid for these working days.”

In practice, this will extend working hours and, in some cases, lower wages because no Sunday supplement will be paid. Forbidding the provisions of collective agreements restricts the freedom of agreement.

The level of compensation paid for sick days will be reduced as the first day would be unpaid (waiting period) and only 80% of the salary would be paid over the next eight days (sick days 2–9). Only after this would sick pay be paid according to the applicable collective agreement.

Collective agreements serve to agree upon full compensation for sick days, while this prevents the concerned parties from following such agreements that produce better benefits than the legislation. Finland’s social security system does not secure full income over sick days. Research indicates that women take short-term sick leave more frequently than men, meaning that this decision is strongly opposed to equality.

The maximum duration of the annual holiday will be reduced, even if collective agreements defined otherwise. “The maximum duration of an annual holiday is set to be six weeks. This means that annual holidays will be shorter in the public sector and in certain fields in the private sector.”

Governmental and municipal collective agreements define longer annual holidays because, along the years, productivity has been increased by reducing annual working hours instead of income. When measured by educational level, salaries are lower in the public sector than in the private sector. According to the trade union movement, this change does not improve Finland’s international price competitiveness.

This will distort the equality of the labour market. Extending annual working hours in the public sector will also have an adverse impact on employment as fewer substitutes will be needed.

Holiday bonuses will be prescribed by laws so that it can be reduced by 30%. However, holiday bonuses will not be extended to all employees. According to the Government proposal, “employees will have a statutory right to a holiday bonus. To allocate these actions equally, a maximum amount will be set out for holiday bonuses paid in addition to the annual holiday pay and holiday compensation, being approximately 30% lower than the current level used in most industries.”

Those not bound by a collective agreement would define this separately in the employment contract but “the regulation would only be applied to employment contracts signed after the entry into force of the act.”

The holiday bonus is only regulated in collective agreements. In many countries, the holiday bonus corresponds with the salary of the 13th month, being 50% of the holiday pay. Now, it would be dropped to 35%.

There are close to 225,000 employees outside the scope of the holiday bonus system because not all employees are covered by collective agreements. This regulation would not provide these employees with a holiday bonus because, according to the Government proposal, the statutory right to holiday bonus would only concern those employment relationships that begin after the entry into force of the act. Even after this, employers may refrain from paying any holiday bonuses if so agreed upon in the employment contract.

According to trade unions, the employer usually has the last say when signing an employment contract.

According to calculations made by trade unions, the aforementioned imperative laws will reduce the annual earnings of employees by 5–8%, depending on the business field and the type of work. Labour market parties will continue negotiations in order to reach a social contract in order for the Government to back down from its imperative laws.

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