Minister of Labour Lauri Ihalainen: Improved competence will safeguard Finland’s future

The walls of the room where we meet Minister of Labour Lauri Ihalainen are adorned with portraits of former ministers. First 12 men, then five women. Ihalainen is the first man in this post since the 1990s. But as a former president of the Central Organisation of Finnish Trade Unions (SAK) he is more than qualified to tackle working life issues. The Social Democrat Ihalainen headed the central organisation for nearly 20 years before retiring in 2009.

On the morning of our meeting, leaders of the Federation of Professional and Managerial Staff (YTN) have announced industrial action at 40 engineering companies after talks with employers broke down. It is the second strike this autumn, following a four day long stoppage organised by the Metalworkers’ Union and employees from the Trade Union Pro. Ihalainen’s mobile telephones keep beeping with fresh text messages about the negotiations.

There is disquiet on several fronts. Markets are down and Finland hopes the markets of main trading partners Sweden, Russia and Germany don’t crash.

“We have a shared destiny with Europe.”

Unemployment has fallen to seven percent and the aim is to reach five percent by 2015. Whether that ambition is reached depends entirely on the level of growth.

The best working life

Right now Mr Ihalainen is concentrating on the opening seminar for a development process aimed at putting Finland top in Europe for a good working life by 2017. A range of measures will build on previous government programmes. There’s a focus on leadership. Ihalainen points out that you cannot have a welfare society without wellbeing in the work place which supports economic growth. To secure growth it is crucial to develop wellbeing in working life. 

Another of the government’s ambitions is for Finland to have the world’s most knowledgeable population by 2020. 

Ihalainen says few can expect to stay in one job or one single career throughout their working life. People must have the capacity to switch jobs or careers at least three, four or five times in their lives. Changes are needed to make sure people in the job market have a multiple of skills, and according to Ihalainen this is “the big story” right now. This is about lifelong learning where work and studies are combined throughout a career. That will give people a greater chance to handle changes while also helping them manage to stay in working life for longer.

200,000 Finns between 35 and 55 have no education beyond secondary school and are badly equipped to handle changes because many of them have also had no further education at work.

Further education emerged as one of the main conflict areas in October when central organisations negotiated a framework for union level negotiations. While president at SAK, Ihalainen pushed for a similar system to one found in Denmark which secures the right to further education for all workers. Employers have not been particularly keen on the idea, especially smaller ones with limited resources that need all hands on deck to keep the business ticking over.        

That’s why the government is now looking at how to finance a system which would help all employers come on-board. There is already a state education fund for adult education. The government wants to take it further and set up independent education accounts allowing employees to save up training days. People over 55 will be allowed to use their earned days to improve their working capacity.

Ihalainen says this reform delivers an important message. The proposal for an individual education model is being looked into by a working party whose report is due at the end of next year. The aim is to give all workers the right to three training days a year.   

Education guarantee

Youth unemployment stands at 17 percent. The majority - 70 percent - have no education beyond secondary school. The government has therefore decided that an education guarantee should form part of their flagship social guarantee for young people programme. The programme guarantees any school leavers a place at college, in vocational training, an apprenticeship, a rehabilitation place or some kind of education within three months. The programme costs €60m.

Today Finnish youth enter working life at 21, or at 27 if they take higher education. When the actual retirement age is around 60, experts feel people’s careers are too short. One problem is the 60,000 people who each year are classed as unable to work and whose retirement age averages 52. The youngest among them are only 15 to 20. Ihalainen says preventative measures must be taken to stop this development. 

“Working life suffers from an ailment. It is important that people feel valued because so many young people feel worthless and insecure. There’s a sense of ‘I do all that I can, but it still is not enough’,” says Ihalainen.

He points to the fact that half of those who are unable to work, for instance because of physical damage, should be able to return to working life. The social partners are responsible for finding solutions which make this possible, not least because the number of people of employable age is decreasing. 

“Increased immigration won’t solve this problem. We must manage better with those we have and make sure they manage better. Finland’s age structure is bad and difficult. Employers who understand what is needed can succeed.”

Ihalainen says the importance of work goes beyond just economic factors, to make a living.

Flexible working hours already in place

Ihalainen’s ambitions also centre on working hours. 100 years ago people worked 3,000 hours a year, while annual working hours are now just 1,600 hours. 

“Flexibility is good if it can be combined with the needs of the family. The line between work and leisure is also becoming increasingly blurred as people are bringing work home.”

Flexibility among Nordic workers is greater than in other European countries, according to Ihalainen. In Finland you can reach local agreements on flexible hours as long as they are not in breach of the national framework agreements. It is up to employers and unions to try to agree. If they can’t, the national agreement stands.

“This is safer for the worker. The point is that both parties should benefit from it.”

Finland also has 57,000 long term unemployed with very poor prospects. Lasting unemployment is a great problem in Finland. Ihalainen is still inclined to say the labour market as a whole does work well. People find work fast. Yet at the same time far too many end up in a vicious circle with now ‘proper‘ jobs offered to them, only various kinds of supported employment.

Unemployment among immigrant youths is three times above average, so as a group they need more support. Ihalainen is politically responsible for integration and he believes the way to go is better language skills and education.

Radical structural changes to businesses demand a different way of approaching problems. Workers need to be offered help to retrain as soon as they are made redundant.

Coordination

This autumn headlines have been dominated by salary negotiations, and the government made it clear early on that any agreement would be rewarded with tax cuts. Economical and financial policies are coordinated with labour market policies. It resulted in a framework agreement which will cover more of the country’s workers. It also means employers have abandoned their demand for decentralisation and local agreements which have been preventing national agreements since 2008.

“This is a pragmatic change in their way of thinking because this is a wage model the employers have not been wanting. But it is a smart model. Yet I don’t know how things will look in two years from now.”

Ihalainen thinks this framework agreement differs from previous collective agreements, while others see major similarities. In any case the government has promised to support the settlement with fiscal aid to the tune of €400m. The deadline is 25 November when the government must decide whether the agreements which have been reached are wide ranging enough for the state to support them.

The model is very flexible and during negotiations unions have found it difficult to pinpoint exactly what the framework agreement entails. As we leave Lauri Ihalainen, the president of the Finnish Confederation of Professionals (STTK) Mikko Mäenpää is waiting to talk to the Minister of Labour. The hand of government is clearly ever present when unions and employers negotiate.