SAK President Jarkko Eloranta: Poorer Finns cannot be a good thing for Finland

There is nothing wrong with the view. The SAK offices are in the Metallhuset by Helsinki’s Hakaniemi Market square. It is a Finnish version of Oslo’s Youngstorvet or Norra Bantorget in Stockholm. The place where the labour movement traditionally has been marching both on May Day and during other events where it has been important to show trade union strength.

SAK, The Congress of the Central Organisation of Finnish Trade Unions, represents more than one million Finns in 21 trade unions. But the entrance to their headquarters is humble. Here too the current economic realities can be seen.

SAK has been forced to make cuts to its staff. Soon they might move away from the old headquarters in what used to be “red” Kallio district. The trade unions’ central organisation cannot live beyond its means. It is not easy to be an employer in Finland, the new SAK President has experienced. 

Life-long union allegiance 

Jarkko Eloranta has spent his entire working life in the trade union movement. He became President of SAK during their congress this summer, a few months after turning 50. Jarkko Eloranta started his career by studying social science in the late 1980s at the University of Turku, and spent six months in the USA.

When his family grew and he neared graduation, he needed to become the breadwinner. Jarkko Eloranta spottet an ad in the paper from the then KAT trade union for municipal workers, which was looking for staff. He took an interest in citizen organisations and was keen to make things happen. He applied. He failed to get that job, but secured another. He was to spend more than 20 years working in various roles for JHL, the Trade Union for the Public and Welfare Sectors. He has worked both with international issues and communication. 

In 2011 Eloranta became President for JHL, but this summer he took one step up, and became head of SAK.

“I have enjoyed my time in the trade union movement. The issues are really important, and the fieldwork has been particularly rewarding. Increasing responsibility has made the job meaningful and motivating,” says Eloranta.

First academic trade union boss

His first job was to lead the voluntary fire brigade in his home town of Naantali. Jarkko Eloranta was also one of the founders of ELMU – Helsinki’s Live Music Association – which aimed to help punk and rock musicians find rehearsal studios and gigs.

Jarkko Eloranta is the first SAK President without a worker’s background. But he comes from a working class family and it does not bother him being the first academic to hold the post. 

“Anyone who has ever held this job has had the knowledge, visions and skills to fill at least one university degree. This is nothing out of the ordinary.

The importance of change 

“The labour market and the economy are changing, that is the most important issue for us. We have high unemployment in Finland, especially among SAK’s members.” 

“Higher educated people are hit by unemployment too, but it mostly affects people in our organisation,” says Jarkko Eloranta. 

“Work is changing in general, raising many questions. Which kinds of jobs will there be, who will be performing them, for what pay and in which conditions – these are really topical issues for us. There is pressure on low-paid jobs both here and elsewhere in the Nordic region.”

Perhaps the biggest issue, according to Eloranta, is to try to keep your job with conditions which makes it possible to manage on the pay you get. 

The Competitiveness Pact – old medicine for modern problems

The government’s Competitiveness Pact, negotiated by employers and employees, has just been signed in Finland after two years of negotiations. It has not been an altogether nice process, says Jarkko Eloranta. 

First of all, it treats public sector workers worse than others – a straight forward wage cut in the shape of lower holiday pay, for instance. The proposed annual extra 24 working hours was difficult to include into the collective agreement, adds Eloranta.

“You could call it old medicine for modern problems. The problems and solutions don’t meet. We are heading towards a time where working hours no longer correspond to or guarantee productivity. Extending working hours according to a template is retrospective and not a solution for the future.”

Endless deterioration?

The three centre-right parties; the Centre Party, the National Coalition Party and the Finns Party, have been in coalition for just over a year. Their government programme is starting to bite. Jarkko Eloranta has expressed concern for an endless deterioration of the labour market once things get going. There is much pressure on working conditions and collective agreements, from many directions. 

One is the move towards hired labour, or so-called zero-hours contracts, where the employer does not have to offer the employee any working hours at all. Another is freelance jobs in the sharing economy. The safety net for wage earners disappears. What do you do when you fall ill, pregnant or need to take parental leave? What is put aside for the future and for retirement? Everything affects life in the future, says Eloranta.

SAK: Go for knowledge and innovation

“We see many ways of exploring and improving people’s skills and competencies. Although we have a well-educated workforce, there will always be those with lower education and professional skills. Knowledge must be strengthened, we must make use of whatever brings growth, innovation, investments. This could be digitalisation or more traditional measures,” says Eloranta.

Another issue is workers’ opportunities to influence the content and organisation of their own work. Perhaps you could use the tired phrase ‘democratisation of working life’, suggests Eloranta.

Low competitiveness – the fault of high salaries?

When Prime Minister Juha Sipilä introduced the agreement on improved competitiveness, the social contract, he mentioned the need for trust. Finland needed the world’s trust to secure investments and employment. Lower wages would bring more jobs. 

But SAK’s President does not seem to agree with the government’s argument – that Finland’s competitiveness is low because of high wages. 

“It is controversial,” confirms Jarkko Eloranta.

“It cannot be a long term strategy and aim for the government and the Prime Minister that it is good that Finland and Finns become poorer. That is what this agreement really means. Future prosperity must be built on research, innovation and knowledge, that’s how you create something you can share out.

“Many companies have done well, much depends on their products, leadership, sales measures, export. These are factors that deserve more attention. It is of course the companies’ responsibility, but the authorities also play a part. Yet here too we are trapped in old models, like business support.”

Tax cuts with borrowed money

Jarkko Eloranta is no fan of large dividends or tax cuts. 

“The tax incentives should be reconsidered. We are not very enthusiastic about the budget proposals covering lower inheritance tax and other tax cuts. It does not necessarily pay to put the money here. There are other, wiser, targets within research and development.”

And now you extend the debt to give company owners tax cuts, adds Jarkko Eloranta.

“It seems to be a problem for the government that Finland’s national debt is increasing, but not that the borrowing is being used to cut taxes for companies and their owners.”

The government has learned the realities of the labour market

So what does the SAK President make of the centre-right government?

“Well, they have learned the realities of the labour marked in just over one year. That is good, of course. Despite difficult times, both sides have developed smoother edges,” says Eloranta.

When the government came to power the Centre Party’s Prime Minister Juha Sipilä was criticised for cold-heartedly engineering a deterioration of working conditions and for degrading women on low wages. Plans were introduced to usher in qualifying days for sickness leave similar to the Swedish model, scrapping Sunday pay, shortening holidays and more. Much of it could be reversed when the parties signed the competitiveness agreement.

“This government’s basic idea still seems to be to frighten wage earners. This government is treating women badly as a group. Yes, the proposed increase in kindergarten fees was axed, but many of the cuts affect women, for instance lower holiday pay. There are also cuts to the quality of child care and other services. This is worrying,” according to Jarkko Eloranta.

“This government is a government for companies and business people. It is mainly a government for company owners,” he says and hits the argument home by carefully banging his fist on the table. 

Unemployment next

The next task for trade unions and employers is to get together to solve the problem of unemployment, on commission from the government. Some proposals involve forcing job seekers into activity, an economic obligation for people to enter the labour market. The Danish model is held up as an example. But unemployment benefits are considerably lower in Finland, points out Eloranta.

The work is in its infancy. They have less than a month to go. The risk, according to Eloranta, is that the government forces through failed solutions. That would bring back the debate about a lack of trust between the government and the social partners.

Something good from the government

Jarkko Eloranta still praises the government for another proposal, the so-called Lex Lindström. It opens up for 60 year olds who have been unemployed for five years to retire. The government also gets praise for its measures to get young people into work. 

“But if you take money from other groups of unemployed people, that’s a bad thing. You are then playing two weak groups against each other and that is of course worrying.”

An impatient SAK President?

SAK has had many legendary presidents. The latest, Lauri Lyly, left the presidency after seven years. He had a reputation for always thinking of something new during negotiations. It is said his successor has less patience. 

Eloranta laughs heartily.

“Well yes, perhaps. It is still too early to say whether I’ll be equally innovative. But Lauri was very tough and creative, skills you probably need as a labour market boss. To be tough, not to give in even in difficult circumstances which look impossible.

“I cannot be the judge of whether I am as good as my predecessor, but I must make sure I develop that kind of knowledge.”

No new central organisation 

This spring an old idea for a central trade union organisation to gather all of Finland’s trade union members under one roof was put to rest. As the SAK crown prince, Jarkko Eloranta had been one of the scheme’s main architects, and was set to be the new organisation’s first leader. But now that project has been buried.

“A new central organisation could be created in a setting where the role of the central organisations as negotiators has changed. We are increasingly part of the social debate and we have influence, we give support and act as coordinator for the organisations on other levels.”

But Eloranta mentions areas where SAK is still needed.

“We still have much to do when it comes to social insurance, labour law and common economic politics where there is a lot of trade union work,” according to Eloranta. 

“We wanted to reduce the number of central organisations. We are overlapping each other’s work at the moment. We have no resources to waste, so we wanted to cut and perhaps also influence and slim down the image of the trade union movement.”

SAK must cut staff too

A merger would have meant rationalisation. Now those same issues must be faced within SAK. Around ten of SAK’s 100-odd staff must go. The congress which elected Eloranta also decided to lower membership fees. This means a 16 to 17 percent cut to SAK’s income. This loss must be covered somehow, says Eloranta. He will now look at how he can best reduce the size of the organisation, but without too many negative consequences.

How does it feel to be the employer in that situation?

“I have been a director and and supervisor for a long time, and know that the employer sometimes must face difficult periods. Nobody wants to have to tell people they have to go. It is never nice, but still necessary,” Eloranta says.

NFS leader

Jarkko Eloranta belongs to a dwindling group of Finns who speak Swedish despite a Finnish childhood. This means he has also taken part in a lot of Nordic cooperation work. 

“The Nordic region is our most important reference. We enjoy a very intensive cooperation within the public sector,” says Jarkko Eloranta. This year it is Finland’s turn – i.e. his turn – to head the Council of Nordic Trade Unions, NFS.

“We travel a lot around the Nordic region for various reasons, this is a very important group. We try to achieve a joint understanding of common issues and to identify common trends.”

Swedish copy

Finland’s relationship to Sweden is also especially important. Finland copies so many ideas from its neighbour in the West; within the public sector, the labour market, political phenomena. It could be privatisation, unemployment benefits, the purchaser-provider model…

“The Finnish parties copy Swedish initiatives, and we consult our Swedish colleagues and ask them about their experience and aims,” explains Eloranta.

When it comes to the competitiveness pact and the government’s relationship with trade unions, the rest of the Nordic countries tuned in. Should Finland lead the way and defend or destroy the three-partite cooperation?

According to Eloranta his Nordic colleagues are aware of Finland’s difficult situation. The NFS even wrote two letters to the Prime Minister about the threat to the tripartite cooperation and Nordic assessments. The rest of the Nordic region kept a close eye on Finland and condemned what was happening. And Finland’s government backed down.`

“But it was not only the letter from the NFS which did this,” admits Eloranta. 

“Nevertheless, it provided much-needed support, it was good that the world outside reacted. Our government realised that it cannot make decisions in its own little bubble.”

NFS demand: The Nordic region at the G20

The new European reality means we should intensify the Nordic cooperation, says Jarkko Eloranta. The economic policy is certainly severely out of sync. It is difficult that Finland, Sweden and Denmark are EU members and Finland even a Euro member, while Norway and Iceland remain outside. 

“But in certain contexts we should be intensifying our cooperation.”

Eloranta brings up the NFS’s proposal for the Nordics to apply for membership in the G20 as one unit. The Nordic region has strong traditions for participating in international organisations. But today the region has no influence in the G20, a statement from the union said in May. Watching from the sidelines, the Nordics – which do not qualify for membership as separate countries – are loosing out on an important opportunity to influence decision-making. 

Cross-border movement rather than defence

It is possible to strengthen the economic and political cooperation in the Nordic region. Today most of the focus rests on defence and security policies, but this should be broadened out, thinks Eloranta.

“We must not forget the freedom of movement from the 1960s, we need to pay attention to the labour force’s mobility. The Swedes in particular wonder why we have such high unemployment in Finland when there are jobs to be found in Sweden. Why doesn’t this work? There are still many obstacles to the movement of labour.”

It should be totally possible for Finns to work in Sweden, on a temporary or permanent basis, believes Eloranta. English is already the working language in many cases, the language barrier is not that high. And the Swedish living standard and salaries are competitive. It would therefore pay to consider closer economic integration, says Jarkko Eloranta.

The Finns Party enter politics and unions

The interview is nearly over, but we rush through some important questions about the crisis in the unions and the Finns Party rise in Finnish politics.

“The able-bodied population is falling, fewer people are working in jobs where the trade unions traditionally have struggled to gain inroads, among private companies and freelancers. The basis for trade union membership is narrowing. The fragmenting labour market has led to younger people loosing interest in the trade unions.

“We must do more to make people understand the importance and benefits of being organised. The rights we have gained have not come without a fight, and will probably not last without the unions. The bitter truth is that right now we can not make great progress. It is more about keeping what we have already managed to get.

“If employers got to decide, working hours would be increased by 100 hours, holidays would be cut along with holiday pay and sickness pay would be eroded. We cannot keep these benefits without fighting for them. This is what we need to tell the people.”

The Finns Party is now represented everywhere – in the Finnish government and in SAK. Sure, says Jarkko Eloranta, the Finns Party are part of the labour market and also among SAK’s members. 

“There is nothing strange about that. We have members form all political parties. The old idea that workers are always Social Democrats and to the left of politics does no longer apply.”

There is more mobility among voters, a phenomenon which has come to stay. What is worrying, in SAK and among all people with low salaries and lower education, is that fewer people are voting. This is a greater threat than whether they are True Finns, Greens or Social Democrats. Jarkko Eloranta considers this to be a democratic problem. Policies are decided by those who vote, i.e. the well educated and well paid.

Jarkko Eloranta is himself a Social Democrat, it goes with the job. But this time we are not discussing Social Democracy or opposition politics. 

It created a certain amount of fuss when Eloranta during an interview with the major newspaper Helsingin Sanomat failed to remember the first lines of the Internationale. “ ”So come brothers and sisters” was changed with ”Forwards, forwards” from a Finnish workers’ march. He now explains this by saying that May Day has never been part of his traditions. 

“I have not been an active party member or taken an active part in any first of May celebrations or marches. My engagement and ties to the movement gets inspiration from other channels,” explains Jarkko Eloranta.

Facts about ‘The Competitiveness Pack’

A central agreement on wages and other working conditions between the social partners: SAK, the Finnish Confederation of Professionals STTK, Confederation of Unions for Professional and Managerial Staff in Finland AKAVA, the Confederation of Finnish Industries EK and the state and church labour market agencies as well as statens och kyrkans arbetsmarknadsverk och the Local Government Employers KT. Some of SAK’s member organisations have not signed, among them the Transport Workers’ Union AKT. Some of the main points: 

- Working hours to rise by 24 hours a year. Public sector workers also loose 30 percent of their holiday pay. No wage increases for anyone.

- The theory is that when the price for labour falls, Finland becomes more competitive. The export industry should benefit from the agreement. 

- The government says the agreement will help reach the aim of increasing the employment rate to 72 percent and create 110,000 new jobs in Finland by the end of this parliamentary term in 2019. 

 When a large enough part of the labour market has signed, more than 90 percent, the government promises to cut taxes to avoid a too big fall in purchasing power.  A “Finland model” lays out the principles for the 2017 wage negotiations. Four criteria will decide the size of wage increases: External competition, the public economy, the employment rate and productivity. The export industry will determine the wage increase ceiling. The government started negotiations when it came to power in the spring of 2015. If the agreement had failed, the government had a plan B, a list of further savings and tax increases. The so-called forced legislation would have shortened holidays and axed various social benefits.