Finnish government on collision course with unions

The current Finnish government has differed from previous ones when it comes to labour market policies. Juha Sipilä’s centre-right coalition has introduce a range of reforms while not always listening to the social partners. The trade union movement says Finland has not had a government this hostile to trade unions for a long time, and there is nearly zero trust between unions and the government. This autumn’s big labour market issue has been a weakening of employment protection legislation, which the government argued would help companies hire new staff.

Initially the government wanted to make it easier for companies with less than 20 employees to sack people. After a barrage of criticism centred on the fact that employees should not be treated differently based on which company they were working for, the government changed its proposal to cover companies with less than ten employees. 

Several unions took strike action

The government appeared to be presenting their proposals without listing to trade unions for a long time, but after several unions took strike action the government said it would agree to tripartite negotiations on the details of the legislation.

Trade unions, the government, the Confederation of Finnish Industries and Finnish business leaders have now reached a compromise on employment protection legislation. The legislation has not yet been put before parliament.

Another thing that prompted the government to take a step back in October and the major trade unions to halt strike action for the time being, was that the government agreed to renegotiate the much criticised activation model – in a tripartite working group. 

Does this mean the tripartite conversation is back?

“I wouldn’t say the tripartite idea as a practical tool has been completely dead in Finland. It has been kept alive on a low flame by the current government,” says Mika Helander, senior lecturer in sociology at the Åbo Akademi University. He has been researching the trade union movement and labour market issues in Finland and globally.

In recent years Juha Sipilä’s government has listened to businesses in a lot of cases, and the former business leader Sipilä has repeatedly said he wants to govern Finland like a company. 

“Although the trade unions have had no direct lobby contact with the government in recent years, they have still been able to mobilise and have used strike action to show that they are still a force to be reckoned with.”

A return to the tripartite model?

Helander believes the new conversation in tripartite groups could represent a return to a tripartite model to a certain extent, but he adds:

“The 2019 parliamentary elections will be very important in terms of how the tripartite cooperation will develop in the long run. If a similar centre-right coalition stays in power, the risk of the tripartite conversation being abandoned increases. This would be difficult for the trade union movement. I think there is only so many times they can ask for strike from their members.”

Mika Helander points out that in the past three years there have been several labour market issue conflicts where the government and trade unions have been diametrically opposed to one another’s positions. One example is the introduction of the activation model for unemployed people. For workers, this meant an extra 24 hours of work a year, with no extra pay. Public sector employees also lost a third of their holiday pay for the years 2017 to 2019.

Etla: “Tripartite model will be less important”

In a recent report, the Research Institute of the Finnish Economy Etla has praised the government for its employment policies over the past three years. According to Etla’s report, the government’s policies for increasing effectiveness and labour supply might have created up to 50,000 new jobs. Etla believes the so-called competitiveness pact which the government pushed through in early 2016 has had a particularly positive effect.

However, Etla’s Managing Director Vesa Vihriälä does not give high scores to the government and trade unions when it comes to the dispute surrounding this summer and autumn’s hot political potato: The weakening of worker’s employment protection.

“This was an unnecessary escalation of the situation when you consider that this was over a relatively minor reform. It is very difficult to decide what impact this reform might have on employment figures – the effects would probably be positive albeit limited. The most important effect would probably be that more long-term unemployed at least would be entering the labour market momentarily.”

Vihriälä believes weaker employment protection can improve productivity just a little.

“I believe it is a good thing to give companies improved opportunities to sack workers who turn out not to be up to scratch.”

Vesa Vihriälä at Etla has no great hopes for the future of tripartite cooperation in Finland. He sees the tripartite cooperation of old as a model that worked, but it does not fit modern EMU Finland.

“Right now we are indeed seeing a temporary return of decision making through the tripartite model, for instance in the case where the parties got a chance to negotiate the upcoming legislation on employment protection.”

"The tripartite cooperation belongs in the past"

Vesa Vihriälä believes time has run out for the tripartite cooperation model; in earlier decades it made sense partly because it meant you could negotiate competition issues on a national level.

“Today, structural changes happen though an ongoing process, and it happens on a company or sector level. In this situation, the tripartite model is considerably less efficient. In the long term, I believe the tripartite model is getting weaker.”

Vihriälä partly rests his argument on the fact that since the spring of 2016, the Confederation of Finnish Industries (EK) has not been participating in central collective agreement negotiations. The agreements are now reached on a trade level. Businesses have been arguing for more local agreement for some time now. 

“On a legislative level is it of course possible that we will see tripartite working groups, but the main trend is that Finland is moving away from the tripartite model as we know it,” says Vesa Vihriälä.

Unthinkable

Sociologist Mika Helander believes the tripartite model will keep going in one shape or other.

“Just how visible the tripartite conversation will be in the future depends a lot on the political power balance. The entire Nordic social construct is based on people taking part and influencing society via citizens’ and interest groups. The disappearance of this type of influence, which concerns a central issue like the labour market, would be unexpected – even unthinkable,” says Helander.