The Finnish labour market model is being altered in favour of employers

Despite widespread opposition from workers, the government has continued to prepare legislation that will weaken employment conditions. Restrictions on the right to strike are the first thing being brought before parliament. After this, the Orpo-Purra government will continue to take a hard line: dismissing people will be made easier and a waiting day will be put into law for the first day of sick leave.

Labour law is designed to protect the weaker party in the employment relationship, i.e. the employee. PAM’s collective agreement manager Juha Ojala thinks the government’s plans are reshaping the Finnish labour market.

Strange change of legislation

The government is also aiming to promote an export-driven wage model, where export sectors would set a ceiling for wage increases in services sectors too. The government wants to do this through a law that would prevent the National Conciliator from offering wage increases higher than in export sectors. The National Conciliator Anu Sajavaara herself has called the plan “strange”.

According to PAM’s collective bargaining specialist Sirpa Leppäkangas, legislation should not be made just with individual sectors or companies in mind. Then the risk is that the changes will erode employment conditions and the conditions for business success in other sectors, with the result that the overall outcome is worse for everyone.

– This could be the result if, for example, local agreements are extended without considering the real needs of employers and workers in the sector. For example, service sectors that rely on demand within Finland are labour-intensive and the competition is restricted to Finland and is fierce. So clearly someone will always take the opportunity to agree on less favourable employment conditions.

As soon as one does this, the others will have to do the same to be able to compete. This can easily end up in a negative spiral, and in the end everybody loses.

The government has taken over the objectives of the employers’ organisations

Many of the government’s plans for labour law can be found in the electoral objectives of the employers’ organisations. At the same time, the objectives of the employees’ side to criminalise underpayment, give trade unions the right to take legal action or workers a stronger right to full-time work are not on the government’s agenda. The government seems to have made a clear choice to pursue the policies that employers want.

The item in the government programme on extending local agreements to non-unionised companies, bypassing union shop stewards, has been a long-standing goal of the entrepreneurs’ organisation Suomen Yrittäjät in particular.

– The government is also making it possible for individual company collective agreements to deviate from some elements of labour law, weakening the position of workers. Examples of these elements include sick pay and overtime and Sunday working compensation, says Leppäkangas, who is responsible for developing the collective agreement in the commerce sector.

Currently, it is only possible to deviate by national collective agreements, so that employment conditions are influenced by a group of workers that is much larger, and therefore more powerful, than a single company’s workforce.

– All in all, the changes on the government’s to-do list are likely to undermine the current system based on collective agreements, Ojala says.

Risk of politicisation of the labour market

If future governments continue along the Orpo-Purra line, there is a risk that the labour market will become permanently politicised. It is of course tempting for politicians to make election promises to workers.

Before the 2023 elections, the current Minister of Finance Riikka Purra stated that “for us [the Finns Party] cuts affecting low-income earners are not acceptable”. In future, after elections, we could see major upsets as promises are kept or broken. This sort of development will not improve the predictability of the business environment.

– The joint development of rules and practices by the social partners has not always meant great leaps forward, but it has been based on reconciling mutual interests and ensuring continuity. If this is now dismantled, it is clear that workers and their unions will also have to find new ways of defending their interests. Of course, we cannot allow the balance in the labour market to be permanently tilted in favour of employers, Ojala concludes.

Text: Pauli Unkuri. Photos: Shutterstock and Eeva Anundi.