European Trade Union Institute, ETUI.

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14 December 2017

Finland: Transforming its industrial relations system

Finland’s industrial relations system is being transformed due to recent political and socio-economic developments. The government's reforming of the labour market and the refusal of employers to continue with central collective bargaining have led to a more fragmented social model. The trade unions are challenged to keep upright a coordinated defence of workers' rights.

The political climate has led to a shift away from a model that combined the strengths of the Nordic model and certain aspects of the Rhineland model into the direction of a neo-liberal market policy. Like in several other countries, the threats of the financial crisis have been used as an argument to deregulate the collective bargaining practices and to reform the labour market into a more fragmented patchwork of decentralised industrial relations. With the slogan that it is necessary to build up a more 'business friendly' environment, the power balance has been reformed at the detriment of the workers and their representative organisations.


An important component of this reform was the decentralisation of bargaining that the employers started to push forward, assisted by the government that had challenged in 2015 the tradition of tripartite consensus. First, the Confederation of Finnish Industries EK pulled out of national tripartite labour market pacts. In March 2017, the employers terminated all 22 national agreements at confederal level and announced unilaterally that it would not conduct any further national level labour market agreements. According to the employers confederation, all future agreements had to be made at union or company level. As a result, no central agreement could be signed. Since 1968, the country had a tradition of national trilateral labour market pacts and central agreements that were always an important reference for the sectoral bargaining. And even more important, the smaller unions, in particular, relied on confederal level agreements.


However, the trade union movement has not followed blindly. Already in 2016, the central trade union confederations tried to influence the process as they negotiated a new deal at tripartite level on how to reform the labour market. This resulted in the conclusion of the Competitiveness Pact, an agreement signed by the Government and the social partners, which aimed to enhance the price competitiveness of Finnish production. The Competitiveness Pact was finally signed on 14 June 2016, after most of the unions endorsed the Pact. Part of the Pact was the opening up of collective agreements for more opportunities of local agreement. Cooperation was also agreed on developing the collective agreement model in a more export-led direction. As the time of centralised nation level labour market agreements was over, the trade unions had to work out a new strategy. The unions had to examine before the autumn negotiations how to integrate provisions stemming from the terminating national agreements.


The question is what is more to come in the near future. The Europe 2020 Strategy National Reform Programme was published before the summer of 2017. Proposed are activities of labour market activation, the promotion of youth employment schemes and a reform of the vocational education and training. A re-instalment of the old industrial model cannot be expected, as the government underlines, referring to EU-recommendations, that the country should 'ensure that the wage setting system enhances local wage bargaining and removes rigidities'.

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