The buzz among companies was not reflected in salary increases

Many fields in the private sector have completed the collective labour agreement negotiations that started in the autumn. The new collective labour agreements have entered into force, and employees received the first salary increases in their bank accounts at the start of the year.

The new agreements cover the majority of TEK’s members in the private sector. In accordance with the agreements, salary increases were negotiated locally between employers and shop stewards.

If an agreement was not found, the salaries of senior salaried employees were increased by 1.1–1.2 per cent (general increase for all employees) and 0.4–0.5 per cent (the component allocated by the employer), depending on the agreement. These make up the minimum increase.

– This was yet another test that measured the need and readiness for local agreements. There are some encouraging examples but, in many cases, the parties were not really ready to negotiate but chose the minimum increases specified in the collective labour agreement, says Teemu Hankamäki, Chair of the Federation of Professional and Managerial Staff YTN, who led the negotiations at TEK.

– It’s a shame if the salary increases are not even brought up in the negotiations, even if the company could afford them. When a company is doing well, it should also practice local agreements and build a collaborative culture that is based on trust.  These efforts will pay off also in bad times, Hankamäki continues.
 

Some employees received a 1.6 per cent general increase

Many large employers paid the salary increase as a 1.6 per cent general increase to all senior salaried employees. This was common, in particular, in the technology industry and the IT service sector.

For example, many workplaces in the technology industry agreed on the 1.6 per cent general increase in December. However, it has not always been so easy. In addition to local agreements, the Federation of Professional and Managerial Staff YTN has received many questions on the minimum increases.

Similar solutions were also agreed in the IT service sector.

– The most common solution has been that everyone received the 1.6 per cent general increase or the minimum increases specified in the collective agreement, concludes Björn Wiemers, Responsible Advisor at the Federation of Professional and Managerial Staff YTN.

However, not all companies chose to settle for the minimum specified in the collective agreement.

When the negotiating parties found that the company is doing well financially, they agreed better solutions. For example, a company in the technology industry implemented a salary increase that amounted to 2.1 per cent.

– There are some agreements that set both the general increase and the employer-specific component at 1.2–1.5 per cent. In one local agreement, the total effects of the increase amount to 5 per cent, Wiemers calculates.

Competition for talent is not reflected in salaries

In some cases, there was no motivation to reach a local agreement.

– Surprisingly many companies settled for the minimum increases, although there was some variation in this. These agreements mean that we are lagging behind the overall salary trends, says Hanna Huotari, Advisor responsible for the design and consultancy sector at YTN.

Huotari wonders why the upward trend of the design and consultancy sector was not reflected in salary increases at workplaces. According to the Finnish Association of Consulting Firms (SKOL), the total revenue of companies grew by 10 per cent from the previous year in January–July 2017. In addition, SKOL estimates that the sector will need at least 9,000 new experts by 2025.

– Now would have been the perfect time to prepare for competition for skilled employees. Our research reveals that a better salary is one of the most common reasons why people change jobs.

A better salary is one of the most common reasons why people change jobs.

Partial lack of skills

This was the first time local agreements were used in the ICT sector.  

– Many companies held negotiations in good spirits and reached an agreement that satisfied all parties. On the other hand, many shop stewards said they felt pressure to leave out the general increase for all employees, reveals Kosti Hyyppä, responsible Advisor at YTN.

The end results are varied.

– Some companies pay the entire sum as a general increase, some increase the entire sum without changing the general increase, and some increase the employer-specific component while lowering the general increase. In some cases, the payment date has been postponed, but the employees have received a larger increase in return, explains Hyyppä.

The advisors believe that salary increases can be agreed upon locally also in the future, but the practices still need to be fine-tuned. At the start of the year, YTN analysed the local agreements made in this round of negotiations.

– The next two years will tell us if workplaces are truly ready to agree on the terms of employment locally, Huotari says.

– Local agreements work as long as the general increase is substantial enough to guarantee a balanced development of purchasing power, Hankamäki concludes.