Eduskuntatalon pylväikköä kuvassa.
A new direction. Teemu Hankamäki would like to see less politics and more labour market in labour market policy. “We should not focus only on shifting power relations.”

The worst is yet to come

News article

TEK’s Labour Market Director Teemu Hankamäki cannot really see any positives in the government’s labour market reforms. Professional and managerial staff will soon feel the effects of the legislative changes.

People have cried, complained and gone on strike, but to no avail. The changes to the labour laws proposed by Petteri Orpo’s (NCP) government keep chugging on like a train.

It appears that the level of earnings-related unemployment security will fall, the termination of employment on grounds related to the employee’s person will become easier, the first day of sick leave will be unpaid and strikes will be even more restricted.

In addition, the government plans to abolish the job alternation leave system and adult education allowance.

What positives can you see in the government's labour market reforms, Labour Market Director Teemu Hankamäki from the Academic Engineers and Architects in Finland TEK?

“It’s difficult to answer that question, I cannot really see any positives. The employment impact of the changes is decidedly weak, but they clearly aim to reduce the cost of labour. I do not believe that these changes to the labour laws can provide a shortcut to happiness if the goal is to drive growth in Finland.”

Autumn will hopefully prove that bargaining and agreements can still make a difference.
- Teemu Hankamäki

According to Hankamäki, the only somewhat welcome change is that the restrictions on unlawful strikes will be tightened. Even competing on the price of labour is not worth it in the long run.

“These people seem to have forgotten that the opportunities for businesses to compete on the price of labour are quite limited. The only possible and desirable direction for Finland is to grow into a nation that produces products and services that make it possible to pay the highest salaries in the world for producing them.”

How can TEK influence the reforms?

“In practice, labour legislation is drafted in tripartite working groups that include the employers, the employees and the government. Akava represents TEK in these groups and therefore has the main responsibility for the preparation of labour legislation and legislation on social security. Naturally, we provide background support to the representatives of Akava and outline our own views with the other Akava affiliates.”

Not even Akava has been able to influence the government's intentions. In a recent laconic statement after the negotiations of the working group on adult education support, Akava said that the proposals made by the organisations have not been accepted as the working group’s proposals.

How can we influence things if our proposals are not accepted?

“The underlying problem is that the Government Programme is highly specific and the government wants to stick to it. These working groups cannot change the actual programme. The methods available to the working groups have been reduced from what they were before and now all they can do is discuss how the government's proposal will be enacted into law. There does not appear to be any room for negotiation or seeking alternative solutions.”

So how can we influence things?

“It is extremely difficult to influence the outcome right now, but that does not diminish the value of the work that is done. This is the way things are right now with this government. Despite the situation, it is important that we can engage in open dialogue with the government.”

Should we wait until the next parliamentary elections?

“I do not believe that the subsequent government will reverse the policies and make the same changes in the opposite direction. A government composition and programme that would completely reverse the changes we are seeing now does not seem very likely. Time will tell what the real impact of these changes will be, and this will probably also influence the next government’s judgement.”

Teemu Hankamäki. Kuva: Markus Sommers
Despite the situation, it is important that we can engage in open dialogue with the government.
- Teemu Hankamäki

Restrictions on centralised bargaining and freedoms for local bargaining

The Government Programme also contains entries that will affect the price of labour of professional and managerial staff.

For example, the government aims to create an export-driven labour market model. The purpose of the new model is to guarantee that any pay increases in export sectors cannot be exceeded by a settlement proposal issued by the National Conciliator’s Office or a conciliation board.

“It looks like this type of legislation will be imposed, despite public speculation as to whether this is possible. I do not see any reason why it would not be imposed. The government has said that this will happen and EK wants it just as much as the industrial peace package. The only alternative to this legislation would be an agreement made by key employee and employer unions on an entirely new labour market model for Finland. TEK is ready to conduct such negotiations.”

The level of unemployment security will also be reduced. The government proposes that the amount of earnings-related allowance be reduced, i.e. earnings-related allowance will be staggered.

According to the latest government proposal, the amount of earnings-related unemployment allowance will be staggered so that the amount would be reduced in prolonged unemployment. The amount of earnings-related allowance would be reduced for the first time already when daily unemployment allowance has been paid for 40 days of unemployment and for the second time when it has been paid for 170 days of unemployment.

In its comment, TEK proposes giving up the staggering of the allowance or at least postponing the first step.

“The first reduction would occur already at about two months of unemployment. For highly educated professionals, this is far too soon, because recruitment processes almost always last for more than two months. In practice, highly educated professionals have little influence over the time it takes to find a job, despite being active,” Teemu Hankamäki pointed out in TEK’s press release.

The government is also going ahead with its plans to increase local bargaining, although TEK, for one, believes that the proposal is flawed and incomplete.

Hankamäki considers it likely that the rights to local collective bargaining will be extended in one way or another.

The government wants to make local collective bargaining equally possible in all companies regardless of whether the company is a member of an employer association or what kind of employee representation system is in place at the company.

“Increasing local bargaining is, in itself, justified. The problem with the proposal is that non-organised employers are now being given more rights without any obligations.”

For example, a compensatory payment for breaches of collective agreements should also be imposed on non-organised companies, because organised companies have this as well.

Collective agreements are next on the agenda

Minister of Employment Arto Satonen (NCP) defended the need to increase local bargaining in the Verkkouutiset media on May Day by arguing that if a company is successful, it also increases the capacity to pay salaries.

“Success is driven by being able to agree locally on the terms of employment to the benefit of both the employees and the employer. This is exactly why it is important to extend local bargaining within the framework of collective agreements to non-organised companies as well.”

CEO of Suomen Yrittäjät Mikael Pentikäinen went beyond this in his May Day speech, calling for the option to derogate from collective agreements.

“The third necessary step – derogating from collective agreements – will be up to subsequent governments to take. This step must be taken, however, because many collective agreements do not provide sufficient opportunities for local bargaining. In addition, some unions have threatened to reduce the opportunities for local bargaining in their collective agreements. This increases the need for the right to derogate from them,” Pentikäinen said in his speech, according to a press release issued by Suomen Yrittäjät.

Hankamäki finds Pentikäinen’s idea is strange as it would defeat the entire purpose of the agreement.

“The basic idea of collective agreements is that they define the key minimum terms for work. Pentikäinen’s statement implies that people should always and in all circumstances have the right to ignore all the minimum terms of the agreement, that is, to agree on worse terms. It is, after all, already possible to agree on better terms, nothing prevents you from doing so.”

Hankamäki expects the collective agreement negotiations this autumn to be interesting. They will measure whether there is still room for negotiation and agreement in Finland.

“Collective agreements are made for the future. They cannot right all the wrongs in history, such as the fact that inflation has eroded purchasing power. Pay increases will naturally be a major issue and the government's labour reforms will also create pressure around negotiation tables to make changes. However, autumn will hopefully prove that bargaining and agreements can still make a difference.”