Teemu Hankamäki

This autumn’s collective agreement negotiations are still up in the air

News article

Generally binding collective agreements that protect the terms of employment of almost 30 000 TEK members will expire on 30 November 2021.

Collective agreements guarantee senior salaried employees, such as TEK members, paid parental leaves, salary during illness, holiday bonuses, overtime compensation and compensation for travel expenses and general wage increases, among other things.

The plan is to start revising the agreements with the new association, Technology Industry Employers of Finland, which recently begun its operations. For the moment, however, the representativeness of the association remains a big question mark.

The degree of representativeness, or how many employers join the new association, will determine whether the new national agreements will be generally binding or not. Having a generally binding collective agreement means that the agreement will also be observed in companies in the same industry that do not belong to the employers’ association.

Technology Industry Employers of Finland published its first figures on 6 September concerning the number of companies that have joined the association and thereby demonstrated their will to continue to be bound by an industry-level collective agreement. According to the announcement, roughly 200 companies have joined the association, with more than 30 000 staff members in total. In addition, about 60 companies had applied for membership, but their applications had not yet been processed.

At least so far, the degree of representativeness has been quite low, considering that Technology Industries of Finland, which negotiated the current collective agreements, has about 1 600 member companies.

 – The big question for launching negotiations is which companies the new employers’ association will represent and how exhaustive will the industry-level agreements be that we are about to negotiate. If the degree of organization in terms of the new association remains low, the generally binding nature of the agreements is also at risk, says Teemu Hankamäki, Labour Market Director at TEK.

Senior salaried employees have generally binding collective agreements under the current Technology Industries of Finland in three industries, namely in technology industries, the consulting sector and the IT service sector.

An agreement has typically been generally binding if roughly half of the employees in the industry in question work for companies organized under the employers’ association.

– In some fields in the technology industries, maintaining the generally binding agreement can depend on very small actions, ultimately the choices made by a handful of big companies. I naturally hope that employers will become widely unionized so that we could negotiate agreements that are as exhaustive as possible and preferably also generally binding, says Hankamäki.

I am concerned that not all companies have necessarily realized the ultimate implications of being excluded from a potential collective agreement.

Employers benefit from a generally binding agreement as well

If the national collective agreement is no longer generally binding in an industry, the terms and conditions of the collective agreements will no longer apply to companies that do not belong to the employers’ association that concluded the agreement.

– In my opinion, it would be highly regrettable if we lost the generally binding nature of the agreements. And I am even more annoyed by the fact that generally binding agreements have been portrayed in public debate as the worst thing that could happen to Finland, says Hankamäki regretfully.

In practice, generally binding agreements maintain the overall employment terms for senior salaried employees working in the industry in question at a fairly reasonable level, also from the companies’ perspective.

In addition, the agreements allow extensive opportunities for local agreement so they enable agreements that bypass or supplement the labour legislation.

– Instead of weakening the terms of employment, generally binding agreements steer companies towards competing e.g. on product or service quality, security of supply, customer satisfaction and, in general, all the ways that a developing, successful company should rely on as competitive factors, says Hankamäki.

– In addition, I am concerned that not all companies have necessarily realized the ultimate implications of being excluded from a potential collective agreement. It will certainly mean more work for the management and HR when they have to consider how to operate while relying on labour legislation alone, which provides limited opportunities for local agreement, for instance. Customizing a company-level collective agreement can also be a tough chore, says Hankamäki.

Read more about the current situation of collective bargaining, generally binding agreements, the significance of collective agreements and what you can do on behalf of good terms of employment.