Suomen ja Ruotisin liput liehuvat taivasta vasten.

TP: Finland and Sweden agree on salaries in a very similar manner

29.10.2021
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News article

According to a recent survey by Industrial Employees TP, the labour market models of Finland and Sweden are very similar to each other. They are both characterised by the strong role of export companies and a high degree of unionisation.

Despite their differences, the labour market models of Finland and Sweden have a lot in common.

Both labour markets feature coordinated salary formation, comprehensive collective agreements and high unionisation rate among salary earners and employers.

The role of export-driven companies is another shared characteristic. Export companies define or at least strive to define the leeway for salary raises both in Finland and in Sweden.

The largest striking difference is that in Finland, local negotiations are more significant in the private than the public sector. In Sweden the situation is reversed: local negotiations are more significant in the public than the private sector.

This is a summary of the analysis published by Industrial Employees TP (Teollisuuden Palkansaajat) titled Miten palkoista sovitaan? Suomen ja Ruotsin työmarkkinamallit vertailussa (How Are Salaries Negotiated? – A Comparison of Finnish and Swedish Labour Market Models). In the analysis, senior researcher Merja Kauhanen from TP compares the collective labour agreement models of Finland and Sweden with regard to salary formation.

Both labour markets feature coordinated salary formation, comprehensive collective agreements and high unionisation rate among salary earners and employers.

TP was incentivised to conduct the analysis in part by the association's desire to influence Finnish labour market discourse.

– The national labour market discourse is distinctly gloomy throughout the year, said Juri Aaltonen, Chair of TP’s board and Chair of the Federation of Special Service and Clerical Employees ERTO, at the publication event of the analysis.

According to TP, the problem is that Sweden is often used as an example when discussing the Finnish labour market model, and people say that there are no generally binding collective agreements in Sweden or that local negotiations are commonplace there. The association points out that it is rarely brought up that the negotiations in Sweden are very coordinated or that the most dispersed negotiations in Sweden are found in the public sector, in municipalities.

TP states that out of all the salary earners in the Swedish public sector, 52% were completely within unrestricted local negotiations in 2020. For senior salaried employees this share was as high as 81%. In Finland, on the other hand, nearly 100% of salary earners in the public sector received their raises as a general raise, which was supplemented by a locally negotiated portion.

It is rarely brought up that the negotiations in Sweden are very coordinated or that the most dispersed negotiations in Sweden are found in the public sector, in municipalities.

In the summary of the analysis, Merja Kauhanen brings up similarities, such as the fact that the collective agreements negotiated in both countries also extensively regulate other terms of employment besides salaries and working hours. One shared feature is the commitment to industrial peace brought about by collective agreements.

– In both countries, binding collective agreements basically apply to all employee groups at workplaces. The salary policy based on solidarity enacted by unions has also raised the lowest salaries and kept the salary dispersion narrow and salary differences relatively small. One of the ways the models differ is that in Finland there is a statutory extension to the collective agreements to also cover unorganised employers, which Sweden does not have. On the other hand, even in Sweden unorganised employers can adhere to the stipulations of collective agreements through so-called joining agreements, writes Kauhanen.

Collective agreements are inclusive

According to the analysis, a defining characteristic of the collective agreement models in both Sweden and Finland is that their coverage has remained high over time.

Here coverage means the share of all salary earners who are covered by collective agreements. In Sweden, some 90% of salary earners aged 16–64 were covered by a collective agreement. In the private sector the coverage has been 83–85%, while the share is 100% in the public sector.

In Finland, the total coverage of collective agreements is some 90% for all sectors. In the private sector this share is some 84% and in the public sector it is 100%.

Industrial Employees TP is a cooperation, research and lobbying association for employees with 14 member unions. Academic Engineers and Architects in Finland TEK is one of those member unions.