Helsinki (01.10.2001 - Juhani Artto) Finland’s new Employment Contracts Act (no. 55 of 2001) that took effect at the beginning of June reinforces the generally binding character of collective agreements in Finland. The trade union movement achieved this advance by intensive lobbying of conservative policymakers who had not appreciated the benefits of the generally binding system for society at large.

Another objective likely to be gained by the trade union movement will be approval of its proposal for transition periods governing labour mobility in the enlarged European Union. An active lobbying programme has greatly improved understanding among policymakers of the need for such transition periods. A final decision on the issue has yet to be made in the EU.

However, a third issue now threatens to undermine these achievements. According to the Treaties of Establishment of the European Union, enterprises in any new Member State will be entitled to tender services immediately following accession. The question then arises of whether any similar transition period will be imposed on the new Member States. In the course of accession negotiations Germany and Austria have even secured a concession on transition periods for tendering of services, but unconfirmed reports suggest that Finland has tabled no comparable demand. The Finnish trade union organisations regard transition periods on the right to tender services as a matter of the utmost importance.

The situation is of considerable concern to Finnish Construction Workers Union President Pekka Hynönen. "If the right to tender services takes effect with no transition period, then business enterprises will have a backdoor way to export labour to Finland from the new Member States that is willing to work for greatly reduced wage and salary levels", he warns.

The risk of such behaviour is currently very real, especially as the European Court of Justice has strongly upheld the principle of unfettered competition, although it is legally possible to construct mechanisms protecting employees against abuse. Examples of this are currently in position in the EU Member States.

What, in practice, is the Construction workers union afraid of? Pekka Hynönen explains: "Even now we can see first signs of this threat. About one thousand Estonians and Russians are working on construction sites and are quite satisfied to receive one third or half of the industry minimum wage in Finland."

At the same time some 6,000 organised Finnish construction workers lost at least one day’s work in July. "We are not opposed to the use of foreign labour in Finland when Finnish workers are not available for particular jobs, and provided that the terms of service applied to foreign employees are consistent with Finnish collective agreements and established labour market practices."

Some foreign workers on construction sites have work permits while others work illegally. The precise number of such migrant workers is known neither to the authorities nor to the union. The union considers that the total is increasing slowly.

If the principle of unfettered competition is overemphasised, then it could dramatically change the situation as soon as 2004 or 2005, when Estonia is expected to join the European Union. Pekka Hynönen describes a likely scenario: "Many Finnish enterprises would probably then import underpaid Estonian labour via Estonian enterprises under the de facto control of those Finnish enterprises."

At this point Hynönen refers in particular to the bitter experiences of the German construction industry and workers in the 1990s. When the market was opened up to competition from other EU Member States the construction sector was flooded by foreign enterprises, most of which were controlled by German entrepreneurs. The arrival of 60,000 Portuguese and 40,000 to 50,000 British and Irish construction workers caused mass unemployment among the Germans.

A similar change in the Finnish construction industry labour market would not only seriously increase unemployment, but would also undermine the generally binding character of collective agreements. The subcontractors and service industry enterprises of the engineering sector - together with their workforce - would also be drawn into the same game as working conditions spiralled downwards and domestic businesses faced unfair foreign competition. Naturally, the unions reject this kind of future.

One approach to engaging with this scenario is to lobby for an important new arrangement whereby public authorities would secure effective means of enforcing application of the Employment Contracts Act. "Such control is currently very weak", Hynönen remarks.

"Public authorities have little real means of exercising control. An employee who is paid less than the minima specified in the generally binding collective agreement can sue the employer under the Employment Contract Act. For foreign workers this is hardly a realistic alternative, as litigation is costly and would involve a risk of losing future employment opportunities in Finland."

"So intensive pressure for a real control mechanism to enforce generally binding collective agreements is now on our agenda", Hynönen says. A tripartite working group will soon be formed to prepare for this.

The trade union movement will be well informed as it embarks on this campaign, as the former labour law expert of the EFBWW, Finland’s Jari Hellsten, is close to concluding his thorough study of control mechanisms in other EU Member States.

A further asset is the principle that honest Finnish entrepreneurs would also benefit from strict enforcement of the Employment Contracts Act.


The Finnish Construction Workers Union has over 81,000 rank and file members. The organising rate in the construction industry is about 75 to 78 per cent. The union is currently seeking to raise the organising rate still further by, for example, increasing the number of shop stewards.