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Helsinki (14.07.2016 - Heikki Jokinen) Finnish business and industry organisations have begun a comprehensive campaign against the generally binding nature of collective agreements. This struggle is supported by right wing politicians.

An important part of the Finnish labour market model are the generally binding collective agreements. This means that even employers who are not members of an employers' association must comply with a nationwide collective agreement that is considered representative of the field in which the company operates.

Companies that are organised in the employers' association naturally follow collective agreements signed by their association.

The arrangement is based on the Employment Contracts Act. The  Ministry of Social Affairs and Health has a specific confirmation board to determine the generally binding nature of collective agreements.

There are more than 160 generally binding nationwide collective agreements in Finland.

On an international level the coverage of collective agreements in Finland is perceived as being exceptionally high. In the public sector it accounts for 100 per cent of employees, and in the private sector for 75.5 per cent.

Due to this Finland has no legal minimum wage.

The purpose of generally binding collective agreements is to safeguard the minimum working conditions of employees, prevent unfair competition between companies and guarantee equal pay.

Traditionally the system has, for the most part, been supported by Finnish business and industry, too. Without this system in place unorganised employers could try to compete with organised employers and undermine them by offering weaker terms of employment.

National Coalition Party demands action

Of late some business and employer organisations have been relentless in attacking the generally binding nature of collective agreements. An influential think tank - Finnish Business and Policy Forum EVA - published a report in June claiming that generally binding collective agreements are the most important problem concerning the labour market.

They claim that national minimum standards set by the collective agreements are a major factor contributing to unemployment by making the labour market altogether too inflexible. They also worry about Finnish competitiveness.

However, the EVA report does not mention The Global Competitiveness Index by the The World Economic Forum, where Finland has, for many years, been ranked very high. In 2015 - 2016 Finland was number eight out of 140 countries, a year before number four.

The neoliberalistic think thank Libera published a similar, but even more hard line report last year. It rejects the existing labour market negotiation system more or less completely.

The Chair of the Libera Board is MP Elina Lepomäki. She was a candidate for the chair of the right-wing National Coalition Party in June, but failed to get elected.

Petteri Orpo, the elected National Coalition Party chair and Minister of Finance, said he is also in favour of scrapping the generally binding collective agreements. The party congress accepted a motion demanding the same by “all means available”.

This illicited a prompt response from the trade union confederations.

SAK chair Jarkko Eloranta said that in the existing difficult economic situation it is more important to build trust in the labour market than confrontation.

STTK director Katarina Murto stressed that without generally binding collective agreements unfair competition in the labour market would grow with unorganised companies paying salaries below the agreements.

Akava reiterated that generally binding collective agreements make it possible to adapt the agreements according to the needs of each branch. A legal minimum wage would not be able to fulfill this.

The battle over generally binding collective agreements is obviously just beginning. If business organisations and right wing politicians really decide to concentrate their energies on it and make it a contentious issue, this will mean unrest in the labour market at a time when it is least needed and will do nothing to boost the ailing Finnish economy.


Read also:

Number of workers included in collective bargaining agreements on the increase in Finland  (30.03.2016)