Finnish labour market model unsuitable for EU applicant States

Helsinki (23.09.1999 - UP/Mika Peltonen) One condition for Eastern European countries seeking EU membership is that they must have functioning labour market systems. However, it would be useless to press for the Finnish collective bargaining model because the required leap would be too great.

There is no need to insist on legislative reforms in the applicant States as in any case they must apply EU directives and the current legislation of the Union. Instead we should improve labour market systems and practices.

"The problems lie in how to implement the goals. The emphasis is on ensuring the existence of labour market partners and organised collective bargaining", says Turo Bergman, representing the Finnish trade union movement on the ETUC (European Trade Union Confederation) enlargement task force.

The EU has begun membership negotiations with Estonia, Poland, Hungary, Slovenia and the Czech Republic. Membership will mean free movement of labour, goods, capital and services.

Levels of pay and standards of social legislation in one Member State which fall clearly below those of the others would make the competitive situation difficult. Production could easily be transferred to low-pay countries. On the other hand labour might drift away from low-pay countries as workers seek a higher standard of living.

Collective agreements in the applicant countries - where such exist - are concluded at enterprise level. According to Bergman, a direct move from this situation to one in which national agreements are the norm is too much to expect. Negotiations are already hampered by the fact that few employers in the applicant States are organised.

For the time being we should seek various kinds of shortcut, Bergman says. "We should find an intermediate model. This might mean, for example following the French and Spanish practice of conducting studies at workplaces to determine what kind of agreements already exist. After this a government department or other authority could select the most representative agreement in the industry for application across the board.

In this way we could establish some degree of control over matters, Bergman argues. At the same time this would further empower the trade union movement.

Like the Finns, the Italians and Austrians, i.e. the nearest neighbours of the new applicant States, have been most active in encouraging labour market reforms in the applicant countries.

Bergman emphasises that it is not enough that these requirements are merely known to applicant country trade unions. The employers will also have to participate for any results to be achieved.

Employers in the EU Member states, however, have shown little enthusiasm for guiding their counterparts in the applicant countries. "They have, perhaps, shown little interest in this, even though it would be both necessary and advantageous for all." Bergman asks why employers are unwilling to promote collective bargaining in the applicant countries, even though they stress its importance in their formal speeches.

The ETUC has a task force involving ten representatives of the applicant countries. This task force is financed by the European Union and distributes funds for education and other purposes.

In other respects the European Union does not promote the goals defined by the trade union movement. Individual Member State governments have argued for functioning labour market systems, while the main aim of the European Union is to liberalise competition. The social dimension has been on the agenda only during the last decade.

As this issue is a new one, European Union officials generally do not understand what is it about. "They are unable to write about these matters."

There is no chance of rapidly increasing pay rates in the applicant countries to the level of the EU Member States. This will inevitably lead to a harsh situation. "Certain kinds of production will be transferred to the low-pay countries." However, wages and salaries are not decisive in all industries and therefore in the applicant countries at least all other matters should be intact", Bergman argues.

"At least this phenomenon would serve as a counterweight to an otherwise inevitable shock. Purchasing power in the most advanced Eastern European countries will grow gradually and in the course of time pay levels will also rise."

"In any case the enlargement of the European Union to the East will be a costly undertaking", Bergman adds.