Plan for a social contract for labour market fails


The attempt by the Prime Minister-designate Juha Sipilä to create a social contract between labour market organisations has failed. Centre Party leader, Juha Sipilä is currently leading negotiations to form a new government in Finland following the parliamentary elections held on April 17.
As a part of this process he announced his wish to draft a ”social contract” between the labour market organisations within a very brief time frame. Sipilä presented three questions to the labour market organisations: how to create a five per cent leap in productivity, how to lower the threshold of employment and how to use the unemployment budget in a more activating way?

Though there was a very short time for the discussions, the three trade union confederations Akava, SAK and STTK met with the employer associations. As a basis for discussion they were handed a paper drafted by an aide to Sipilä. The trade union confederation leaders went into these discussions with an open mind, as the Finnish economy is not good shape. However, they expressed the view that the cost of reform should not be borne only by employees.

The draft proposal for the social contract was, however, leaning in this direction. It proposed among other things to prolong the trial period for new employment from four to six months. During this time an employee can be dismissed without hindrance. Sipilä also proposed to extend the working time for Finns by a 100 hours per year, which would amount to two and half weeks extra work without compensation. According to the trade union confederations given the situation of high unemployment we should be talking and thinking about how to get work for unemployed people, not how to get people who are already employed to work even longer days.

Employers’ hard line

Another reason for the breakdown in talks was the hard line taken by the employers; their association EK presented a long list of proposals to make the document even more employer friendly. The Sipilä draft stated that the weakening of terms of employment could be dispensed with when the Finnish economy becomes more robust. EK refused to include this in the document. It also refused to accept that a written reason should be required in cases of dismissal during trial periods. The draft also proposed that business leaders should recommend moderate pay rises for high- ranking personnel in companies. This EK also refused, wanting to change the word recommendation to an appeal. The whole character of the document was a bit unclear, too. Trade union confederation leaders stressed that it cannot automatically replace hundreds of collective agreements, which are legally binding. Further negotiations are needed.

Price too high

– Employees were ready to shoulder responsibility even at a heavy price, but now the price for weakening the terms of employment was too excessive and unbalanced,  says Akava chairperson Sture Fjäder on the negotiations.

SAK Chairperson Lauri Lyly makes the point that a five per cent improvement in competitiveness which is brought about only through sacrifices made by wage and salary earners was too high a price for the social contract. He adds that the tight schedule was also an obstacle.
– In a few days one does not change the Finnish system of collective bargaining.

STTK chairperson Antti Palola says that the opinions of the negotiating parties were too far away from each other. The two goals to improve flexibility in the labour market and to improve security in respect of unemployment did not meet, he says.