The idea for a labour market social contract is back. Earlier in May PM Juha Sipilä presented his ideas to the labour market organisations on extending Finnish working hours and other changes to the terms of employment. The negotiations fizzled out. Now Finland’s new government has taken a different tack. If the labour market organisations do not accept the list of measures proposed by the government, extra budgetary cuts will be imposed, along with further tax levies, totalling 1.4 billion euros altogether. But if the government list of measures is adopted there will be a ‘sweetener’, a one billion euro cut in taxes. The Government Programme promises to present an exact list of proposals before the end of July and the labour market organisations will be obliged to commit broadly to the agreement before the end of August.
The Finnish media has generally perceived this as a skilful political move to put pressure on the trade union movement. If the latter do not accept all the proposals as such, the government can then point the finger and the unions will be blamed for a number of planned austerity measures. This is quite contrary to the well-established Finnish tradition of seeking consensus through negotiations. The conditional cuts announced by the Government include among other things an end to alternation leave, cutting the index linked increase in work related pensions to half and stopping the adult education allowance for vocational studies.
Also on the list are cuts in child benefits, unemployment benefits and study grants. The three Government parties have already decided on some other measures that will weaken the terms of employment like prolonging the trial period for new employees beyond the existing four months. During this time an employee can be dismissed without hindrance. At the moment there have to be justified grounds or reasons for a fixed term employment. Now the Government has decided that with fixed-term employment contracts shorter than one year these grounds are not necessary.
Genuine negotiations are welcomed
The first comments of the three trade union confederations Akava, SAK and STTK stress that they are ready to negotiate on the social contract, but wage and salary earners should not be the only ones to carry the costs of changes. Sture Fjäder, Chairperson of Akava says that Akava is ready to negotiate in order to guarantee the welfare society.
– Finland needs to find a common path towards which the Government and labour market organisations can march together. Moreover, the Government ultimatum can not only be directed at wage and salary earners, employers must also shoulder their share of responsibility.
SAK Chairperson Lauri Lyly says that the social contract can only be established through negotiations and with a more balanced negotiation position.
– The Government Programme makes it more difficult to reach an agreement as the Government has already unilaterally dictated the goals and most important content. The Government is offering the labour market organisations the role of a working life consultant.
Genuine tripartite negotiations cannot be conducted in this way according to Lyly. STTK Chairperson Antti Palola says that STTK is also ready for negotiations, if the goal is a balanced and fair solution. Development of working life will also have to be done in the future through tripartite negotiations.
– STTK does not accept one-sided proposals to prolong the working hours for instance. Alternation leave has to be retained as a way to making work careers longer…Flexibility and security have to be in balance in any reforms.
The Employers’ Confederation EK in its analysis of the Government Programme couldn’t find any negative aspects in the planned social contract for the labour market. On the contrary, it warned instead of the negative consequences if the Government proposals are not accepted.
Read more: Plan for a social contract for labour market fails (11.05.2015)