Current situation in the Finnish Labour Market
August 19, 2010

The overwhelming majority of the collective agreements which are valid in autumn 2010 were concluded in the period from August 2009 to July 2010. During this period, 250 new agreements out of 270 have been signed in the private sector, covering 1.07 million wage earners in EK´s member companies. This means 97 per cent coverage.

The agreements are relatively long; the average duration of the agreements is 2 years and 3 months. The shortest durations vary from 6 months to one year and the longest from 3 to 4 years. Due to the economic recession and uncertainty in business, the actual wage settlements have been made for a shorter period, on average for one year and one month.

According to the majority of the agreements, new wage settlements are to be negotiated during the period from autumn 2010 to spring 2011.

Opening for the wage settlements in autumn 2010

The opening agreements were concluded in the technology industries on 16 August 2010 covering 180 000 employees, i.e. nearly one fifth of all employees in EK’s member companies.

According to these two agreements, the appropriate pay rise will be negotiated locally at the workplace level. If no local agreement is reached, salaries will be raised from 1 October 2010 at a cost of 1.5 per cent, of which 1 per cent will be distributed as a general pay rise and 0.5 per cent in the form of discretionary pay rises.

Policy guidelines of the Board of EK

It is important to seek greater opportunities for local wage formation at individual enterprises, says the Board of EK. According to the statement by the Board on 17 August 2010, enterprises must be given the opportunity to decide on the content of wage settlements.

In order to curb rising labour costs, it is vital to ensure that no general increase exceeding one per cent is agreed in any industry in the autumn wage bargaining. 

The Board considers it essential for the level and structure of wage settlements to boost cost competitiveness, economic growth and employment in all industries, after a sharp drop in GDP and competitiveness in 2009.

Modest wage increases since August 2009

As a result of the economic crisis, only modest increases have been made in the wage packages of the new collective agreements since August 2009. The incentive impact of these increases has generally been 0.5 per cent a year in manufacturing. The average increase has been 0.9 per cent a year covering all agreements affiliated to EK.

The wage settlements vary to some degree between different sectors, for example in terms of structure and timing of the wage increases. In some agreements, e.g. in seafaring and air traffic, no new wage increases have been agreed or pay rises have been postponed.

However, the wage increases in the municipal sector exceed those in the private sector.

Opening clauses in many agreements

It marks a significant moment in Finnish labour history that for the first time the collective agreement gives the possibility to delay wage increases, pay less than was agreed or not implement the increases at all if the financial situation of the company so demands. The procedures for this kind of opening clauses must be agreed on the company level.

For example the technology industry (during the period October 2009 – September 2010) and mechanical forest industry (during the period January 2010 - August 2010) have included this provision in their agreement. 

Local pay rises becoming more common

Wage increases in Finland have been usually agreed as general increases, given in Euros or in percentages.

However, since 2007 approximately half of all employees in the private sector have been covered by company-specific wage increases which have usually been a part of the wage settlement.

Since 2009, the share of local pay rises has been one third of total pay rises on average. This has been in line with the objectives of EK and its member associations.

Many strikes in spite of economic recession

Despite the challenging economic situation companies and branches were facing since winter 2009, the labour market has been subject to a certain number of labour disputes.

The most serious strike has been carried out in stevedoring in March 2010. During the last 12 months, strikes have been carried out also in the banking sector, among salaried employees within the technology industry, in the vehicle traffic and transportation as well as in commerce and food industry. 

Damages and business losses resulting from the strikes have, however, been relatively small, with the exception of stevedoring. 

See also:

• Current situation in the Finnish labour market, images (pdf)
  
• Position statement by the Board of EK, 17 August 2010:
  EK policy for the autumn wage bargaining
  
• The negotiated wage settlement between Federation of Finnish Technology Industries and Finnish Metal Workers’ Union 
  
• The negotiated wage settlement between Federation of Finnish Technology Industries and Federation of Professional and Managerial Staff (YTN)