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The long shadow of 2016 makes collective bargaining difficult

The PM Sipilä right-wing Government drastic actions in the labour market some years ago casts a long and dark shadow today over this year’s collective bargaining round.

In 2016, the Government forced almost all trade unions to accept 24 unpaid annual extra working hours in their collective agreements. The alternative would have been harsh punishments in labour legislation cutting the rights and benefits of wage and salary earners.

At the same time unions were forced to accept a transfer of some labour social costs from companies to employees. According to calculations by the Finnish Confederation of Professionals STTK this shift will benefit employers in 2017 – 2020 to the tune of 6.577 billion euro.

Another of PM Sipilä’s dramatic measures was the introduction of the so called activation model. This was designed to penalise unemployed people by cutting their benefits if they had not been able to find a job or training or starting up their own businesses.

These and some other measures like one-year pay freeze went under the name of the national Competitiveness Pact. The purpose was to help the ailing Finnish economy for the next three years, especially the export industry.

More work for women and profits up

What is the balance sheet of these pet projects of PM Sipilä? Unfortunately, quite much the same as what the unions had predicted.

The widely disapproved of activation model is now buried. The decision to do so was one of the first made by the PM Rinne centre-left Government that took power after Sipilä in June 2019. It soon became clear that this Sipilä’s pet project did nothing to activate nor help people in finding a job, it just cut unemployment benefits.

However, the Finnish Centre for Pensions reported in December that they received about 25 per cent more applications for a disability pension than the year before. Even the number of accepted applications showed a clear increase. And this was interpreted by researchers at the Centre as being due to the activation model.

In other words: the intended goal – to get more people working – had the opposite effect and was totally counterproductive whilst punishing unemployed wage and salary earners.

PM Sipilä’s right-wing Government came up also with the plan to give 24 annual extra free hours of work specifically to help the export industry.

What actually happened, according to the Statistics Central in November was that the number of regular working time hours done rose by almost half an hour in a week between 2016 and 2017, but only for women. For men, there was no significant change.

In jobs dominated by women, like education and health and social services there was a clear rise in working time. In industry and construction the rise was very small.

In other words: if the purpose of the extra unpaid hours really was to help male dominated sectors like the export industry, it failed. If the purpose was to make the workload for women in public services greater, it succeeded.

The right-wing Government justified these measures, together with the partly transfer of companies social security fees to employees, claiming that will help the economy by making it possible for companies to invest again.

In December, Statistics Finland revealed what really happened. “In the third quarter of 2019, the profit share of non-financial corporations, or the share of profits in value added, grew from the previous quarter by 0.5 percentage points to 33.6 per cent. The investment rate of non-financial corporations, or the proportion of investments in value added, fell by 0.4 percentage points to 25.9 per cent.”

In other words: profit went up, but investments went down. In the Q4 of 2015, the investment rate of non-financial corporations was 27.2 percent with a profit rate of more or less the same, 27.5 per cent.

Struggle of unpaid working hours ahead

But the longest shadow of PM Sipilä is cast over the negotiation tables on the ongoing collective bargaining round. Employers make it absolutely clear that the 24 unpaid hours from 2016 are permanent and will not be revoked.

Should it be otherwise they insist that companies must be compensated by offering a smaller pay rise. The technology industry calculates that the cost effect of these free hours is equivalent to a 1.4 per cent pay rise.

Trade unions, for their part, say that the time of free work is now over as Finland has survived and emerged rather well from the bad economic situation it was in 2016.

They also say that extended working hours were, in fact, free labour for companies. And it would be strange that employees, after doing in many cases unpaid work for three years, should have to pay when it is over.

And this struggle will take place in negotiations of every collective agreement.

Read more:

Extended unpaid working hours yielded no positive impact in the workplace (13.09.2019)

The long and winding road of the failed activation model comes to an end (05.07.2019)

New government programme promises cooperation instead of confrontation in the labour market
(03.06.2019)