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Analysis: UPM rejection of collective bargaining not a whim

The forest industry giant UPM announced on 8 February that it will no longer participate in negotiations on collective agreements for salaried employees at any level in Finland. This unilateral refusal to engage in collective bargaining is not just based on a whim.

UPM had obviously decided to prepare well in advance and with a big budget for the more aggressive labour market actions it now pursues.  After the Finnish Forest Industries Federation pulled out of collective bargaining last October, UPM hired two experienced chiefs from the Federation labour market department.

The highly competent UPM labour market staff has without doubt analysed very well the risks and costs of this new move. One factor is who will have more resources at their disposal in the event of strikes or lockouts: UPM or the unions?

UPM is in good financial shape. In 2020, it made a profit of almost one billion euro, which was 11.1 per cent of sales. A year before, the profit was greater still, 1.4 billion euro and 13.7 per cent of sales. The unions, needless to say, have much more limited resources than a huge multinational company.

Trade Union Pro, that represents the salaried employees, is a wealthy union after it sold off its office building in 2019. In the beginning of 2020 Pro’s balance sheet stood at 200.3 million euro. So, It should be able to support its members in any possible strike action.

Another question is, whether UPM is acting fully independently, or is it a spearhead of the forest industry in an action to destroy collective bargaining in general. Or, will there be more companies to join this move to scrap collective bargaining in the near future. The existing forest industry collective agreements begin to expire at the end of this year.

The forest industry is well-known in Finland for its hardball labour market practises. In 2005, it organised one of the most dramatic industrial actions in history: a lockout that closed paper mills for more than six weeks. More than 24,000 employees were kept out of work for 44 days.

The cost of the lockout was colossal, both for the companies and for the national economy, but the industry strategy then looked a bit like the one the German General Erich von Falkenhayn employed at the Battle of Verdun in 1916. His purpose was to bleed the French dry regardless of casualties on his own side.

UPM failed to avoid industry-level collective agreement in Germany

This is not the first time UPM has tried to radically break free of collective bargaining. In December 2012, it announced that it would leave the German employers’ association and the industry-level collective agreement. At that time UPM had seven plants and ten per cent of the employees in the paper industry in Germany.

The IG BCE union, however, was adamant in its rejection of this move of the employer and said clearly that leaving the branch collective agreement would endanger industrial peace, thus forcing UPM back to the negotiation table. Back in January 2013 UPM and IG BCE made an agreement that included agreeing terms of employment on the basis of the industry-level collective agreement.

It remains open as to what the multinational UPM will do in the future in the other 11 countries where it has production plants, like in Uruguay, where UPM is a major employer. “UPM is fully committed to freedom of association and the right to collective bargaining”, advises the company in its document UPM in Uruguay, published by the company itself in May 2020.

Read more:

UPM wants to scrap collective bargaining for salaried employees completely (10.02.2021)

Forest industry declares it will no longer take part in collective bargaining
(05.10.2020)