Pay determination of municipal employees becomes more transparent

A new level pay system is going to transform the pay criteria of over 130,000 municipal employees. JHL’s chief shop steward expects the new model to improve pay transparency.

Original article written in Finnish by Antti Tuominen Photos: Vesa-Matti Väärä Reading time: 5 mins

Chief shop steward Maarit Salonen has spent countless hours last spring and summer discussing the pays of the employees working for the city of Turku.

Salonen is one of Trade Union JHL’s two representatives in negotiations about how the new pay system of municipal employees is going to be applied in Turku. The other JHL’s representative in the group in Turku is chief shop steward Tini Vehviläinen.

The pays of employees in municipalities will undergo a major change at the end of September when municipalities start implementing the level pay system.

This reform concerns about 120,000 employees who are subject to the general collective agreement for the municipal sector (KVTES). It is the collective agreement that covers for example childcarers, library employees, and the personnel of employment services.

The pay system change will furthermore concern those about 17,000 teachers in early childhood education and care who work in daycare centres.

The numbers are based on data from Local Government and County Employers KT.

Pay depends on skills and responsibility

The basic principles of the pay system have been agreed at the national level in a collective agreement between trade unions and KT.

A municipal employee’s job specific pay component will be based on the pay group where their job duties fall. For example, childcarers in early childhood education and care and employment services specialists each have their own pay groups.

Another factor that affects an employee’s pay is their level of skills and responsibility. This is also the reason why the system has been termed the level pay system (in Finnish “tasopalkkajärjestelmä”). Job specific pay components will be divided into three levels: A, B and C. The level depends on the skill and responsibility requirements of the job.

Level A has the lowest pay, and level C has the highest pay. An employee’s pay will increase when they gain so much more skills and responsibility that they advance for example from level B to level C. An employee can advance to a new pay level for example through additional education and training. Their pay is revised if the criteria of the higher skills and responsibility level are met.

Each municipality needs to agree independently on how different job duties are assigned to pay groups and pay levels. This is done based on criteria set in the national collective agreement. The collective agreement also determines the minimum that needs be paid for a job.

JHL’s Bargaining Specialist Keijo Hiltunen has been involved in the preparation work of the new pay system for a long time. He has observed that municipalities follow closely what other municipalities do when they implement the system.

“Will this affect so that local circumstances are not considered as much as they should be?” Hiltunen asks.

Hiltunen speculates that the employers may try to apply the system as similarly as possible because they want to avoid pay competition.

Additional levels and increments are negotiated locally

Municipalities can agree on additional levels, where the pay is higher than at level C. Any additional levels need to be recorded in a local agreement. The agreements are negotiated in local pay working groups that include representatives of the employees and the employer.

According to Hiltunen, one of the risks in the system is that the pay does not rise enough when an employee advances to a higher level. In that case, learning new things may not be financially motivating for the employee.

The local pay working groups also negotiate increments within levels. Increments within levels can be paid if an employee stays at the same pay level (for example level B) but gains news skills or new responsibilities.

Our largest groups are early childhood education and care and teaching assistants. They need the biggest amount of finalising work.

Shop steward Maarit Laaksonen in Turku has spent many working hours this year in one of those pay working groups. The working group has been busy because the new pay system needs to be ready by the end of September. If an employee’s pay changes, the change will take effect at the latest in October. In Turku, many details were still negotiated in August.

“Our largest groups are early childhood education and care and teaching assistants. They need the biggest amount of finalising work and have expressed the most opinions about what needs to be included,” Salonen says.

Turku has daycare centres where all child groups are multicultural. One of the questions to be settled in the negotiations was how cultural diversity is taken into account in pays of early childhood education and care employees.

“It has been agreed that children’s enhanced and intensified support needs will be scored, but there was disagreement on what the threshold scores for moving to a higher pay level should be.”

More transparency

Chief shop steward Maarit Salonen sees many positive things in this pay system reform. The new system offers employees more ways to influence their pay and provides more information on how the pays are composed.

In Turku, for example, representatives of the employees have until now not been included in groups where pays have been agreed. Now the national collective agreement clearly states that pay working groups have to include the shop stewards.

“Transparency improves when employees have access to the descriptions of [pay] levels. They won’t need to grumble so much by themselves about why someone else is paid more than they. Employees can see what conditions they need to meet in order to advance for example from level A to level B.”

This article also draws on an interview of JHL’s Bargaining Director Kristian Karrasch, who has participated in the preparation work of the pay system reform.