Employment minister pushes for upper limits on pay rises; unions sceptical

Finland's right-wing government is looking to make radical changes to the labour market.

Employment Minister Arto Satonen in his office.
Real estate developer Arto Satonen (NCP) has been labour minister since June. Image: Juha Kivioja / Yle
Yle News

Employment Minister Arto Satonen (NCP) called a meeting of labour market organisations on Wednesday, in an effort to advance the government's plan to set limits on collectively agreed pay rises.

Ministers want to ensure that other sectors don't exceed pay raises granted in the industrial exports sector.

Satonen is seeking a voluntary agreement from employers' and employees' organisations on the government's preferred line.

That would mean separate legislation on the matter would not be required. The government's proposal is about to be sent out for consultation.

"My primary wish is that labour market organisations would agree on this among themselves," said Satonen, a millionaire real estate developer.

"I strongly hope and believe that there will be a discussion among the labour market organisations about how the export-driven model could be created in Finland and what details would be connected to it," said Satonen.

Satonen declined to offer an opinion on who among the labour market organisations would negotiate the export-based model.

"That's an issue for the labour market organisations," said Satonen.

Mixed reception

That agreement is unlikely to be forthcoming. Workers' organisations have already said they are sceptical about the proposals, and the blue collar confederation SAK is currently engaged in strike action in an effort to influence the plans.

They are particularly concerned about plans to taper off income-linked unemployment benefits, cuts to housing benefits and limits on the right to strike.

Unions representing workers in fields traditionally dominated by women are concerned about the possibility that historical pay gaps could be cemented into place if their pay rises are capped.

SAK chair Jarkko Eloranta said that the most important thing was that the seminar was arranged at all.

"The proposal is going out for consultation," said Eloranta. "Then the minister hopes that organisations will start to negotiate. Then everyone can surely ponder what that could mean."

Both public and private sector employers, on the other hand, are relatively happy with the government's plans.

"I emphasise now that the ball is in the unions' court," said Jyri Häkämies, who chairs the private sector industrial employers' organisation EK. He is a former NCP minister of economic affairs.

Labour conciliator: Mistrust is strong

In practice the so-called "Finnish model" is actually the Swedish model. Prime Minister Petteri Orpo (NCP) has often compared Finland to Sweden, where wages are negotiated "export sectors first".

In Sweden strikes are rarer, but there are also other reasons for that: issues are more often discussed before management makes decisions.

National Labour Conciliator Anu Sajavaara says it is problematic that most people pick the parts they like from practices in other countries.

The general atmosphere in Finland, however, is a bigger problem.

"Mistrust is quite strong at this point, and that isn't improving," said Sajavaara.

Wages have in practice been negotiated first by exporting industries first in recent years, but there was an exception in 2022.

In that year's pay round municipal workers won an exceptional deal mandating their pay increases would be at least one percentage point greater than those in the exporting industries.

The change was intended to correct long-standing pay gaps in the care and nursing sectors, but in practice the same pay rises were agreed for every municipal employee.

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