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Union leaders slam ETLA's competitiveness pact report

Labour-affiliated researchers say ETLA research exaggerates the impact of longer work weeks and docked holiday pay.

kaksi työmiestä rakennustyömaalla kantavat rautatankoa
The extension of working time was implemented in different ways in various sectors. Image: Jani Saikko / Yle

Union leaders on Monday criticised a report by a think tank affiliated with business lobbyist the Confederation of Finnish Industries that suggested an increase in working hours has helped create between 8,000 and 16,000 jobs in Finland.

The Finnish Institute of Economic Research (ETLA) said in a report published on Monday that the competitiveness pact, introduced by former Prime Minister Juha Sipilä's government in 2016, increased employment and improved Finland's competitiveness.

Unions fought the pact when it was introduced, and sharply criticised the use of 'free labour' to improve Finland's economic competitiveness.

"The economic situation has improved but Finland's growth cannot rely on free labour for much longer. SAK's board members are sending out a strong message that extra hours without pay as included in the competitiveness pact is considered to be extremely unfair," said Jarkko Eloranta, president of SAK.

Reducing the cost of labour

The pact was the government's attempt to reduce unit labour costs in Finland and make Finnish companies more competitive compared to their international peers. One of the terms of the pact required that workers increase their time on the job by 24 hours a year, a significant real-terms pay cut.

The ETLA report predicts that this extension of working time will create an additional 8,000 to 16,000 jobs in Finland by the end of 2022.

Story continues after photo

Kuvassa ministerit Juha Sipilä ja Alexander Stubb (oik) sekä Jari Lindström (ps.). Hallituksen neuvottelut yhteiskuntasopimuksesta.
Prime Minister Juha Sipilä (Centre) and Finance Minister Alexander Stubb (Right) announced labour market reforms with a fist bump at the end of their press conference. Image: Mauri Ratilainen / AOP

This increase accounts for about 40 percent of the improvement in employment figures, the research group says, while the remainder is explained by the pact's reduction in social security contributions and taxation.

Current Prime Minister Antti Rinne's administration has vowed to improve the current 72 percent employment figure to 75 percent during it's term in office. In order to achieve this, ETLA estimates that an additional 40,000 jobs would need to be created, above and beyond the additions it has predicted.

Export industry pleased with pact

Businesses in the export sector expressed satisfaction with both the current progress of the competitiveness pact and the ETLA projections. Forest, technology and chemical industry associations also reported employment surges that they say was boosted by the pact.

"The competitiveness pact has been of great importance to the export industry as a whole. This is very important for the future in a situation where the economy is becoming increasingly uncertain," said Jyrki Hollmén, labour market director of the Finnish Forest Industries Federation.

Minna Helle, labour market director at the Federation of Finnish Technology Industries, agreed with the forestry companies' assessment.

"Export companies operate in global markets and therefore customised solutions are needed to achieve success in international competition. Individual workplaces know which solutions work best for them," Helle said.

Unions sceptical

The union-funded Employees' Research Institute responded to ETLA's report by criticising the institute's estimates of the effects on employment. According to Research Director Tuomas Kosonen, the overall impact of the pact has been exaggerated.

"In my opinion, their estimates of the impact on employment are tenuous, as they are based on models from the research literature and not empirical data. It's also something that's difficult to evaluate accurately. Many other factors affecting employment have also changed, not just working hours," Kosonen says.

However, Kosonen does not dispute that the competitiveness pact has had an impact on employment.

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Metallityöväenliiton kylttiä irroitetaan Hakaniementie 1:n katolla.
Metallityöväenliiton kylttiä irroitettiin Hakaniementie 1:n katolla Image: Juha Kivioja / Yle

Trade unions also responded to the ETLA report on Monday. Riku Aalto, President of the Confederation of Finnish Industries, urged caution when reading the report.

"The impact of the competitiveness pact should not be overestimated. In particular, the unpaid extension of working hours has been exaggerated. The extra hours in federation industries that have signed the pact have been implemented in quite an irregular manner and the effects have been mixed," Aalto said in a press release from the union.

Weekly working time below EU average

As part of its research, ETLA compared Finnish working hours with other European countries. The average weekly working time in Finland was found to be an hour shorter than the EU average. Annual holidays, public holidays and other absences also reduced the number of working hours in Finland more than in other European countries.

The agreement was negotiated and signed by the government, business representatives and labour market organisations in 2016. In addition to the increase in working hours, the pact also introduced a 30-percent reduction in holiday pay for public sector workers.

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