Appeal lodged with the EU against Finland’s generally binding collective agreement system – in Norway generally binding agreements have been extended
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PAM rejects the claims cited by the think tank Liberal in its appeal to the European Commission on the legality of the generally binding nature of collective agreements. In Norway generally binding agreements have been extended to cover a total of nine sectors.
Together with the law firm Borelius, the think tank Libera has lodged an appeal with the EU against the legality of generally binding collective agreements. It is claimed that the current generally binding collective agreement system is harmful to Finland and hinders the activities of non-organised employers, especially in matters that are agreed locally.
PAM rejects these claims. The generally binding collective agreement system in place in Finland does not prevent local agreement, rather it creates ground rules for it that guarantee fair competition and prevent exploitation of employees.
According to PAM President Ann Selin, a comprehensive collective agreement system and generally binding collective agreements allow business owners to thrive and implement the vision in their business plan whilst ensuring fair competition. Selin put it like this most recently in June:
“Having fair operating practices and a minimum set of employment rules based on collective agreements creates the conditions for healthy business activities. When these are not applied, it all too often means that a company’s success is not down to a viable business concept but exploitation of people and of the instruments put in place by the welfare society”.
According to Selin, not having a system of collective agreements would also increase the risk of the grey economy.
In Norway generally binding agreements extend to hospitality sector employees
Whilst Libera thinks that collective agreements hold up competition, in Norway in recent years the collective agreements in many sectors have been declared to be generally binding. Most recently this has been the case in the hotel, restaurant and catering sectors, which employ 91,000 people.
When Norway joined the European Economic Area, there was a wish to prevent wage dumping. Therefore a law was enacted by which the collective agreement in a certain sector can be declared wholly or partly generally binding. Then all employers have to comply with the minimum wages or other working conditions specified in the agreement.
This was found to be an approach that works and over the years generally binding agreements have been extended to several sectors. The decisions are made by the government body Tariffnemnd. There are currently generally binding agreements in nine sectors in Norway, including construction, shipbuilding and shipyards, road haulage, agriculture and horticulture, electrical fitting and cleaning.
Usually only the provisions in the collective agreements on minimum pay are generally binding, but sometimes other provisions such as supplements, workwear or reimbursement of travel costs are too. From the beginning of this year the agreement for employees in the hotel, restaurant and catering sectors was declared to be generally binding as regards minimum pay. The Fellesforbundet union, which advocated the move, considers this important for the sector as a whole. There is now a statutory minimum level for wages in the sector.
At the same time maximum prices were set for how much employers can charge for accommodation that they provide. Underpaying cannot be legally passed along the chain. Employers must ensure that their subcontractors also pay the minimum wages in generally binding collective agreements.
In Norway shop stewards have the right to require their employer to demonstrate that subcontractors are complying with the collective agreement. If a main contractor does not have a shop steward, the shop steward of the next subcontractor has the same right to information from his or her own company’s subcontractors. The labour authorities have published guidelines e.g. for ensuring that subcontracted cleaning work complies with the rules.
According to PAM’s Collective Bargaining Director Jaana Ylitalo, generally binding collective agreements guarantee equal treatment of workers and proper pay.
“The Norwegian example shows that we made the right choice in having generally binding agreements, which have created an equal society. There is no need now to start looking round for anything else", Ylitalo comments.