Collective agreement negotiations have reached a crucial juncture

The labour market has reached a critical juncture. PAM will agree to centralised negotiations as well as negotiations at individual union level, says PAM's First Vice President Jaana Ylitalo, who is heading the negotiation activities.

In the coming days, we should know whether the employer and employee confederations will negotiate on a centralised agreement, or whether each union will negotiate its own agreements. From the perspective of the Finnish national economy, a centralised agreement would create stability.

“Given the situation, the level of wage increases must be reasonable; not zero, however. The government needs to be involved,” Ylitalo says.

By the time this magazine is published, we may have a better idea of what shape the negotiations will take, with the Finnish Government due to hold its budget session on 28–29 August. In the metal industry, possible negotiations between trade unions and employers' associations will begin in August/September. A few years ago, negotiations on the framework agreement taught us that centralised and union-level negotiations should not be held simultaneously.

At PAM, the first agreements will expire at the end of October. This means that, although negotiations are approaching, most collective agreements negotiated by PAM are valid until the spring.

“We on SAK's board will examine the centralised option, but if this is not practicable we will continue our ongoing preparations for the union-level round,” Ylitalo says.

Efforts were made as early as last spring to reach a centralised agreement. After the negotiations broke off, a round of unilateral negotiations with possible strikes was anticipated for the autumn. Sentiments changed at the beginning of August, however, when Finland's economic data took a turn for the worse. The Confederation of Finnish Industries EK, which generally pushes for company-level agreements, is no longer rejecting a centralised solution. Minister of Finance Jutta Urpilainen added to the pressure on labour market leaders by commenting that, “now if ever”, we need a moderate, long-term centralised agreement. The industrial sector is laying off people and we are lagging behind in terms of competitiveness. The state needs to take on more public debt than anticipated. Our home markets alone will not be able to spur growth in the national economy.

The ball was left in the Confederation of Finnish Industries' court, after the employee confederations SAK, Akava and STTK announced they would agree to a centralised solution, with certain conditions.

While the situation in the service sector is not quite as bad as in the industrial sector, Ylitalo points out that we have not seen the kind of growth expected in the spring. Compared to last year, the level of employment has remained reasonably good. This autumn, the collective agreement for facilities services is the only one which will expire among the major sectors represented by PAM. Under the income development programme currently underway in the sector, the schedule for the remaining two wage increases is still to be agreed. Previously agreed increases were made at the beginning of the year. Agreement has been reached that these raises will always be implemented at that point in the year.  

While there is light on the horizon in Europe, Finland's situation did not see any significant improvement in August. “Confidence indicators and the industrial order books give reason to assume the recession is over in Europe and the economy will resume growth,” says Olli Koski, Chief Economist of SAK, the Central Organisation of Finnish Trade Unions. In Finland, we will probably see a turn for the better in six months at the latest. A further problem in Finland, alongside competitiveness, is the poor purchasing power of consumers.

“Real earnings have not increased since 2011. Although wages have risen, inflation has eaten away at wage earners' gains,” Koski says.

During the last week of August, we should have a resolution.

“At the minimum, there should be a signal on whether we are aiming for a centralised agreement. However, ideally speaking, such an agreement should already be concluded by that time,” Koski adds.

PAM collective agreements due to expire towards the end of this year include those for the ski resort sector, the programme services sector and the hairdressing sector, as well as one of the main sectors – the facilities services sector. In the commercial sector and hotel, restaurant and leisure industry, the agreements are valid until the end of April. The security sector's agreement will expire at the end of May.

Marja Ikkala