Pam Magazine 13/13: Scarcity must be evenly distributed

The centralised wage agreement, achieved a week ago in negotiations by labour market confederations, is being praised at PAM. 

Having been widely discussed in the media, the wage increases - EUR 20 now, with a 0.4 per cent across-the-board increase entering into force a year from now - do not put wage-earners in a celebratory mood, nor should they feel depressed.

- The form of this wage increase is something low-income earners should be happy about. Euro increases are always more significant for low-wage sectors, says SAK Chief Economist Olli Koski.

- Also, this negotiation result includes none of the reduced benefits of employment relationships or collective agreements proposed by the employer organisations, notes Jaana Ylitalo, First Deputy Chairman of PAM.

According to Ylitalo, the objective of this agreement is to introduce more predictability into the Finnish economy and provide tools for achieving a higher employment rate. According to a joint calculation of the labour market confederations, employment should improve by some 50,000 people during the agreement term as a result of the employment-promoting wage policy.

- The negotiation result must be assessed in its entirety, also including tax decisions, unemployment security and labour pension funding. As such, this is a reasonable package, Ylitalo states.

The centralised agreement, named the agreement for employment and growth, is only the result of negotiations by the labour market confederations, acting as the template on the basis of which each sectors' employee and employer organisations can negotiate their sector-specific agreements within the next eight weeks. Between 19 and 20 September, PAM agreement sector commissions will convene to discuss the upcoming negotiations. If sufficiently comprehensive agreements have not been reached by 25 October across the labour market field, the centralised agreement will expire.

Those working in the facilities services sector should keep in mind that the increases of this negotiation result do not cancel the sector's income development programme. In accordance with the programme, wages will be increased by as much as 16.5 per cent between 2011 and 2015. The increases negotiated now will be added on top of those increases.

- Two additional increases have been agreed on (1 January 2014 and 1 January 2015). We have around six per cent in raises to go, says Ylitalo.

Improvements for unemployed people and people with short-term jobs are provided by the new items in unemployment security. Accepting work will be made easier by means of a protected component, meaning that unemployed people may earn EUR 300 per month without it affecting their earnings-related unemployment allowance, labour market support or basic daily allowance. The waiting period for earnings-related unemployment allowance will be reduced from seven days to five days from the beginning of next year.

According to Antti Veirto, the head of PAM's social policy unit, the agreement is suitable to the economic situation - or at least "it can be stomached".

- This wage agreement certainly does not solve the structural problems related to Finnish imports. We are selling the wrong products for which there is no demand. Yet it is a fact that after the slow decline in our industry's fortunes began in 2009, it has inexorably trickled down to the service sectors, Veirto states.

PAM sectors' connections to this decline can be interpreted by using the sector's unemployment figures and unemployment fund statistics. - For instance, there were more unemployed guards and storemen in July than at any point since 2006, Veirto says.

- In the short term, these wage increases may not seem like much. In the long term, people may find solace in the fact that they are more likely to keep their jobs thanks to this agreement, says PAM economist Sampsa Hamarila.

Veirto also hopes that the wage agreement will calm down labour market discussions in this tough economic situation.

- I hope this will quieten down those voices asking for reduced wages for young people or calling for more German-style low-income work in Finland.

The way forward:

PAM sectors: the current agreement will end either this year or the next. If a centralised wage agreement is achieved, the length of agreements is dependent on whether the current agreement ends before the end of this year.

Agreements ending in 2013: new ones will be in force for 24 months. If not, the length is 22 months. A third wage increase, in accordance with the agreement, will be negotiated by the labour market confederations in the summer of 2015.

Increases: the EUR 20 monthly increase will be seen in accounts once the new agreement has been in force for four months. The 0.4 per cent increase will follow four months after this.