Academic journal article The Economic and Labour Relations Review : ELRR

Workplace Finland: New Forms of Bargaining and Participation

Academic journal article The Economic and Labour Relations Review : ELRR

Workplace Finland: New Forms of Bargaining and Participation

Article excerpt


This paper examines new forms of bargaining and participation in Finland with particular reference to the round of wage negotiations in 1993, experiences of the new systems of representative participation and the diffusion of direct participation in recent years. Based on the analysis, two hypotheses are put forward: first, that the present centralized system of collective bargaining is giving way to a more decentralized system, in which the focus of negotiations is at the union level with increasing possibilities to deviate from the provisions of sectoral agreements at local and plant levels. Second, the greatest progress in employee participation in the 1990s will take place along with the introduction of new management methods (management by results, quality management, lean management, etc.), not by strengthening forms of representative participation.

Collective Bargaining During the Incomes Policy Era

During this century, the Finnish labour market system has undergone several profound changes, all of which coincide with shifts in the economy, politics and international relations. The history of Finnish industrial relations can thus be divided into different phases, characterized by the relations among labour market organizations and the relations between these organizations and the State. Kauppinen (1992), for example, describes different types of corporatism where the 'strategic triangle' of decision-making is located at different levels during different periods of time (Figure 1).

The Incomes Policy Era: 1968-93

The first incomes policy agreement (1968), which was inspired by the devaluation of the Finnish Mark by 23 percent in 1967 and facilitated the victory of the Social Democratic Party in the parliamentary elections of 1966, extensively affected the economy, politics and the labour market. The agreement, together with the devaluation, boosted competiveness of Finnish companies and the Finnish national economy as a whole and was considered such a successful initiative that it was repeated with only few exceptions for the next 25 years. This period has been called a period of 'societal' or 'democratic corporatism'. It was characterized by incomes policy agreements which included the central organizations for employees and employers and the State as a third party, the active participation of labour market organizations in political decision-making, high union density (70 to 75 percent) and a steady growth of the welfare state (Bruun et al. 1992; Kauppinen 1992; Kyntaja 1993; Lilja 1992; Lilja et al. 1990; Pekkarinen et al. 1992).

During 1968-92 a one or two year incomes policy agreement failed to be achieved only four times (in 1973,1980,1983 and 1988). It should be noted, however, that the skeleton agreements reached by the central organizations only act as recommendations for employers' associations and trade unions, which they need not follow. In practice, there have always been a few associations and unions that have not accepted the agreement. Furthermore, in a few sectors crucial to the Finnish economy, such as the paper industry, national collective agreements have left much room for local bargaining (Alasoini 1992; Committee Report 1992).

Following rapid, even overheated, economic growth encouraged by the first incomes policy agreement, the Finnish economy ran into a recession in 1976-78, brought about by the oil crisis. As a way out of the recession an incomes policy agreement was signed in December 1977, in which SAK (Central Organization of Finnish Trade Unions) and the other employees' central organizations TVK (Confederation of Salaried Employees), Akava (Confederation of Unions for Academic Professionals in Finland) and STTK (Confederation of Technical Employee Organizations in Finland, later the Finnish Confederation of Salaried Employees) agreed to postpone rises in pay that had already been decided by half a year. In addition to the positive effect it had on the economy, this agreement also carried an important symbolic meaning, and as the recession was left behind, there was talk of 'national consensus' in the Finnish labour market system. …

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