Thematic feature - unskilled workers
This article gives a brief overview of the industrial relations aspects of the topic of unskilled workers and unskilled work in Finland, as of February 2005. It looks at: national definitions of unskilled workers or work; the number of unskilled workers and workers in unskilled jobs, and the extent of unskilled work; employment and unemployment among unskilled workers; the regulatory framework; trade union organisation among unskilled workers; pay and conditions; recent initiatives to improve the situation of unskilled workers; and the views of trade unions and employers' organisations on the issue and its implications for collective bargaining.
In recent years, labour market developments have altered the demand for labour. Increasingly, employers are looking for adaptable workers, with more 'transversal' and 'relational' competences. The nature of skills required to be considered efficient in a job has thus evolved. In this situation, there is a growing risk of exclusion among unemployed workers whose profiles do not match the job characteristics needed, while the low-skilled or unskilled workforce is more at risk of unemployment.
In this context, in February 2005 the EIRO national centres were asked, in response to a questionnaire, to give a brief overview of the industrial relations aspects of the topic of unskilled workers. The following distinctions are used, where applicable:
(a) an unskilled job is a job which requires, for its proper execution, hardly any formal education and/or training and/or experience;
(b) a worker in an unskilled job is a worker doing such a job, irrespective of their level of qualifications or competences (especially under conditions of high unemployment, a significant share of those occupying unskilled jobs may be 'overeducated' for them, or 'underemployed'); and
(c) an unskilled worker is someone who has only the lowest level of qualifications or education (however defined).
The questionnaire examined: national definitions of unskilled workers or work, including those used or provided in laws, statistics or collective agreements; figures or estimates on the number of unskilled workers and workers in unskilled jobs, and the extent of unskilled work; employment and unemployment among unskilled workers; the regulatory framework, including any specific laws or collective agreements, and trade union organisation among unskilled workers; the pay and conditions of unskilled workers and workers in unskilled jobs, or for unskilled jobs; any recent initiatives to improve the situation of unskilled workers; and the views of trade unions and employers' organisations on the issue and its implications for collective bargaining. The Finnish responses are set out below (along with the questions asked).
Definitions and extent
(a) Please provide a definition of unskilled workers or work (see distinctions above) in your country. Are there any definitions provided in laws, statistics or collective agreements?
There are no specific definitions of unskilled workers or work in Finland. Unskilled workers are most often regarded as workers who have only a basic education and, thus, do not have a post-secondary qualification.
(b) Are there any figures or estimates available on the number of unskilled workers and workers in unskilled jobs, and the extent of unskilled work. How have these figures changed in recent years - have changing skill needs or improvements in education/training systems led to a reduction in the numbers of unskilled jobs, unskilled workers and workers in unskilled jobs? Please break all figures down by gender where possible.
In 2003, about 23% of employed men and just under 20% of employed women had only a basic education - see table 1 below. Among employed people, the share of those with no post-secondary qualifications has been steadily declining in Finland. The difficult situation of unskilled workers in Finland is reflected in the fact that their share among the unemployed is much higher than among the employed.
| . | 2000 | 2001 | 2002 | 2003 |
| Share of unskilled workers among employed | ||||
| Men | 25.7% | 25.3% | 24.2% | 23.3% |
| Women | 21.8% | 20.8% | 20.1% | 19.6% |
| Share of unskilled workers among unemployed | ||||
| Men | 40.2% | 39.5% | 38.2% | 37.2% |
| Women | 36.5% | 35.3% | 36.4% | 35.2% |
*Workers with a basic education only (no post-secondary qualification).
Source: Statistics Finland, Labour Force Statistics.
(c) Please provide figures on employment and unemployment rates for unskilled workers, compared with higher-skilled groups. Have unskilled workers/workers in unskilled jobs been particularly affected by industrial and company restructuring? Have new jobs created in recent years been filled by unskilled workers? Please break all figures down by gender where possible.
The Finnish economy underwent considerable restructuring during and after the deep recession of the early 1990s. According to a study by Petri Böckerman, in manufacturing the job-creation rate has been much higher for employees with university degrees compared with that for employees with only a basic education. Furthermore, during this period of extreme economic contraction, highly educated employees had a much lower propensity to lose their jobs, while employees with only a basic education and the least-experienced employees carried the heaviest burden of restructuring during the recession.
The labour force participation rates of unskilled workers are much lower than those of skilled workers and have been declining even over the past few years - see table 2 below. In 2003, as many as 84.7% of men with higher education participated in the labour force, compared with only 48.4% of men with a basic education. For women the corresponding figures were 82.6% and 39.5%.
| . | 2000 | 2001 | 2002 | 2003 |
| Men | 69.5% | 69.7% | 69.2% | 69.0% |
| Basic education | 49.8% | 50.0% | 49.4% | 48.4% |
| Secondary education | 78.9% | 78.8% | 77.8% | 77.4% |
| Higher education | 85.7% | 85.3% | 84.3% | 84.7% |
| Women | 63.2% | 63.6% | 64.0% | 63.5% |
| Basic education | 40.8% | 40.2% | 40.3% | 39.5% |
| Secondary education | 71.2% | 71.4% | 71.5% | 70.2% |
| Higher education | 82.3% | 82.8% | 83.2% | 82.6% |
Source: Statistics Finland, Labour Force Statistics.
The risk of unemployment is about three times higher among workers with a basic education only, compared with those with a higher education - see table 3 below. In particular, over the last few years, this relative risk has increased among unskilled women, whose unemployment rate is higher than that of men, even though among women in general the unemployment rate is lower than that of men.
| . | 2000 | 2001 | 2002 | 2003 |
| Men | 9.1% | 8.6% | 9.1% | 9.2% |
| Basic education | 13.5% | 12.8% | 13.7% | 13.9% |
| Secondary education | 9.6% | 9.1% | 9.9% | 9.8% |
| Higher education | 4.1% | 4.0% | 3.8% | 4.2% |
| Basic/higher | 3.3 | 3.2 | 3.6 | 3.3 |
| Women | 10.6% | 9.7% | 9.1% | 8.9% |
| Basic education | 16.5% | 15.4% | 15.3% | 14.9% |
| Secondary education | 11.4% | 10.5% | 9.8% | 9.8% |
| Higher education | 5.8% | 5.2% | 4.5% | 4.5% |
| Basic/higher | 2.8 | 3.0 | 3.4 | 3.3 |
Source: Statistics Finland, Labour Force Statistics.
Regulation and conditions
(a) Is there a specific regulatory framework in your country concerning unskilled workers and workers in unskilled jobs (however defined)? Are there specific laws or collective agreements? Are there specific trade union organisations for them, or are they represented in 'normal' union structures. Have there been any changes in these area reflecting the changes referred to in question (b) under 'Definitions and extent' above?
There are three main trade union confederations in Finland, essentially organising different categories of workers (blue-collar, white-collar and professional). These are the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusliitto, SAK) with 1,062,000 members, the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK) with 650,000 members, and the Confederation of Unions for Academic Professionals in Finland (AKAVA) with 436,000 members. SAK represents for the most part blue-collar workers. Within SAK, however, unions are organised by industry and all workers within the same industry belong to the same trade union. no matter what their level of education.
(b) Please provide any figures available for the pay of unskilled workers and workers in unskilled jobs, or for unskilled jobs, and the relationship of this pay with the average or with higher-skilled groups. Do collective agreements contain specific pay grades for unskilled workers, or workers in unskilled jobs? Please break all figures down by gender where possible.
Centralised incomes policy agreements have formed the core of collective bargaining in Finland for most of the past 30 years. The agreements have largely been based on 'solidaristic' pay policy principles. In achieving this, various mechanisms ('pay norms') have been used to determine the amount and distribution of wage increases. Since 1995, the pay norm in use has been the 'Tuposeto model'. The margin for pay rises in this model is calculated by adding together the target inflation rate and the average productivity increase of the national economy, and by subtracting from that any increases in employers’ social insurance contributions. The margin is then normally divided between a general pay rise and provisions to grant higher rises for groups whose wages have lagged behind. In this way it has been possible, for example, effectively to bring the incomes of low-wage earners (often women) closer to those of other workers. In this context, it should be emphasised that incomes policy settlements regulate wages for different types of jobs, not for different types of people (FI0408202F).
However, in the most recent incomes policy settlement for 2005-7 (FI0501203F), solidaristic elements are not as strongly present as in the 2003-4 deal (FI0212103F). Pay policy continues to be 'solidaristic' in that: first, a general pay rise will constitute a major part of wage increases; second, in 2005 the general pay increase will be higher (as a percentage share) for low-wage earners than for others; and third, in 2006 there will be an 'equality increment' of 0.3% whose distribution is calculated so that both low-wage and female-dominated sectors gain advantage.
As a result of the solidaristic elements in the past incomes policy settlements, in the past few years the earnings of unskilled workers have increased in relative terms more than those of workers with a graduate degree - see table 4 below. In 1998, wage and salary earners with only a basic education had earnings that were 53%-56% of the monthly earnings of those wage earners with a degree. In 2002, this share had risen to 59%-60%. However, it appears from table 4 that the gender wage gap among wage earners has risen at all educational levels, so that in 2002 the relative position of women with lower levels of education had weakened somewhat.
| . | Basic level | Secondary level | Graduate level | Basic/graduate |
| 1998 | ||||
| Men, EUR | 1,616 | 1,688 | 3,035 | 0.53 |
| Women, EUR | 1,401 | 1,513 | 2 509 | 0.56 |
| Women/men | 0.87 | 0.90 | 0.83 | . |
| 2002 | ||||
| Men, EUR | 2,166 | 2,231 | 3,678 | 0.59 |
| Women, EUR | 1,756 | 1,792 | 2,934 | 0.60 |
| Women/men | 0.81 | 0.80 | 0.80 | . |
Source: Statistics Finland, Wage and salary statistics.
(c) Are there any differences between unskilled workers/workers in unskilled jobs and higher-skilled groups in terms of access to other benefits, social security, pensions, etc? Please break all figures down by gender where possible.
In principle there are no differences in this respect between workers in unskilled or skilled jobs. The higher risk of long-term unemployment among unskilled older workers means in practice lower pensions in the future for them, even though access to benefits is the same for all workers.
Actions and views
(a) Please describe any recent initiatives taken jointly or separately by companies, public authorities (national or local) or the social partners (eg collective agreements) to address the situation and improve the situation of unskilled workers in terms of pay, working conditions, training, employability, unemployment etc.
The higher the education level the more likely an employee is to participate in training - see table 4 below. To improve this situation, the government introduced a five-year programme known as NOSTE for 2003-7. It aims to raise the education level of adults aged 30-59 who have no post-secondary qualification by offering them opportunities to take a vocational qualification and training in preparation for a computer skills test. Before the start of the NOSTE programme, a total of 10,000 people aged 39-59 without vocational qualifications took part annually in preparatory training for vocational qualifications. According to the current government's programme, this will be raised during its term of office until there are at least 10,000 new students a year. Furthermore, about a fifth of basic vocational training and polytechnic training will be aimed at the adult working-age populations.
| . | 2000 | 2001 | 2002 | 2003 |
| Men | ||||
| Basic education | 8.0% | 7.0% | 7.1% | 6.7% |
| Secondary education | 17.2% | 17.5% | 16.3% | 15.2% |
| Higher education | 28.4% | 26.5% | 25.6% | 21.9% |
| Women | ||||
| Basic education | 9.5% | 9.7% | 9.4% | 10.6% |
| Secondary education | 20.6% | 20.8% | 20.0% | 19.4% |
| Higher education | 31.7% | 30.2% | 30.8% | 27.4% |
Source: Finland’s National Action Plan for Employment, 2004.
See above under 'Regulation and conditions' for details of collective bargaining with relevance to the pay of unskilled workers.
(b) Please summarise the views of trade unions and employers’ organisations on the issue and its implications for collective bargaining.
The Confederation of Finnish Industries (Elinkeinoelämän keskusliitto, EK) believes that it is important actively to increase the employment rate in Finland. This requires that new measures should be introduced which increase employment in low-productivity and low-wage jobs. In particular, a system is required that subsidies employers that operate in the low-productivity sectors and for which wage costs are unacceptably high in relation to the workers’ productivity. EK suggests that state pension contributions should not be levied on such employers.
In relation to collective bargaining, EK suggests that all wage increases should be based on percentage changes instead of flat-rate cash amounts, a practice that has meant higher percentage wage increases for those at the lower end of wage spectrum. SAK has rejected these demands. EK also suggests that employers should have a right to pay lower wages to young people at the start of their career. To improve employment in the low-productivity sectors, EK suggests changes in labour market support for unemployed people, the removal of 'incentive gaps', and increasing temporary agency work.
SAK emphasises the importance of increasing skills among workers with no post-secondary qualifications, as has been targeted in the NOSTE programme and included in the incomes policy settlement for 2003-4. The social partners support the EU framework of actions related to improving the education of the labour force at national level.
Comments
In Finland, as elsewhere in the developed world, globalisation and technical change have meant increasing skill demands on the labour market. The employment of unskilled workers has declined in absolute and relative terms. Various measures have been introduced to tackle the problems related to unskilled workers in Finland. Employers emphasise the need to reduce the discrepancy between labour costs and productivity in low-skilled jobs, while trade unions regard education and training as the main road to finding a solution to the employment problems of unskilled workers. (Reija Lilja, Labour Institute for Economic Research)