Lay-offs ahead in municipalities

Following Finland's severe economic depression of the early 1990s, the finances of some municipalities are still in relatively bad shape. According to a survey conducted in November 1997, a quarter of municipalities have announced that cuts will be made on personnel expenditure, and this may lead to lay-offs and dismissals.

The social partners in Finland's municipal government sector conducted a survey in early November 1997 concerning estimates of possible cuts in expenditure for the next year. Every fourth municipality is about to lay off or dismiss employees or use local "savings agreements".

At the beginning of the 1990s, Finland's severe economic depression created a powerful need to make savings on personnel expenditure in the municipalities, as government subsidies were cut radically. Throughout the decade, the municipalities have made savings on personnel expenditure by means of laying off staff and reducing the level of services provided. Today, even though the Finnish economy is growing at a high rate, the situation in the municipalities is not improving.

Previously, the economic problems were concentrated mostly on those municipalities with an unbalanced industrial structure in their areas, which suffered most from the depression. Today, however, the need for savings also concerns centres with high economic growth. Some municipalities must face dismissals, and lay-offs will weaken services (such as education and healthcare) to almost a million people. According to the survey, personnel expenditure will be cut not only by those municipalities whose finances are in bad shape, but also by some well-off municipalities.

Personnel is the largest item of expenditure in the municipalities, but this expenditure is being cut because, among other factors, the amount of the state subsidies has been reduced, and the amount of accrued taxes for earned income has been lower than expected. The municipalities have to make the most painful savings in their main fields of activity - education, social and welfare services - which are also the biggest areas of employment in this sector. Erkki Kangasniemi, the chair of the public sector negotiating body of the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö, AKAVA), has demanded rapid measures to support the operations of the municipalities. According to the Union of Health Professionals (Terveyden- ja sosiaalihuoltoalan ammattijärjestö, TEHY), the large-scale lay-offs weaken significantly the availability and quality of services. The health professionals have also issued a reminder that the tolerance of the personnel has limits: "games with short-term temporary posts, dismissals and lay-offs have already led to an increase of work exhaustion among the medical staff." (quoted in the Helsingin Sanomat newspaper, 18 November, 1997)

The unwillingness of the municipalities to employ staff has also been criticised. Liisa Jaakonsaari, the Minister of Labour, says that municipalities which spend employment funds provided by the state in accordance with their own interests must be brought under control, perhaps by having their subsidies frozen. Ms Jaakonsaari has a strong impression that some municipalities lay off and dismiss staff and then have the work done by means of subsidised work. Jussi-Pekka Alanen, the general director of the Federation of Municipalities (Kuntaliitto) does not support Ms Jaakonsaari's view, believing that it would be wrong to cut employment funds to the municipalities, since it would then be even more difficult to create new jobs. According to Mr Alanen, every municipality considers it important to address unemployment. (quoted in the Kaleva newspaper, 20 November 1997)