Finland’s labour and social policies were topics of extensive public debate in 2023. This was mostly due to the reforms proposed by the new right-wing coalition government, led by the National Coalition Party (NCP), which took office in June following a general election in April.
In its ambition to strengthen the state of public finances and the overall economic performance of the country, the NCP’s campaign promoted substantial reforms in labour and social policy. The incumbent coalition aspires to introduce a new labour market model, increase local collective bargaining, reform unemployment benefits towards a more means-tested model, introduce restrictions on politically motivated industrial action (that is, strikes not motivated by diverging opinions between the social partners but by opposition to government policy), increase union strike fines and relax grounds for dismissal.
The proposed measures will be submitted to parliament in 2024. The response from the social partners has been mixed: while employer organisations largely approved of the reforms, trade unions were critical and initiated industrial action. Finland saw widespread industrial action in the autumn, including walkouts, work stoppages and demonstrations, intended to continue in 2024.
As an upshot of the planned reforms, internal turmoil arose within the trade unions. At the core of the conflict were tensions between public and private sector unions. The Trade Union for the Public and Welfare Sectors (JHL) voiced opposition to the proposed new labour market model, which would restrict the National Conciliator (the independent government agency mandated to mediate labour disputes) from proposing wage increases exceeding the limit set by export industries. According to JHL, the model would diminish the public sector unions’ power to influence working conditions in low-paid public sector jobs. Eager to undertake negotiations autonomously, JHL opted out of the Central Organisation of Finnish Trade Unions (SAK) coordination in the discussions concerning the new labour market model. The conflict culminated in JHL threatening to leave SAK, after SAK’s refusal to accept JHL as its representative to discuss the new labour market model. Furthermore, the chair of JHL, Päivi Niemi-Laine, resigned from her position in protest against SAK’s policies.
Finland saw historically high wage rises in 2023 – the highest in 15 years – largely due to soaring inflation in 2022. In February, a general wage increase of 3.5% was agreed upon in the technology industry, to be followed by a general increase of 2% for 2024 with a 0.5% employer contribution. The outcome set a high benchmark for other sectors. Increases in the municipal and welfare sector were tied to export industries, and in June 2023, the general increase in the municipal sector was 2.2%, with an additional increase of 0.7%, of which 0.3% was to be negotiated locally. For 2024, the general increase is 2.27% and an additional 0.73%, of which 0.33% is to be negotiated locally. Furthermore, wage increases in 2023 were topped off with a one-time payment, granted to over one million wage earners (approximately 40% of the total) from several income groups in a wide range of industries.
Collective bargaining rounds in 2022–2023 were tough, resulting in industrial action in different sectors in spring 2023, including among dock workers, bus and coach drivers, locomotive drivers, private social care workers, and the commercial sector. Eventually, the negotiating parties agreed on compromises, which included substantial wage increases in some cases.
Entering 2024, the outlook for the Finnish labour market is turbulent, as trade unions are committed to undertaking further industrial action, while the government considers unions unwilling to find joint solutions to strengthen the economy, which the government perceives to be in a dire shape.
