Working life in Finland

Notes: Values for real GDP per capita are chain-linked volumes (based on 2010 data; €). The unemployment rate for men and women is the annual average as a percentage of the active population aged 15–74 years, and the youth unemployment rate is the annual average as a percentage of people aged 15–24 years. The employment rate for men and women is the annual average as a percentage of the active population aged 15–64 years, and the youth employment rate is the annual average as a percentage of people aged 15–24 years. GDP, gross domestic product.

Source: Eurostat [sdg_08_10], for real GDP per capita and percentage change 2012–2022; [une_rt_a], for unemployment rate by sex and age; [lfsi_emp_a], for employment rate by sex and age

Economic and labour market context

The economy of Finland has gone through a turbulent couple of years. After the effects of the COVID-19 pandemic, Finland experienced a strong recovery at the beginning of 2022, but later that year Finnish households were subjected to reduced purchasing power due to high inflation and rising interest rates. The inflation level was at 9.1% in December 2022 (Statistics Finland, 2023a), a dramatic spike after a decade of moderate inflation levels (Statistics Finland, 2023b). In 2021, Finland’s real gross domestic product (GDP) growth was 3%, compared with the EU average of 5.4% (World Bank, 2023), and is estimated to have been around 2% in 2022 (European Commission, 2023). The employment rate in Finland has nevertheless steadily increased since 2012, by 5.4 percentage points from 2012 to the end of 2022, when it was 79.8%. The employment rates of men and women are almost the same and both have increased to their highest points in 10 years. Unemployment figures have seen a slight decrease over recent years, from 7.9% in 2012 to 6.8% in 2022 (Statistics Finland, 2023c).

Legal context

The working conditions of employees are determined on the basis of legislation and collective agreements. The most important legislation regarding employment relationships in Finland are the Employment Contracts Act 55/2001 (Työsopimuslaki), the Annual Holidays Act 162/2005 (Vuosilomalaki) and the Working Time Act 872/2019 (Työaikalaki). A new Working Time Act entered into force in 2020, which in turn was amended in 2021. The Employment Contracts Act saw several amendments in 2022. Several acts safeguard non-discrimination and diversity at work. These laws apply to all employees working for Finnish employers, regardless of their nationality.

The most important laws governing labour market organisations and collective bargaining include the Collective Agreements Act 436/1946 (Työehtosopimuslaki), which sets the framework for the agreement system, and the Act on the Labour Court 646/1974 (Laki työtuomioistuimesta) and the Act on Mediation in Labour Disputes 420/1962 (Laki työriitojen sovittelusta), which are designed to settle disputes in relation to collective agreements. The latter was amended in 2022/2023. In 2022, a new Co-operation Act 1333/2021 (Yhteistoimintalaki) entered into force, with the purpose of improving dialogue practices in the workplace. Labour market legislature is drafted in a tripartite manner, with trade unions and employer organisations involved in the process.

Industrial relations context

Finnish industrial relations are highly centralised. The various trade unions and employer organisations cooperate closely through peak-level organisations. The Finnish system of collective bargaining was first implemented in 1940, when the labour market organisations first recognised each other as negotiating partners; the process of tripartite cooperation began fully in 1968. In addition to employment issues, the Finnish labour market organisations are also key actors in developing other policy areas, such as the pension scheme. With a tradition of consensus, the government usually consults the social partners in detail over any proposed amendments to the laws that affect working life.

Finland has traditionally had a three-tier system, with collective bargaining normally taking place at national, sectoral and local levels. This practice, however, is currently in a state of change: following a change to its internal rules in 2015–2016, the peak-level Confederation of Finnish Industries (EK) (Elinkeinoelämän keskusliitto), Finland’s principal employer organisation, opted out of participating in central-level collective bargaining. Thus, the 2016 Competitiveness Pact (Kilpailukykysopimus), a major tripartite labour market agreement entailing a wage freeze for 2017 and a 24-hour extension of annual working time, among other things, may have been the last of the large, centralised agreements. The collective bargaining rounds of 2017–2018 were negotiated directly at sectoral level, without being preceded by a centralised agreement.

In addition to the formally negotiated collective agreements, the social partners engage in mutual working life discussions during the agreement period through the ‘continuous negotiation system’. This practice has grown increasingly common during the last decade.

The bargaining round of 2020 was concluded successfully despite increased economic uncertainties due to the COVID-19 pandemic. One of the contributing factors was the close cooperation among the peak-level social partners. In March 2020, the partners made a joint proposal to the government (Akava, 2020). Several of the measures included in this proposal were implemented, and these added flexibility to the labour market during the first year of the COVID-19 crisis. In 2021, the role of the social partners shifted from being a driving force behind measures directly tackling the immediate consequences of COVID-19 to focusing on long-term measures to support the recovery and resilience of Finland. Instead of ad hoc measures, the social partners focused on tripartite processes related to wider labour market and other reforms. The key issue in collective bargaining in 2021 was not the COVID-19 pandemic, although the crisis did have an accelerating effect on the negotiations. Instead, the major issue was the ongoing shift towards a more decentralised bargaining system (Eurofound, 2022). However, 2022 was marked by increased employer coordination in the collective bargaining rounds, as negotiations were halted while employers across sectors waited for the technology sector to come to an agreement. The technology industry is by tradition the pacesetter in collective bargaining for wages. In 2022, industrial action by the nurses’ unions also took place, which resulted in the Act on Securing Essential Health Care and Home-based Care during Industrial Action 826/2022 (Laki välttämättömän terveydenhuollon ja kotihoidon turvaamisesta työtaistelun aikana). This temporary act specified that nurses could be mandated to work during industrial action, to avoid life-threatening labour shortages in the critical healthcare field. The temporary act was in force until 31 January 2023.

The government’s cross-governmental social and healthcare reform was finalised in 2022. This had implications for collective bargaining within the welfare sphere, as thousands of employees were transferred from the collective agreement covering municipalities to the agreement covering the new welfare regions.

Trade unions, employer organisations and public institutions play a key role in the governance of the employment relationship, working conditions and industrial relations structures. They are interlocking parts in a multilevel system of governance that includes European, national, sectoral, regional (provincial or local) and company levels. This section looks at the main actors and institutions and their role in Finland.

Public authorities involved in regulating working life

The Ministry of Economic Affairs and Employment (Työ- ja elinkeinoministeriö) is responsible for securing the functioning of the labour market by creating a favourable environment for industrial activities and employment. It drafts and monitors labour legislation. The Ministry of Social Affairs and Health (Sosiaali- ja terveysministeriö) is responsible for the legislation on occupational safety and health and equality issues. The Regional State Administrative Agencies’ (Aluehallintovirasto) divisions of occupational safety and health are responsible for regional supervision of occupational safety.

The National Conciliator’s Office (Valtakunnansovittelija) assists the social partners in disputes concerning collective agreements by facilitating mutual agreements, while the Labour Court (Työtuomioistuin) deals with cases between employer and employee organisations related to alleged violations of collective agreements and can order compensatory fines. Legal cases concerning employment legislature that are not related to the collective bargaining agreements are settled by general courts. The Co-operation Ombudsman (Yhteistoiminta-asiamies) monitors compliance with laws related to personnel representation, such as the Act on Co-operation within Undertakings.

Representativeness

There are no statutory regulations regarding representativeness, except for the central principles of collective bargaining in the Collective Agreements Act. The act sets out the principles as follows:

A collective agreement within the meaning of this Act is any agreement concluded by one or more employers or registered associations of employers and one or more registered associations of employees, concerning the conditions to be complied with in contracts of employment or in employment generally.

For the purposes of this Act, ‘association of employers’ means any association whose specific objects include that of safeguarding the employers’ interest in the matter of employment; and ‘association of employees’ means any association whose specific objects include that of safeguarding the employees’ interests in the matter of employment.

Trade unions

About trade union representation

According to the Employment Contracts Act, all workers, regardless of the sector they are employed in, have the right to join trade unions. Membership of trade unions in Finland is high, and trade union density has remained around 70% since 2011. Explanatory factors for the popularity of trade unions include trade unions’ involvement in pensions and unemployment schemes, which make them a provider of individual security, even though other institutions providing similar services exist and are becoming increasingly popular. The Finnish history of trade union prominence in working life and politics may also be a reason for the normalisation of membership of trade unions.

Trade union membership and density, 2011–2022

Notes: * Proportion of employees who are members of a trade union. ** Trade union membership of employees derived for the total union membership and adjusted, if necessary, for trade union members outside the active, dependent and employed labour force (i.e. retired workers, self-employed workers, students and unemployed people). n.a., not available.

Main trade union confederations and federations

The three peak-level trade union confederations are the Central Organisation of Finnish Trade Unions (SAK) (Suomen Ammattiliittojen Keskusjärjestö), the Finnish Confederation of Professionals (STTK) and the Confederation of Unions for Professional and Managerial Staff in Finland (Akava). SAK represents mostly blue-collar occupations, while STTK represents officials and clerks (mostly white-collar workers) and Akava is the trade union confederation for those with a university, professional or other high-level education.

Main trade union confederations and federations

In 2014, the two largest peak-level trade unions, SAK and STTK, started a process towards merging. The merger was planned for 2016. Its aim was to increase the centralisation and potential bargaining power of the employee organisations. However, the project was abandoned in June 2016 after several STTK member unions and some SAK member unions decided to withdraw from it.

STTK has in recent years lost member unions to Akava. In 2016, the Finnish Police Union SPJL (Suomen Poliisijärjestöjen liitto), with around 11,000 members, switched from STTK to Akava and, in 2017, another three public sector unions with a total member count of 5,700 did the same. Between 2018 and 2022, several mergers occurred between trade unions within STTK; all of them included one of its largest members, Trade Union Pro (Ammattiliitto PRO). Trade union mergers also happened under the umbrella of SAK, for example when three industrial unions merged in 2018, forming one of the largest trade unions in the country (RAU, 2018; ETUI, 2020; PRO, 2020; Nousu, undated). During the 2022 collective bargaining round, unions affiliated to SAK intensified their cooperation due to a logjam in private sector collective bargaining (Trade Union News from Finland, 2022).

Employer organisations

About employer representation

All employers have the right to freedom of association, and membership of employer organisations is voluntary in the private sector. The employer organisation density was stable during the 2010s, and was around 65% in 2017. There has been a marked trend of organisations merging, and this is expected to continue. The relatively high employer organisation density is most likely related to the power that labour organisations have in the collective agreements.

Employer organisation membership and density, 2012–2022

Note: * Percentage of employees working in an establishment that is a member of any employer organisation that is involved in collective bargaining. n.a., not available.

Main employer organisations

The EK is the leading business organisation and represents the entire private sector and companies of all sizes. In recent years, the EK has lost two notable member organisations: the Finnish Forest Industries Federation (Metsäteollisuus) left in 2016, claiming to need better-targeted interest promotion, and the Employers’ Federation of Road Transport ALT (Autoliikenteen työnantajaliitto) left in 2017 because the EK no longer participated in collective bargaining. The ALT has approximately 660 member companies with 26,000 employees and Metsäteollisuus has 62 member companies with 42,000 employees.

Local Government and County Employers KT (Kuntatyönantajat) is an interest organisation for local government employers representing all Finnish local, regional and joint authorities. It negotiates and concludes collective agreements for municipalities, welfare regions and federations of municipalities and welfare regions that employ about 434,000 people (2021) in total (KT, undated).

The Office for the Government as Employer VTML (Valtion työmarkkinalaitos) negotiates and concludes collective agreements for the approximately 80,000 (2022) employees working for the state (Explore Administration, undated).

The Church Employers (KiT) represents the Evangelical Lutheran Church of Finland (Evankelis-luterilainen kirkko) as an employer and negotiates a collective agreement for about 20,000 employees working for the parishes (JUKO, 2023).

The Federation of Finnish Enterprises SY (Suomen Yrittäjät) has the largest membership of all business-related federations in Finland. Its membership consists of more than 115,000 enterprises of all sizes (although half of the members are solo entrepreneurs), from all over the country, and encompasses the entire business spectrum. The SY was founded in 1996. It is not a negotiating party in collective bargaining.

Main employer organisations and confederations

Note: * Following the EK’s change of rules, centralised agreements should no longer occur and, in 2017–2018, no centralised agreement was signed. However, traditionally, the central organisations have been deeply involved in collective bargaining and, in 2017–2018 and 2019–2020, the central organisations did support and coordinate their member unions in the sectoral negotiations.

Tripartite and bipartite bodies and concertation

Owing to a strong tradition of tripartite cooperation, there are various bipartite and especially tripartite working groups in Finland. While some are of a more permanent nature, others are established ad hoc, by the government or based on national-level agreements, to investigate a certain issue. The most important ones are the national-level tripartite bodies listed in the table ‘Main tripartite and bipartite bodies’, although smaller discussion groups and regional tripartite forums also exist. The national working groups are highly influential, as they participate in policymaking in various areas in cooperation with the government or other public actors. These areas include issues connected to collective bargaining, such as wage and cost developments, in which the government wants contracts that suit the overall situation of the economy. Other important issues include competitiveness and employment, as well as unemployment and pension schemes. For permanent bodies, there are often fixed consultation mechanisms, while ad hoc groups’ processes vary on a case-by-case basis.

In addition to political negotiations, the tripartite and bipartite bodies are discussion forums for developing Finnish working life and enhancing international competitiveness.

Main tripartite and bipartite bodies

Workplace-level employee representation

Finland has a high rate of workplace-based employee representation, with the incidence of employee representation as a whole at 56% of establishments (European Company Survey, 2019). Employee representation is essentially characterised by single-channel representation by shop stewards (luottamusmies), who are elected representatives, affiliated to trade unions and whose position is regulated by sectoral collective agreement. Shop stewards are generally affiliated to SAK or STTK. Akava often has a lower level of employee representation at workplace level, such as contact persons (yhdyshenkilö or yhteyshenkilö). Shop stewards are the main partners for information and consultation procedures, as well as for collective bargaining at establishment level. Collective agreements provide for shop stewards to be present in workplaces in all sectors of the economy. The election of shop stewards and their terms of office are regulated by the unions' internal statutes.

In workplaces where there is no trade union shop steward, or in cases where a specific personnel group has no trade union shop steward, a shop steward without a trade union affiliation (luottamusvaltuutettu) may be elected instead. The position of such shop stewards is regulated by law, and their tasks are similar to trade union-affiliated shop stewards.

If neither type of shop steward has been elected, employees may elect a cooperation representative (yhteistoimintaedustaja) to represent them in negotiations and activities with the employer regarding work, working conditions and the position of the employees in the workplace. In employer–employee cooperation negotiations and activities that involve more than one personnel group, the employer and the employees may agree to establish a works council (yhteistoimintaneuvottelukunta) with representatives of all parties to facilitate negotiations. The positions of cooperation representatives and works councils are laid down in legislation. The Act on Co-operation within Undertakings specifies subjects that employee representatives need to be informed of and consulted on, including issues such as the economic situation of the company and the outlook for production and employment, statistics on pay for different categories of employees, and consultation on changes in the organisation of work and cases of restructuring.

An employee occupational safety and health representative (työsuojeluvaltuutettu) monitors matters of occupational safety and health in workplaces with 10 or more employees. In workplaces with 20 or more employees, there must also be an occupational safety and health committee (työsuojelutoimikunta) in which both employer and employee representatives, including the elected occupational safety and health representative, are involved.

In private companies with 150 employees or more, employees have the right to be represented in the company’s relevant governing bodies (henkilöstön edustaja).

Trade union delegations (ammattiosasto) are municipality- or workplace-level branches of trade unions affiliated to SAK and STTK. They provide information, support, training and recreational activities for their members. Akava’s counterpart of the trade union delegation, in large workplaces, is the company union (yritysyhdistys).

Regulation, composition and competences of the representative bodies

The central concern of employment relations is the collective governance of work and employment. This section looks at collective bargaining in Finland.

Bargaining system

Collective bargaining in Finland has usually taken place at three levels: national, industry and company. As part of the country’s tripartite tradition, the peak-level social partners have engaged in dialogue with the government to negotiate national framework agreements on wages and employment conditions. The national central-level agreements have then been the basis for bargaining at sectoral level – the predominant level in the sense that sectoral agreements are the legally enforceable basis of employment contracts. Sectoral agreements may transfer some issues to be negotiated locally, in company-level agreements. In recent years, there has been a tendency towards more local bargaining, although this decentralisation is taking place within the limits set by national and sectoral bargaining (Asplund, 2007; Sippola, 2012). As the main peak-level employer organisation, the EK, withdrew from central-level bargaining in 2016, decentralisation will probably increase in the future. The collective bargaining rounds of 2017–2018 and 2019–2020 were thus carried out directly at sectoral level, without a preceding central-level agreement.

Wage bargaining coverage

The Finnish collective bargaining system is characterised by a principle of general applicability, which has been in force since the 1970s. According to this principle, employers that are not involved in collective bargaining or are not signatories to a collective agreement must comply with the nationwide sectoral-level collective agreement considered representative in their sector. In 2001, the ‘confirmation procedure’ for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question. The employer side has, in recent years, been promoting the dilution of general applicability.

Owing to general applicability, the degree of coverage of collective wage bargaining in Finland is high, with the coverage rate of all levels being around 89%, according to the latest available data (Ahtiainen, 2019).

Collective wage bargaining coverage of employees at all levels

Notes: * Percentage of employees working in local units where more than 50% of the employees are covered under a collective pay agreement against the total number of employees who participated in the survey. ** Proportion of employees covered by collective agreements.

Sources: Eurofound, European Company Survey 2013 and 2019 (including private sector companies with establishments with >10 employees ((NACE codes B–S), the question in the survey was a multiple choice question and multiple answers were possible); Eurostat [earn_ses10_01], [earn_ses14_01], [earn_ses18_01], Structure of Earnings Survey 2010, 2014 and 2018 (including companies with >10 employees (NACE codes B–S, excluding O), with a single answer for each local unit)

Bargaining levels

As the Finnish collective bargaining system is traditionally strongly centralised, national-level bargaining has been the most important level in setting the framework for changes in wages and working time. However, the withdrawal of the main peak-level employer organisation from central-level bargaining in 2016 will presumably affect bargaining levels. Details concerning wages and working time are worked out in lower-level agreements. Sectoral agreements constitute the legally enforceable basis of employment contracts (Asplund, 2007).

One of the measures included in the Sanna Marin government programme is to increase local collective bargaining (Finnish Government, 2019). So far, the announcement in 2020 of the Finnish Forest Industries Federation’s shift to local-level bargaining has been the most significant indication of the increasing decentralisation of the Finnish collective bargaining system.

Levels of collective bargaining, 2022

Articulation

Traditionally, a national-level agreement, after having been approved by a sufficient number of sectoral organisations, sets the minimum conditions for pay changes and working time. These guidelines must then be followed in the sectoral agreements. Company-level contracts in turn must be designed according to sectoral-level agreements so that their demands are fulfilled. Since 2017, no national-level agreements have been negotiated and bargaining has been initiated directly at sectoral level.

Timing of the bargaining rounds

The autumn is the busiest time for bargaining for new collective agreements in Finland. This is because the turn of the year (at the end or beginning of the year) is a typical time for the start of new collective agreements. Traditionally, the bargaining round starts with the collective agreement for the technology sector (including metalworking), which to some extent serves as a pace-setting agreement for other sectors. The collective agreements negotiated within the framework of the tripartite Competitiveness Pact in 2016 were set for only one year, instead of the previously more usual two or three years. In the negotiations of 2017–2018 and 2019–2020, two or three years seem once again to have been the standard. In 2022, the standard duration of validity of generally binding collective agreements was two years (Finlex, undated).

Coordination

When it comes to the trade unions, the collective bargaining system is coordinated both across different bargaining levels and horizontally: the actors within the same sector communicate at company, sector and central organisation level to promote their industry-related interests. Horizontal coordination is also significant: the cooperation between different sectors is strong in the highly centralised national-level organisations. However, in the collective bargaining round of 2017–2018, cross-sectoral coordination was more challenging, as no central-level agreement was negotiated prior to the sectoral negotiations.

Although the employers are represented by different interest organisations, their collective bargaining action was hitherto substantially coordinated by the EK. However, with the EK stepping away from central-level bargaining in 2016, it no longer has such a strong role in coordination and instead acts more as a platform and provides support for the member organisations.

Extension mechanisms

According to the principle of general applicability, which has been in force since the 1970s, sectoral-level collective agreements are generally binding and thus apply also to unorganised employers and employees in the sector. In 2001, the confirmation procedure for universally binding collective agreements came into force. A special commission under the Ministry of Social Affairs and Health confirms the general applicability of the agreements. A sector-level agreement is generally applicable if it can be considered representative of the field in question. Representativeness in this regard entails that, as an estimate, more than half of the employees in the sector work for employers that are signatories of the agreement.

Derogation mechanisms

Overall, derogation from collective agreements is not possible. However, it is not uncommon for sectoral-level agreements to include opening clauses for agreeing on certain matters such as working time arrangements or wages at local level, usually within given limits.

Expiry of collective agreements

When collective agreements expire without new agreements being in place, the regulations of the old contract are observed until a new agreement is negotiated. According to the Employment Contracts Act, strikes are legal only when the agreement period has elapsed.

Peace clauses

According to the Employment Contracts Act and the Act on Mediation in Labour Disputes, industrial action is allowed only when a collective agreement has expired and a new agreement is yet to be established or when the reason for the action is something unrelated to the employment conditions, as is the case for political strikes and solidarity actions. The peace clause in a collective agreement may also be unconditional and, in such cases, solidarity actions are also prohibited. Peace clauses apply to trade unions, employer organisations and members of employer organisations. Peace clauses do not formally apply to individual employees or trade union members, but non-compliance of individual trade union members may have repercussions for the union.

A distinction can be made between an active and a passive peace obligation. A passive peace obligation prohibits trade unions and employer organisations from taking up industrial action, while an active peace obligation compels the organisations to monitor the peace and to take measures to prevent and halt illegal industrial action.

Peace clauses do not apply when the employer is bound by the general applicability of the collective agreement, without being a member of a signatory employer organisation.

Other aspects of working life addressed in collective agreements

The Finnish collective bargaining agenda includes a wide range of issues connected to working life. A recent issue highlighted by the two sides of industry is the topic of equality regarding family leave. An equal number of paid parental leave days for both parents has, for example, been negotiated for university employees, in line with the Family Leave Reform (Perhevapaauudistus) in 2022. This has also been an objective of collective agreement negotiations for other white-collar workers (Insinööriliitto, 2021).

In the latest central-level agreement (the Competitiveness Pact), the peak-level organisations agreed to promote the following provisions in the sectoral-level negotiations of their members:

• the transfer of part of the liability for social security contributions from employers to employees
• a 30% cutback in holiday bonuses of public sector workers for 2017–2019
• greater employer responsibility for dismissed employees, including providing access to occupational healthcare for a period of up to six months after the dismissal
• greater local bargaining opportunities

Legal aspects

The Finnish Constitution guarantees the right to strike but, under the legislation in the Employment Contracts Act and the Act on Mediation in Labour Disputes, strikes are allowed only when a collective agreement has expired and a new contract is yet to be established or when the reason for the strike is something unrelated to the employment conditions, as is the case for political strikes and solidarity actions. The right to strike is also restricted in some sectors, such as healthcare, whose functioning is vital to the safety of society. To be legal, a strike must also be announced to the National Conciliator in advance. The legal types of industrial actions are therefore strikes taking place during a period when no agreement is in force and strikes for political and solidarity reasons. Among the most common forms of industrial action are strikes (lakko) or refusing to work either wholly or partly, walkouts (ulosmarssi) and overtime bans (ylityökielto).

Developments in industrial action, 2012–2022

Note: The numbers provided include all types of industrial action, including not only strikes (the most common form of industrial action), but also threats, embargoes and similar actions.

Source: Statistics Finland, 2020a

Dispute resolution mechanisms

Collective dispute resolution mechanisms

The mediation system is based on Finland’s Act on Mediation in Labour Disputes. The National Conciliator, together with other part-time conciliators at the National Conciliator’s Office, assist the negotiating partners if a collective agreement cannot be reached without outside help. The parties can voluntarily involve the National Conciliator’s Office in collective bargaining rounds without there being a threat of collective action. The central labour market organisations can also be assisted by the National Conciliator when drawing up comprehensive incomes policy agreements. It is compulsory to participate in the mediation of labour disputes, but the different sides do not have to accept the National Conciliator’s proposal. The Labour Court handles cases related to violations of the collective agreements and can issue fines in cases of illegal industrial action. The new Co-operation Act is meant to strengthen social dialogue in the workplace.

Individual dispute resolution mechanisms

Individual labour disputes arising out of individual employment contracts concluded between a single employer and a single employee or arising out of the legislation regarding employment relationships – and indeed any labour dispute not falling within the scope of the Labour Court– are dealt with as ordinary civil cases, in the first instance by the district courts (alioikeus). District courts are made up of professional judges and, in certain cases, lay judges. The decision of a district court can normally be appealed against in a court of appeal (hovioikeus), and a decision of the latter can be appealed against in the Supreme Court (korkein oikeus). The individual employment disputes that are referred to the district courts typically relate to matters such as pay and termination of employment contracts. In individual employment law cases before the civil courts, there is no direct involvement of trade unions, and such cases cannot be brought by unions without the worker’s consent. The district courts and courts of appeal can impose fines in employment-related cases.

Use of alternative dispute resolution mechanisms

Disputes resolved in the Labour Court are much more common than those mediated by the National Conciliator. Of the 82 rulings in the Labour Court during 2022, 29 were connected to strikes, threats of strike or other industrial action.

Use of dispute resolution mechanisms: number of labour disputes mediated by the National Conciliator, 2012–2022

Note: n.a., not available.

Source: National Conciliator’s Office, 2022; undated; Labour Court, undated

‘Individual employment relations’ refers to the relationship between the individual worker and their employer. This relationship is shaped by legal regulation and by the outcomes of social partner negotiations over terms and conditions. This section looks at the start and termination of the employment relationship and entitlements and obligations in Finland.

Start and termination of the employment relationship

Requirements regarding an employment contract

The minimum working age in Finland is 15 years, although 14-year-olds can be employed with special provisions that take into account their education. The employment of minors also includes other restrictions on matters such as dangerous work. Non-EU citizens normally need a work-based residence permit to start working in Finland. Exceptions to this include people who are performing work of short duration within certain occupations or asylum seekers, for example.

An employment contract must be issued whenever a paid employment relationship begins. Such a contract can be either oral or written. A person under 15 years of age needs the signature or approval of their legal guardian to sign an employment contract (Occupational Safety and Health Administration in Finland, undated). The provisions regarding employment are laid down in the Employment Contracts Act.

Dismissal and termination procedures

Fixed-term contracts are ended without notice at the end of the pre-specified employment period. Indefinitely valid employment relationships end either by mutual agreement between the employer and the employee or by a unilateral act of termination (giving notice). If the employer terminates the contract, this must be based on weighty grounds, that is, serious transgressions on the employee’s side or a change in circumstances that makes the employee unable to cope with their duties. Financial or production-related reasons are also acceptable. The employee does not need a specific reason to terminate the contract. Both sides must respect the notice period at the termination of the contract, the length of which is related to the length of the employment period. Employees whose contract has been terminated due to financial reasons are also entitled to a period of paid re-employment leave. The views of both parties must be heard in the process of terminating the employment contract, and the employer must explain the possible financial reasons for the termination.

Entitlements and obligations

Parental, maternity and paternity leave

The parental, maternity and paternity leave policies in Finland are generous, although the duration of the leave is not among the longest in Europe. Although most fathers use at least some of the paternal leave days they are entitled to, women still avail of most of the non-earmarked parental leave. According to the latest figures, the uptake of parental leave among fathers has been increasing since 2000 but is still well below the uptake of mothers. In 2021, fathers’ took 11.1% of parental leave (Kela, 2022a).

In 2022, the government’s new family leave reform entered into force. This reform increased the length of earnings-based leave from 12.5 months to approximately 14 months. The reform consists of 40 working days of leave for the parent who is pregnant and then about 6.4 months leave for each parent. Two-parent families can choose to transfer 63 days from one parent to the other. In single-parent families, the parent gets all of the parental leave. With the new reform, parental leave is no longer linked to gender (Finnish Institute for Health and Welfare, 2022). The reform also introduced the right to take unpaid carers’ leave for up to five days per year (Ministry of Social Affairs and Health, 2022a).

Statutory leave arrangements

Sick leave

The Employment Contracts Act provides the legislation on sick leave. The sick leave allowance is paid by the Social Insurance Institution of Finland (Kela). The reimbursement rate depends on the worker’s income level, so that the minimum amount paid is €31.99 per working day and the maximum is 70% of the worker’s salary, as of 2023. The maximum duration of sick allowance is 300 working days, after which a disability pension is an option if necessary. It is also possible to receive a partial sickness allowance for a maximum of 150 working days (Kela, 2022b). Rehabilitation programmes are also offered in cases of long-term illness. The employer has the right to terminate the employment contract only if the condition of the worker makes them permanently unable to do their work and no other suitable work can be offered.

Retirement age

According to the National Pensions Act 347/1956 (Kansaneläkelaki), the general retirement age is 65 years, and early retirement can be granted from the age of 64 years. In the case of early retirement, the amount of the pension payments will be reduced. Recipients of extended unemployment allowance can apply for an old-age pension at the age of 63–64 years. These allowances will, however, be discontinued for all age groups in 2030 (Kela, 2022c). In accordance with the pension reform that was agreed upon by the central labour market organisations in 2014 and that entered into force in 2017, the earliest eligibility age for the old-age pension will be raised gradually to 65 years by 2025. After 2025, the retirement age will be tied to life expectancy.

For workers, pay is a reward for their work and their main source of income; for employers, it is a cost of production and a focus of bargaining and legislation. This section looks at minimum wage setting and earnings in Finland.

Wage setting in Finland has historically been agreed upon through the three-tier system. The central-level organisations agreed on the general framework for wage increases, along with general provisions regarding working hours, conditions and relevant social policy measures. These centralised agreements were then followed by sectoral collective bargaining within the set centralised framework, and finally by workplace-level negotiations within the centralised and sectoral frameworks. However, this bargaining structure has changed as the EK no longer participates in centralised bargaining as a consequence of a change in the organisation’s internal rules in 2015–2016. Nowadays, wage setting is still coordinated through collective bargaining agreements negotiated mainly at the sectoral level.

Pay development in Finland has been very moderate since 2018. Collectively bargained pay solutions were low during the first half of the 2010s, and the tripartite Competitiveness Pact of 2016 froze 2017 wages completely in most sectors. During 2022, full-time employees had a pay increase of 2.4% on average, but the increase in real earnings was small due to inflation. According to estimates, real earnings were down by 4.4% on average for 2022 (Statistics Finland, 2023d). At the same time, unemployment rates have been high for many years. In the bargaining rounds of 2017–2018 and 2019–2020, the average wage increase was settled at approximately 3% for the following two years. In the following rounds, wage negotiations took place while the inflation trajectory was still moderate and wage increases for 2022 were set at 2.0%.

Median monthly earnings of full-time wage and salary earners by gender and industry (€), 2022

Notes: The standard classification (NACE) in Finland goes under TOL, Standard Industrial Classification (Toimialaluokitus). *Corresponds to the wage in 2020, figures for 2022 are not available.

Source: Statistics Finland, 2024

Average monthly earnings of all wage and salary earners by gender (€), 2018 and 2022

Note: The table shows average monthly earnings in all sectors (central government, local government, private sector and others).

Source: Statistics Finland, 2023d

Minimum wages

Finland does not have a statutory minimum wage, but de facto minimum wages are determined separately for each sector in generally applicable collective agreements. Traditionally, the export industries negotiate first, setting a benchmark for wage increases in the other sectors. The principle of general applicability of collective agreements ensures that employers that are unorganised in terms of collective bargaining must also comply with the nationwide agreements that concern their field of economic activity.

Working time is ‘any period during which the worker is working, at the employer’s disposal and carrying out his activity or duties, in accordance with national laws and/or practice’ (Directive 2003/88/EC). This section briefly summarises the regulation of and issues regarding working time, overtime, part-time work and working time flexibility in Finland.

Working time regulation

Working time is primarily regulated by the Working Time Act 872/2019 (Työaikalaki) and the Annual Holidays Act 162/2005 (Vuosilomalaki).

The Young Workers’ Act 998/1993 (Laki nuorista työntekijöistä) includes special provisions on the working time of underage workers.

Detailed frameworks for working times in each sector are determined in collective agreements through sectoral bargaining between the social partners. The specifics of the working times in individual employment contracts are then negotiated at company level according to the regulations of the collective agreements.

Overtime regulation

The Working Time Act regulates overtime working and how it should be compensated. According to the act, an average of 48 hours per week over a period of four months is the maximum working time of an employee, including overtime. The overtime regulation differs slightly when an employee has period-based working time or flexible working hours (Ministry of Economic Affairs and Employment, undated-a), ranging from no overtime allowed to up to 60 hours per week for four months.

According to the act, in the case of daily overtime (working time that exceeds eight hours per day), the two first overtime hours of a working day must be compensated for by the regular wage plus 50% and the additional hours must be compensated for by the regular wage plus 100%. In the case of weekly overtime (more than 40 hours per week), the compensation is regular pay plus 50%. Sector-specific provisions can be negotiated if they fulfil the conditions set by the law and these must be followed at company level.

Part-time work

Part-time work is defined as work in which the employee’s working time is less than the sector’s regular working hours for a worker under a regular employment contract. Part-time work is regulated by the Working Time Act and the Employment Contracts Act.

Based on statistics from Statistics Finland, the prevalence of part-time work in Finland increased slightly between 2021 and 2022, from 17.6% to 18.4%. The proportion of women working part-time was double that of men during both years (Statistics Finland, undated-a). A large proportion of part-time employees are students and older workers. Part-time work is relatively uncommon in Finland, as full-time employment has traditionally been the standard in the country. The proportion of women in full-time work has generally been higher in Finland than in many other countries in Europe due to policies such as free school lunches and subsidised day care for children. However, the uneven distribution of care responsibilities is nevertheless the main reason for women working part-time more often than men. In addition, part-time work has been more common in female-dominated sectors, such as the retail trade.

Night work

The Working Time Act defines night work as work carried out between 23:00 and 06:00. A night shift is a work shift whereby at least three hours take place between these hours.

Shift work

Shift work has not been defined in legislation. It is nevertheless regulated in the Working Time Act, which states that shifts in shift work:

must change regularly and at intervals agreed upon in advance. Change is considered regular when a shift does not coincide for more than an hour with the immediately following shift or the shifts are no more than an hour apart.

Special permits to diverge from these directives may be granted by the Office of the Regional State Administrative Agency (Aluehallintovirasto).

Weekend work

There is no legal definition of weekend work. According to the Working Time Act, employees must normally have at least 35 hours of uninterrupted free time per week, and these hours should preferably be arranged around a Sunday. Work on Sundays or on church holidays can occur when it has been agreed in the employment contract or with the employee’s consent. No consent is required ‘if the nature of the work is such that it is regularly performed on these days’ (Working Time Act). Sunday wages are twice the regular wage. There are no special provisions for Saturday work.

Rest and breaks

There is no explicit legal definition of rest periods, but they can be defined based on the definition of working hours in the Working Time Act. Accordingly, rest periods can be defined as time not spent on work and when the employee is not required to be present at the workplace and at the employer’s disposal. Rest periods include travel time unless the travel time constitutes work performance. Stand-by time, during which the employee has agreed to stay at home or to be otherwise available for being called to work, also qualifies as rest, but it must not ‘excessively disrupt’ the employee’s free time and must be reasonably reimbursed. There are also more detailed provisions concerning the length and frequency of breaks and rest periods.

Working time flexibility

Working time flexibility is primarily regulated by the Working Time Act, which must be followed when specifying sectoral conditions in collective agreements. The sectoral agreements must then be taken into consideration in company-level contracts in addition to national legislation. Flexible working times have to be specified by mutual agreement in the employment contract so that the daily regular working hours can be extended or reduced only by a maximum of four hours. According to the act, ‘average regular weekly working hours cannot exceed 40 during a period of not more than four weeks’. When working flexible hours, an employee may not accumulate an excess of more than 60 hours or a deficit of more than 20 hours during the reference period.

Over 56% of Finnish workers have the possibility of adapting their working hours.

Maintaining health and well-being should be a high priority for workers and employers alike. Health is an asset closely associated with a person’s quality of life and longevity, as well as their ability to work. A healthy economy depends on a healthy workforce: organisations can experience loss of productivity through the ill health of their workers. This section looks at psychosocial risks and health and safety at work in Finland.

Health and safety at work

The Occupational Safety and Health Act 738/2002 (Työturvallisuuslaki) and the Occupational Health Care Act 1383/2001 (Työterveyshuoltolaki) require the employer to protect the employees’ health and safety and provide the healthcare and expert services needed for this. All employers are thus obliged to have an occupational safety and health policy in place, either one that covers the entire business or a separate policy for each unit. Compliance with the law is overseen and enforced by the Occupational Safety and Health Administration (Työsuojeluhallinto) under the Ministry of Social Affairs and Health and the district administration for occupational safety and health.

National data on accidents at work differ somewhat from Eurostat data, showing slightly more elevated figures. Both, however, saw a large drop in the number of accidents between 2019 and 2020. National data also indicate that accidents at work affect men more commonly than women, which is explained by the fact that men, on average, work in more risky sectors than women, such as the building and construction sector.

Number of accidents at work among wage and salary earners resulting in four days’ absence or more – national statistics, 2011–2020

Source: Statistics Finland, 2020b

Psychosocial risks

The main regulations concerning psychosocial risks at work are found in the Occupational Safety and Health Act, which covers occupational risks to both physical and mental health. In 2021, a programme on mental health at work was implemented by the government with the purpose of better equipping workplaces to support employee mental health and to manage risk factors for mental health issues (Finnish Institute of Occupational Health, 2021). The vulnerability of young workers is taken into consideration in the additional regulations provided by the Young Workers’ Act. The Non-discrimination Act 1325/2014 (Yhdenvertaisuuslaki) prohibits discrimination related to all aspects of working life and the Working Time Act protects workers against excessive amounts of work. The Act on Occupational Safety and Health Enforcement and Cooperation on Occupational Safety and Health at Workplaces regulates the conduct of the occupational safety and health authorities.

Skills are the passport to employment; the more highly skilled an individual, the more employable they are. People with good skills also tend to secure better-quality jobs and better earnings. This section briefly summarises the Finnish system for ensuring skills and employability and looks at training provision.

National system for ensuring skills and employability

Skills identification, development, validation and recognition are conducted by both public institutions and labour market organisations. At national level, the tripartite national education and training committees monitor and anticipate skills needs in different sectors and contribute to the design of education and training in upper secondary vocational education and training (VET) and higher education. The committees consist of representatives of relevant sectoral trade unions and employer organisations, of teachers and educational institutions, and of the Finnish National Agency for Education (Opetushallitus). Equally, the social partners have representatives in VET degree committees, through which adult learners can get their professional skills formally validated. In recent years, the social partners were also deeply involved in preparations for the comprehensive VET reform, which was enforced in January 2018.

The Public Employment and Business Services TE Services (Työ-ja elinkeinopalvelut) organises vocational labour market training to enhance the skills and employability of unemployed people. TE Services also provides personal guidance and information on vacancies and education to jobseekers. Starting January 2025, these services will be provided by municipalities. Trade unions provide their own training programmes for both employed and unemployed members, as well as activation schemes for ageing workers and those who are long-term unemployed. Both sectoral unions and central organisations provide different training options. Unions also provide career planning and employment services. Employer organisations provide training courses for their member companies on a variety of topics, such as legal issues and business management.

Employee training must be offered free of charge if the employer in question is obliged by law or by a collective agreement to offer such training. This training will also be counted as working time. Since 2014, employers with 20 employees or more may claim the cost of employee training as tax deductible. In order to make tax deductions, companies have to create an individual professional development plan.

Training

The Ministry of Economic Affairs and Employment is responsible for designing the policies related to training and skills development, while the Ministry of Culture and Education (Opetus- ja kulttuuriministeriö) handles VET. The Centres for Economic Development, Transport, and the Environment ELY Centres (Elinkeino-, liikenne- ja ympäristökeskus) and TE Services are jointly responsible for regional and local implementation and development tasks. In 2024, TE Services will, however, be transferred to the municipalities, according to a government decision of 2021 (Ministry of Economic Affairs and Employment, undated-b). According to the European Company Survey 2019, in 81% of Finnish establishments, at least 20% of employees receive on-the-job training.

The principle of equal treatment requires that all people – and, in the context of the workplace, all workers – have the right to receive the same treatment, and will not be discriminated against on the basis of criteria such as age, sex, disability, nationality, race and religion.

The Non-discrimination Act, together with amendments to the Act on Equality between Women and Men 609/1986 (Laki naisten ja miesten välisestä tasa-arvosta), entered into force in 2015. The two acts, which complement each other and together cover all grounds of discrimination, increase the employer’s obligation to promote equality and to eliminate discrimination. Among other things, the acts set out new rules on mandatory plans for promoting equality in the workplace and strengthen the role of shop stewards and other personnel representatives with regard to non-discrimination. According to the legislation, employers are obliged to investigate and follow up on gender pay gaps at individual workplaces.

Compliance with anti-discrimination in employment is monitored by the following independent bodies: the Non-Discrimination Ombudsman (Yhdenvertaisuusvaltuutettu) and the Ombudsman for Equality (Tasa-arvovaltuutettu) (both connected to the Ministry of Justice (Oikeusministeriö)), the National Non-discrimination and Equality Tribunal (Yhdenvertaisuus- ja tasa-arvolautakunta), appointed by the government, and the Regional State Administrative Agencies.

Equal pay and gender pay gap

The gender pay gap was around 20% in Finland in the early years of the 21st century. It has decreased slightly since then and, in 2020, it was, on average, 16% (Ministry of Social Affairs and Health, undated). However, the gap is still wider than the average EU gap. In addition, wage differences between men and women are larger in the private sector than in the public sector.

The Employment Contracts Act and the Non-discrimination Act demand equal treatment of workers in all aspects of working life, including wages. The Act on Equality between Women and Men specifically prohibits wage discrimination based on gender. Finland is already in line with the new EU Pay Transparency Directive (Directive (EU) 2023/970), as employers with 30 employees or more are obliged to draft equality plans and to carry out pay auditing every two or three years, in cooperation with employee representatives. The pay audit must compare data on men’s and women’s wages in ‘comparable’ groups of workers. Collective agreements also set the framework for wages in different occupations, which must be observed for all workers.

The Ministry of Social Affairs and Health is responsible for monitoring compliance with the Finnish non-discrimination legislation related to working life. It coordinates the tripartite Equal Pay Programme (Samapalkkaisuusohjelma) with the aim of narrowing the gender-based pay gap to 12% by 2025 by means of contract policy, decreasing the gender-based segregation of occupations, developing pay systems and supporting women’s career development. In cases of suspected pay discrimination, the employee and the trade union shop steward of the establishment have the right to hear the grounds for the wage level set by the employer. The employee can appeal to the general court, which can order the employer to pay compensation to the employee, in line with the EU Pay Transparency Directive. The Ombudsman for Equality and the labour market organisations can also bring cases to the National Non-Discrimination and Equality Tribunal, which can impose fines if necessary. According to regulation already in place, the burden of proof lies with the employer if an employee suspects pay discrimination.

According to the EU Pay Transparency Directive, employees have the right to request information on pay levels from their employer for categories of workers doing work of equal value. The criteria based on which work can be considered equal are not specified in Finnish law. The current legislation does not specify a pay gap percentage at which an employer has to take concrete action, as required by the EU Pay Transparency Directive (Helsingin Sanomat, 2023).

Quota regulations

The only quota regulation regarding employment is found in the Act on Equality between Women and Men, which specifies that the proportions of both men and women in public administration bodies must be at least 40%. This applies to public authorities at both state and municipal levels.

Employer organisations

EK and affiliates

• Confederation of Finnish Industries (EK)
• Technology Industries of Finland
• Finnish Cosmetic and Hygiene Industry Association
• Finnish Food and Drink Industries’ Federation (ETL)
• Finnish Energy (ET)
• Chemical Industry Federation of Finland
• Rubber Manufacturers’ Association of Finland (RMAF)
• Confederation of Finnish Construction Industries (RT)
• Finnish Textile & Fashion
• Finnish Commerce Federation
• Logistics Firms’ Association
• Finnish Hospitality Association (MaRa)
• Service Sector Employers (PALTA
• Finance Finland (FA)
• Employment Industry Finland (HELA)
• Finnish Association of Private Care Providers (HALI)
• Real Estate Employers
• Finnish Media Federation (Finnmedia)
• Association of Finnish Furniture and Joinery Industries (Puusepänteollisuus)
• Finnish Port Operators Association
• Finnish Education Employers (FEE)
• General Industry Federation (YTL)

Other employer organisations

• Local Government and County Employers (KT)
• Office for the Government as Employer (VTML)
• Church Employers (KiT)
• Federation of Agricultural Employers (MTA)
• Employers’ Federation of Road Transport (ALT)
• Federation of Finnish Enterprises (SY)
• Finnish Forest Industries Federation

Trade unions

SAK and affiliates

• Central Organisation of Finnish Trade Unions (SAK)
• Finnish Transport Workers’ Union (AKT)
• Air Transport Union (IAU)
• Industrial Union
• Union of Supervisors in Commerce (KEY)
• Trade Union for the Public and Welfare Sectors (JHL)
• Service Union United (PAM)
• Paper Workers’ Union (Paperiliitto)
• Finnish Post and Logistics Union (PAU)
• Finnish Construction Trade Union (Rakennusliitto)
• Railway Union (RAU)
• Finnish Electrical Workers’ Union (Sähköliitto)
• Finnish Food Workers’ Union (SEL)
• Finnish Seafarers’ Union (SMU)
• Finnish Customs Officers’ Union (Tulliliitto)(Fi)
• Finnish Non-commissioned Officers Union (Aliupseeriliitto)
• The Border Security Union (Rajaturvallisuusunioni)
• Finnish Musicians’ Union
• Trade Union for Theatre and Media Finland (Teme)
• General Union of Journalists (YLL)

STTK and affiliates

• Finnish Confederation of Professionals (STTK)
• Union of Private Sector Professionals (ERTO)
• Federation of Technical Employees in the Dairy Industry (MVL)
• Finnish Ships’ Officers’ Union (SLPL)
• Finnish Union of Practical Nurses (SuPer)
• Union of Health and Social Care Professionals (Tehy)
• Federation of Public and Private Sector Employees (Jyty)
• Church Sector Employees
• Trade Union Pro
• Engine Officers’ Union
• Union of Business Economy (LTA)
• Forestry Experts’ Association (Meto)
• Finnish Association of Fire Fighters (SPAL)
• Association of Finnish Construction Engineers and Architects (RIA)
• Association of Agrologists

Akava and affiliates

• Confederation of Unions for Professional and Managerial Staff in Finland (Akava)
• Akava Special Branches
• Finnish Association of Academic Agronomists (Agronomiliitto)
• Association of Finnish Lawyers
• Finnish Business School Graduates
• Akava’s General Group (AYR)
• Union of Swedish-speaking Engineers in Finland (DIFF)
• Finnish Dental Association
• Finnish Medical Association
• Finnish Psychological Association
• Finnish Union of University Researchers and Teachers
• Finnish Veterinary Association
• Trade Union of Education in Finland (OAJ)
• Finnish Officers’ Union
• Finnish Association of Architects (SAFA)
• Finnish Pharmacists’ Association (SFL)
• Academic Engineers and Architects in Finland (TEK)
• Finnish Association of Speech and Language Therapists
• Finnish Union of University Professors
• Union of Professional Engineers in Finland
• Association for Professionals and Managers (ASIA)
• Union for Sales and Marketing Professionals (MMA)
• National Union of Public Health Nurses (Terveydenhoitajaliitto)
• Union of Professional Business Graduates in Finland (TRAL)
• Akavan sairaanhoitajat ja Taja
• Trade Union Ava
• Union of Diaconal Workers in Finland
• AKI Unions (AKI)
• Finnish Union of Church Youth Workers (KNT)
• Union of Technical Professionals (KTK)
• Finnish Association of Rehabilitation Professionals (KA)
• Union of Professionals in Natural, Environmental and Forestry Sciences (Loimu)
• Institute Officers Union of the Finnish Defence Forces and the Border Guard
• Union of Professional Social Workers (Talentia)
• Finnish Police Union (SPJL)
• Finnish Association of Occupational Health Nurses
• Social Science Professionals (YKA)

Other trade union organisations

• Union of Journalists in Finland (SJL)

Government

• Ministry of Economic Affairs and Employment
• Ministry of Social Affairs and Health

Other links

• Statistics Finland
• Finnish Work Environment Fund
• Finnish Institute of Occupational Health
• Office of the Ombudsman for Equality
• Work Research Centre, Tampere University
• Trade Union News from Finland – sponsored by trade union confederations with affiliates
• Finnish National Agency for Education

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