Public sector unions demand curbs on fixed-term jobs

The level of fixed-term employment remains high in the Finnish public sector (with around a quarter of all workers affected) and women in particular are involved. In 2005, several public sector trade unions have expressed their concern about the situation - for example, in June the VAL union lodged a complaint with the Parliamentary Ombudsman over the use of fixed-term contracts in the state sector.

The comprehensively redrafted Employment Contracts Act, which was the result of half a decade of tripartite negotiations, came into force in 2001 (FI0107193F). One of the aims of the reform was to curb the spread of fixed-term jobs and other forms of 'atypical' employment that had proliferated in the course of the 1990s. In 1989, the share of fixed-term jobs in all employment had been only 12% but by 1997 it had reached a high of 18.4%. By the time the Act came into affect in 2001, the share was down to 16.4%. The new legislation prohibited the employment on a fixed-term basis of people who carry out much the same work on a continuous basis. The Act applies to all private sector and municipal sector workers. Similar restrictions were, however, also placed on state employment by the Public Servants Act of 1994.

Effects of the legislation limited

In the three years that followed the adoption of the Employment Contracts Act, between 2001 and 2004, the share of fixed-term jobs in all employment came down by a mere 0.3 percentage points to 16.1%. This share of temporary jobs is the fourth highest in the EU, and is exceeded only in Spain, Portugal and Poland. Young people and women in particular remain strongly affected. In 2003, 46% of employees aged 15 to 24 had been hired on a fixed-term basis, up 0.8 percentage points from two years earlier. Meanwhile, 19.6% of the jobs of women were fixed term, compared with only 12.6% of those of men. The gender discrepancy is, to a large extent, a reflection of the fact that women hold more jobs in the public sector where fixed-term jobs are particularly widespread. In 2003, the share of temporarily hired workers was 24.2% in the public sector, while in the private sector it amounted to just 12.7% of all jobs. Furthermore, the proportion of fixed-term jobs in the public sector actually increased between 2001 and 2003 by 0.9 percentage points while their share in the private sector decreased. Within the public sector, short-term contracts are roughly as common in both the municipal and the state sectors.

Public sector unions demand change

The Finnish National Union of State Employees and Special Services (Valtion ja erityispalvelujen ammattiliitto, VAL), which represents waged workers in the state sector, has long criticised the use of fixed-term contracts in the organs of the state. It welcomed attempts by the State Employer's Office in 2003 to promote permanent jobs by drafting guidelines on the use of different types of employment contracts. The recommendations it sent out to the administrative branches and departments included that they should draw up special action plans and go through jobs case-by-case in order to reduce the use of fixed-term contracts. VAL insists that these positive recommendations have, however, hardly at all been followed in the state administration, and that the Employment Contracts Act and the Public Servants Act continue to be violated as workers carrying out similar work year after year are not granted open-ended contracts. In order to bring change, VAL lodged a complaint in June 2005 with the Parliamentary Ombudsman against the use of fixed-term contracts in the state sector.

Within the state sector, fixed-term contracts are by far the most common at universities where a full 61.5% of workers were, in 2002, employed for a specified period of time. Universities have argued that the use of fixed-term contracts is necessary because of their increasing dependence on short-term funding from outside sources. The Association of Finnish University and Research Establishment Staff (Yliopistojen ja tutkimusalan henkilöstöliitto, YHL), which represents universities’ non-research staff, maintains that this is not a legally valid justification. It demands that the reasons for using fixed-term contracts should be thoroughly examined and that a set of principles guiding staff policy should be established at each university in cooperation with the employees.

Union dissatisfaction with fixed-term jobs is strong in the municipal sector as well. The Trade Union for the Municipal Sector (Kunta-alan Ammattiliitto, KTV), which represents wage earners in municipalities, has emphasised the gender aspect of the issue. It maintains that the employment of women in temporary jobs over extended periods is one of the greatest obstacles to gender equality at Finnish workplaces. While part-time employment is a grievance in female-dominated private services, fixed-term employment is a key problem in the female-dominated municipal sector, KTV states. According to the union, as many as 80% of the quarter of municipal sector workers that have fixed-term contracts are females. Thus women are more vulnerable than men to the various disadvantages that affect temporarily hired workers. These include, according to KTV, limited possibilities for individual pay increments, pay-dependent social security benefits, personnel training and annual leave. KTV insists that the social partners and municipal authorities have the responsibility to promote the wider use of open-ended contracts and thus bring an end to this injustice.

Commentary

Fixed-term contracts are relatively common in the public sector in Finland, despite the existence of rather advanced prohibitive legislation. The state of affairs might be different if, in the event of violations of the law, workers more often took legal action against their employers. Many are, however, afraid to do so out of fear of what might happen to their careers if they do so. Thus employers are hardly ever penalised for the illegal use of fixed-term contracts. In this light, it is understandable that unions have long attempted to achieve the right independently to take legal action against employers on behalf of workers who choose not to take any such steps. Employers have, however, thus far blocked these attempts on grounds that unions should not hold such rights of individual people.

The fundamental obstacle to increasing the number of permanently employed staff in the public sector is that it leads to rising costs. Dropping fixed-term contracts in favour of open-ended ones would go against the aim of numerous state organs and municipalities that are busy tackling limited budgets; namely the reduction of labour costs. Temporary staff need be paid lower wages and benefits than those with permanent contracts. Moreover, fixed-term workers are much easier and less costly to make redundant, which increases flexibility. For these reasons, the public sector employers are unlikely to yield easily to the union demands to increase permanent employment. (Aleksi Kuusisto, Labour Institute for Economic Research)