Incomes Policy Goals Originate Abroad - Labour Market Has Entered
EMU Era SAK speeds up computerisation of union activists
Nordic
unions force Ikea to smarten up its act
Finnish is the main language of trade union www-sites in Finland
Welfare
State Reaches Turning Point*
Finland
near EU average in accidents at work
More work-related deaths - experts blame new work structures
In ten years Europe will have centralised trade union
organisations, believes SAK president Lauri Ihalainen
The Finnish way of doing things is a long way from what Fletcher
Challenge demands of its workers in British Columbia
Incomes Policy Goals Originate Abroad
- Labour Market Has Entered EMU Era
Helsinki (20.04.1998 - UP/Kari Leppänen*) The Finnish
labour market has moved into the era of EMU and of EMU incomes policy agreements, says
Timo Kauppinen, research director of the Dublin-based European Foundation for the
Improvement of Living and Working Conditions.
Kauppinen claims that a clear qualitative change began
with the 1995 incomes policy agreement. The new direction was confirmed by the December
1997 incomes policy settlement.
"The essential difference with the past is that
Finland clearly adapted to economic policy goals which were defined outside of the
country, i.e. in the EMU criteria."
Kauppinen emphasises that the framework for the 1995
incomes policy settlement was already obtained directly from EMU convergence criteria. The
aims were low inflation and interest rates coupled with a healthy national economy. The
latter was defined in terms of two goals: the deficit had to be less than three per cent
and the State debt was not to exceed 60 per cent of GNP. Moreover, currency devaluation
was no longer to be allowed as a means of restoring price competitiveness.
"These criteria are goals of general economic policy
and the national economy must adapt to them."
There are various mechanisms available.
"In Finland these pressures create a spirit of
national unity. The Finns adapt to such pressures by means of a concerted labour market
settlement."
Kauppinen observes that even in past labour market
settlements the parties made allowances for the surrounding world, seeking to safeguard
price competitiveness and operating conditions for the export sector. However, problems of
internal policy such as industrial disputes, wage drift and runaway inflation tended to
negate these efforts.
"Devaluation was always used to correct the
situation. Now it can no longer be used, which means that the economy must be managed with
greater precision than before."
The parties have responded to external pressures by means
of concerted labour market settlements, but such unity has also been accompanied by
internal disintegration. Local negotiations have become much more common.
"Local agreements had to be made in the early 1990s
because of the need to survive the recession and preserve jobs."
Local agreement has subsequently been approved in national
agreements. Almost all collective agreements made in the 1990s authorise local agreements,
especially in respect of working hours and timetabling.
"The engineering industry showed the direction and
soon authority to negotiate and agree locally spread to practically all agreements."
Kauppinen believes that this trend will continue. The
scope for local agreement is encroaching onto wage and salary issues as well as into other
conditions of employment.
He feels that national agreements and labour market
organisations will preserve their significance, even though local agreement will become
more common and the general goals of economic and labour market policy will be formulated
abroad. Decision-making power has not slipped away from organisations at national level.
"Agreement on frameworks and general guidelines is
still possible at national level. National agreements are needed, especially in order to
achieve the general objectives of economic policy."
Neither does Kauppinen believe in cooling down the income
distribution struggle, although the margins of the wage and salary settlements will become
narrower.
"If the economy is sound, there will also be room for
an internal income distribution struggle. One can always ask how incomes are distributed
between labour and capital and between earners."
Kauppinen assumes that organisations have not lost their
influence, even though labour market policy has in many respects been adapted to the
general goals of economic policy.
"Radical structural change will continue and strong
lobbying organisations will also be needed in future to defend the rights of various
interest groups. In spite of all this, democratic modes of influencing development will
remain."
Almost all EU countries are suffering from high
unemployment while trying to adapt to the EMU criteria. Different countries have sought
solutions moving in similar directions. Kauppinen feels that concerted structures are
making a comeback as one alternative among labour market policy approaches.
"In many countries the social partners have responded
with employment agreements. This has been done, for instance, in Ireland, Spain, Portugal
and Italy. In Germany and Belgium such efforts were made but were not successful."
New, EU level structures are emerging above the national
decision-making level. The Maastricht and Amsterdam agreements opened up opportunities for
labour market organisations to negotiate at European level about issues pertaining to
working life. The employers are represented by Unice, and the employees by the European
Trade Union Confederation ETUC.
Now the parties are beginning to negotiate about
fixed-term labour relations. The employers have refused to negotiate about hearing the
employees at national level.
The organisations already participated in the 1995 talks
pertaining to an EU directive on works councils. After this, they agreed on part-time work
and parental leave.
Weak though they still are at present, Kauppinen believes
that the European-level structures will get stronger as time goes by.
"The role of the organisations is strengthening. As
the social dialogue has now begun, its sudden end would be surprising."
According to Kauppinen, the EU Commission would prefer
issues pertaining to working life to be agreed upon between the social partners.
"The Commission needs organisations at EU-level to
support its own decision-making. It is much easier to discuss with organisations than with
everyone separately."
* Kari Leppänen is a journalist working for the
independent Finnish news service Uutispalvelu (UP). Kauppinen's interview was originally
made for seven trade union magazines in Finland.
SAK speeds up computerisation of union activists
Helsinki (19.04.1998 - Juhani Artto) SAK, the largest
central Finnish trade union organisation representing 1.1 million members in its
affiliated unions, is to speed up computerisation of local union activists.
According to one SAK estimate, 5,000 - 10,000 union
members are thinking about buying or renting a home computer before the end of this year.
An agreement negotiated by an organisation as big as SAK would give these members a
considerable discount and a strong incentive for individual investment decisions. SAK has
asked for tenders for a package comprising a multimedia-equipped pentium, printer, modem
and Internet connection. The individual rental or purchase agreement will be made between
the union member and the equipment supplier.
SAK plans to launch the project in the autumn. Decisions
on this are expected soon.
The idea of more rapid computerisation of SAK union
activists comes from neighbouring Sweden, where the corresponding organisation LO,
covering 2.2 million workers, has been enormously successful in its own project.
The project began last autumn in Sweden, and by mid-March
58,000 PCs had already been installed in activists' homes. For less than 60 US dollars per
month the Swedish deal provides union members with a computer, colour printer, Internet
connection, application software package, use of a free telephone helpline for one year,
life and long-term unemployment insurance and the right to buy the entire package after a
three-year rental period for less than 200 US dollars.
The LO agreement gives union members a 30 per cent
discount. Another advantage is that for a deal made on such a scale the provider has been
especially interested in guaranteeing easy installation of the package. The provider,
Hewlett-Packard, claims that its LO package can be set up in eight minutes.
Trade union organisations in Norway plan a similar
computerisation project.
LO's success has been so great that in its March 18
edition The Wall Street Journal Interactive Edition published a long and enthusiastic
feature article on the PC project of the Swedish trade union movement.
Nordic unions force Ikea to smarten up its act
Helsinki (07.04.1998 - Juhani Artto) To many people around
the world, the Ikea brand signifies no more than homely furnishings. Recently, however,
The Sunday Times exposed an uglier side of this giant, originally Swedish multinational
concern.
The newspaper reported on working conditions at the
Romanian Magura plant: one of Ikea's numerous subcontractors. On average its workers earn
less than 17 US dollars for a 44-hour working week, i.e. about 40 cents per hour.
The Magura plant was privatised in 1992. The managers of
the company became its new owners with the help of a loan provided by Ikea.
The Sunday Times report caused strong reactions in the
Nordic trade unions. Norway's wood industry workers union declared its willingness to
launch a boycott against Ikea, provided that wood industry workers unions in Finland,
Sweden, Denmark and Iceland joined the initiative.
In this heated atmosphere another way forward was found.
Ikea and the Federation of Nordic Construction and Wood Workers signed an agreement
whereby Ikea promised to behave in an orderly manner and to demand the same of its
subcontractors. These must all honour the international agreements and recommendations
negotiated within the International Labour Organisation, ILO. The agreement should
guarantee that employees of Ikea's subcontractors everywhere have the right to set up and
join trade unions and to negotiate collective agreements.
In their joint statement, the Federation and Ikea favour
improved international codes of practice for working life. The parties plan to create a
joint system to supervise enforcement of their agreements and to stay in regular contact
concerning the development of the industry.
Finnish is the main language of trade
union www-sites in Finland
Helsinki (04.04.1998 - Juhani Artto) The Finns score high
in per capita Internet connections and www-publications, but language sets limits on how
thoroughly this northern European nation has integrated into the global electronic
network. This can clearly be seen in the Finnish trade union movement.
While reading, writing, hearing and speaking English is
almost daily routine for academics and the younger generation in Finland, for many other
Finns language is still an isolating factor. Five million people speak Finnish, a language
which is closely related to Estonian and to several very small minority languages spoken
in Russia and also more distantly related to Hungarian.
The trade union organisations are accustomed to publishing
materials in Finnish and in Swedish, which is the mother tongue of 300,000 Finns and the
second official language in Finland. They have mainly used English and other international
languages to advise their counterparts in other countries about the basic facts of the
Finnish organised labour scene.
Internet has had little immediate impact on this state of
affairs. The three central trade union organisations SAK, STTK and Akava, and a few of
their member unions have included some English language material in their
www-publications. Since August 1997 there has also been the present publication, Trade
Union News from Finland, which provides short background and news stories concentrating on
issues of interest to union activists in other countries and on other continents. As the
compiler of this publication, I strongly believe that the Finnish experience is as
important to know as are the experiences of working people in any other region.
The Finnish trade unions have not been particularly quick
to recognise the potential of Internet to dynamise and internationalise the mission of the
union movement. The language factor must have been one of the reasons for this slow start.
Until now, Finnish unions have mainly benefited from
Internet e-mail. Most of the national union organisations have begun to use e-mail in
their daily work. However, rank and file union members with Internet connections are not
yet using them much in union activism.
The Finnish union movement seems to be going through a
rather long transition period before it learns to make full use of basic Internet
services. Despite the high net connection density in Finland, the majority of union
activists, who are men in their 40s and 50s, have serious doubts about the whole Internet
affair. My prognosis is that it will take 2-4 years before the web is regarded by the
Finnish trade unions as an important and regular part of their working methods.
However, many unions already have early versions of their
www-publications and many more have sites of their own under construction. More
information will be provided in English but the total amount will still probably remain so
limited that any globally curious American, Australian, Asian, African, Argentine,
Albanian, etc. activists would do well to start learning Finnish.
Welfare State Reaches Turning Point*
Helsinki (26.03.1998 - Rauno Pentti) Intense
debate about the welfare state's future is now under way in Finland. Differing
opinions have been expressed as to the role of social policy. Calculations and
examples of many different kinds have been presented, but they don't seem to be
culminating in a common vision.
Professor Jukka Pekkarinen, Director of the Labour Institute for Economic Research, thinks
this stems more than anything else from the difficulties encountered in grasping the
overall effects of the various partial segments. "Modern society is a system where
every aspect affects all other aspects, and where even slight shifts can result in major
changes, he says.
Let's take taxation as an example. Finland and
all the Nordic countries are criticised for their high taxes. This is the case if
taxation as such is compared with the tax rates levied in other countries. But if
everything obtained through tax funds and citizens' total cost burdens are also included
in the comparison, the results often look quite different.
In Pekkarinen's opinion, Nordic social policy is an
example of the good that can be accomplished with high tax rates. "The Nordic model
starts from universality and provision of services by the public sector. In
international comparisons, these factors have proved to be the most effective in
eliminating inequality. To me, that's one example of an achievement worth paying
for," he continues.
Pekkarinen is convinced that the present welfare model enjoys wide support among
citizens. He therefore finds it odd that many economists, bureaucrats and
politicians have recently had so much enthusiasm for measures aiming at lower taxation.
"I don't believe that social reform can be carried out simply by cutting taxes. In my
view, it would also be important to inspect the overall effects of the desired tax
cuts," Pekkarinen states.
This is not to say that he considers it unnecessary to
talk about cutting tax rates. "Quite the contrary. I think it's important
that we discuss together, for instance, the best way of guaranteeing the future
availability of services falling within the sphere of social security, so long as the
discussion is diverse enough. The advantages and weaknesses of the current scheme,
as well as the improvements called for, should be presented openly. Now the discussion
easily polarises round the issue of whether or not taxation should be reduced,"
Pekkarinen continues.
Typical of the situation, in Pekkarinen's opinion, is that bureaucrats, in particular,
display monetary calculations illustrating the amounts accrued to the State through
taxation and the money spent to manage the public debt and how much is then left for other
uses, such as social income transfers. "In the final analysis, social policy is
always a matter of will. Expenditure for social welfare cannot be derived on mathematical
grounds," Pekkarinen explains. Pekkarinen suspects that the recent debate has fuelled
the concept that social policy has become some sort of burden to the national economy;
that money spent for social policy goes down the drain.
"To me, that line of thinking is an antiquated relic
from the time when social security was considered a luxury, something to be provided only
if it can be afforded. And the national economy was seen as some sort of pie that could be
cut into suitably sized slices according to what was considered necessary at the moment. A
more relevant concept arouse already in the 1960s, when Pekka Kuusi wrote his
internationally acclaimed work on the grounds of Finnish social policy. Kuusi's
departure point was the theory that social income transfers are a factor stabilising the
national economy. They reduce differences in incomes and increase citizens' purchase
power, thereby vitalising the economy. I believe this theory is still valid
today," Pekkarinen claims.
Pekkarinen guesses that opinions critical of the current welfare model in the end are
motivated by concern; concern about the impacts of changes in the social environment and
concern about controlling these changes. "The demands of the global economy and of
market forces have given rise to new uncertainty factors. Growth of productivity and
improved living standards have become increasingly more dependent on efficiency. In
consequence, we may need to choose from difficult alternatives affecting the economy and
social policy. For example, decisions pertaining to taxation may have detrimental effects
on incentives affecting individual households," Pekkarinen explains.
He points out that, in weighing potential effects, careful
consideration must be given to the advantages and disadvantages on a wider scale. "As
I already said, not everything can be measured directly in terms of money. One less
tangible
determinant is a peaceful and orderly society. That, too, may be convertible into money in
the future, for instance when international enterprises seek sites for their
investments", Pekkarinen continues, adding that market forces and their influence are
part of our real world.
The swiftness of market forces challenge society to undergo reform at an ever-quickening
pace. "Market forces and their actions, however, involve risks that call for
protection provided by society. Unemployment insurance, for example,
requires public control, because the need for unemployment insurance may arise from
disturbances having widespread impacts."
According to Pekkarinen, the current high unemployment rate is an issue that typically
divides experts into two camps. "Some think that high unemployment is here to stay.
The idea of citizens' pay, for instance has developed on the basis of this view. If
the idea of citizens' pay were adopted, the fruits of economic productivity would be
distributed to people irrespective of whether or not they happened to be gainfully
employed. I see this line of thinking as faulty. It would be a very expensive idea
if implemented in practice; firstly, because it would increase the tax burden of those
gainfully employed and secondly, because it could lead to abuse. Many might begin to ask
why they should work and pay taxes if they could merely collect citizens' pay and work
under the table," he says.
Pekkarinen agrees that he is a proponent of the old-fashioned school that strives for high
employment. "Of course, the starting point for high employment is a healthy and
smoothly functioning economy. In addition, people need to be
encouraged to remain active in working life as long as possible. This calls for measures
to ensure that their motivation, know-how and skills are maintained," he continues.
In discussions of employment policy, Pekkarinen says we must also take a serious view of
poverty traps. "Great Britain is now considered the model of a new social policy. It
has been found, however, that British social security has gaps, say, with respect to
single parents. In practice this means that single parents cannot go to work, even if they
wish to, because society does not provide a sufficient amount of children's daycare
services. People thus are forced to subsist on a weak level of basic income support; the
outcome may be impoverishment and exclusion."
In this regards, matters are in better shape in Finland. Even so, Pekkarinen reminds us
that our social security also has incentive traps which, for instance, encourage mothers
of small children to stay at home rather than return to work. "The economic
gain obtained through various social supports may exceed the income earned by working if
low-paying part-time jobs or short, fixed-term contracts are the only employment
available."
Nevertheless, ever stronger demands calling for tax cuts are being presented; by
bureaucrats, so-called experts and even by many politicians. The limits to radical
cuts, however, are generally acknowledged. The huge public debt is a menace, and its
existence cannot be ignored. That's why people calling for tax cuts talk about reductions
in public expenditure at the same time, presenting them as the means to implementing tax
cuts. But in practice, reductions in public expenditure would lead, for instance, to
further savings in expenditure for social welfare and health care.
"In my opinion, these issues should be weighed very carefully, paying particular
attention to the impacts such measures might have. I consider our present social policy
system to be such a great achievement that we shouldn't jeopardise it by acting rashly.
The system guarantees equality fairly well. We don't have any real division between
an upper and a lower class, and no one needs to experience economic insecurity. People
also, more or less, have equal opportunity for education and development. If we start to
dismantle this system, we might launch a process having unpredictable effects,"
Pekkarinen cautions, pointing out that the public sector is also a notable employer.
"Appreciable tax cuts would inevitably weaken the service-readiness of the public
sector. The sharpest effects would be felt in women's employment situation, since
the public sector - municipalities and the State - is a major source of employment.
Privatisation of services would hardly replace all the government jobs lost," he
continues.
It riles Pekkarinen that in discussing these issues, even people of high standing in
society present opinions based on flimsy premises. "It would appear that many
calls for reform are merely test balls thrown into the fray. But I don't think they
help clarify the total picture. Nor is the situation improved by the fact that
economists and social policy experts often speak a totally different language," he
says.
Pekkarinen suspects that bureaucrats aren't always presenting ideas that they themselves
have come up with. "It's easy for civil servants to present ideas and opinions
because they aren't saddled with political responsibility for them. But
they know that they are stepping up the pressure centring on issues that political
decision-makers must take a stand on. For this reason, I think it would be important for
bureaucrats to inspect these issues from a wider perspective, assessing their overall
effects as well."
In Pekkarinen's opinion, the current debate has polarised into two camps; neither of the
opposing sides listens to the other's reasoning with an open mind. "I think it
would be important to remember that no single social policy system is necessarily the best
alternative in changing conditions. New challenges require reform. The system should be
inspected critically, but with sufficiently diverse values. That's why I'd prefer a
low-key approach to the current debate; no unnecessary exaggerations or half-baked
notions."
Pekkarinen concludes by reminding us that a well functioning social security system is an
important component of any active, evolving society. "It increases citizens'
basic sense of confidence, the feeling that the material side of life
is under control, and provides a good foundation for constant self-development. The
opposite situation causes insecurity and resistance to change; people then cling tightly
to what they already have and avoid new things. Such a situation stiffens society
and also weakens economic activity."
translated by Sheryl Hinkkanen
*Published originally in Socius Finland 1-98, the
English language magazine of Ministry of Social Affairs and Health
Finland near EU average in accidents at work
Helsinki (22.03.1998 - Juhani Artto) Finland is close to
the EU average in accidents at work. This can be seen from the latest statistics issued by
Eurostat.
Accidents at work, standardised numbers per 100,000
persons in employment, 1994 (excluded: road deaths and those from natural
causes),
(included: agriculture, hunting, forestry, manufacturing, construction,
wholesailing, retailing, repairs, hotels and restaurants, transport and communication,
finance, real estate, renting, business activities) |