Social Pacts in Finland: Income Policy Agreement for the Years 2001-2002

Period: 2001-2002 (signed December 2000)

Negotiating Parties:  Commission for church employers, commission for local authority employers, The employers’ Confederation of Service Industries in Finland, the Central Organisation of Finnish Trade Unions (SAK), Finnish Confederation of Salaried Employers, state employer’s office

Goals of the pact: To provide support for a continued favourable development of the national economy and the employment situation; to maintain stability in the economy and society

Matters agreed:Decisions on collective agreements included:

• Agreement on moderate increase in wages, including sectoral and equality allowances, guidelines of salaries for the private and the public sector, and pay increments for shift work and work under special conditions in 2001 and 2002
• Central organisations (social partners) agreed to issue a recommendation to sectors to facilitate the adoption of EURO.
• Introduction of the index clause to monitor Finland’s and other EMU countries’ national economies, their competitiveness, employment and prices and earnings.  If the increase of the consumer price index in 2001 exceeded the ceiling of 2.6%, wages and salaries would be raised by the percentage exceeding 2.6%.  However, increases of less than or equal to 0.4% would not be paid. 
• Agreement on the introduction of an income progression clause in order to ensure equal wage development for those sectors falling behind the average wage development of all workers.  The incomes policy information commission will monitor this development. 
• Ascension day to become a public holiday
• Greater compensation to shop stewards
• Unemployment benefits: increase of earning related unemployment benefits in 2002
  • Agreement on the formation of a tripartite working group under the supervision of the Ministry for Social and Health Affairs to study the possibilities for an integrative strategy to deal with the unemployment benefit system and employment policy (with special focus on the long-term unemployed.
• The adoption of the system of continuous negotiations between the signatory parties on following subjects:
  • Pensions policy
  • Unemployment protection
  • Improvement of negotiation procedures and agreement systems
  • Issues related to world or work, training (lifelong learning) and equality

Institutions involved: The signatory parties ensure that the agreements are implemented on the basis described.

Procedures: After the conclusion of incomes policy agreements at the central level, negotiations moved to the sectoral level for implementation.

Background: The Finnish economy had become very competitive and the Finnish industrial relations model functioned well under the new regime of EURO.  Continued economic growth was predicted, which allowed wage increases without jeopardising macroeconomic stability.

Comments: This agreement covers some 90% of Finnish employees.  Unlike its predecessor, this agreement was not signed by AKAVA, a trade union confederation, and other workers’ organisations, which reduced the coverage rates.