Social Pacts in Finland: Income Policy Agreement for the Years 2003-2004

Period: 2003-2004 (signed December 2002)

Negotiating Parties:  Confederation of Unions for Academic Professionals in Finland (AKAVA), Commission for Church Employers (KiSV), Commission for Local Authority Employers (KT), Employers’ Confederation of Service Industries in Finland (PT), Central Organisation of Finnish Trade Unions (SAK), Finnish Confederation of Salaried Employers (STTK), Confederation of Finish Industry and Employers (TT), State Employer’s Office (VTML)

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

Matters agreed:

• Collective agreements: Adjustment in wages and salaries  
• General pay increase
  • 2003: from 1 March 2003, general pay increase of 17 cents per hour or 28.39 EURO per month (or at least 1.8%)
  • 2004: from 1 March 2004, general increase of 16 cents per hour or 26.72 EURO per month (or at least 1.7%)
• Increase in sectoral allowance and equality allowance
• Pay increments for shift work and other work under special conditions
• Indexation clause providing an extra pay increase of 0.4% if inflation rises beyond 2.7%
• Continuous negotiation of collective agreements as an effective means to adapt to changes
• Promotion of the system of continuous negotiations on wider economic and social policy issues
• Maintenance and development of knowledge and competence
• Quality of working life
  • Minimum working period of four hours
  • Special assistance for workers being made redundant
  • Establishment of a special unit for supervising the terms and conditions for foreign workers at the Ministry of Interior
  • Measures to safeguard the career development of full-time trade union representatives
  • Extension of child care leave
• Joint position on employment policy

Institutions involved: The Income Policy Settlement Commission assists the signatory parties in monitoring and evaluating earning developments.

Procedures: The signatory parties shall meet in May 2004 to review the extent to which the aims of this agreement have been achieved and to monitor increases in earnings as specified in the collective agreements.

Background: Over the decades, the focus of incomes policy agreements moved away from the imperative of guaranteeing social peace to that of supporting employment.  The national strategy is to maintain a high level of competitiveness which is believed to ensure high employment. 

The negotiation process for this incomes policy agreement was exceptionally difficult, because talks have been dominated both by pay and other contested topics related to the quality of work. 

Comments: Over 90% of the wage earners are covered by the new agreement, because most trade unions approved the agreement. 

The government agreed to support the incomes policy agreements with substantial tax relief (income tax cuts and social charges) in 2003.

Link to the full text: http://netti.sak.fi/sak/pdf/inco0304.pdf