Finland Needs to Expand Local Bargaining – Here’s How to Do It

The benefits that local bargaining would provide Finland’s competitiveness and economic growth are widely recognised. Most recently, this subject was brought up by the experts of the Ministry of Finance, who stated in a report published in February that Finland’s economic growth needs a great deal more company-specific flexibility with respect to the regulation of employment.

This is an important issue. In order to get past just recognising the issue, it is important to understand what local bargaining is and what opportunities Finland’s current employment legislation provides for it.

Local Bargaining Often Blocked by Shop Steward Requirements in Collective Agreements

Local bargaining ultimately encompasses all agreements made at the workplace. However, public debate surrounding local bargaining often revolves around what collective bargaining agreements say about local bargaining. This is understandable, as local bargaining is often blocked by the provisions of collective agreements.

Many collective agreements provide that concluding a local agreement requires that the workplace have a shop steward. The selection of a shop steward is based on the provisions of the collective agreement that only obligate employers that are part of an employer organisation, i.e. organised employers. The shop steward represents an entire personnel group despite being elected by only those employees who are union members. This is true even if only a fraction of the employees at a workplace are union members. In practice, local bargaining is not possible if the collective agreement requires that a shop steward be a party in local bargaining, but the workplace has for some reason chosen to not appoint one.

The current system does not provide sufficient support for an alternative in which employees could be represented by an elected representative (who pursuant to the Employment Contracts Act is the primary representative of employees of non-organised employers) or other representative chosen by the employees from amongst themselves. The selection of these kinds of representatives is supported by the fact that they more fully represent all of the employees at the workplace, because all of the employees can participate in electing them, regardless of union membership.

Another odd feature of local bargaining in Finland relates to the fact that semi-mandatory provisions of employment legislation—such as sick pay, grounds for lay-off and the re-employment obligation—can only be agreed upon to the detriment of employees in national collective agreements between employer and employee organisations.  Current legislation does not recognise that an employer that has committed to a company-level collective agreement, or an employer that has no collective agreement at all, could conclude an agreement on these provisions with their personnel. Furthermore, non-organised employers are not permitted to apply collective agreement provisions concerning local bargaining at all if they concern semi-mandatory legislation.

The Boundaries of Local Bargaining Need Reform

The future of local bargaining will depend a great deal on reforming the boundaries set for it so that they meet the needs of modern working-life. Today, the fact that a labour organisation operates nation-wide does not automatically mean that it has the best understanding of the minimum level required by the employees at a given workplace or of what the best end result would be. There are no solid grounds for treating non-organised employers differently with respect to local bargaining.

The legislative materials of the current Employment Contracts Act from the year 2000 justifies the unequal position of unorganised employers with the limited resources of occupational safety and health authorities. On the other hand, even back then the legislative materials stated that it is necessary to monitor the development of local bargaining and take legislative action as necessary. The provisions concerning local bargaining in collective agreements have, indeed, developed in the intervening years, which is a good thing. For example, few collective agreements from twenty years ago made it possible to swap holiday bonuses for extra leave based on local bargaining even when the employee wanted to do so.

Expanding the use of local bargaining would require efficient and effective legal remedies in case one of the parties breaches the agreement. Nevertheless, what needs a shakeup is the idea that a national organisation or a person representing just some of the employees at a workplace is always the best party to assess whether local bargaining is necessary at the workplace and what is in the interests of the employees at a given workplace.

Local bargaining should be expanded to be available to all employers. This in not just sensible, but also a more sustainable solution from the perspective of the freedom of association guaranteed by Finland’s constitution. Furthermore, it should be possible for a personnel representative other than a shop steward elected by the members of a particular union to be the party to local bargaining. The employees’ day-to-day need for protection at the workplace does not always align with what unions want to protect.