Labour market and local bargaining

Suomen Yrittäjät wants to see reform of the labour market system in a way that improves employment and reduces unemployment. Reforms are essential to secure and finance the welfare state and care for the weakest in society.

The Finnish labour market is clearly more rigid than in competitor countries. Generally, the flexibilities which it offers are reflected in unemployment numbers. Tailored, workplace-specific solutions on salaries, working time and other issues would help achieve real changes more smoothly and quickly.

Suomen Yrittäjät demands legislative amendments to bolster opportunities for local bargaining. This is essential to secure jobs and growth. Employees and business owners must be given space to jointly agree on sensible solutions for work, salaries, working time and time off in the most sensible way to meet both employees’ needs and the business’s production and efficiency. This will boost productivity.

Companies which use generally binding collective bargaining agreements must be given the same flexibility as companies that are members of employer unions. A collective bargaining agreement applies to every employee: no one can choose not to be bound by it. Finnish legislation currently prevents local bargaining, that is, on the company level, in companies that use generally binding collective bargaining agreements. This is because if parties to collective bargaining agreements have permitted local bargaining on the matters the law allows, bargaining is only possible for members of employer confederations. Suomen Yrittäjät demands an end to these prohibitions and equality of non-confederated companies and members of employer confederations. Reaching agreements in practice is not possible if only unionized workers can take part in bargaining and vote to elect worker representatives. The law must not discriminate against non-unionized workers. Removing the prohibitions would also do away with almost 50 norms which are barriers to local bargaining.

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In employment regulation, a new balance needs to be struck between the principle of employee protection and a healthy labour market. Employment legislation is ultimately regulation of the functioning of the markets; it affects both the demand for and supply of labour. Legislation must be used to create new bargaining opportunities. For example, it should be possible to agree on Sunday pay and overtime compensation at the company level.

To boost employment, a complete overhaul of social security is needed to make it worthwhile to accept employment in all situations. Additionally, earnings-linked unemployment benefit needs to be renewed to promote non-discrimination.

A second key structural reform would be more flexible hiring through easier dismissal on personal grounds. Legislation is already being prepared for this. The excessively stringent personal grounds for dismissal particularly discourage the smallest businesses from hiring staff. The consequences of unsuccessful recruitment are more damaging for a business the smaller it is.