The Collaborative Approach : Following the Finnish Example

Editor's Note :
The current economic crisis in the United States has provoked strong responses and reactions against organized workers, including the targeting of pensions, benefits, and wages that were previously collectively bargained. As both organized labor and employers search for creative ways to address the crisis, UWS correspondent Stephen Holmes, through his recent interviews with Finnish Labor officials, details that country's approach.

By Stephen Holmes, UWS Correspondent

On a recent trip to Finland, I was fortunate enough to have the opportunity to sit down on separate occasions with two representatives of Finnish Trade Unions: Mr. Reijo Paananen who is Adviser for European Union Affairs, and Member of the European Economic and Social Committee (EESC) for SAK (The Central Organisation of Finnish Trade Unions), and Ms. Liisa Folkersma, who is the International Secretary for AKAVA (Confederation of Unions for Professional and Managerial Staff in Finland). Both were helpful in explaining how their system is organized differently than ours, and how their different confederations are dealing with the current economic struggles in Finland and Europe.

The current consensus that governs how Finland’s workers are represented formed at the end of World War II. The intent is to make workers, employers, and the government equal partners in deciding :

  • how work is organized

  • what constitutes an acceptable wage and benefit package for a particular industry

  • the overall role of government in people’s working lives

Mr. Paananen gives a clear example of how this consensus works: Union, employers, and the government will  together calculate wage increases in view of other wages, tax policy, and the cost of living so that it does not cause inflation. This system has served Finland well for almost seventy years as the country enjoys one of the highest standards of living in the world , but it has come under internal and external pressure to change in recent years.

The Finnish system makes it very easy for workers to organize themselves into unions and, correspondingly, for employers to organize themselves into professional associations. When a majority of workers in an industry affiliate with a union, that union begins negotiations with the employer's association that represents that industry. Once an agreement is reached, the contract becomes binding on all workers and employers in the industry whether they belong to the union or the employer’s association or not. (Non-majority agreements would be possible between unions and employers, but their agreements would not be binding on the industry as a whole). The SAK publication "Together” explains this entire process in clear language. In other words, a retail clerk in a convenience store is paid the same and enjoys the same benefits as one working in an expensive shop. All a new worker needs to do to join the union is sign up with the respective union. Mr. Paananen says that according to the latest data it is approximately 72% in Finland.

One obvious question is : if you don’t need to be a union member to enjoy the benefits of a union contract, then why join and pay dues? This dilemma is handled in a variety of ways. First there are increased unemployment benefits for union members as well as the benefit of having a union representative to advocate for you in the workplace. Secondly, many unions also act as professional development centers for their members. The biggest reason, however, that most people join is that they are invested in the system and in its benefits. That does not mean that unions do not work hard to organize new members. Ms. Folkersma relates that an Akava affiliated unions spend a good deal of time and money performing outreach to university students in fields they represent, including yearly tours and presentations to potential members.

The other large problem for Finnish unions is that the consensus has started to break down slightly on the employers end. In the past all the industry contracts were negotiated at the same time which ensured solidarity among all workers, but recently contracts have started to be negotiated at different times which means that not all workers are negotiating at the same time. Despite this, however, there is no push to radically change the system as it currently exists, and unions are overwhelmingly supported. Mr. Paananen told me that SAK’s view is that in case of a job action the work, not the worker, is considered to be on strike and that any picket lines are respected by almost everyone.

In addition to internal changes, the Finnish system has also come under external pressure. The largest one is membership in the EU (European Union). This has led to at least two major challenges. The first is that the EU guarantees free movement of EU citizens to work anyplace within the EU. This means that workers who are willing to work for less can come to Finland legally. Technically, the industry wide agreements should ensure that they work under rules as other workers, but the reality is that many are exploited due to language or cultural barriers or ignorance of their rights under the law. This is similar to the plight of some immigrants, both documented and undocumented, in the United States. In fact, Ms. Folkersma praised unions in America for hiring organizers that speak different languages and performing outreach to immigrants and said it was a step Finnish unions needed to take.

The second challenge is that Finland is part of the Eurozone which means they share a common currency with 16 other countries. This has a number of implications, but it boils down to the fact that Finnish workers' wages and purchasing power are tied to what happens in the other 16 European countries.

To successfully handle these twin challenges, Finnish unions take a two pronged approach. The first is that they work closely with the government to ensure that workers in Finland are protected. Mr. Paananen provides examples of the Finnish government requiring that any loans given to any European countries in distress be guaranteed, thus ensuring that workers won’t have to pick up the cost if the other country defaults. Additionally, the government has resisted the creation of Eurobonds which could affect Finland’s credit rating and lead to higher interest payments. The second is that Finnish labor affiliates work with other European labor unions, on a formal level through organizations like the European Trade Union Congress, to ensure that labor unions across Europe work together to protect all members' rights.

Ultimately, Finland has a trade union system that is radically different from the one in the United States. The Finnish system of organized labor is built on consensus and trust, as opposed to the United States' more adversarial one. Finnish Trade Unions work cooperatively with employers and the government to ensure all parts of the economy are in harmony. This has resulted in high union density and a high standard of living with generous social benefits. There are obvious lessons that the US could take from this.

Further reading: Mr. Paananen and Ms. Folkersma were extremely generous not only with their time but also with background material about their respective confederations which I have provided below:

Two great overviews of how the Finnish system works are in brochures called: The Finnish Trade Union Movement—What every employee should know and Finland: A System That Works.

A Glance At Akava provides a great snapshot of that confederation and more information is available on their publications web page.

On SAK’s Publications in English web page there are a number of items about that confederation.

 Finally, the Finnish Ministry of Labour has a publication called Industrial Relations and Labour Markets in Finland, which gives their take on the system.

Have a tip or lead on a story like this? Wish to contribute your own piece? Email the UWS Press Team