New Labor Market proposals from Finnish Government before the new elections in 1 year

Two important changes have been proposed to further activate the unemployed to find jobs and another to make it easier for small companies to fire staff .

Extra resources for active employment specialists

Finland has seen 3% GDP growth now for 2 years and enjoyed a small fall in unemployment. The previously low employment rate has gradually moved from 69% to near 72%, but much more needs to be done to achieve a 75% to 80% employment rate that is seen elsewhere. Long-term and youth unemployment remain serious challenges. 

The government has tried to ease labor regulation, as well as requiring the unemployed to report to professional employment specialist on a regular basis like the system already in place in Denmark. Failure to report in or follow an agreed plan results in a reduction in claimable benefits. 

Although the results from this new policy are not huge, progress is being made slowly through activating people to search for work. Naturally there has been resistance from the left and from the unions, but progress appears to be made. More time is needed before a final assessment can be made. 

However, the government is taking these weak positive signals seriously and are now increasing the funding and manpower of these employment specialists and supporting the unemployed with extra funding to take on more job change vocational training.

Proposal to facilitate sacking staff in small companies

However the most important proposal, if passed into law, will allow companies of less than 20 people to sack staff more easily. The new proposal is expected to allow much more flexibility than the present system that basically forces SME’s to wait a year before an employee can be let go.

The government’s proposal is aimed at very small companies, the main drivers of economic growth. One of the biggest impediments to employing staff is that it is currently a very slow legal process to sack an employee. This means that many small companies hesitate to employ new staff when there is obviously a need to grow. The impact of a poor or unsuitable worker will always be felt more the smaller a company. Large companies have a better ability to absorb such staff, but this is not the case and this is one of the main reasons fro this easing of the regulations.

In any event the ILO Termination of Employment 158 shall remain in force:

Article 5

The following, inter alia, shall not constitute valid reasons for termination:

  1. union membership or participation in union activities outside working hours or, with the consent of the employer, within working hours;
  2. seeking office as, or acting or having acted in the capacity of, a workers’ representative;
  3. the filing of a complaint or the participation in proceedings against an employer involving alleged violation of laws or regulations or recourse to competent administrative authorities;
  4. race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin;
  5. absence from work during maternity leave.

Article 6

  1. Temporary absence from work because of illness or injury shall not constitute a valid reason for termination.

Naturally it appears that both proposals have been met with major objections from the left and the unions. Much more needs to be done to increase the employment rate to 80%? The unions, it appears, are not willing to consider other more robust solutions. Minister Lindström proposed one solution and that is removing the the binding nature of collective agreements and letting companies decide on their own wage policies. That is blindingly obvious except none of our politicians are strong enough or willing to take on the unions. 

However, it remains to be seen what will happen with the unions. Another barrier to the above becoming law is that these proposals must be written into laws and, according to the civil servants present at the press conference, this will take months because of a lack of staff resources! Talk about the tail wagging the dog…

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