The government has chained and locked itself to an ideological tree like an activist outside a construction site of a nuclear power station. They are committed to passing a new law that makes it a little easier for very small companies (less than 10 staff) to fire poorly performing workers.
The trade unions have, like a group of burly policemen, are trying to “remove the activists” by going on strike in protest of this new law.
The new law will bring some small changes to these companies that represent over 90% of all companies here in Finland.
There is no question that the is a big fight with the election just 6 months away and the Social Democrats have the lead position in the polls, with the ruling parties with a low poll of 38%.
The government has said they want to help small companies expand faster by allowing them to easier conditions to fire employees more easily. Under the present labor laws it is said to be hard to fire poorly performing or unsuitable staff. It is costly and time consuming. However the newly proposed law does not actually make much difference because Finland like most EU countries is bound by international laws that guarantee workers protection from employers who fire staff without a good reason.
In many of these small companies, the owners do not want to employ outside staff because they see no benefit in growing. Another group of these small companies find it less risky to outsource parts of their business like accounting and invoicing rather than employing new staff. There are also existing ways to employ staff without having labor law hassles. There are always the 4 to 6 month probationary periods and government sponsored employment arrangements.
Interviews with small companies by FinnishNews that want to grow will employ staff in any event. They are willing to take on these risks because they want and need to grow – but they are probably in the minority.
The government could help small companies grow by giving them a much bigger VAT-rebate benefit – the present sum is very small and does not encourage these companies to grow.
The government could also provide the companies with legal assistance for firing staff – if you really need to fire a person who performs badly then the legal costs are high! The legal situation is so complex that lawyers are a necessary and high cost.
From the trade union side this proposal appears to be politically motivated and a show of power. This is unfortunate because trade unions are not voters, even though their members are.
The financial losses of strikes are felt hard by small companies and actually threaten the employment safety of their staff. The unions argue two things – why should people in small companies be at greater risk that this working in large companies and why did the government not talk within the unions when proposing this law.
The first argument is altruistic and the second is valid to some point. It is worth noting that the big and powerful employers union here also objects to the government’s stance. The big companies have a lot to lose if there are widespread strikes.
The Prime Minister is having a press conference later today (11.9.2018) — will he bring out the knives and strike deeper into the heart of the economy or will be backtrack? He has already stated emphatically that the unions are not responsible for government!
That was not exactly a smart statement but very few things about the present government have been aimed at making the economy more efficient and that is reflected in the polls!
On balance this fight is one created by ideological motivation and not by a carefully planned well thought out strategy. The government should back down and have more constructive talks with the unions.
For the record, here is the ILO Termination of Employment 158 regulation (mentioned above) that will remain in force:
The following, inter alia, shall not constitute valid reasons for termination:
- union membership or participation in union activities outside working hours or, with the consent of the employer, within working hours;
- seeking office as, or acting or having acted in the capacity of, a workers’ representative;
- 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;
- race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin;
- absence from work during maternity leave.
- Temporary absence from work because of illness or injury shall not constitute a valid reason for termination.
As a final comment there can be no doubt that Finland needs to increase its employment rate beyond the low 72% to 80%. Much more needs to be done to achieve this objective. The unions, it appears, are not willing to consider other more robust solutions that the government needs to propose. There are many proposals that can be examined like like letting companies decide on their own wage policies and other policies that will help SME’s grow. In the end it is the SME that impacts growth, not the big companies that are busy firing staff right left and centre….