Many Finnish employees facing pay cuts
As a result of the economic downturn, many Finnish employees are now threatened by wage or salary cuts.
Some companies have already suggested reductions in the basic salary or cutting the holiday pay of their employees, while some others have only discussed such a plan tentatively.
Recently, several questions have been sent to online discussion forums and to trade unions over how to react to an employer’s proposal of pay reductions.
For example the Union of Salaried Employees TU has received requests for help from employees of small enterprises - those who do not regularly have shop stewards, for example, small retail outlets.
Typically, the proposed pay reductions are linked with threats of dismissals, if no agreement is reached.
The trade unions point out that there is no guarantee that the employer would not be forced to dismiss its employees regardless of pay reductions. Salary cuts are frequently only a temporary solution.
The representatives of the Confederation of Finnish Indusries EK have been suggesting in the course of the spring that firms should reduce their payroll costs as one method of cost-cutting.
Leif Fagernäs, the CEO of EK, is the latest executive to hint at pay reductions. In his view, a stand for or against this issue will have to be taken at all negotiating tables.
Fagernäs believes that pay reductions could improve the competitiveness and productivity of Finnish companies.
According to EK, the payroll costs of its member firms are expected to grow by 5.5 % in 2009, and by a further 2.5 % next year.
In general, companies begin their economy measures with less drastic steps, including pension packages or working hour arrangements. Moreover, holiday payments have already been converted into corresponding free time at the request of the employer in many enterprises and municipalities.
The collective labour agreement of the chemical industry includes a clause under which it would be possible to postpone the agreed salary increases in a time of crisis.
Officially, employers have not called for the deployment of this clause, but it has been discussed at the local level.
EK’s Senior Adviser Seppo Saukkonen points out that salary reductions continue to be very exceptional in Finland.
”From the employer’s point of view, it is good that the Finnish system allows several alternative courses of action in various situations”, Saukkonen notes.
”The conversion of holiday pay into time off is not necessarily a profitable alternative, as it will also lead to a decrease in the volume of work completed. Frequently the next step is to lay off employees or to shift to part-time work”, Saukkonen argues.
Currently, many municipalities are also discussing the issue of how to reduce labour costs. The 2.4 % general salary increase agreed upon for the municipal sector from next autumn is one of the questions under debate.
Previously in HS International Edition:
Finnish trade unions would prefer shortened working hours to lay-offs (20.2.2009)
Temporary lay-offs are a Finnish version of organising work for everybody (18.2.2009)
Temporary lay-offs unique Finnish labour policy contrivance (10.2.2009)
Union of Salaried Employees TU
Confederation of Finnish Industries EK