Temporary lay-offs unique Finnish labour policy contrivance

Tens of thousands of Finns forced into more unpaid holidays than they would care for

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By Juha Akkanen
     
      This recession will be remembered for its temporary lay-offs. At this point in time no one is yet able to estimate exactly how many forced unpaid holidays the Finnish labour force will be tested with by the end of the year. In any case, the figure will be in the tens of thousands.
      Already at the beginning of the year the Ministry of Employment and the Economy estimated that nearly 50,000 wage-earners were either temporarily laid off or had received a notification of a coming forced vacation.
     
Since then thousands more temporary lay-offs have been announced on a weekly basis.
      Even though the number of lay-offs will at some point start levelling out, this does not mean that the situation would be over. At that point either negotiations will be held on the renewal of the temporary lay-off round, temporary lay-offs will be turned to ones lasting until further notice, or people will simply be dismissed.
      Both the employers’ and the wage-earners’ representatives predict that the figures are still going to turn uglier.
     
A temporary lay-off, or “an obligatory unpaid holiday”, is the Finnish version of flexible protection of employment: The workforce size can be adjusted to suit the prevailing manpower need.
      Tarja Kröger, Senior Advisor of Legislative Affairs at the Ministry of Labour, points out that the Finnish system of temporary lay-offs is quite unique on a global scale. The system in Norway bears similarities to the one used in Finland.
      “Instead, we have received a number of enquiries for example from Sweden, Great Britain, and The Netherlands on how this system works in practice. Many have stated that they, too, should have a similar set-up.”
     
Temporary lay-offs were included in the Finnish employment contract legislation in 1970.
      The employment contract law committee justified the lay-offs by saying that they benefit both the employers and the employees.
      In a way, the system recognises the employer’s need to keep professional workers tied to their companies even when the companies “for temporary reasons” are unable to organise work and pay salaries to everybody.
      “The firms wanted to hold on to their labour force, even when there was no work to offer to them”, Kröger explains.
      So, nothing much has changed then.
      “When we think about the impending labour shortage, the employers’ argument is just as topical now as it was back then.”
     
Judging by the recent headlines, in the early part of the year the metals and engineering industry firms have been busiest in laying off their staff.
      The Federation of Finnish Technology Industries executive vice president Risto Alanko praises Finland’s temporary lay-off system.
      “Without it our only option would be to make people redundant. The wisdom of the system for this very situation is in the awareness that at some point there will be another upswing, but not knowing when exactly this might happen. A temporary lay-off is a good way to adjust to this quandary.”
      “If we think about the technology industry, many companies’ order-book figures have fallen dramatically, but the companies do not think that the market would have imploded permanently. At the same time they want to hold on to their personnel. For this purpose the temporary lay-off system as a Finnish solution is in my opinion extremely necessary and sensible.”
      “Sure, it translates to a lowered income level for the worker, but to this Finland’s unemployment benefit system provides a reasonable antidote.”
     
Sitting opposite to Alanko around the same negotiating table are the Finnish Metalworkers' Union chairman Riku Aalto, the Union of Salaried Employees chairman Antti Rinne, and the Federation of Professional and Managerial Staff chairman Sture Fjäder.
      They, too, consider the system a good one, though not by any means as perfect as in Alanko’s view.
      The Finnish Metalworkers' Union operate under the Central Organisation of the Finnish Trade Unions (SAK), whereas the Union of Salaried Employees belongs to the Finnish Confederation of Professionals STTK. The Federation of Professional and Managerial Staff, in turn, operates under the umbrella of Akava, the Confederation of Unions for Professional and Managerial Staff in Finland.
      “Of course it is a positive thing that there is an alternative to straightforward pink-slips. This shows that employers are keen on holding on to their employees”, Aalto acknowledges.
      In his view, however, in this day and age companies would be wise to further educate their staff, rather than lay them off. For the workers it is definitely easier to plan their finances when they have an idea of when the work might resume, outlines Aalto.
     
Antti Rinne from the Union of Salaried Employees also recognises that a temporary lay-off is a significantly better option than a permanent dismissal.
      “But there are also companies that lay-off and dismiss staff without any real need”, Rinne charges.
      Fortunately less than ten per cent of the country’s businesses belong to this group.
      “Companies with strong balance sheets could well use their staff’s unpaid forced holiday time to further educate them. There are firms that do that, too.”
     
In Sture Fjäder’s view, on the whole the country's largest companies conduct their employee co-determination negotiations in an exemplary fashion.
      “In such talks the wage-earner organisations, the company management, and the authorities have managed to genuinely cooperate and provide training for those temporarily laid off.”
      “And then again there are companies that reduce the size of their workforce even in situations where the firm is making a profit. Are there any production-related or economic reasons to justify such lay-offs?” Fjäder wonders.
     
The professional- and managerial-level staff have their own problems to worry about:
      Those who remain with the company often have to take care of their own work but also the duties of those who were laid off.
      Few of them have the courage to bill the company for overtime.
      “Many work double shifts in order to keep their jobs”, Fjäder adds critically.
      In his opinion this is anything but fair from the employer’s part.
     
     
Helsingin Sanomat / First published in print 8.2.2009


Previously in HS International Edition:
  Research institutes predict stagnation of economic growth next year (30.10.2008)
  Recession to spread into Helsinki only gradually and via services (23.12.2008)
  Poll: Finns optimistic that consequences of recession will not be severe (17.11.2008)
  Bank of Finland: Recovery not expected to begin before 2010 (10.12.2008)
  Labour Ministry predicts 13,000 new jobless next year (12.11.2008)

Links:
  The Central Organisation of Finnish Trade Unions (SAK)
  The Federation of Finnish Technology Industries
  Employment Contracts Act, 2001 - see Chapter 5

JUHA AKKANEN / Helsingin Sanomat
juha.akkanen@hs.fi