National income policy agreement (Finland)

Last updated

Finnish national income policy agreements or comprehensive income policy agreements (Finnish : tulopoliittinen kokonaisratkaisu, often called tupo; Swedish : inkomstpolitiskt helhetsavtal) are tripartite agreements between Finnish trade unions, employers' organizations, and the Finnish government. They are policy documents covering a wide range of economic and political issues, such as salaries, taxation, pensions, unemployment benefits, and housing costs. They represent collective bargaining taken to its logical maximum, reaching virtually all wage-earners. Their enforcement is made easier by the universal validity of collective labour agreements. However, they are voluntary agreements and are not considered government legislation, i.e. they do not represent central planning of the economy.

Contents

In national income policy agreements, the government and the employees' and employers' organizations attempt to reach a common understanding of the best choices for the national economy in terms of economic growth and real wages. The basic conundrum is simple: employees want higher salaries, employers want no wage hikes. The government wants to maintain international competitiveness and a high employment rate, while simultaneously ensuring sufficient tax revenues and keeping inflation in check.

National income policy agreements are usually valid for a two-year period. These agreements are not compulsory. If the employers' and employees' national organisations cannot agree on terms, no agreement is signed. In that case, negotiations on salaries are carried out by individual trade federations with no government participation. Sometimes talks are not even initiated due to differences of opinion between employers' and employees' organizations.

History

The first national income policy agreement was negotiated by National Labour Dispute Conciliator Keijo Liinamaa. In 1967, Liinamaa was given a special task by Prime Minister Rafael Paasio: Liinamaa was to negotiate a comprehensive economic deal with employers' organisations and labour unions in order to prevent inflation due to rising wages. These negotiations resulted in the first national income policy agreement, the so-called "Liinamaa I" and brought fame to Liinamaa, a later caretaker prime minister. The tradition of comprehensive agreements has been particularly persistent since then, even if there are always doomsayers predicting their end. Currently, there is no such agreement. This follows from the political pressures to increase public sector competitivity that led to comparatively higher increases in public sector wages, particularly nurses' wages.

In 2008, the main employer's union Confederation of Finnish Industries, representing 70% of Finland's GDP, announced that new national income policy agreements will not be made, and that they will radically reduce the influence of the central union, and close down the special office that has prepared previous agreements. The reasons cited were the inflexibility of comprehensive agreements, their incompatibility with global markets and the differences between different industries. This was met by accusations of irresponsibility from some trade union leaders.

The agreements have ultimately been an effective way to curb inflation, particularly in recent times where globalization has placed pressure on both the employers and employees. The consensus policy unravelled several "perpetual inflation machine" problems: wages tied to price indices, constant competition over nominal wages between different employee unions resulting in constant nominal wage hikes, the government effectively subsidising these wage hikes by subsidising exports based on costs (including wages), and perpetual strikes to increase minor benefits (particularly Niilo Wälläri's seamen's union). On the other hand, a comprehensive agreement maintains distortions that have arisen between different industries, i.e. when wages are too low in one industry relative to other industries.

See also

Related Research Articles

A trade union, often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment". such as attaining better wages and benefits, improving working conditions, improving safety standards, establishing complaint procedures, developing rules governing status of employees and protecting the integrity of their trade through the increased bargaining power wielded by solidarity among workers.

Labour laws are those that mediate the relationship between workers, employing entities, trade unions and the government. Collective labour law relates to the tripartite relationship between employee, employer and union. Individual labour law concerns employees' rights at work also through the contract for work. Employment standards are social norms for the minimum socially acceptable conditions under which employees or contractors are allowed to work. Government agencies enforce labour law.

Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights for workers. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. The collective agreements reached by these negotiations usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms, and rights to participate in workplace or company affairs.

Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other entity, pays the other, the employee, in return for carrying out assigned work. Employees work in return for wages, which can be paid on the basis of an hourly rate, by piecework or an annual salary, depending on the type of work an employee does, the prevailing conditions of the sector and the bargaining power between the parties. Employees in some sectors may receive gratuities, bonus payments or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits may include health insurance, housing, disability insurance. Employment is typically governed by employment laws, organisation or legal contracts.

United Kingdom labour law Labour rights in the UK

United Kingdom labour law regulates the relations between workers, employers and trade unions. People at work in the UK can rely upon a minimum charter of employment rights, which are found in Acts of Parliament, Regulations, common law and equity. This includes the right to a minimum wage of £9.50 for over-23-year-olds from April 2022 under the National Minimum Wage Act 1998. The Working Time Regulations 1998 give the right to 28 days paid holidays, breaks from work, and attempt to limit long working hours. The Employment Rights Act 1996 gives the right to leave for child care, and the right to request flexible working patterns. The Pensions Act 2008 gives the right to be automatically enrolled in a basic occupational pension, whose funds must be protected according to the Pensions Act 1995.

Incomes policies in economics are economy-wide wage and price controls, most commonly instituted as a response to inflation, and usually seeking to establish wages and prices below free market level.

Keijo Liinamaa Finnish politician and lawyer (1929–1980)

Keijo Antero Liinamaa was a Finnish lawyer and politician who served as caretaker Prime Minister of Finland from June to November 1975.

Enterprise bargaining is an Australian term for a form of collective bargaining, in which wages and working conditions are negotiated at the level of the individual organisations, as distinct from sectoral collective bargaining across whole industries. Once established, they are legally binding on employers and employees that are covered by the Enterprise bargaining agreement. An Enterprise Agreement (EA) consists of a collective industrial agreement between either an employer and a trade union acting on behalf of employees or an employer and employees acting for themselves.

IG Bauen-Agrar-Umwelt


The IG Bauen-Agrar-Umwelt is a trade union in Germany with a membership of 350,000. It is the fourth largest of eight industrial affiliates of the DGB. IG BAU is active in the sectors of construction and engineering, building materials, building cleaning, facility management, gardening, forestry and agriculture. Since 2013 Robert Feiger has been the president of IG BAU.

Trade unions in South Africa has a history dating back to the 1880s. From the beginning unions could be viewed as a reflection of the racial disunity of the country, with the earliest unions being predominantly for white workers. Through the turbulent years of 1948–1991 trade unions played an important part in developing political and economic resistance, and eventually were one of the driving forces in realising the transition to an inclusive democratic government.

An employers' organization or employers' association is a collective organization of manufacturers, retailers, or other employers of wage labor. Employers' organizations seek to coordinate the behavior of their member companies in matters of mutual interest, such as during negotiations with trade unions or government bodies. Employers' organizations operate like trade unions and promote the economic and social interests of its member organisations.

A two-tier system is a type of payroll system in which one group of workers receives lower wages and/or employee benefits than another.

The Prices and Incomes Accord was an agreement between the Australian Council of Trade Unions and the Australian Labor Party government of Prime Minister Bob Hawke and Treasurer Paul Keating in 1983. Employers were not party to the Accord. Unions agreed to restrict wage demands and the government pledged to minimise inflation. The government was also to act on the social wage. At its broadest this concept included increased spending on education as well as welfare.

Labor relations Study of work and workers

Labor relations is a field of study that can have different meanings depending on the context in which it is used. In an international context, it is a subfield of labor history that studies the human relations with regard to work – in its broadest sense – and how this connects to questions of social inequality. It explicitly encompasses unregulated, historical, and non-Western forms of labor. Here, labor relations define "for or with whom one works and under what rules. These rules determine the type of work, type and amount of remuneration, working hours, degrees of physical and psychological strain, as well as the degree of freedom and autonomy associated with the work."

Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation.

A collective agreement, collective labour agreement (CLA) or collective bargaining agreement (CBA) is a written contract negotiated through collective bargaining for employees by one or more trade unions with the management of a company that regulates the terms and conditions of employees at work. This includes regulating the wages, benefits, and duties of the employees and the duties and responsibilities of the employer or employers and often includes rules for a dispute resolution process.

Rehn–Meidner model

The Rehn–Meidner model is an economic and wage policy model developed in 1951 by two economists at the research department of the Swedish Trade Union Confederation (LO), Gösta Rehn and Rudolf Meidner. The four main goals to be achieved were:

Herbert Arthur Frederick Turner (1919–1998) was a British economist, statistician, and academic. His great strength was a thorough understanding of economics and statistics, particularly the operation of labour markets and the limitations of available statistics. This set him apart from most other academic industrial relations specialists. He was an inspiring lecturer and his tutorials and post-graduate supervisions were challenging and provocative as students were prodded and persuaded into thinking.

South African labour law regulates the relationship between employers, employees and trade unions in the Republic of South Africa.

Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie (1999) C-67/96 is an EU law case, concerning the boundary between European labour law and European competition law in the European Union.

References