The right-wing government and employers have represented the reforms as in line with the ‘Nordic model’ they seek to dismantle.
The International Trade Union Confederation recently published its Global Rights Index 2024. Finland and other Nordic countries have traditionally fared well in global comparisons of labour rights. Thanks to a clutch of recent reforms, however, Finland has lost its top-tier rating and become a Nordic outlier.
The worsening of trade-union and employee rights should not though surprise observers of Finnish politics. Since its election in 2023, the right-wing government led by Petteri Orpo has sought to undermine the situation of workers via changes to collective bargaining, labour law and social security. If carried through, these would consolidate the shift towards capital in the balance of social power.
Over recent decades the Finnish trade-union movement’s influence on policy and working conditions has declined along with its membership. But, comparatively speaking, the Finnish experience of labour-market ‘liberalisation’ has been gradual: collective bargaining remains widespread and many unions have retained key defensive capacities.
The Orpo government reforms aim in this light to increase employers’ say-so over pay and working conditions, inhibit the right to strike and render unemployment benefit more conditional. Expanding the economy’s low-wage sectors is one motivation; returning Finland to export-led growth is another.
More state-dominated
The reforms continue a shift towards a more state-dominated labour-market regime, under way since the mid-2010s. This state steering stands in contrast to the Nordic model, where negotiations between organised labour and capital customarily occupy centre stage. So the government and employer associations have sought to frame the reforms as necessary if Finland is to maintain a Nordic model of industrial relations, based on a selective account of its supposed determinants.
The first element of the reform package was legislation passed in May limiting ‘political’ strikes and solidarity actions. It stipulates penalties applied to individual workers where strikes are deemed unlawful. High-profile strikes failed to stop the legislation in its tracks.
Secondly, the government seeks to reform wage bargaining, expanding local bargaining rights to non-organised employers while allowing local agreements to be struck with non-union representatives. Following negotiations in a tripartite working group, a legislative proposal is expected soon.
Thirdly, the government is pushing for a wage model in which export sectors would set the ceiling for wage increases. The government seeks to restrict legally the national conciliator’s capacity to resolve a wage dispute by offering an increase that exceeds the norm. The reform is claimed to emulate the ceiling-setting role of export industries in Sweden, yet the Swedish practice is regulated by negotiation between parties and not by law. This reform remains pending.
Fourthly, the government is seeking to make it easier to dismiss employees and hire employees on temporary contracts—it suggests this will boost employment. Moreover, the government aims to make the first day of sickness absence the employee’s own liability.
Fifthly, the government believes that cutting social benefits, such as earnings-related unemployment benefit and housing allowance, improves incentives to work. The cuts in social benefits will have a significant impact on poverty among young adults, single parents and one-person households.
Lastly, the government has revamped the Finnish system of lifelong learning. An adult-education allowance has provided support for the professional development of employees—for instance, helping practical nurses study to become nurses—but the government has decided to cease its funding. This will likely make it more difficult for public services to recruit skilled workers.
Upending institutions
The Orpo government is seeking drastically to shift the balance of power in the Finnish labour market. Its reforms are in line with the long-term goals of Finnish business organisations. They both calculate that the weakening of the left and trade unions has created a window of opportunity to upend labour-market institutions.
Leading ministers and the Confederation of Finnish Industries have recurrently claimed that the proposed reforms have already been implemented in other Nordic countries. According to this narrative, Finland needs radical labour-market reforms if it wishes to catch up with the other Nordics’ economic performance.
The opposition parties and trade unions have accused the government of cherry-picking in such comparisons. Ministers selectively emphasise institutional elements in other Nordics that fit their reform agenda but fail to mention concomitant labour-friendly features.
The labour-market historian Ilkka Kärrylä demonstrated in his recent report on the ‘Nordic model and its four exceptions’ that the government rhetoric did not stand up to scrutiny. Considering the reforms as a package of nine, Kärrylä found that Denmark, Norway and Sweden had implemented only between two and four (depending on the generosity of interpretation).
Moreover, Kärrylä emphasised that the manner of preparing and implementing the reforms set Finland apart from its Nordic peers. The government had pursued them unilaterally, avoiding negotiations and compromises with employee organisations.
Forcefully challenged
Progressive politicians around the world tend to represent the Nordics as egalitarian, social-democratic utopias. And, to an extent, the Nordics continue to exhibit comparatively high overall tax rates, maintaining universal social and health services, with extensive collective bargaining and less stretched social hierarchies.
Yet this external image has been forcefully challenged since the economic depressions of the 1990s. The offensive of the right-wing government in Finland represents an intensification of this emblematic trend. Domestically, the ‘Nordic model’ is now being presented not to argue for genuine social reform but to undermine the rights of labour.
Antti Alaja is an expert at the Finnish Centre for New Economic Analysis in Helsinki, a progressive think-tank established in 2023.
Joel Kaitila is a doctoral researcher in public and social policy at the University of Jyväskylä, Finland.