Finnish national income policy agreements or comprehensive income policy agreements (, often called ''tupo''; ) are
tripartite agreements between Finnish
trade union
A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ...
s,
employers' organization
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 ...
s, and the Finnish government. They are policy documents covering a wide range of economic and political issues, such as
salaries
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis.
...
,
tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
ation,
pensions,
unemployment benefit
Unemployment benefits, also called unemployment insurance, unemployment payment, unemployment compensation, or simply unemployment, are payments made by authorized bodies to unemployed people. In the United States, benefits are funded by a comp ...
s, and
housing costs. They represent
collective bargaining
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 ...
taken to its logical maximum, reaching virtually all wage-earners. Their enforcement is made easier by the
universal validity of collective labour agreements
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 (or with an ...
. However, they are voluntary agreements and are not considered government legislation, i.e. they do not represent
central planning of the economy.
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
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
in terms of
economic growth and
real wage
Real wages are wages adjusted for inflation, or, equivalently, wages in terms of the amount of goods and services that can be bought. This term is used in contrast to nominal wages or unadjusted wages.
Because it has been adjusted to account ...
s. 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
revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
s and keeping
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
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
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...
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
Caretaker may refer to:
Arts, entertainment, and media
* ''The Caretaker'' (film), a 1963 adaptation of the play ''The Caretaker''
* '' The Caretakers'', a 1963 American film set in a mental hospital
* Caretaker, a character in the 1974 film '' ...
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
The Confederation of Finnish Industries (EK, fi, Elinkeinoelämän Keskusliitto, sv, Finlands Näringsliv) is the largest employers' association in Finland. It was formed at the beginning of 2005 when the two employers' associations ''Palvelutyö ...
, 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
Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...
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
*
Betrothal of January
*
Collective bargaining
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 ...
*
Incomes policy
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.
Incomes policies have often been resorted to ...
*
Labour law
*
Polder Model
*
Trade union
A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ...
*
Tripartism
Tripartism is an economic system of neo-corporatism based on a mixed economy and tripartite contracts between employers' organizations, trade unions, and the government of a country. Each is to act as a social partner to create economic policy ...
References
External links
Industrial relations profile(European Industrial Relations Observatory)
Comprehensive incomes policy settlement(Central Organisation of Finnish Trade Unions - SAK)
{{Finland topics
Politics of Finland
Trade unions in Finland
Economy of Finland