News - 28.06.2016 klo 09.27

Here’s how the competitiveness contract changes your terms of employment

A new annual leave system for the commerce sector, encouragement to introduce self-notification of sick leave and a long stretch without pay rises – these are just a few of the changes brought about by the competitiveness contract for PAM members.

A new annual leave system for the commerce sector, encouragement to introduce self-notification of sick leave and a long stretch without pay rises – these are just a few of the changes brought about by the competitiveness contract for PAM members. On 3 June, PAM’s Executive Committee conditionally accepted the results of negotiations on the competitiveness contract for most PAM sectors. When the Metalworkers’ Union also announced that they were in, the competitiveness contract was confirmed. It was signed in mid-June.

Among other things, the contract required extending annual working hours by 24 hours without changing income levels, improving conditions for local bargaining and agreeing on procedures for situations where local adjustments are applied under a collective agreement when a company is facing difficulties.

Before entering the contract application negotiations, PAM’s Executive Committee set four conditions based on which PAM would be prepared to join the competitiveness contract: the position of part-time employees must be safeguarded when increasing annual working hours; self-notification of sick leave must also be included in collective agreements in services sectors; shop stewards’ standing should be improved; and the ‘survival clause’ intended for companies facing financial difficulties must not lead to deteriorating the terms and conditions of employment on flimsy grounds.

Different sectors have agreed to implement the 24-hour extension of annual working hours in different ways, as their working hours systems vary considerably. As a general rule, however, the burden of extended working hours will be borne by those working on full-time contracts. At the same time, many sectors reformed their working hours systems.

Most sectors – such as commerce, tourism, restaurant and leisure services, facilities and security services – will stipulate in their collective agreements that it is possible to agree locally to introduce employees’ own notice in cases of short-term sick leave. This clause is similar to those already found in many collective agreements in place in non-service sectors. In addition, employers’ organisations and PAM have agreed plans to move this forward.

Conversely, shop stewards’ standing and local bargaining did not experience any major changes in PAM’s collective agreements. Procedures for implementation of the survival clause were agreed. The adjustment measures allowed in cases of financial difficulties included the chance to transfer certain pay components, but not undercutting the minimum terms and conditions under the collective agreement.

A new annual leave system for stores

As a general rule, changes in working hours will enter into force at the beginning of next year, while the remaining amendments will kick in when the current collective agreements expire. For the majority of PAM members, this will take place either side of this coming turn of the year.

In the commerce sector, the extension of working hours will be implemented as part of a transition to a new annual leave system. While collective agreements previously specified certain public holidays that reduced working hours, now both full-time and part-time employees will accrue one 7.5-hour day off for every 220 hours worked. This means that you can accrue up to 6.5 days off per year, while the average amount used to be 8.4 days, depending on the days of the week on which public holidays fell.

The new system will benefit those part-time workers who are doing more hours than specified in their employment contracts. Alternatively, it is possible to agree locally to increase the weekly working hours of full-time employees from 37.5 hours to 38 hours, instead of introducing the new annual leave system.

In tourism, restaurant and leisure services, working hours would increase from 111 hours to 112.5 hours over a three-week period for full-time employees. This would not have a bearing on the working hours of part-time workers. In addition, the sector would introduce an annual leave system similar to the one in place in the commerce sector, but the maximum number of days off would be 7 days per year. This would also apply to part-time workers.

In facilities services, working hours would primarily be extended as agreed locally at workplaces. If the parties cannot reach an agreement, those working 40-hour weeks would see a reduction in their number of additional days off, while those working 37.5 hours per week would either face an increase to 38 hours, or the extension would be dealt with using training days.

As it is not possible to increase the number of weekly working hours for those working 40 hours per week, different sectors have come up with alternative solutions.

In security services, the extension of working hours would also be organised using an annual leave system that would include both public holidays and additional days off. In other sectors with smaller numbers of employees, the matter will either be agreed locally or the working week will become longer at least for full-time employees, depending on the sector concerned.

The competitiveness contract also covers some components that used to be agreed between those labour market federations representing employees and employers. The key point for employees is the fact that the current collective agreements will still be in force for another 12 months beyond the originally agreed dates of expiration without any pay increases.

Employees’ social security contributions will go up

However, the earnings-related pension and unemployment insurance contributions payable by employees will increase, while those paid by employers will decrease accordingly. Pension contributions will increase by 0.2 percentage points in 2017 and 2018 and by another 0.4 points in 2019 and 2020. Employees’ unemployment insurance contributions will, in turn, go up by 0.45 percentage points in 2017 and by another 0.4 points in 2018.

The contributions payable by a person currently earning 1,500 euros per month will increase by about 120 euros in 2017. However, as these payments are partially tax-deductible, the real reduction will amount to 70 euros. The Finnish government has promised that if the contract reaches 85% coverage of employees, taxes will be reduced by a total of 415 million euros next year. At a monthly income of 1,500 euros, this will offset the contribution increases, representing an €18 increase in annual income.

Mandatory labour laws were scrapped

There is no certainty about tax decisions for the following years, but if the notion floated a year ago about tax cuts amounting to one billion euros over the term of the current government holds up, there will be some allowance for reductions in the years to come as well.

The Finnish government promised, as per the competitiveness contract, to do away with additional cuts of 1.5 billion euros in items such as unemployment benefit, which would have gone ahead if the contract had fallen through. Likewise, the package of mandatory labour laws introduced last autumn was scrapped. In addition, the majority of cuts planned for adult education subsidy were cancelled.