Finnish Forestry Ends Collective Deals in Labor Market Shock

(Bloomberg) -- One of Finland's biggest employer' unions said it will no longer take part in collective wage agreements, dealing a blow to the country's decades-old labor market model.

The Finnish Forest Industries Federation won't negotiate new agreements with labor unions, shifting responsibility to its member companies, according to a statement on Thursday. The Finnish Paper Workers' Union said will still negotiate on behalf of its members.

The forestry organization, whose members employ roughly 140,000 people and account for a fifth of Finland's exports, wants companies to be free to react to changes in demand faster than they currently can. The industry has had some of Finland's best paid blue-collar workers, who have tended to strike for pay hikes. A two-week strike earlier this year shut more than 50 paper, paperboard and pulp mills.

The surprising move could prompt other industries to follow suit, according to Sanna Kurronen, an economist at Finnish Business and Policy Forum EVA, which is affiliated with the employer organizations.

It could also mean that parliament might need to look into introducing a minimum wage, she said by phone. It's not clear “whether the unions see this as a big enough blow to warrant a general strike,” she said.

Elina Pylkkanen, who runs the Labour Institute for Economic Research, said the move won't preclude pacts between employers, unions and the government to fix the competitiveness of Finnish exports, such as the 2016 Competitiveness Pact achieved by then-Prime Minister Juha Sipila.

“Being in the euro zone, Finland has few tools to improve its cost competitiveness,” she said. “That means society-wide agreements including an element of internal devaluation will be needed in the future and will absolutely still be possible.”

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