Developing the conciliation system

Labour disputes are mediated by the National Conciliator, part-time conciliators and conciliation boards. 

A conciliation board may be appointed for a specific mediation task. The National Conciliator or other conciliator handling a labour dispute submits a proposal to the Ministry of Economic Affairs and Employment on the appointment of a conciliation board, and the Ministry of Economic Affairs and Employment appoints the chairman and other members of the conciliation board.

Conciliation refers to a procedure for the mediation of a labour dispute under the direction of a conciliator.

A settlement proposal is the last resort for finding a solution in a conciliation procedure. The conciliator may submit a written settlement proposal to the parties to the labour dispute if the conciliator is unable to reach a resolution through negotiations or otherwise. The conciliator may set a short time limit during which the parties are encouraged to accept the settlement proposal. The issuance of a settlement proposal and its content are at the discretion of the conciliator.

No. The parties to the labour dispute will decide on whether to accept the settlement proposal submitted by the conciliator. If the parties to the dispute do not accept the settlement proposal, the mediator must then consider whether the conciliation will be resumed or suspended.

The Government aims to strengthen Finland’s long-term competitiveness and the capacity of the national economy. The solutions emerging in conciliation are reflected in the functioning of the labour market and wage formation. Well-functioning wage formation is one of the key factors contributing to Finland’s competitiveness and the overall benefit of the national economy.

The act obliges the conciliator to act in their conciliation procedure in a manner that will safeguard the overall benefit of the national economy so that wage formation will work as well as possible and the functioning of the labour market will not be compromised. 

Safeguarding the overall benefit of the national economy means that, in addition to the demands of the parties to the labour dispute, the conciliator should consider factors affecting the capacity of the national economy and Finland’s competitiveness. The conciliator guides the parties to the labour dispute towards solutions that are balanced in terms of Finland’s competitiveness and well-functioning wage formation and takes these factors into account in the conciliation process and also when submitting a settlement proposal.

Under the current act, the conciliator must strive to reach a settlement between the parties mainly on the basis of their own proposals and offers to which the conciliator must propose concessions and adjustments that appear necessary in terms of reasonableness and discretion. The legislative amendments specify the consideration of reasonableness and discretion applied in the conciliation procedure.

There were previously no provisions on the procedure followed by the conciliation board. The regulation must consistently apply to procedures that fall within the scope of the national conciliation system. The decisions made by the conciliation board may have long-term effects on the labour market and the ability of the conciliator to find solutions on labour disputes in future.

The reform will harmonise the activities of the conciliation board appointed for a specific conciliation task. In the future, the National Conciliator or a conciliator appointed by the National Conciliator acts as the chair of the conciliation board. The conciliation board must therefore comply with the provisions guiding the activities of the conciliator in its proceedings. In addition, the provisions laid down in the Act on Mediation in Labour Disputes on the submission of a settlement proposal also apply to the settlement proposal submitted by the conciliation board.

The amendment lays down in law the objective of safeguarding the overall benefit of the national economy and the functioning of wage formation in conciliation procedure. In practice, the National Conciliator already considers these factors, even though they are not laid down in law. Conciliators have felt for decades that they are bound by the general level of pay adjustments in the labour market in their conciliation procedure.  

As a result of the amendments, the practice will also apply to settlement proposals submitted by the conciliation board. This will be a change to the current situation. The conciliation board complies with the established practices of the National Conciliator's Office or agrees on its practices when starting its work. However, conciliation boards have been appointed so rarely that no established practices have been formed for them.

In order to safeguard the overall benefit of the national economy, the conciliator must act in a way that does not jeopardise the functioning of the labour market while ensuring that the wage formation process operates as well as possible. The settlement proposal should also support the functioning of the labour market and not compromise the wage formation process in other sectors. 

The central task of the National Conciliator is to promote the functioning of the labour market. Conciliators have carried out this task in their conciliation procedure by monitoring practices emerging in the labour market, such as the general level of pay adjustments. The general level of pay adjustments affects the level of pay as well as other provisions with cost impacts in different sectors and agreement periods. According to the current view, attaching sufficient value to the pay adjustment decision of the initiator sector (usually an export sector that competes internationally and makes a pay adjustment decision first) will support the overall benefit of the national economy. 

Following this practice of the labour market also in the settlement proposal would create stability and predictability in the labour market and help the initiator sector reach a pay adjustment decision. 

To realise the overall benefit of the national economy, the conciliator must consider how the settlement proposal reconciles the demands of the parties to the labour dispute with the goal of supporting Finland’s competitiveness, the sustainability of public finances and positive employment and productivity development. The settlement proposal should support the functioning of the labour market and should not compromise the wage formation process in other sectors.

The intention is not to prevent sector-specific and job-specific characteristics from being considered in the settlement proposal at the conciliator’s discretion. The settlement proposal should aim to reconcile the demands of the parties to the extent possible without compromising the overall benefit of the national economy and the functioning of wage formation and the labour market.

The settlement proposal should take into account the principles of wage formation, which is based on the labour market model that enjoys wide labour market acceptance. These principles support the functioning of wage formation and the realisation of the overall benefit of the national economy.

No. The amendment concerns the mediation activities of the conciliator and the conciliation board and the content of the conciliation proposal.

Finland is bound by e.g. international obligations concerning the freedom of professional association and the right to collective bargaining. The international obligations binding Finland do not prevent the conciliator from taking into account issues of public interest, such as the functioning of wage formation and national economic aspects, when submitting a settlement proposal. 

The amendments only apply to the activities of a conciliator and a conciliation board. The reform will not interfere with the autonomy of the social partners in deciding on negotiating objectives or with the right of trade unions to promote the living and working conditions of their members. The right of the social partners to agree on the level of pay and other terms of employment is also not affected.

The main reason for the gender pay gap in Finland is the significant professional segregation of the labour market. Education policy is the primary means for dismantling professional segregation. In fact, there are only limited possibilities to promote pay equality between sectors in the conciliation procedure due its nature. The conciliation procedure is used for settling a labour dispute in an individual sector based on the demands of the parties to the dispute. The conciliator ensures that the proposed settlement does not result in terms of employment in the sector that discriminate based on gender.

The conciliator will consider different solutions to an individual labour dispute that take into account the overall benefit of the national economy, the practices created in the labour market and the special needs of specific sectors and tasks. Solutions that promote equal pay and gender equality as part of the overall settlement proposal can be brought forward at the conciliator’s discretion.

The reform does not limit the right of the social partners to make agreements among themselves.

A round of statements on the Government Programme entries concerning the export-driven labour market model and the development of the conciliation system was organised from 8 November 2023 to 9 January 2024. A total of 71 statements were submitted.

The Ministry of Economic Affairs and Employment appointed a tripartite working group for the period 1 February - 31 May 2024 to prepare the legislative amendments. The working group was chaired by Mika Nykänen, State Secretary of the Minister of Employment. In addition to the Ministry of Economic Affairs and Employment, the working group included representatives from the Confederation of Finnish Industries (EK), the Office for the Government as Employer, Local Government and County Employers KT, the Church Employer's Office, the Central Union of Finnish Trade Unions (SAK), the Finnish Confederation of Professionals (STTK), Akava - Confederation of Unions for Professional and Managerial Staff in Finland, and the joint representative of the key trade unions. The working group did not reach a unanimous decision during its work. The Confederation of Finnish Industries (EK), Local Government and Country Employers (KT), Central Organisation of Finnish Trade Unions (SAK), Confederation of Unions for Professional and Managerial Staff in Finland (Akava) and Finnish Confederation of Professionals (STTK) submitted a dissenting opinion on the report.

The Ministry of Economic Affairs and Employment circulated the working group’s report for comments from 4 June to 30 July 2024. A total of 56 statements were submitted.

Yes. As an alternative to legislative amendments, the Government has encouraged the social partners to engage in bilateral negotiations on the Finnish labour market model. The Government has hoped that the social partners reach an agreement on the labour market model. It was reported in June 2024 that the social partners would not begin negotiations on the matter. 

The reform does not prevent the social partners from agreeing on a labour market model and wage formation principles based on it.

Parliament made minor technical changes to the act. The legislative amendments entering into force at the beginning of 2025 mainly correspond to the Government proposal.

The legislative amendments will enter into force on 1 December 2025.