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Competing Countries’ State Aid Competition Complicates the Business Environment in Finland – Government’s Planned Labor Peace Legislation Reforms Are Welcome

The current government should do everything in its power to keep Finland’s business environment vibrant and attractive for industrial investments.

The bleak global economic situation is not expected to brighten in the coming months, and there is no relief in sight for domestic industries either. The turnover of member companies of the Chemical Industry Federation of Finland has been declining since the summer of 2022. Production volumes have developed less favorably than turnover, and there has been and continues to be weak demand in sectors crucial to the chemical industry.

Of particular concern is that the outlook for member companies of the Chemical Industry Federation of Finland is the weakest since the 2008 financial crisis. Basic chemistry production in Europe has not yet returned to normal following the energy crisis that began after Russia’s attack war.

One worrying factor in the current business environment is the strong support from major competitor countries for industrial investments in the green transition, especially in battery and energy industries, as well as the chemical industry. The United States, with its massive infrastructure bill, aims to increase investments in clean production, in addition to slowing down inflation, with the goal of reducing emissions. Germany, on the other hand, has a €212 billion climate and transformation fund for the years 2024–2027, which also supports the industrial green transition.

In Finland, similar measures supporting industrial companies have been scarce compared to European countries. In the current business environment, it is noteworthy that the green transition is initiating a wave of investment globally that will renew industry.

– This is a competition for the best business environment, i.e., which country attracts green investments and jobs, says Mika Aalto, CEO of the Chemical Industry Federation of Finland.

The current government should make every effort to keep Finland’s business environment vibrant and attractive for industrial investments. The acceleration of the green transition must continue resolutely.

Labor Peace Legislation is Finally Being Reformed

The government is planning good and long-awaited changes to labor peace legislation. The Chemical Industry Federation of Finland welcomes the fact that legislation from 1946 is finally being reformed. In Finland, the collective bargaining system is based on certain principles, the most important of which is that employers purchase industrial peace for the duration of the agreement period through collective agreements.

When collective agreements are in force, all labor actions that affect the collective agreement are prohibited. Engaging in labor actions during this time constitutes an illegal strike. The penalty for labor actions is a compensatory fine in the Labor Court.

The government’s labor peace reforms focus on three types of strikes: illegal strikes, support strikes, and political strikes. The maximum compensatory fine for illegal strikes is set to increase to €150,000, with a minimum of €10,000. There will be a €200 penalty for employees who continue an illegal strike. Changes are also coming for support strikes and political strikes.

The Chemical Industry Federation of Finland considers illegal strikes particularly harmful, as they can cause companies damages in the millions. The methods used by labor unions to monitor labor peace during the agreement period vary from assertive to completely indifferent. The current low compensatory fines are one key reason for the occurrence of illegal strikes. Hopefully, the reform of labor peace legislation will bring about a change in this regard.

– In Finland, the majority of labor actions are illegal every year, whereas in Sweden, there are almost none. Unfortunately, illegal strikes have become a “custom” in Finland over the years, says Minna Etu-Seppälä, Director of Labor Markets at the Chemical Industry Federation of Finland.

Limiting political labor actions and support strikes, as stated in the government program, is already commonplace in many European countries. The credibility of our collective bargaining system requires that our labor peace legislation is finally brought into the 21st century.