The purpose of this blog is to provide analytical commentary on formal and informal labour organisations and their attempts to resist ever more brutal forms of exploitation in today’s neo-liberal, global capitalism.

Friday, 15 February 2013

Globalisation and the erosion of the Nordic model

In 2007 the Finnish employers’ confederation withdrew from the comprehensive tripartite, multi-sector bargaining system, a step which had been taken by the Swedish employers’ federation 17 years earlier. In Sweden, it signalled to some extent the demise of the so-called Swedish model. In Finland, by contrast, Finnish employers organised in EK and here especially the Federation of Finnish Technology Industries, which represents Finnish export companies, did not succeed in enforcing company level bargaining and, thus, more flexibility in wage structures. Instead, a sectoral collective bargaining system, giving sectoral trade unions significant power, was established. How can we understand this failure in comparison to the more successful attack of the Swedish employers in the 1990s? In this blog post, I will argue that the far lower degree of transnationalization of production in Finland explains to some extent why the attack on the established class compromise happened much later than in Sweden and has been less successful. Nevertheless, I will also conclude that trade unions must remain vigilant in their protection of the welfare state as further attacks are likely.

Photo by Christopher Neugebauer
The step to withdraw from the class compromise by Swedish employers in 1990 came against the background of their sustained opposition to the Swedish model since the mid-1970s. When the Social Democrats together with trade unions pushed for wage-earner funds, which would have given trade unions control over investment in large Swedish corporations, employers had started a strong pro-market campaign. This was supported throughout the 1980s with a considerable shift of production abroad to counter the Swedish government’s hesitation over EU membership. In order not to be excluded from the Internal Market, companies decided to move their production to locations inside the EU. However, it would be wrong to argue that it was only the employers, which had contributed to the demise of the Swedish model. Social Democratic governments throughout the 1980s had started to implement neo-liberal restructuring. Most importantly, this involved the deregulation and liberalisation of financial markets, depriving the state of crucial tools of economic sovereignty. Swedish trade unions too had played a role. In 1983, the Swedish Metalworkers’ Federation undermined labour solidarity by agreeing on a separate wage deal with the employers of their sector. Divisions over EU and EMU membership in the 1990s further weakened labour unity. Can we identify similar developments in Finland?

Photo by the_girl
Comparing the Finnish and Swedish production structures, it is noticeable that the former is much less transnationalised. While inward FDI stocks as a percentage of gross domestic product were 76 per cent in Sweden in 2010, they were only 34.6 per cent in Finland. The figures for outward FDI stocks as a percentage of gross domestic product are 73.2 per cent and 54.7 per cent respectively (Bergholm and Bieler 2013: 7). In contrast to Sweden, Finnish production with the exception of Nokia is not characterised by the dominance of large transnational corporations. The way Finland is most closely integrated with the global economy is through the country’s focus and dependence on exports – Finnish exports account for 40 per cent of Finland’s GNP – and this requires to some extent also the co-operation by trade unions in the organisation of the national political economy. Export-oriented Finnish capital’s structural power has not yet been enough to pressure trade unions into accepting further decentralisation of collective bargaining.

Photo by Zache
Nevertheless, Finnish trade unions must not be complacent in their defence of the welfare state and working class achievements. When in opposition between 2007 and 2011, the Finnish Social Democrats adopted a leftist discourse, portraying themselves as the defenders of the Finnish welfare state. This should not make one overlook, however, that they had accepted neo-liberal economic principles in the 1990s and had been part of a large coalition government from 1995 onwards, which is credited with some of the most severe restructuring in the Finnish political economy. Back in power since 2011, again as part of a broad coalition, there is at least the danger that neo-liberal restructuring will continue in an incremental fashion as a result of consensus policy-making.

Trade unions too should not be too confident as a result of having been able to hold the employers to collective bargaining at the sectoral level. This very step has brought to the fore some tensions within the Finnish labour movement. While the Metalworkers’ Union, concerned about the competitiveness of the Finnish export industry, would have preferred to stick with multi-sector bargaining across the whole economy, public sector unions and private domestic service sector unions welcomed the decentralisation of collective bargaining to the sectoral level, as this would allow them to close the gender wage gap between their predominantly female members and male workers in export manufacturing (see also Finnish trade unions in changing times – Part I). Similar tensions can be identified over employer pressures towards privatisation of the public sector. While public sector unions and blue-collar trade unions more generally oppose this attack on the public sector, white collar-unions especially in the export sector are much less concerned. 

Photo by hugovk

In October 2011, the Swedish employers’ confederation EK and the trade unions, with the strong support of the government, reached a national, multi-sector framework agreement on pay and conditions and several social reforms in areas including unemployment insurance and parental leave. Considering, however, continuing disagreements between employers and trade unions over how to implement key aspects of this agreement, the indications are that this reversal of developments will only be temporary. A re-emergence of full neo-liberal restructuring pressures is highly likely. Finnish trade unions must remain vigilant in their protection of the welfare state (see also Finnish trade unions in changing times – Part II). Trade union unity remains essential in Finland in order to resist neoliberal restructuring.

This blog post is based on the article

Bergholm, Tapio and Andreas Bieler (2013) ‘Globalisation and the erosion of the Nordic model: A Swedish – Finnish comparison’, European Journal of Industrial Relations, Vol.19.

Prof. Andreas Bieler
Professor of Political Economy
University of Nottingham/UK

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15 February 2013

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