Government proposal for an act amending the Act on Mediation in Labour Disputes is contrary to the objectives of the Constitution of Finland and the Equality Act (VN/30511/2023; TAS/365/2024, issued on 11 July 2024)
The Ombudsman for Equality commented on the proposal for an act amending the Act on Mediation in Labour Disputes. The Ombudsman for Equality does not support the proposed changes in any respect.
The stated purpose of the Government proposal is to promote the functioning of wage formation in the labour market, as well as favourable economic and employment development. The proposal seeks to establish in law the commitment of the National Conciliator and Conciliation Board to the so-called export-driven labour market model. However, the actual effect of the proposal would be to increase the gender pay gap in the labour market.
The section of the proposal concerning gender impact must be considered regrettably limited. The proposal essentially states that, because the labour market is so segregated, any labour market reform will have gender implications. However, the proposal does not assess what these implications would be for the present law – and whether they are acceptable in the light of the objectives being pursued.
In Finland, the labour market and its sectors are divided along gender lines between women and men. The gender pay gap in Finland is higher than the European average, especially between female- and male-dominated sectors. Pay rises above the general level in female-dominated sectors would be a necessary tool in the quest to achieve equal pay.
Equal pay is a matter of fundamental and human rights. The State must take responsibility for the effective implementation of equal pay. The Ombudsman for Equality stresses that the powers of the National Conciliator and Conciliation Board should not be limited in such a way that the National Conciliator cannot also propose higher pay increases than the general level, in female dominated sectors.
The proposed regulation would not only accentuate the current gender pay gap, but also widen it further. The "general level" of contractual solutions has been defined as a cost impact based on percentage. ,A similar percentage increase in costs between higher and lower wage sectors will actually lead to an increase in the wage gap in euros between sectors. Each round of percentage-based pay rises will then increase the gender pay gap, with higher pay in the male-dominated sectors.
The proposal as a whole contrary to the objectives of the Constitution of Finland and the Act on Equality between Women and Men
The Ombudsman for Equality considers that the Government proposal as a whole is contrary to the objectives of the Constitution of Finland and the Act on Equality between Women and Men (Equality Act). According to section 6, subsection 4 of the Constitution of Finland, gender equality is promoted in the determination of pay and the other terms of employment. This obligation specifies the general obligation of public authorities to guarantee the observance of basic rights, as laid down in section 22 of the Constitution. The purpose of the Equality Act is to improve the status of women, particularly in working life, as stated in section 1 of the act. Section 4 of the Equality Act in turn imposes a more specific obligation on all authorities to promote equality, which also falls on the National Conciliator and Conciliation Board. The explanatory memorandum of the act must indicate how gender equality and the obligation to promote equal pay will be taken into account in the implementation of the act and in the work of the National Conciliator. These things are missing from the explanatory memorandum of the act.
The Equality Act also obliges every employer to promote gender equality in a targeted way. It can not be thought that employers are exempt from the obligations of the Equality Act, and in particular from promoting the purpose of the act, by organising themselves collectively to negotiate terms and conditions of employment as an employers' federation.
The proposal is built around so-called "public interest". In the view of the Ombudsman of Equality, the "public interest" cannot be defined only from a narrow economic perspective. The proposal talks about sustainable solutions, but it cannot be considered sustainable if the gender pay gap is not closed. Public interest must also take into account aspects such as welfare, the promotion of equality and respect for basic rights. The Ombudsman for Equality stresses that discriminatory structures do not serve the interests of the national economy either.
The proposal briefly states that the proposed regulation could lead to the negotiating parties drafting an agreement outside the mediation system. If it were only possible to achieve higher pay rises than the general level in female-dominated sectors outside the mediation system, the system would not be effectively available to all sectors. The pressure to avoid resorting to a conciliator would effectively limit the use of the threat of strike in female-dominated sectors, as the threat of strike automatically leads to the intervention of the National Conciliator. This would make it more difficult to develop working conditions in female-dominated sectors, such as health and social services, where there are labour shortages.
According to the proposal, mediation activities are limited by the functioning of the labour market, the sustainability of the national economy, competitiveness and public finances. The Ombudsman for Equality notes that these concepts are broad and ambiguous. Similarly, "increased flexibility" in the labour market may in practice mean, among other things, making it more difficult to reconcile work and family life, which in turn would be detrimental to the accessibility, attractiveness and equality of the labour market, and contrary to employers' obligation to promote equality under the Equality Act.
The proposal also has other negative effects on the promotion of equality. The proposal is likely to undermine the parties confidence in the agreement system and, at the same time, the effectiveness of the mediation system. In this respect, the proposal would appear to contradict the objectives of the stability and efficient functioning of the labour market, which it aims to achieve. General uncertainty in the labour market is undermining effects to improve the position of women in the world of work.
If the Government submits the proposal to Parliament, the Ombudsman for Equality considers it essential that the proposal takes into account in greater detail the obligations of international and EU-level regulation and the feedback received about it. The proposal must then be developed not only from the point of view of the right to organise, but also from the point of view of equality and the prohibition of undermining basic and human rights. It is also necessary to add to the proposal a statement to the effect that the proposal must be assessed by the Constitutional Law Committee.
11 July 2024
11.07.2024
