The Creation of Minimum Wage in Finland

Finland is finally discussing the creation of minimum wage regulations since sector specific minimum pay regulations have not existed in the country, which creates both more opportunities and risk for employees in the country. Since the 1970s, Finland has utilized collective bargaining practices in order to negotiate wage agreements. This has been the case both on a national level, as well as on an industry specific level.

By introducing minimum wage requirements, employees and employers are concerned that this will weaken the overall collective bargaining system currently in place in the country. Opposing arguments however suggest that the generation of a set minimum wage creates a safety net for employees, as employers cannot offer extremely low wages.

Studies show that over 90% of workers in Finland are regulated using some form of collective bargaining agreements to determine the employment conditions of the nations workers. Within these agreements are some recommendations for minimum payable rates across a variety of sectors. The issue however, is that these minimum payment rates are not regulated across the country or within each employment sector. Those in favor of maintaining the collective bargaining agreements have countered with proposed arguments for creating national and industry specific minimum wage requirements on the basis that these regulations would create an employment condition where the employees had less power over their terms of employment.

Finland is a country where employees have relatively high labor security, especially in comparison to other countries around the world with no set minimum wages. Therefore, those in favor of maintaining the current methods of using the collective agreements believe that the argument towards increasing the safeguards for employment conditions are moot, since a majority of the employees already receive highly safeguarded employment opportunities.

The implementation of a government mandated minimum wage would undoubtedly change the state of the entire nation. Scandinavian countries may not be as socialist as once perceived. Instead, countries in this region – including Finland – are based on free market economies.

While Scandinavian countries were considered extremely wealthy during the late 19th and early to mid 20th century, the late 20th century began to paint a different picture for this region. With these facts in mind, why would it make sense to follow the same collective agreement practices that were followed decades ago if the entire economic structure of the country is completely different than it was when the concept of collective agreements were originally created? As Finland is now considered a welfare state, it is reasonable to assume that changes in how employees are paid should be made in order to adapt with the changing policies and structures of the government as a whole. It will be interesting to see in the near future if the employees of Finland will be paid based on created minimum wage structures, or if the collective agreement policies will continue to persist for years to come.

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