The central government is the central government and the wellbeing services counties are the wellbeing services counties – and there is a reason why they are kept separate in labour market matters

“Trust in the Future” seems like a rather tragicomic title for the Ministry of Finance’s policy outlook. In particular, its proposal to raise the retirement age to 70 and beyond has caused outrage in public discussion. The fact is that there is no need to reform the employment pension system, and a proposal of this kind, aimed at balancing central government finances, will certainly not boost trust in the future. 

One might also question trust in the memories of public officials in central government, as now the public officials of the Ministry of Finance are proposing that Local Government and County Employers (KT) be placed in the central government’s pocket: 

“The Government Programme should set out how the central government’s capacity to influence contractual arrangements in the wellbeing services counties will be strengthened, bearing in mind that the funding of the wellbeing services counties is largely based on central government funding.”

There are clearly some gaps in the public officials’ memories: It was just under two years ago that the pay gap act was drafted in an attempt to reduce the powers of the National Conciliator, and during the preparatory work it became clear that the National Conciliator’s hands could not be strictly tied to any specific cost level for agreements imposed from outside. That includes a cost framework set by the central government. This was confirmed by the Ministry, and as a result, the legislation enacted does not correspond at all to the original, strict wording of the Government Programme, but instead allows the National Conciliator some leeway in certain situations.

That ill-fated legislation was justified by Petteri Orpo’s Government and the public officials who drafted it on the grounds that there would be no problem with regulating mediation, as “the parties retain contractual freedom.”

The Ministry of Finance has yet to say where this contractual freedom is to be found now. Where would the contractual freedom of the wellbeing services counties or the staff employed by them lie if the central government were also to dictate this matter? After all, what the “capacity to influence” mentioned in the Ministry of Finance’s policy outlook actually means is central government control.

The wellbeing services county model is based on regional self-government, which is strongly protected under the Constitution. That is how the model was sold to the public. That is the context in which county councillors are elected to exercise decision-making power; they are not elected to serve as puppets carrying out the Ministry of Finance’s directives or the decisions of the central government.

The current situation in the wellbeing services counties is not normal. There are major flaws in their funding, and these need to be rectified. However, stripping the wellbeing services counties and their elected county councillors of the power that rightfully belongs to them is not the way to go about this. Nor is destroying the strongly protected contractual freedom enjoyed by the labour market parties of the health and social services sector. In fact, it is neither permitted nor even possible to impose restrictions on this freedom, as has already been established in other legislation projects.

Re-widening the pay gap

The Ministry of Finance’s proposal reflects the strong desire once again to pin the blame for the problems in central government finances on the pay growth of health and social services professionals.

It is therefore worth recalling what the 2022 pay settlement was all about: Pay growth in the public sector (local government) had generally lagged behind the private sector for decades, as clearly shown by Statistics Finland’s index of wage and salary earnings from the mid-1960s onwards. At the same time, job responsibilities and training requirements in the health care sector had increased significantly, as a result of which wages in the sector were no longer at a level that they should be at in this day and age. These issues needed to be resolved, and indeed they were resolved through negotiations and by reforming the pay systems.

Now that substantial progress has been made to close the pay gap through agreements concluded by Tehy and Super, the Ministry of Finance is suddenly in a hurry to put new structures in place to ensure that the pay gap widens again. Everyone, including us, understands the difficult state of central government finances and how it affects the wellbeing services counties, but that does not justify just anything.

No one wants to go back to comprehensive incomes policy settlements, and the Ministry of Finance’s proposal for the central government to take control of the terms and conditions of employment in the wellbeing services counties is not feasible. 

We do agree with the public officials in central government on some issues: the funding model for the wellbeing services counties needs to be reformed, and that is a task for the decision-makers. However, the reform must be carried out in such a way that it enables the wellbeing services counties to carry out their duties properly and ensures that all parties enjoy the rights to which they are entitled. The trust in the future that the Ministry of Finance is calling for also requires trust in that everyone will stick to their own remit.

Here at Tehy, we have plenty more ideas on how to improve the situation in the wellbeing services counties, as presented in our Government Programme objectives (page in Finnish).