Collective agreement negotiations – what is it all about?
In collective agreements, employee and employer organisations negotiate various working-life provisions that have not been laid down by law.
A collective agreement is a contract that defines the terms of work between the employer or employers’ association and the representatives of the workers, i.e., the trade union.
The purpose of the collective agreement is to agree on the basic aspects of the employment relationship, such as wages, working hours, holidays, sick leave, notice period, and other rights and benefits. The collective agreement is part of labour legislation and is supplemented by the Employment Contracts Act, which is a general law for all employment relationships. The collective agreement aims to safeguard the rights and benefits of workers and promote industrial peace and cooperation in workplaces.
The negotiation process
Collective agreement negotiations are a process in which the parties aim to agree on a new or revised collective agreement. Negotiations can last for weeks or months depending on the negotiation atmosphere and the number of disagreements. Negotiations consist of several stages, such as preparations, initial negotiations, sector-specific negotiations, main negotiations, and final settlement.
If the negotiations do not produce a result and the parties do not reach a consensus, they can resort to industrial action, such as strikes or blockades. These are legal means to pressure the opposing party to accept their own demands.
What is a General Pay Increase?
Collective agreement negotiations reach agreement on general pay increases for all employees. Achieving pay increases is almost always the result of difficult negotiations. Individual employees do not need to participate in these negotiations. Instead, the unions negotiate on their behalf.
If an employment relationship is not governed by a collective agreement, general pay increases are not automatically applied. However, an employer may choose to grant the increase or otherwise raise wages at their discretion.
General pay increases play a crucial role in ensuring wage growth and maintaining employees’ purchasing power, even in the face of rising prices or taxes. Without a general increase—or at least an individual pay rise—real earnings would start to decline.
Even small annual increases add up to a significant boost in earnings over time.
More information
Public sector
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Arja Varis
Advocacy director
Universities
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Maija Holma
Chief negotiator
Private sector
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Aaro Riitakorpi
Public affairs manager, chief negotiator