The Health Impact of Restructuring on Public sector employees and the role of social dialogue (HIRES.Public) FINLAND national sectoral trajectory report: Local government (2 1.12.2010) 1. Background to the sector Local government as a part of the public sector In Finland, the public sector comprises central (state) government and local (municipal) government, and the Church as well as social security funds. Basically, the public administration is organised by two tiers of government, the central government and the municipalities. Due to the intense decentralisation and a single tier of local government, the Finnish municipalities bear a heavy burden of tasks. Municipalities are responsible for providing social welfare and health care services as well as most education and culture services. In addition, municipalities provide the basic environment and technical infrastructure services. (Moisio et al. 2010) Central government and its duties Central government operations are associated with the provision of important and indispensable services in the social, business and civic services sectors. The largest personnel groups under the State s on-budget entities are defence services personnel and those employed by universities. On-budget government agencies and departments, their duties, operations and personnel have undergone significant changes over the past two decades. The number of employees has been reduced from over 215,000 employees in 1988 to slightly below 124,000 in 2009. Most of this decrease is due to converting government agencies and departments into unincorporated state enterprises, incorporated state companies and municipal companies. Public services provided by local government At the beginning of year 2010, there were 342 municipalities and 150 joint authorities. Municipalities may set up a joint authority for any service they desire, but membership of a joint authority is compulsory for specialized health care (hospitals) and regional councils. The joint authorities usually organise basic health care because small municipalities are too weak to arrange health care alone. Joint municipal authorities are also common in education. The 19 regional councils are responsible for regional development and supervision of the interests of regional players. Each municipality is led by a town manager or municipal manager who has been appointed to a public service employment relationship by the municipality. Members of the municipal board and the municipal council are political decision-makers elected through local elections. Finnish municipalities are self-governing entities by constitution. But despite their self-governing status, the provision of many public services has been delegated from central government to the municipal sector in Finland. And because a number of municipal tasks are regulated in detail by central government legislation, the municipalities may have little or no room to maneuver independently. In practice, it is often only the wealthiest municipalities that can afford to provide services above the set standards.
Due to the many tasks assigned to municipalities, the overall economic importance of the municipal sector is considerable. Municipality spending as share of GDP is around 18% and municipalities employ roughly 20% of the total Finnish workforce. The municipalities provide basic public services for their inhabitants. They may provide statutory services themselves, through cooperation in the form of joint authorities comprising other municipalities or by outsourcing services to other local government or private sector operators. One fifth of the employed workforce (33% of the women and 9% of the men in the employed workforce) is employed by the local government sector. The number of local government personnel has more than doubled over the past thirty years. This increase, particularly in the 1 970s and the 1 980s, was due to increases in statutory welfare services. The size of local and joint authorities as employers varies a lot. Three-quarters of municipal employers do not employ more than 500 people. The biggest employer is the City of Helsinki with some 36,000 employees. More than 80% of all local government personnel work in the health care, social services or educational sectors, providing statutory basic local government services. Key areas in social services include children s day care, care for the elderly and social work. Health care covers specialized hospital care, primary health care, dental care and environmental health care. Ageing of the population will increase the need for health care services and care for the elderly. Education covers comprehensive schools, upper secondary schools, vocational training, polytechnics and libraries. Municipalities also have museums, theatres and orchestras. The local government services sector is extensive and comprises more than 5,000 different occupational titles. The most extensive occupational groups are registered and practical nurses and comprehensive school teachers. Lack of personnel in public sector The ageing of the labour force (in general, and particularly amongst employees in the local government sector where a third is retiring in next ten years) and falling employment rates have forced the Finnish policy makers to find means of increasing the well-being of older workers and of lengthening their work careers. The proportion of municipal employees in Finland who have postponed their exit from work has increased since the pension reform in 2005. Almost a quarter of those who retired on an old-age pension in 2007 had delayed their exit from the labour market, and each year some 3,000 public sector workers at municipal level are still working even after retirement. As the issue of prolonging work careers is a high priority for the government, it is important to take measures to ensure the well-being of workers. In the public sector, a clear increase in exhaustion among workers has been reported since the recession of the 1990s (Lehto & Sutela 2009). During the 1990s the negative development involved mainly amongst local government employees. However, the 2008 survey shows that, over the past decade, the central government sector has also been affected. The central government sector is currently also affected by time pressure, lack of personnel, insecurity about the future, lack of access to information and lack of openness. These factors have traditionally not been considered as big a problem in the central government sector as they have been in the other sectors of the economy. Work-related immigration to Finland is still small and finding any work is a major obstacle for immigrants integration into Finnish working life, especially for those with a refugee background. Insufficient knowledge in Finnish language, difficulties in the recognition of foreign educational qualifications and the lack of workrelated guidance given in the non-national employees own language can be considered as the main obstacles for the occupational development and career advancement of non-national employees in Finland. Good practices to support migrant workers careers are still being developed.
The Association of Finnish Local and Regional Authorities (Kuntaliitto) has recommended that the work-based immigration is striven to promote. Table 1. Employees in the local government sector Local government sector 2005 2009 Number of employees 422,000 433,000 Of total workforce, % of municipal employees 20.1% 20.8% Of monthly salaried, permanent employees 74.2% 77.6% Of monthly salaried, fixed-term employees 23.7% 21.0% Temporary employees under the government employment scheme 2.1% 1.4% Of total personnel, % of women 78% 79% Average age 45,0-year 45,5-year Source: KT Commission of Local Authority Employers (link: http://www.kuntatyonantajat.fi/index~id~3c33ae32dc744d87ab4abc847a5c107d.asp ) Despite the fact that a proportion of fixed-term contract has decreased and respectively a proportion of permanent contract has increased from mid-2000s, a proportion of fixed-term contract is about two times higher in the local government sector than private sector. According to Statistics Finland (Income Level Index, last quarter of 2009), the average salary of monthly salaried permanent employee was 2,703/month in local government sector. In the private sector the corresponding amount was 3,124/month and in the central government sector 3,313/month (the average income of all employees was 3,004/month). Table 2. Income level of wage and salary earners Index of wage and salary earnings Annual change, % 2005 = 100 Nominal Real 2006 2007 2008 2009 2006 2007 2008 2009 2006 2007 2008 2009 Total 102,9 106,4 112,3 116,8 2,9 3,4 5,5 4,0 1,3 0,9 1,4 4,0 Private sector 102,9 106,3 112,0 116,5 2,9 3,3 5,4 4,0 1,3 0,8 1,2 4,0 Local government 103,0 106,9 112,8 116,8 3,0 3,8 5,5 3,5 1,4 1,2 1,3 3,5 Central government 103,2 106,6 114,6 120,8 3,2 3,2 7,5 5,3 1,6 0,7 3,3 5,3 Males 102,9 106,3 112,0 116,1 2,9 3,3 5,4 3,7 1,3 0,8 1,2 3,7 Females 103,0 106,5 112,4 117,1 3,0 3,4 5,6 4,2 1,3 0,9 1,4 4,2 Source: Statistics Finland, Wage and salary statistics 2010 As the table 2 shows, despite the economic crisis, especially the year 2009 meant a clear increase in both nominal and real earnings of employees. The sectoral wage bargaining round 2007-2010 was very favorable particularly to employees in the public (central and local government) sector. Collective agreements offered even pay increases of about 11% for most workers over the 28-month period (1.10.2007 31.1. 2010). These
pay rises included an equality allowance of 2% earmarked for qualified employees in female-dominated occupations, such as in care, social welfare and nursery schools. Of this 2% increase, 1.5% has been allocated to low-paid employee groups according to a national allocation agreement, while the remaining 0.5% has been allotted to employees at local government level. The equality allowance varies according to the proportion of female employees and level of education among workers in these occupations. 2. Outline of the types of restructuring taking place in the sector As a result of the crisis of early 1990s and the reforms that followed, modernization and implementation of new market-oriented mechanisms took place in the municipalities. The market-orientation was brought into practice by outsourcing, service-provider splitting, incorporating public utilities, competitive tendering in procurements, public-private partnership models and privatization (Niemi-Iilahti 1995, 272 275). When Finland became a full member of the EU in 1995 municipalities had to change certain practices. Due to membership, Finnish legislation was harmonised with EU legislation and directives. For the municipal sector this meant that some monopolies operating as producers of local government services had to be opened to competition, and that public procurements had to be subjected to competitive tendering rules. During the 2000s, one of the most important ways of restructuring in the public sector is related to a change in the societal division of labour between the public, private and third sector. That has been manifested in the structural change in Finnish welfare society and is guided by the New Public Management (NPM) doctrine, which for stresses market logic in organisation s activity. This has meant that the private and third sectors have been taking more responsibility for providing services and production that used to belong to the public sector, which on the other hand pushes public sector employees to start working as self-employed persons and subcontractors. The structural reform project (PARAS) The Finnish government launched a local government restructuring project in 2005. The main goal of the project was to create bigger municipalities or enhanced cooperation of municipalities. The project aims to achieve economies of scale and sound capacity in the municipalities to provide services. Bigger municipalities and intensified municipal cooperation are expected to help the municipalities to cope with growing demand for the municipal services (especially the demand for health care and elderly care services) due to the rapidly aging population. As a follow-up to the restructuring project, the Structural Reform Act was enacted in 2006. According to this Act, municipalities are obliged to prepare plans to reach the predetermined minimum population bases for different activities defined in the Act. In primary health care and associated social services, municipalities should reach a population base of at least 20,000, and in vocational basic education a population base of 50,000. In 2010, only a quarter of health centers had a population base of more than 20,000. Some flexibility is allowed based on archipelago environments, long distances and language and cultural rights. Municipalities have been free to decide whether they reach the minimum population bases with mergers or with enhanced cooperation. In cases where a partnership area is formed, a new joint municipal body must be established for the management of the relevant tasks. The Finnish future is overshadowed by the fact that in the near future Finland will have the most unfavorable dependency rate of all EU-countries. This means that in a very short time-span, a huge part of the workforce will be pensioned, and Finland will experience serious shortages of labour. Finland has not been in a favorable position to tap into immigration, both because of geography and a path dependency of a tight immigration policy (Finland has the lowest foreign population of the entire EU, about 1.2%).
Concerning organizational change and restructuring, there are several laws related to employees' rights. The Finnish Ministry of Employment and the Economic (TEM) has organized special services to make sure that employees' situation during the organizational change is secured. Also the labour market parties in Finland decided in 2005 to implement "change security" model during restructuring. The aim of this reform was to speed up re-employment of redundant employees. At the same time, there are systems which support early retirement. One major reason why elderly employees in Finland quit working due to restructuring situations is the so called "unemployment pension tube" system. This system offers elderly employees a possibility to retire earlier, which they often use. Recently, this system has been made stricter and only those long-term unemployed born before year 1950 can apply for unemployment pension. However, one of the challenges of the system is how to make sure that all those elderly employees who use it, do it voluntarily and not because they feel pressure for example from their workmates. Due to privatisation, outsourcing of labour and market-oriented mechanisms, one of the most challenging problem in the local government sector is the fact that there are increasing number of those (for instance temporary agency workers, self-employed and those working under the commission agreement) who are not within the sphere of negotiations and within the taking care of employees interest organized in a work place. 3. Outline of the main forms of social dialogue in the sector The Finnish labour market negotiations have been largely based on a tripartite system. This means cooperation and negotiations among employer organizations, the trade union movement and the government. Pay, working hours and other terms of employment relationships have been agreed on in sector-specific negotiations between employer and employee organizations. Collective agreements determine the terms of employment relationships in the public sector. The agreements are usually valid for one or two years. In the public sector, an important part of workplace-level bargaining is negotiations over the requirements of each job and over the individual competence of workers within these positions. This is being done as part of a major reform of pay structures in the public sector, which is nearing completion in the state sector and mostly forthcoming in the municipalities. Through the reform, pay levels are increasingly made to reflect variations in productivity levels between workplaces and between individual employees. There are five major collective agreements in the local governmental sector. About 70 % of the personnel are covered by the General Collective Agreement, for example registered nurses and kindergarten teachers. Teachers, physicians, technical personnel and hourly-paid employees each have their own agreements. In the municipal sector the employees union density is 88 %, and also non-unionised employees fall within the scope of agreement application. In the public sector at municipal level, according to the Act on the Municipal Collective Bargaining Agreements for Civil Servants (669/70), the negotiating parties are the Commission for Local Authority Employers (Kunnallinen työmarkkinalaitos, KT) and organisations representing municipal employees with whom KT considers it appropriate to conclude a collective agreement. Principal negotiating organizations in the trade union s side are: The Union of Local Government Employees (Kunta-alan unioni) represents JHL and Jyty The Negotiation Organisation for Public Sector Professionals (JUKO representing for instance OAJ) The Negotiating Organisation of Salaried Employees (TNJ) The Confederation of Employees in Technical and Basic Service Professions
At the local representativeness level concerning social dialogue, the Finnish model means cooperation bodies with the representatives of aforesaid organisations. So, the social partner organisations are important players also at the local level cooperation and social dialogue. 4. Outline of health risk management in the sector New Change Security Model At the beginning of 2005, structural reforms were implemented regarding public labour force services where the activities of employment offices, the Social Insurance Institution of Finland as well as municipal social welfare offices were reorganised. The main goal of the reforms was to reduce long-term unemployment by increasing the amount of individually-oriented active measures and by improving the traditional labour force guidance provided by employment offices geared toward the open labour markets. Overall, the new change security model (muutosturva) extends employees right to individual re-employment programmes, drawn up by state employment offices. The main aim of this new model is to increase cooperation both at workplaces and with the labour authorities, as well as to enable redundant workers to find alternative employment as swiftly as possible. Thus, the model means improved employment services for persons facing unemployment caused by competition reasons or reasons related to organisation. Increased unemployment benefits are also available on certain conditions. The maintenance of work ability (MWA) is a Finnish concept more or less similar to the internationally better known term of workplace health promotion. According to the Finnish Institute of Occupational Health (FIOH), MWA refers to joint measures taken by employers, employees and workplace organisations in order to promote and support the work ability and functioning capabilities of all workers at every stage of their careers. The social partners gave a recommendation for MWA activities in 1989. In 1999, the Advisory Board for Occupational Health Services of the Ministry of Social Affairs and Health defined that...the central goals in the practical measures taken at a workplace to maintain employees work ability are development of work and the work environment, improvement of the work community and work organisation, and promotion of the employees health and professional competence. The point of departure is that all parties of the work community and workplace commit themselves to, and participate and co-operate in, as well as have a possibility to influence the measures taken at the workplace within occupational health and safety work or other activities aimed at the promotion and maintenance of work ability... In local government sector an interesting example is the Raisio study which has found that that major downsizing was associated with a significant twofold increase in medically certified sickness absence among employees. The risk of long-term sick leave after downsizing was especially high for the older employees, employees with a tendency towards hostile reactions, employees with a higher income, and employees in large work units. The risk of health problems, as indicated by musculoskeletal problems and poor self-rated health, was at least two times greater after major downsizing than after no downsizing. Half of this excess risk was attributable to an elevated level of work stress after major downsizing. The findings of the widely known Finnish 10-Town study (Kuntakymppi) have confirmed the same kinds of result for sickness absence. This Finnish 10-Town study has also showed that cardiovascular mortality was similarly twice as high after major downsizing than with no downsizing. (see Vahtera et al. 2004). Researchers (Vahtera, Kivimäki & Forma et al 2005) found that, not only people (a total number of 19,273 participants aged 21 54 years in the study) who lose their jobs, but also those who remain in work after downsizing may be at increased risk of being granted a disability pension. A study found an almost twofold risk of disability retirement below 55 years of age among people who remained in employment after major downsizing. Furthermore, downsizing was associated with increased risk of disability pensioning attributable to physical
illness, such as musculoskeletal disorders. Instead, no association was found between downsizing and psychiatric diseases. Research-group (Kivimäki et al. 2007) has also found that employees who were exposed to downsizing but kept their jobs were at a higher risk of being prescribed psychotropic drugs than those not exposed to downsizing. The Finnish Centre for Pensions (Eläketurvakeskuksen tutkimuksia 2/20 10; Tuominen et. al 2010) released a research report in 2010 involving three articles which main focuses are working conditions and continuing at work (Työolot ja työssä jatkaminen). In the article on the long-term trends of the working conditions in the municipal, government and private sectors in 1984 2008 (Työelämän pitkät linjat kunta, valtio- ja yksityisaloilla vuosina 1984 2008), sector-specific information on working conditions and their changes is presented. According to the researcher, the special challenges of municipal work include a hectic working pace and mentally and physically demanding work. Nevertheless, municipal work also has its strengths. Municipal employees appreciate their work to a slightly higher degree and experience it as less monotonous than employees in the other sectors do. Uncertainty at work has been lesser in the public sector than in the private sector, where the threat of dismissal is larger. 5. Highlight good practices in health risk management and restructuring in the sector Towards Successful Seniority group method The Towards Successful Seniority group method was developed in the Finnish Institute of Occupational Health (FIOH) to promote career management preparedness, work ability and mental health among employees in changing organizations (Vuori, Toppinen-Tanner, & Mutanen, 2010). The proximal aim of the method is to strengthen employees' preparedness for their own career management in an increasingly unpredictable career environment. The intervention was carried out in 17 work organizations, mostly in municipalities, but also in private sector. The activities during the 20 hour intervention comprised topics such as identifying own interests and skills, lifelong learning, managing organizational change, getting social support, managing conflicts, career management, and committing to a concrete career goal. In all content areas, self-efficacies and inoculation against setbacks were enhanced 1) by identifying work life goals and barriers, 2) identifying solutions to them, and 3) by practicing these solutions in small groups. The immediate impact was a significant increase in career management preparedness among the group participants compared to controls. Work life goals and intrinsic motivation towards these goals increased significantly among group participants. The follow up after seven months showed that the intervention significantly decreased intentions to retire and symptoms of depression, especially among those participants who were in risk of depression at baseline. This study demonstrates that employees preparedness to manage their work career can be strengthened with resource-building group interventions in the changing work life. A general aim of the method is to provide tools to work organisations for primary prevention on individual level by combining the knowledge bases from occupational health services regarding stress and health, and from human services management regarding occupational competencies and work careers.
The role of KEVA in health risk management The Local Government Pensions Institution (KEVA) takes care of the earnings-related pension cover of the employees of Finnish local governments and the Evangelical Lutheran Church of Finland. Recently, the services Of KEVA are aim to improve employyes possibilities to continue at work in the situation where the employee s capacity to work has decreased. The main tool is the Vocational rehabilitation is meant for those employees who are threatened by incapacity to work due to health problems. The aim is for the employee to continue to work performing tasks better suited to his or her work capacity or return to work after a long sick leave. An important element of the vocational rehabilitation is the close cooperation between the occupational health care, workplace (employer) and the Employment and Economic Development Office. References Kivimaki M, Lawlor DA, Davey Smith G, et al. Socioeconomic position, co-occurrence of behavior-related risk factors, and coronary heart disease: the Finnish Public Sector study. Am J Public Health. 2007; 97:874 879. [PMC free article] [PubMed] Lehto, Anna-Maija and Sutela, Hanna, Three decades of working conditions, Findings of Finnish Quality of Work Life Surveys 1977 2008, Helsinki, Statistics Finland, 2009. Moisio, Natti Loikkanen, Heikki A. & Oulasvirta, Lasse (2010): Public services at the local level - The Finnish way. Government Institute for Economic Research, VATT Policy Reports 2/2010. (link: http://www.vatt.fi/file/vatt publication pdf/valm.rap.2.pdf ) Niemi-Iilahti Anita (1995): The structure and finances of Finnish local government in European perspective. Finnish Local Government Studies, no5/1995. Statistics Finland (Tilastokeskus), Wage and salary statistics 2010 (link: http://www.stat.fi/til/pal en.html ) Vahtera J, Kivimäki M, Pentti J, et al. Organisational downsizing, sickness absence, and mortality: 10-town prospective cohort study. BMJ 2004; 328:555. Tuominen, Eila & Mervi Takala & Pauli Forma (toim.): Työolot ja työssä jatkaminen. Eläketurvakeskuksen tutkimuksia 2010:2 KT Commission of Local Authority Employers (link: http://www.kuntatyonantajat.fi/index~id~3c33ae32dc744d87ab4abc847a5c107d.asp )