Back

IDICT: Seminar "Globalisation, Competitivity and Collective Bargaining" on 8.-9. November 2000

Tuomo Alasoini

Modernisation of Organisational Practices and Industrial Relations in Northern Europe

 The Case of Finland
  October 2000

This paper examines modernisation of organisational practices and industrial relations in the context of Northern Europe and with special reference to Finnish experiences. After a brief introduction to the new discourse on the transformation of working life, the author presents empirical evidence on the characteristics of successful enterprises. Section 3 of the paper looks at the diffusion of new organisational practices in Europe, presenting also empirical material on Finland. Sections 4-6 give an overview on the infrastructure for workplace change in Finland, focusing on the role played by the system of industrial relations, working-life research and development, and governmental workplace development policy.

1 The transformation of working life – a brief introduction to the new discourse

In recent years, there has been many attempts to capture theoretically the main characteristics of the transformation of working life. Theoretical concepts built for this purpose include, among others, industrial vs. post-industrial or information society, Fordism vs. post-Fordism, mass production vs. flexible production or specialisation, and organised vs. disorganised capitalism. Globalisation is the driving force of transformation in all these dichotomies. It is closely linked to certain trends in the structure of production and the economy on the whole, such as

• Knowledge is becoming an increasingly important factor of production and the most sustainable source of competitive advantage for enterprises. The growing knowledge-intensity of production concerns all industries and obscures the traditional division between goods and services, or between manufacturing and service industries.

• The capacity of quick learning and continuous development is becoming an increasingly important success factor for individuals, for enterprises and even for entire societies.

• New information and communication technologies (ICTs) constitute the technological basis of the growing knowledge-intensity of goods and services and they are an important enabler of the improved learning capacity of individuals, enterprises and entire societies.

The changing context of international competition calls for new institutional solutions at national and regional level as well as new organisational solutions at enterprise and plant level. Discussion on the effects of globalisation so far has been dominated by a strong individualistic emphasis, which regards private enterprises operating in a free market economy as key agents of change. The role left for public authorities to play is to intervene in the operation of the market only in the case of visible market failures. Some other views have given public policies a more pivotal role to be played in building up an innovation system (especially R&D, education and training, industrial relations and financing systems), which advances and supports the development of corporate and entrepreneurial activities at national and regional level. Schienstock (1999), for instance, talks of the need to change over from traditional direct technology policy to conditions-enabling innovation policy (Table 1).

This changeover would mean that the legitimation of public policy intervention is not so much market failure, but weak performance of the market mechanism in terms of innovation in a much broader sense. Seeing public policy intervention through this framework would call for shift of the policy focus from technological innovations to organisational and institutional innovations. This is the line of argument we also follow in this paper.

Table 1. Direct technology policy and conditions-enabling innovation policy (Source: Schienstock 1999).

2 Characteristics of successful enterprises – empirical evidence

Various experts have tried to catch features characteristic of successful enterprises of the future in the form of concepts, such as the "high-performance workplace", the "flexible firm", the "learning organisation", the "high-involvement organisation", the "lean enterprise", the "value-adding corporation", the "knowledge-creating company", etc. There exists different analytic frameworks and normative assumptions in the background of these concepts. The views of these concepts on major characteristics of successful enterprises, however, are very similar. They emphasise the following characteristics, above all:

• multi-skilled employees with versatile job assignments;

• job rotation in support of professional and personal development;

• co-operative work practices based on teamwork, networks and the similar;

• empowering management methods and employee involvement;

• broad participation by employees in development activities;

• comprehensive production and development co-operation with other companies, customers and supporting institutions; and

• reward systems linked to skill, results and quality.

Applying single practices is not enough, because there are logical and systemic interdependencies between them. For instance, forms of working based on teams are not possible without empowering methods of management, job rotation supports multi-skilling, results-based payment motivates staff to participate in development activities, etc. It is possible that change strategies, which aim at improvements only in individual practices, can lead even to negative outcomes in company performance (Ichniowski et al. 1996; Whittington et al. 1999). More important than applying single practices is their internal fit within the enterprise. One should perceive enterprises as systems of interrelated practices and, hence, take a holistic and systemic view of the process of workplace change.

Even this is not enough. These practices must also be externally fit with the operational strategy of the enterprise (Huselid 1995). For instance, Taylorist and Fordist work patterns may be still very effective in stable production environments, in which the degree of variation and the demands for flexibility and continuous innovation are low. The principles of internal and external fit, and especially the latter, mean that, strictly speaking, there are no epistemological grounds for talking of "best practices". Empirical studies from the US, the UK, the EU Member States and the Nordic countries (Denmark, Finland, Norway and Sweden), however, support the conclusion that enterprises applying the above practices were more successful than other enterprises in the 1990s when measured by their financial or operational performance (Cully et al. 1999; Ichniowski et al. 1996; NUTEK 1999; Whittington et al. 1999). Fewer and fewer enterprises today operate in an environment where the old Taylorist and Fordist work patterns show their superiority.

The Finnish Flexible Enterprise Project, which was carried out as a survey and an analysis of longitudinal data of Finnish private-sector workplaces with more than nine employees, found that changes in the number of personnel from 1990 to 1996 were associated with several workplace-level factors, as shown in Table 2. Changes in the number of personnel were used as an indicator of workplace success in this study.

Table 2. Factors influencing personnel increases at Finnish private-sector workplaces from 1990 to 1996 (Source: Antila & Ylöstalo 1999).

A typical problem in surveys is that it is difficult, often even impossible, to draw valid conclusions on causality. Likewise, it is difficult to distinguish effects of the adoption of new organisational practices to performance or financial success from those caused by other factors. Least we can say is that between the new practices, on the one hand, and between them and workplace success, on the other hand, there seems to prevail a clear and consistent "virtuous circle" according to many studies.

In which way and at what rate enterprises adopt new practices is an issue of no little importance from the point of view of public policy. Enterprises, which are not capable of applying them, are in danger of losing their strategic leeway and may be enforced to seek competitive advantage only through achieving lower costs for traditional production factors, such as labour. Adoption of these new organisational practices, on the other hand, will increase the strategic room for manoeuvre available to a company. The company has additional ways of competing in the market using competitive factors other than price, e.g. the quality, degree of customisation, innovativeness and continuous development of products and services, comprehensive service concept, or a capacity for quick response.

This has several positive effects to employees’ terms and conditions of employment. It makes the enterprise less vulnerable to fluctuations in demand or price changes in production factors and strengthens the real job security of its personnel. It also increases the interest of management in continuous development of employee skills and expertise and the application of a qualitative (functional) flexibility strategy in the use of labour. The qualitative flexibility strategy reinforces the labour market skills of the workforce and their employability, and it may also serve to promote the maintenance of the working capacity of the workforce.

3 Studies on the diffusion of new work organisational practices

3.1 Is Europe lagging behind? 

Owing to the lack of uniform concepts and research methodology, it is difficult to draw far-reaching conclusions or to make valid comparisons on the spread of new work organisational practices in different countries. A further problem is that comparative studies often focus on some single characteristics of enterprises, such as teamwork or job rotation, without paying any attention either to internal fit of these practices or to their external fit with the operational strategy of an enterprise. Neither exists there any comparative material on many of the new innovative forms of work organisation and enterprise structures characteristic of firms operating in the ICT-based "new economy". Examples of these include partnership co-operation, virtual teams and corporations, strategic enterprise networks, co-configurative forms of production, etc.

Results of the Massachusetts Institute of Technology’s (MIT) summary of a comparative research into the automobile industry, published as The Machine That Changed the World (Womack et al. 1990), raised much attention in Europe in the early 1990s. This work presents empirically based comparative studies into productivity and quality between automobile manufacturers in different regions. In both productivity and quality, European assembly plants were lagging far behind especially their Japanese but also North-American counterparts. According to the authors, the differences apply to both volume-produced and luxury cars.

The authors explained that the main reason for the differences was to be found in the field of production models. Japanese manufacturers were far ahead the others in applying the principles of lean production, whereas European plants were still stuck in the logic of mass production or craft production. According to the study, in Japanese-owned plants teamwork and job rotation were much more common, job classes were fewer, workers were more broadly and systematically involved in development activities, and, on average, new production workers also received more training.

The enormous attention paid to the study in many European countries could be explained by the fact that in many big industrial countries the automobile industry is a key industry and in some cases even a source of national pride. The authors also argued shockingly that the superiority of lean production is not limited to high-volume automobile industry, but its applications would bring about competitive advantages in other industries also. The claim on the superiority of lean production was heavily targeted to socio-technically-inspired Scandinavian forms of work organisation. The MIT study owned a separate section to the critique of Volvo’s new flagship, the Uddevalla plant, arguing that the plant would never achieve the same level of performance as its lean competitors. The idea of "good work", which is characterised by large-scale autonomy at work, long cycles of work and craftsmanship, was labelled as Utopian in an environment of global competition. Debate on the superiority of different production models was further fuelled, when the management of Volvo announced to close down the Uddevalla plant in 1993. Heated debate on this subject, however, continued long afterwards.

Yet, many of the results of the MIT study cannot be regarded as convincing. In respect of teamwork, for instance, one of the most fundamental criticisms has been that the MIT study provides no definition of what is meant by the idea of working in "teams". Comparative studies have demonstrated that in different labour market environments group work or teamwork can take on very different forms. The methodology of the MIT study and many of the conclusions by the authors can be called into question and subjected to severe criticism also in many other respects (Berggren 1993; Sandberg [ed.] 1995).

The problems with the definition and measurement of the spread of teamwork or other new organisational practices mean that it is not possible to justify a claim that European companies are lagging behind their North American or South-East Asian competitors without several reservations. In the following, some conclusions on the spread of teamwork, job rotation and delegation of responsibility in Europe and especially in the Nordic Countries are drawn by examining a selection of studies. These include the EPOC Project (Benders et al. 1999) and the Survey on Working Conditions 1996 (Paoli 1997) by the European Foundation of Living and Working Conditions, the Nordic Nordflex Project (NUTEK 1999) and the OECD (1998; 1999) summaries on surveys and policy approaches concerning flexible organisational practices in Western industrial countries:

• A general impression shared by many experts is that Europe on the whole is lagging behind the US in the adoption of new forms of work organisation.

• The diffusion of group work or teamwork seems to be much thinner on the ground in Europe than the lively discussion of it would suggest. Precise figures may be misleading, because of the lack of reliable statistical data and because definitions, methodology and materials differ from one study to another. According to the EPOC Project, for instance, group delegation could be found in one third of workplaces in the EU Member States, but only in the case of 4% of workplaces, it was possible to regard the entire workplace as a "team-based organisation". This is in line with an argument by Whittington et al. (1999, 594) who state on the basis of their European panel study from 1992 to 1996 that though there is a movement in European businesses towards the new organisational practices "holistic or systematic transformation is still very rare, involving fewer than one in twenty European firms".

• Employees’ opportunities to influence decision-making at work increase as we move in Europe from the South to the North. Sweden is obviously the leading country in Europe in applying group work. Also Finland, Denmark and the Netherlands would seem to be above the EU average. Improvements in quality of working life, together with those of productivity, have also been more often a goal in these countries as new practices are being introduced.

• It would seem that within the Nordic Countries new organisational practices are more widely used in Sweden and Finland than in Denmark and especially in Norway (Table 3). This may be partly explained by the fact that both Sweden and Finland experienced a deep-going economic stress in the 1990s.

 Table 3. Proportion of workplaces with 50 employees or more in the Nordic Countries, which practise teamwork and formal job rotation (Source: NUTEK 1999). 

 - National-level factors would seem to explain the spread of new organisational practices better than structural features of the enterprise. National-level factors include, among others, high level of education and training of the workforce, collaborative system of industrial relations, participatory management culture, lack of mass production, and a long tradition in working-life research and workplace development. All these features apply reasonably well to all four Nordic Countries.

 3.2 Accelerated change in Finland in the 1990s

There are no reliable data or statistics available on the spread of new organisational practices in Finland during the last 20 years or so. In the 1970s and 1980s Finland probably lagged far behind Sweden, but the gap narrowed in the 1990s. The metalworking industry and the finance and insurance sector have traditionally played a path-breaking role in the introduction of many of the new work and human resource practices in Finland. Surveys by the Metal Workers’ Union among union members (Kevätsalo 1999) show that working in groups was the principal form of working for 36% of the members in 1997, while the corresponding proportion in 1993 was only 26%, i.e. their share increased by more than one third in four years. It is interesting to note in comparison that from 1979 to 1993 there was hardly any change at all in the proportion of union members working in groups!

The results of the annual Working Life Barometer by the Ministry of Labour provide a very similar picture of an accelerated change at Finnish workplaces in the 1990s. According to the Barometer, the share of workplaces in which working in groups (teams, cells, project groups, etc.) was the principal form of working increased by one fourth from 1995 to 1999 (Table 4). 

Table 4. Proportion of Finnish workplaces in which working in groups is the principal form of working (Source: Ylöstalo 2000). 

Quantitative changes in the spread of teamwork at Finnish workplaces are associated with qualitative changes in the characteristics of teams. Tightening demands for customisation and short delivery times, and familiarisation with the ideas of lean production, quality management and other approaches of process management encouraged many companies to strive for radical renovations in their work organisation. Companies apply now teamwork in a more comprehensive way than they did in the 1970s and 1980s when groups or teams usually were established only as stand-alone solutions in single stages of production without corresponding changes in the enterprise organisation by and large. Moreover, the tasks of teams have expanded. Today also many shop-floor teams have responsibility for planning of their daily activities, continuous improvement, and direct contacts to suppliers and customers without separate supervisors.

Empirical results both from the Working Life Barometer and Surveys by the Metal Workers’ Union confirm the argument on the increased role played by shop-floor employees in process and product improvement activities. According to the Barometer, the proportion of employees that have made suggestions at their workplace concerning improvements in working conditions, working methods, products or services grew consistently from 1995 to 1999, in manufacturing industries from 46% to 57% and in service industries from 54% to 68%. The Surveys by the Metal Workers’ Union show that the share of union members that had taken part in development groups at their workplace increased from 13% in 1985 to 26% in 1997.

4 The system of industrial relations as an infrastructure for workplace change in Finland

From 1968 onwards, collective agreements in Finland have been generally based on a centralised incomes policy. The basic idea this system of bargaining rests on is that the central labour market organisations representing employees and employers both in the private and the public sector try to find general conditions by which sectoral collective agreements can be reached. If the central organisations manage to reach a centralised skeleton agreement, sectoral collective agreements will be signed in accordance with it. The skeleton agreement is not legally binding, however, and the unions have the opportunity to depart from it. When necessary, the Government has encouraged the agreements with economic, educational and social policy reforms.

During 1968-2000, a one- or two-year incomes policy agreement failed to be achieved only seven times (in 1973, 1980, 1983, 1988, 1993, 1995 and 1999). In terms of the relative weight of different bargaining levels (intersectoral, sectoral, company), the Finnish system is one of the most centralised in the EU. Of the six countries, in which there is some wage bargaining at intersectoral level in Table 5, this covers the whole economy (i.e. both the private and public sector) only in Finland and Ireland. Major prerequisites for the survival of a centralised system in Finland for more than 30 years are the high density of unionisation (about 80% of all wage earners are union members), the positive effects of incomes policy as to economic development and welfare, and, last but least, an ideology of national consensus deeply rooted into Finnish society.

Table 5. Wage bargaining levels in the European Union and Norway (Source: EIRO 4/2000).

X = existing level of wage bargaining

XX = important, but not dominant level of wage bargaining

XXX = dominant level of wage bargaining

In the 1970s, the most virulent opponents of incomes policy were the Communists, who were in opposition within SAK (the Central Organisation of Finnish Trade Unions) and its most important industrial unions, but who represented the majority in many of the large local union branches. In recent years, criticism of the centralised system of collective bargaining on the part of the left-wing opposition within the trade union movement has declined, as the Communists have lost influence and become more moderate. Another strong opposition against centralised bargaining rose in the early 1990s, this time from the ranks of employers who criticised centralised bargaining for permitting too little flexibility regarding pay, working hours and the forms of labour deployment at enterprise and plant level. Today, also criticism on the part of employers has largely faded as legislative reforms and intersectoral and sectoral agreements have broadened scope of company bargaining and, thus, brought about increased opportunities for deviation from the provisions of sectoral collective agreements at enterprise and plant level. Interestingly enough, the main opposition to a new incomes policy agreement during the bargaining round of 1999 rose this time from a group of industrial unions in which the Social Democrats have a clear majority.

Though the intersectoral and sectoral level are still the most important levels of collective bargaining in Finland, we can talk of a trend towards "centralised decentralisation" (Lilja 1998), the main characteristic of which is an increased importance of local bargaining within an institutional framework regulated by the sectoral collective agreements. An important milestone was the bargaining round of 1993, when efforts to sign an incomes policy agreement failed and the subsequent union-level round of negotiations led to sectoral collective agreements, many of which broadened opportunities for local bargaining considerably (Alasoini et al. 1994).

Enterprise- and plant-level bargaining has gained ground in Finland mainly on the initiative of the employers as a response to demands of the market for increased productivity, quality, customisation and flexibility. An extensive study by the University of Turku on local bargaining in Finland (Uhmavaara et al. [eds.] 2000) shows that the share of companies with five employees or more which had signed local collective agreements on at least some issues increased from 60% in 1992 to 90% in 1998. The main hindrance to further expand the scale of local bargaining is no more legislation, the provisions of intersectoral or sectoral agreements, or other structural or institutional factors, but low-trust industrial relations and undeveloped "bargaining culture" at enterprise or plant level.

The most common issues in the agenda of local bargaining are working hours and pay (e.g. flexible daily and weekly working-time arrangements, payment of overtime premiums, timing of annual holidays and results-based remuneration). The diffusion of local bargaining has contributed to the accelerated pace of technological and organisational change by making it easier to agree on changes in pay, working hours, job contents, etc. in enterprises in the event of the changes. At plant level, there is a strong positive association between the extent of company bargaining and new work organisational practices. It is probably no coincidence that the metalworking industry, which is a forerunner in the introduction of new organisational practices in Finland, has played the same role in widening the scope for local-level agreements, too. In respect of working time flexibility, for instance, the sectoral collective agreement in the metalworking industry does not limit the right of the bargaining partners in enterprises (usually management and the head shop steward) to agree on regular maximum daily or weekly hours. Neither does it limit the reference period to average the hours worked.

The key agents in local bargaining are enterprise or plant management and head shop stewards. The shop steward system was officially established by the general agreements of 1944 and 1946, drawn up by the social partners. The formal authority of shop stewards strengthened in the 1960s and 1970s with the increased adherence of employees to trade unions and new general agreements between the social partners. Compared with many other European countries, shop stewards and the comparable representatives of white-collar employees in Finland have a strong position, which is guaranteed by labour legislation and general agreements between the social partners, while bodies such as works councils have never gained a significant foothold.

According to the survey by the University of Turku, shop stewards were the key bargaining agents on the part of employees in most cases, but in one fifth of the cases local agreements were signed by individual employees and in another one fifth by work groups, teams, employee groups or the whole staff. It is not possible to foresee whether the spread of local bargaining will further strengthen or weaken the role of shop stewards as representatives of employees in the longer run.

Employers see the effects of local bargaining more positively than representatives of the personnel, and more than three thirds of employers are ready to further broaden its scope. The majority of employee representatives, on the other hand, are satisfied with the currently prevailing opportunities for local bargaining. The difference probably owes to the fact that the employers have played a more active role in taking up issues to the bargaining agenda. Many of the employee representatives feel that they are not on an equal standing with the representatives of employers, owing to lack of relevant information on the conditions of a company or to poorer knowledge of legislative and contractual details. Lilja (1998, 182-184) uses the concept of "competence trap" by which he means that the unions’ internal organisation and the specialised experience of their officials are not well suited to handling issues related to work organisation, skills or management and, therefore, the unions often have limited possibilities to provide support to head shop stewards as these issues are negotiated in enterprises.

The system of codetermination is another channel in Finnish companies for employees to have a say in the event of technological and organisational changes. The Act on Codetermination in Companies, enacted in 1977 and amended on several occasions in the 1980s and 1990s, is the most important law on collaboration between employers and employees in companies. The aim of such codetermination is both to increase ways in which employees can influence their work and decision-making concerning their workplace, and to improve operations and working conditions within the company. The Act is applied in companies regularly employing at least 30 people, and it establishes the employer’s duty to consult employees about the grounds for, effects of and options to the measures concerned with those employees affected. Matters affecting a large number of employees, such as major technological and organisational changes, are primarily dealt with between the employer and the shop stewards or the comparable employee representatives in the case of white-collar employees. A special committee can also be elected to deal with codetermination matters. In occupational safety and labour protection issues, there is a separate system of codetermination in which labour protection delegates have a say in plans and measures aimed at promoting occupational safety and health at the workplace. 

5 Working-life research and development as an infrastructure for workplace change in Finland

Sweden, Norway and Denmark have gained international reputation in the area of development of participatory forms of work organisation ever since the 1960s. Finland does not have as long tradition of programme-based, research-supported workplace development as is found in the other Nordic Countries, despite the otherwise intensive co-operation between government and labour market organisations in various sectors of public policy. The quality of working life and humanisation of work did not win a central position in debate on labour policy in Finland in the 1970s. Rather, the focus was on developing systems of representative employee participation, occupational health care and occupational safety (Kasvio 1994; Koistinen & Lilja 1988). Research on working life consequently also focused on these subjects

The actual rise of research-supported workplace development in Finland did not take place until the late 1980s. Factors promoting this rise included rapid economic growth and the subsequent shortage of labour, increasing problems caused by lack of job satisfaction, and the atmosphere of national consensus, which became stronger in Finnish society in the 1980s. Overall, the position of action-oriented research into working life became consolidated at universities and other research institutions. There were also improvements in the funding opportunities for such research.

The position of working-life research and development as an infrastructure factor in boosting workplace change further strengthened in the 1990s:

- The pace of change in Finnish enterprises accelerated in the 1990s, leading to growing demand for consultancy. This opened up new opportunities for universities and other educational and research institutes to take part in actual processes of workplace change as providers of training and education, and of process consultancy and action-oriented research services.

- Programme-based approaches to workplace development have become an integral part of government policy since the mid 1990s. The Governments, in co-operation with the social partners, have launched several programmes with a view to improving productivity and the quality of working life in Finnish enterprises and public-sector organisations, including the National Productivity Programme in 1993, the National Workplace Development Programme in 1996, the National Programme for Ageing Workers in 1998 and an Action Programme to promote "ability to cope" at work in 1999. Characteristic of the Finnish programmes compared with those of the other Nordic Countries is the visible role played by the Government as the co-ordinator and financiator of the programmes. Unlike the majority of work organisation development programmes in the other EU Member States (see Business Decisions Limited 2000), all the Finnish programmes focus on both the private- and public-sector organisations.

- Finland joined the European Union in 1995. This has led to an increased number of transnational projects and programmes in which Finnish universities and enterprises are involved. Finland’s rapid economic growth, its (so far) successful transition from a factor-driven to knowledge-driven economy and its good international reputation in innovation policy, all have increased interest in the other EU Member States to launch joint activities with Finnish partners.

All these changes have made a significant contribution to strengthening of the workplace development infrastructure. Nevertheless, there still are weaknesses in the infrastructure (Alasoini 1999):

- There are approximately 30 units in Finland which both conduct research and research-supported development of working life (this figure includes units of the universities and other institutes of higher education, the Institute of Occupational Health, and the Technical Research Centre of Finland). There, however, are very few large or even medium-sized R&D units in this field. Other potential weaknesses are the scarcity of multidisciplinary research facilities and the very uneven geographical distribution of units. There is a great shortage of R&D staff in the east and north of the country, i.e. in regions which already are lagging behind in terms of economic development. It is obvious that the small average size of units and the scarcity of multidisciplinary research facilities pose potential problems for the accumulation of knowledge. This underlines the importance of strengthening co-operative networking between units at local, regional, national and international levels.

- Finland has lacked an institutionalised co-ordination of workplace development at regional level, although the activities of the Labour Districts, the Labour Protection Districts, the Regional Institutes of Occupational Health, and the regional units of the National Technology Agency (Tekes) and the Ministry of Trade and Industry (MTI) may have at times touched on this area. One interesting new development at regional level is the setting up of 15 Employment and Economic Development Centres. These centres, which started operating in September 1997, bring together the former Labour Districts, the Regional Business Service Offices of MTI, and the regional units of Tekes. The broad range of expertise contained within the new centres could also expand their future importance as regional network co-ordinators into the area of workplace development.

6 The Finnish National Workplace Development Programme as an example of new approach in public policy

The Finnish National Workplace Development Programme (FNWDP) was launched in 1996 as part of the programme of Prime Minister Lipponen’s first Government, and will continue until 2003 under the programme of the second Lipponen Government. The aim of FNWDP is to improve efficiency and the quality of working life by promoting workplace change and staff know-how at Finnish workplaces. This is intended to help companies and public-sector organisations cope better with the changing environment and to create better conditions for sustainable employment.

FNWDP was drawn up jointly by the Ministry of Labour and the social partners in 1995. They, together with three other ministries and three R&D funding bodies, constitute the management group. Ministry of Labour is responsible for co-ordination of the programme. The programme is funded by the Government. The total budget of FNWDP from 1996 to 1999 was FIM 95 million (EUR 16 million), and the annual budget for the year 2000 is FIM 36 million (EUR 6 million).

The programme can grant expert support to workplaces striving to comprehensive changes in their modes of operation. The purpose of the expert support is to encourage planning, testing and adoption of new work practices and to lower the threshold for workplaces to launch co-operative development processes. Expert support is used mainly for funding the use of researchers or consultants in the projects. However, workplaces are themselves responsible for most of the project costs.

473 workplaces and 45,000 employees in 284 projects took part in the first stage of the programme (1996-99). The main goals of the projects have included the establishment of work teams, adoption of empowering methods of management, multi-skilling and enhancing working capacity of employees, building up intra-firm and inter-firm co-operative network structures, and improvement of the social atmosphere at workplaces. The number of workplaces taking part in the programme from 2000 to 2003 will be considerably higher.

Many of the projects have been joint efforts comprising many workplaces. A special appropriation was earmarked for network projects of a special kind. This funding was intended for research and experimentation to support the creation and testing of organisational innovations. The projects must involve a sufficient number of companies in vertical (production) or horizontal (development) networks to achieve a critical mass with the view to promoting the accumulation of knowledge.

The second focus area deals with the dissemination of knowledge related to workplace development. As part of the programme, publications have been issued and seminars held, and a comprehensive information register has been created on the Internet (www.mol.fi/tyke). An important focus is an electronic data bank containing project descriptions with "good practices".

The third focus area concerns strengthening the workplace development infrastructure in Finland. FNWDP has functioned as a co-operation forum at setting up comprehensive dialogue between the key stakeholders. It has promoted co-operation between workplaces, various development programmes, different governmental authorities, R&D institutes and funding bodies, and the social partners. Close links have been created with the European Work & Technology Consortium and EWON (European Work Organisation Network).

The results of the projects in the first stage are encouraging in many ways. According to the views of management and employees involved in the projects, most projects have achieved improvements in productivity and customer service, established team-based work organisation and boosted the participation of employees in workplace development. The key stakeholders in the programme, principally the labour market organisations, R&D institutes and public authorities also seem satisfied with the results achieved so far. A recent survey showed that more than 90% of respondents considered FNWDP to be necessary and also considered that publicly funded workplace development programmes will be necessary in the future, too.

Finnish working life faces a number of structural and other problems, which will persist in the immediate future. These include a high level of structural unemployment, an ageing workforce, problems with working stamina, a falling labour supply, and demands for higher productivity, quality and flexibility in the workplace. It is obvious that these problems cannot be successfully dealt with by using traditional technology policy measures or training and rehabilitation of the workforce alone. We must turn our attention more and more to organisational and other workplace innovations in line with the idea of conditions-enabling innovation policy, as shown above in Table 1.

References

Alasoini, T.: Organisational innovations as a source of competitive advantage - new challenges for Finnish companies and the national workplace development infrastructure. In Schienstock, G. & Kuusi, O. (eds.): Transformation towards a learning economy: the challenges for the Finnish innovation system. Sitra 213. Helsinki 1999, 205-219.

Alasoini, T., Kauppinen, T. & Ylöstalo, P.: Workplace Finland: new forms of bargaining and participation. Economic and Labour Relations Review 5 (1994):2, 62-83.

Antila, J. & Ylöstalo, P.: Functional flexibility and workplace success in Finland. Finnish Ministry of Labour. Labour Policy Studies 206. Helsinki 1999.

Benders, J., Huijgen, F., Pekruhl, U. & O’Kelly, K.P.: Useful but unused - group work in Europe. European Foundation for the Improvement of Living and Working Conditions. Dublin 1999.

Berggren, C.: The Volvo experience: alternatives to lean production in the Swedish auto industry. Macmillan. Houndmills 1993.

Business Decisions Limited: Government support programmes for new forms of work organisation: a report for DG Employment & Social Affairs. Office for Official Publications of the European Communities. Luxembourg 2000.

Cully, M., Woodland, S., O’Reilly, A. & Dix, G.: Britain at work: as depicted by the 1998 Workplace Employee Relations Survey. Routledge. London – New York 1999.

Huselid, M.A.: The impact of human resource management practices on turnover, productivity and corporate financial performance. Academy of Management Journal 38 (1995):3, 635-672. 

Ichniowski, C., Kochan, T.A., Levine, D., Olson, C. & Strauss, G.: What works at work: overview and assessment. Industrial Relations 35 (1996):3, 299-333. 

Kasvio, A.: Action-oriented research in Finland: the development of a multiparadigmatic research programme in the midst of an employment crisis. University of Tampere. Reports of the Work Research Centre 48/1994. Tampere 1994. 

Kevätsalo, K.: Jäykät joustot ja tuhlatut resurssit [Rigid flexibilities and wasted resources]. Vastapaino. Tampere 1999. 

Koistinen, P. & Lilja, K.: Consensual adaptation to new technology: the Finnish case. In Hyman, R. & Streeck, W. (eds.): New technology and industrial relations. Blackwell. Oxford 1988, 263-271. 

Lilja, K.: Finland: continuity and modest moves towards company-level corporatism. In Ferner, A. & Hyman, R. (eds.): Changing industrial relations in Europe. Second edition. Blackwell. Oxford 1998, 171-189.

NUTEK: Flexibility matters – flexible enterprises in the Nordic Countries. NUTEK B 1999:7. Stockholm 1999. 

OECD: Technology, productivity and job creation: best policy practices. OECD. Paris 1998. 

OECD: Employment Outlook June 1999. OECD. Paris 1999. 

Paoli, P.: Second European Survey on Working Conditions. European Foundation for the Improvement of Living and Working Conditions. Dublin 1997. 

Sandberg, Å. (ed.): Enriching production: perspectives on Volvo’s Uddevalla plant as an alternative to lean production. Avebury. Aldershot 1995. 

Schienstock, G.: From direct technology policy to conditions-enabling innovation policy. In Schienstock, G. & Kuusi, O. (eds.): Transformation towards a learning economy: the challenge for the Finnish innovation system. Sitra 213. Helsinki 1999, 420-441. 

Uhmavaara, H., Kairinen, M. & Niemelä, J. (eds.): Paikallinen sopiminen työelämässä [Local bargaining in working life]. University of Turku. Publications of Faculty of Law A:99. Turku 2000. 

Whittington, R., Pettigrew, A., Peck, S., Fenton, E. & Conyon, M.: Change and complementarities in the new competitive landscape: a European panel study, 1992-1996. Organization Science 10 (199):5, 583-600.  

Womack, J.P., Jones, D.T. & Roos, D.: The machine that changed the world. Rawson. New York 1990. 

Ylöstalo, P.: Työolobarometri: lokakuu 1999 [Working Life Barometer: October 1999]. Finnish Ministry of Labour. Labour Policy Studies 217. Helsinki 2000.

Tuomo Alasoini
Labour Market Counsellor
Finnish Ministry of Labour
tuomo.alasoini@mol.fi