Government plans to include employee representatives in boards of smaller companies in Finland

Prime Minister Petteri Orpo announced on Tuesday that the government aims to include employee representatives in the boards of smaller companies. This change is generally seen as positive and a step in the right direction by labor representatives, including Jarkko Eloranta, chairman of the SAK, and Riku Aalto, chairman of the Industrial Union. However, they do not view it as significantly meaningful.

According to Eloranta, “It is not proportionate to the cutbacks and losses the government has implemented and continues to do. Rather, it’s more like a band-aid on an open wound.” The reform regarding administrative representation is part of a broader labor market overhaul. Current legislation mandates that companies with a minimum of 150 employees must have an employee representative on their board, and the government plans to extend this requirement to smaller firms.

This change would enhance employee representation in decision-making processes across more companies. The government’s sweeping reforms to labor market legislation have been criticized for favoring employers, with strong opposition from labor unions.

The government also intends to alter local agreements governing work conditions and wages. Presently, local agreements are contingent upon a company being a member of an employer association. According to Orpo, the government will appoint a mediator this fall and initiate a tripartite working group to prepare for the administrative representation reform early next year.

Eloranta believes the threshold of requiring representation should be lowered significantly, suggesting a minimum of 50 employees, similar to Sweden’s model which mandates at least two employee representatives in companies with over 25 employees. Industrial Union’s Aalto is cautious about any threshold reductions, stating, “A cosmetic change will not suffice.” Meanwhile, STTK Chairman Antti Palola expresses his approval of Orpo’s proposal, viewing it as a gesture towards labor organizations and hoping for substantial improvements. He emphasizes that employee representation should be mandatory on company boards rather than in advisory committees.