Future at the Workplace

Erkki Laukkanen
Economist, The Central Organisation of Finnish Trade Unions (SAK)
Helsinki, Finland

Future at the Workplace SAK's Anticipating Project
Autumn 1998

Introduction

Since 1992, the Central Organisation of Finnish Trade Unions (SAK) has been carrying out a bi-annual inquiry by interviewing shop-stewards about the last six months and the present situation at their workplace. A new element, a section dealing with the future, has now been introduced to the inquiry. Due to this future information, based on shop-stewards' expectations, the project is named an anticipating project. The project, financed by the European Social Fund, is SAK's contribution to the European Commission's Green Paper on reorganisation of work. This english memorandum sums up the main findings of the project report. [Erkki Laukkanen (1998). Tulevaisuus työpaikoilla. SAK:n ennakointihanke. ISSN 1435-4534]

The main aim of the project is to find out to what extent the objectives and procedures listed in the national Co-operation Within Undertakings Act have improved the capacity to cope with the present situation in the workplaces and to anticipate the future developments. Due to shop-stewards' duty to supervise employees' interests, a high degree of unionisation, the long tradition of co-operation and agreements between labour market organisations, chief shop-stewards have a good opportunity to estimate the issues addressed in the project.

The projects starts from the present situation and the developments during the last twelve months in particular. The report therefore contains a great deal of information on, for example, working time and wage incentives related agreements at workplaces (supplementary to collective agreements between unions), reorganisation of personnel, development and training measures targeted at personnel, and labour shortage - all the institutions and phenomena, which are crucial when evaluating the co-operation procedures at the workplace.

The project is based on two different time spans: the anticipated developments during the year ahead and the anticipated developments during the next five years. The one-year span concentrates on quantitative changes, such as estimating the growing and diminishing occupational groups, whereas the five-year span concentrates on qualitative changes in the labour market.

The data of the project was collected via two identical questionnaires in autumn 1997 and spring 1998. The following findings are based on the combined data of these inquires. The number of respondents was 1091 and the results are representative for most SAK affiliated unions. (See Annex). In Finland 80 % of the employees are organised, and there is a shop steward in nearly all workplaces. Consequently the results are quite representative in respect of the finnish labour market.

The Theoretical Framework

The theoretical framework of the project is related to the structural change within the workplace, the capacity to anticipate change and to the adjustment of operations to the changes. The same questions are included in the EU Green Paper on a new organisation of work. The Green Paper calls for a new balance, a balance between flexibility and security at the workplace. This project seeks to find out how these, often rather strong presuppositions, gain or fail to gain support among the chief shop-stewards of the SAK. [European Comission (1997). Green Paper. Partnership for a new organization of work.]

Another relevant reference in this context is adaptability, the third pillar in European Employment Policies. It is rather suprising that there are so few reports considering this topic. Especially the work done at the workplace is rarely reported, although activities may be numerous, extensive, and long lasting. In this report those activities are carefully clarified in the context of the Finnish labour market.

Anticipating activities according to the nature of change

Nature of change	Measures Employees	Jobs
1. General Changes in Worklife	Vocational education Voluntary adult education (Ministry of Education)	Development programmes Occupational qualifications General competencies
2. Changes within Enterprises	Personnel development (Co-operation procedures, Collective agreements)	Job rotation, Broader tasks, New tasks
3. Uncontrolled Changes	Labour market training (Ministry of Labour)	New jobs

The point here is that anticipating activities are needed on three levels. The first level contains general changes like the impact of new technolgy, life-long learning and occupational flexibility. The Ministry of Education is mainly in charge of these issues. The second level contains changes within enterprises like reorganisation of production, work and tasks. Labour market organisations, employers and employees, have the best possibilities in implementing these changes. The third level contains uncontrolled changes like quick and unexpected changes in market situation of enterprises. These changes often lead to bankruptcies and unemployment. In general, the Ministry of Labour is responsible for these issues.

The problem in Finland is that these three levels are not dealt with as an unity, but to great extend function separately and independently from each other. The institutional cooperation between Ministry of Education and Ministry of Labour has stopped in the national board for educational planning. This tripartite board ceased to exist some years ago, and no national co-operation organ has been established to replace it. There is only partial local co-operation which mainly works from day-to-day basis.

It follows that in these circumstances the role of labour market organisations in anticipating activities becomes ambiguous. This problem is very clearly to be seen when labour shortage is discussed. Employers demand that public funds be used for firm-spesific training. This policy, however, is contradictory to Finland's educational policy, which says that only general education should be financed by public funds and the firmspecific should be financed by enterprises.

This report concentrates on changes within enterprises. The relevant questions are: what is done and what should be done to increase adaptability at the workplace.

The Situation in 1997 and 1998

Overcoming the recession has increased trust between employers and employees. Local agreements on working time and wage incentives are commonplace, but not unproblematic. Every third workplace with working time and wage agreements at the workplace has had problems in execution. The problems were often related to the interpretation of the agreements; namely the employers' privilege to interpret when agreements were inexact.

The flows into the workplaces, within the workplaces and out from the workplaces have been remarkable. The primary measures (training to other tasks, job rotation etc.) to prevent dismissals have usually been well clarified. New employees, however, have been primarily hired to perform 'old' tasks. Therefore, employers' weak commitment to their own employees remains problematic. This becomes evident, for example, in recycling labour force: former employees are dismissed and replaced by new ones at every tenth workplace. Therefore, the Labour Contract Act included obligation to hire former, dismissed employees does not seem to function properly.

Personnel training at the workplace, aiming at improving competence, has been provided by every second workplace, but this mainly applies to big firms, and often such training is based on public subsidies. A significant peak in training activities is seen in firms where the number of employees exceeds 30, which is also the boundary for co-operation procedures.

Human resource development is rather extensive in the area of occupational safety and health. However, training needs are rarely evaluated by each personnel group or by older employees separately although these objectives are clearly stated in the Co-operation Within Undertakings Act. Altogether 57 % of the workplaces within the sphere of that act, i.e. workplaces having more than 30 employees, do have a personnel development and training scheme. The personnel, however, has been able to influence adequately the contents of these schemes at only 16 % of these workplaces. Consequently, more efforts should be made to make the objectives of the Co-operation Act to work in practice.

Labour shortage is evident in one third of the workplaces although only 8 % of the workplaces have a shortage of educated and experienced employees. Two thirds of the labour shortage results from the features of the particular workplace or the personnel policy practised by the employer: prohibition of recruitment, difficulties in organising work, unattractive terms and conditions of employment or the image of the workplace. Understaffed workplaces have become a permanent phenomenon.

The locus of the labour shortage was evaluated on the basis of the ISCO 88 classification of occupations. The classification defines professional skills in terms of both the level of education and the field of specialisation. According to the results, and thus undermining popular belief, the labour shortage concerns occupational groups in which the qualification requirement is secondary level education. Only 16 % of the branches suffering from labour shortage are in demand of experts with tertiary education. [ISCO 88, International Standard Classification of Occupations.]

The key variables in personnel administration can be divided into two factors. The 'personnel development' factor, is associated with the needs for personnel development evaluation, training of personnel and to some extent, working time and wage incentive related agreements at the workplace. In other words, the personnel development and the fact that the parties have been able to negotiate about wage and working time at the workplace support each other.

The second factor could be described as the 'labour shortage' factor. Labour shortage seems to occur mainly in the Helsinki metropolitan area, in big firms and in connection with short-sighted recruiting policies like substituting 'old' employees for 'new' ones (see recycling it the attached table). The position of big firms is problematic. One explanation is that big firms are leading the development, both positively and negatively. They train more than small companies but then again often make short-sighted decisions, for example, recycle their employees.

The potential impact of the key variables on the near future prospects


variable	economic	size of
	operation	personnel

Number of employees	0	0
atypical contracts, %	0	0
on-the-job-training, 0-1	+++	++
shortage of labour, 0-1	0	++
capital area, 0-1	+	+
personnel develop.schemes, 0-4*	++	++
recycled labour, 0-1	0	0
local agreements, 0-1	0	0

*with respect to different personnel groups, elderly employees, health and safety.

The Year Ahead

The economic prospects for operation are estimated to improve in most unionbranches. Nevertheless, the number of employees is not expected to increase correspondingly. For example, the number of employees at the Railway Men's Union, the Finnish Electrical Workers' Union, and the Postal Workers' Union workplaces is estimated to go down although the economic prospects for operation are expected to improve.

The relationship between the key variables in personnel administration and the prospects for development the year ahead is weak although it coincides with the Green Paper presuppositions: good personnel administration improves employment prospects and the prospects for economic operation. One explanation is the fact that workplaces which have invested in human resource development can increase their productivity, if required, through reorganisation of work.

The change in occupational and skill structure is estimated to favour experts. A major part of the net growth, however, will not affect 'official' occupational groups as such. The need for multi-skilled employees and general professional competence (computer skills and languages) will increase irrespective of the occupational group or level of education. The structural labour shortage, i.e., understaffed workplaces, is expected to continue. If the deficiency concerns experts, they are likely to be hired. If the shortage concerns ordinary 'blue collar workers', the grievance is not redressed but personnel is expected to be 'flexible'.

According to the shop-stewards, only 8 % of workplaces had made adequate preparations for the foreseeable changes in skill and competence structure, 64 % of workplaces had carried out some preparations, whereas the preparations in 28 % of the workplaces were totally neglected. The situation can be regarded as satisfactory only in the Railway Men's Union and the Finnish Media Union workplaces: every fourth workplace was well prepared for upgrading skills during the coming year.

The Next Five Years

When shop-stewards were asked to evaluate the statements concerning the future developments in their workplaces, the Green Paper presuppositions were only partially supported. The following results are based on statistically significant disparities.

According to the shop-stewards, two contradictory trends can be detected in the change of task structure: specialisation within the present tasks and combining present tasks to a broader unity. The latter is clearly the more prominent trend and coincides with the Green Paper assumptions. The conflict between these two trends becomes emphasised in the Finnish Electrical Workers' Union, the Railway Men's Union and the Finnish Media Union workplaces.

In terms of working time policies, the national features of Finnish labour market, such as scarcity of part-time work and the large volume of fixed term employment may even become more emphasised. In addition, no substitution is expected between the use of temporary work and annual working hours in full-time work. The use of temporary work is expected to increase during backlog peaks, but the annual working time of full-time work is not expected to become shorter. The share of part-time work decisively divides the unions into two groups: in service sector the number of part-timers is expected to increase while in manufacturing it is expected to decrease.

The new organisation of work is expected to proceed, and eventually to apply to all personnel. The employers, however, are not expected to assume a greater responsibility in developing and training personnel. The most hesitant about the employer's attitude were the representatives of the Construction Trade Union and the Finnish Food Workers' Union. With a view to personnel development, the balance between flexibility and security does not seem to come true.

Employees' accountability for economic results is expected to increase greatly, especially in the form of group and team work. In spite of this, the use of subcontractors and outside labour is not expected to diminish. This is clearly something that should be addressed, if employees' commitment to the objectives of the workplace is desired. In addition, and contrary to the presuppositions of the Green Paper, short, repetitive work cycles are expected to decrease in only a few union-branches. Considering the conditions for broadening tasks and increasing teamwork, one would have expected the view on the decrease of short, repetitive work cycles to be much more widely held.

The impact of skills and competence on wages is increasing, in the form of competence and results bonuses, while the number of pay grades is decreasing. The differentials between part-time and full-time work, between men's and women's work and between production and management were expected to continue, especially in traditional industrial unions. Only in the Postal Workers' Union and Railway Men's Union the shop-stewards assumed that individual initiative could work as instrument for increasing wages.

Joint Challenges

The chief shop-stewards' expectations concerning the future of work can be classified into four factors, i.e., joint challenges for all union-branches, in the following way:

'Reorganisation of Work': The change in task structure is a key issue in the new organisation of work. The scope of reorganisation is determined by combining present tasks to form larger unities and an increase in accountability of employees through group and team work. Reorganisation will become enhanced in workplaces which already have experience in evaluating the personnel development needs. In these workplaces the relationship between the present and the future can be indicated, and it has given them a head start over the others.; The new organisation of work is also rather commonly perceived as co-operation and training issues. In other words, employer's responsibility for personnel development will be weighed in terms of reorganisation. The problem is the weak relationship between the scope of reorganisation of work and wage differentials in different personnel groups.
'Accountability': The core issue in accountability is that the wage effect will increase in the form of group bonuses and individual wage supplements. To some extent, the development of payment by results is determined by the changes in the valuation of production and management work. The relationship between accountability and the new organisation of work is evident, since group and team work and corresponding wage supplements determine both payment by results and the new organisation of work.; Problematic, however, is that increasing accountability is regarded as intrinsically valuable rather than an instrument of change: nearly all respondents thought that accountability for economic results will increase while the relationship between increasing accountability and the potential bonuses is weak. The worst-case scenario is that part of the entrepreneurial risk will be transferred to the employee through increasing accountability for economic results - without compensation in wages.
'Wage Differentials': The wage differentials between part-time and full-time work, between men and women, between production and management work, are determined by the implementation of reorganisation of work. The crucial issue is whether the use of outside labour will increase and what kind of training and development responsibility the employer will assume during the phase of the new organisation of work.; The relationship between wage differentials and the new organisation of work can be found in communal implementation - not in the extension of reorganisation. Reorganisation which is implemented in co-operation and is based on personnel development would seem to reduce the wage differentials. This is in line with the assumptions of the Green Paper.
'Atypical Employment': Temporary, part-time or fixed-term employment shall exist also in the future, especially in workplaces with high density of atypical work at the moment of interviews. The development of atypical employment is especially determined by the extent to which the peaks are handled by temporary personnel. There seems to be no visible connection between atypical employment and the new organisation of work. Therefore, atypical work could be interpreted as an alternative for reorganisation of work.

Factor analysis: 4 factors


Propositions \ Factors	Reorgan.	Account-	Wage dif-	Atypical
	of work	ability	ferentials	work
SKILL STRUCTURE
more specialication	0	0	0	0
broader tasks*	++	0	0	0
quite new tasks	+	0	0	0
WORKING TIME
less hours per year	0	0	0	0
more temporary work in peaks	0	0	0	++
part-time work increases*	0	0	0	++
fixed-term work increases	0	0	0	++
REORGANISATION OF WORK
reorganisation increases*	++	0	0	0
reorganisation touches everyone*	++	0	0	0
execution in co-operation*	+	0	++	0
employer increases education*	+	0	++	0
WAY OF WORKING
repetitive work decreases*	+	0	0	0
accountability increases*	++	+	0	0
teamwork increases*	++	++	0	0
outside labour decreases*	0	0	++	0
WAGE DIFFERENTIALS
fewer pay grades*	0	0	0	0
know-how-premia increase*	0	++	0	0
team-premia increase*	+	++	0	0
contract-premia decrease*	0	0	0	0
whole-time-premia decrease*	0	0	++	0
male-premia decrease*	0	0	++	0
white-collar premia decrease*	0	+	++	0
self-acting-premia increase*	0	++	0	0
BACKGROUND VARIABLES
atypical work, %	0	0	0	+
personnel development scheme	+	0	0	0

* According to the Green Paper

Differences Between Branches

With the help of grouping analysis, unions can be defined in relation to each other. The unions holding similar future expectations are close to each other and thus belong to the same cluster. The data below includes the positions of shopstewards towards future statements by union and branch of economy.

The union-specific positions constitute two union clusters. The core of the 'service cluster' is formed by the union pair municipality-state around which other service clusters are grouped. The Railway Men's Union and the Postal Workers' Union are furthest away from the core. Correspondingly, the core of the 'industrial cluster' is the union pair foodstuff-metal. The Transport Workers' Union and the Construction Trade Union are furthest away from the core. The major differences between clusters seem to apply to the relationship between accountability and wage supplements. In the service cluster, this relationship is more obscure.

The branch-specific positions constitute five branch clusters. The distance between branches is greater than it is between unions if estimated by the number of clusters. If we think of the co-operation between unions, and the future co-operation in particular, this provides a good starting point for it, in fact, a better than in the case of 'pure' branch unions.

General Evaluation

The personnel development activities at the workplaces are still rather modest, the emphasis being on 'traditional' issues such as health and safety. Thus the cooperation Within Undertakings Act, and the obligations included in it, seems to have failed to produce satisfactory results. The main instrument in personnel development, the personnel development and training scheme, usually exists. Seldom the personnel, however, has been able to influence adequately the contents of these schemes. The situation in Finland is thus very much the same as in other EU-countries, where, according to the Green Paper, roughly every fourth workplace can be classified as a workplace of high skill and trust.

For the time being, higher company profitability has not resulted in more extensive personnel development schemes, although their benefits are obvious. For example, labour shortage has had the least impact on firms who have trained and developed their own personnel. In order to prevent labour shortages, personnel development schemes should have higher priority, since at least two thirds of the labour shortage results from the features of the workplace or the practised personnel policy.

Although the economic outlook for the year 1999 is rather optimistic, firms are cautious about hiring new employees. The core of the labour shortage, i.e. the understaffed workplaces and problems concerning the organisation of work, will largely continue the year ahead. The changes in task structure are, however, are mainly focused on multi-professional skills and general expertise (languages and computer skills), and on experts with higher vocational education. According to the chief shop-stewards, 30 % of workplaces have made no plans whatsoever to cope with these changes.

The opinions concerning the hypotheses of the EU Green Paper on the new organisation of work were contradictory: some of the hypotheses gained support from the chief shop-stewards, while others failed to do so. The supported hypotheses included broader tasks, an increase in reorganisation of work and employees' increasing accountability for economic results. Nevertheless, the chief stop-stewards were highly sceptical about the narrowing of wage differentials between different personnel groups. Neither did they believe in the reduction of the use of subcontractors and outside labour nor in an employers' increasing accountability for personnel development policies. Thus, the possibility to establish a new balance at the workplace seems to fail. Flexibility is believed to increase at the expense of job security.

Despite problems in co-operation, reorganisation of work and accountability are regarded as a joint challenge in most union-branches. It is, however, problematic that employees' increasing accountability is regarded as intrinsically valuable rather than as an instrument of change: accountability increases whereas potential wage supplement is unlikely. The threat among shop-stewards is that a proportion of the entrepreneurial risk is transferred to the employees without due compensation in wages.

Follow-Up

The shop-stewards' positions towards the future statements were quite informative. Only few statements remained in the 'neutral zone' and thus failed to judge future expectations. The method is a suitable tool not only as the basis of the follow-up but also as a point of comparison.

The results of this project indicate that the relationship between the present and the future is weak - at least at the workplace. The variables, which adequately describe the situation today, correlate poorly with expectations concerning the future. The aim of anticipating activities will be to strengthen the relationship between the present and the future in order to achieve a more sustainable basis for adaptability.

The collective agreement for 1999-2000 includes a development programme for working life. The programme pursues measures to maintain fitness for work, promotes equal opportunities at the workplace, encourages to continue work evaluation and upgrading of skills and competence. The results of SAK's anticipating project show that this kinds of programmes are clearly needed.

The motives for this are evident. Reorganisation of work is also economically motivated through the increase in production capacity. Moreover, the personnel development activities will improve the internal adaptability of the workplace and increase the appliance of rewarding personnel management. It is common knowledge that in terms of the management by results and total quality, motivation and commitment to objectives will ultimately determine the achieved accountability.

On the basis of this and other data, the unions should define the opportunities and limitations of their own anticipating measures. The qualitative change taking place would seem to be very common, and therefore co-operation between unions seems to be the best point of departure.

Topics for the Further work

Agreements at workplaces. Strengthening the communal nature of agreement procedures and decreasing the amount of problems in execution.

Personnel development. Increasing the number and quality of personnel development and training schemes and thus preventing labour shortages.

The change in skill structure. Identifying the needs for multi-skilled employees, general professional competence (computer skills and languages) and firm-specific skills and including these needs to personnel development and training schemes.

Reorganisation of work. Identifying the general character and firm-specific features of reorganisation over several years. Finding the suitable strategy for your own workplace.

Functional distribution of income. Finding a better balance between employees' increased accountability and compensatory wage supplements.

Annex

There are 27 SAK affiliated unions. The following were large enough for statistically meaningful results:


1	Chemical	Chemical Workers' Union
2	Wood	The Wood and Allied Workers' Union
3	Metal	Metalworkers' Union
4	Paper	Paperworkers' Union
5	Construction	Construction Trade Union
6	Foodstuff	Finnish Foodsttuff Workers' Union
7	Electrical	Finnish Electrical Workers' Union
8	Textile	Textile and Garment Workers' Union
9	Media	Finnish Media Union
12	Transport	Finnish Transport Workers' Union
13	Restaurant	Restaurant Workers' Union
17	Commercial	The Union of Commercial Employees
18	Postal	Postal Workers' Union
23	Municipal	Trade Union for Municipal Sector
24	Railway	Finnish Railwaymen's Union
26	State	The Finnish National Union of State Employees and Special Services VAL

ISCO 88, International Standard Classification of Occupations

1-3	Profession	1	Legislators, senior officials and managers
		2	Professionals
		3	Technicians and associate professionals
4-5	Service	4	Clerks
		5	Service workers, shop and market sales workers
6-7	Craft	6	Skilled agricultural and fishery workers
		7	Craft and related trades workers
8	Plant	8	Plant and machine operators and assemblers
9	Elementary	9	Elementary occupations