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Nobel Peace Prize Laureate Martti Ahtisaari has warned that the stubbornness of trade unions has become a threat to the welfare state.
Nobel Peace Prize Laureate Martti Ahtisaari has warned that the stubbornness of trade unions has become a threat to the welfare state.

Heikki Taimio, a senior researcher at the Labour Institute for Economic Research (PT), has pointed out that both of the two recent Nobel Prize Laureates from Finland, Martti Ahtisaari and Bengt Holmström, have, on the one hand, expressed their support for the welfare state and, on the other, criticised the trade union movement.

Taimio points out that studies conducted in several countries have found a link between income inequality and declining trade union membership.

Related posts:

- Holmström: Age of trade unions is over (13 October, 2016)

- Nobel Economics Prize winner is a critic of education cuts in Finland (11 October, 2016)

- Ahtisaari: Obstinacy of trade unions a threat to welfare state (05 October, 2016)

“The International Monetary Fund (IMF), for example, has called attention to the link between […] declining trade union membership and the growing inequalities in several countries. You can see a clear correlation also in the sense that a weaker trade union movement is linked to the […] wealthiest one per cent managing to increase their share of the common pie,” he says in an interview with Uusi Suomi.

He warns that the diminishing significance of trade unions will exacerbate income inequality and its various adverse side-effects, such as the emergence of far-right movements.

Taimio also rejects suggestions that income inequality could be a means to drive economic growth. “If there's a connection, it's rather that big income differences inhibit economic growth,” he tells.

The Finnish labour markets are faced with a major change, as the Government has announced its desire to promote local bargaining and the Confederation of Finnish Industries (EK) its decision to transition entirely to union-specific bargaining. Taimio, however, is unconvinced by the benefits of less-centralised bargaining systems and claims that union-specific agreements have typically offered greater wage increases than centralised ones.

“Maybe Ahtisaari and Holmström think that individuals will negotiate alone with employers. That's an elitist view of labour markets – [a view of] top experts having employers and benefits compete against one another. That elitist view fails to take into account the fact that most employees are in a relatively weak position in relation to employers,” he says.

One of the foremost advocates of greater wage differences as a means to spur economic growth in Finland has been Elina Lepomäki (NCP). She believes a wider wage scale would create jobs and, thereby, increase the number of people in employment.

“The better the employment situation, the better the bargaining power of wage earners,” she writes.

Aleksi Teivainen – HT
Photo: Roni Rekomaa – Lehtikuva
Source: Uusi Suomi

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