Finland's center-right government has proposed sweeping reforms to fixed-term employment contracts and layoff rules, aiming to boost hiring flexibility but drawing fierce criticism from trade unions who fear increased job insecurity. Labor Minister Matias Marttinen of the National Coalition Party presented the legislative package on Wednesday, with the new rules slated to take effect as early as April 1st. The core change would allow employers to hire workers on fixed-term contracts without providing a specific justification under certain conditions, a significant departure from current law which requires grounds like seasonal work or substituting for another employee.
The Government's Rationale for Change
Minister Marttinen framed the proposals as essential for improving employment prospects. 'With these proposals to improve the conditions for hiring, we aim to ensure that more and more Finns get jobs,' Marttinen stated during the announcement. The government argues that the current regulatory framework is too rigid and stifles hiring, particularly for small and medium-sized enterprises hesitant to commit to open-ended contracts. The reform intends to simplify the initial hiring process, making it easier for employers to bring new people into the workforce. Marttinen specifically suggested the new rules would aim to eliminate situations where fixed-term contracts are chained together back-to-back, though unions directly contest this point. The changes are part of the government's broader agenda to make the Finnish labor market more dynamic and responsive to economic fluctuations.
Key Changes to Fixed-Term Contracts
Under the proposed legislation, employers could hire someone on a fixed-term basis without a stated reason in two specific scenarios. The first is when it is the very first employment contract between that employer and that employee. The second scenario applies if at least two years have passed since the end of a previous employment relationship between the same parties. Such contracts could be made for a maximum period of one year and could be renewed a maximum of two times within a year. This structure, the government contends, creates clear boundaries to prevent abuse. Currently, employers must have an objective reason for offering a fixed-term contract, such as project-based work, seasonal demand, or covering for an employee on leave. The removal of the 'justification requirement' in these defined cases represents the most contentious element of the reform, shifting the default toward temporary arrangements for new hires.
Shortened Deadlines and Reduced Obligations
The reform package includes other significant modifications alongside the fixed-term contract changes. The notice period for layoffs would be halved, dropping from 14 days to 7 days. This gives businesses much faster flexibility to adjust their workforce in response to sudden downturns in demand or financial difficulties. Furthermore, the obligation for an employer to rehire laid-off workers would be scaled back. Currently, this rehire obligation applies more broadly, but under the new rules, it would only apply to companies with at least 50 employees. This means smaller businesses would have no legal duty to offer positions back to employees they previously laid off once business conditions improve. The government's view is that these changes reduce administrative burdens and perceived risks for employers, especially smaller ones, thereby encouraging them to hire in the first place.
Union Opposition and Warnings of Abuse
The Finnish trade union movement has reacted with strong opposition and concern. Unions argue that the changes, particularly to fixed-term contracts, will have the opposite effect of the government's intention, leading to a proliferation of chained temporary contracts and greater job insecurity. They fear it will create a two-tier labor market where a growing number of workers, especially young people and those new to the workforce, are trapped in a cycle of temporary positions without the benefits and security of permanent employment. 'The new legislation will particularly reduce young people's opportunities for a permanent employment relationship, and uncertain livelihood does not encourage starting a family,' stated Else-Mai Kirvesniemi of the Finnish Confederation of Professionals (STTK). Unions also warn of a potential increase in so-called pregnancy discrimination, where employers might be more inclined to offer temporary contracts to women of childbearing age to avoid maternity leave obligations associated with permanent positions.
Legal Framework and EU Context
Finland's existing labor laws on fixed-term work have been shaped by both national tradition and European Union directives. The EU's Fixed-Term Work Directive aims to prevent abuse arising from successive fixed-term contracts, ensuring equal treatment for temporary workers compared to their permanent counterparts. The Finnish government asserts its new proposals remain within the bounds of EU law by setting clear limits on the duration and renewal of contracts made without cause. However, legal scholars and union lawyers are likely to scrutinize whether the 'without justification' model violates the spirit of the directive, which emphasizes that fixed-term contracts should be the exception, not the rule. This EU dimension adds a layer of complexity, as any final law could potentially face challenges if deemed to undermine workers' security and rights.
Political Landscape and Next Steps
The proposal now moves to the parliamentary process where it will be reviewed by committees, most importantly the Employment and Equality Committee. The government holds a majority in the Eduskunta, which suggests the reforms are likely to pass, though they may face amendments during the committee stage. Opposition parties on the left, namely the Social Democratic Party and the Left Alliance, have aligned with the trade unions in condemning the plan. They are expected to argue vigorously against it, framing it as an erosion of the Nordic model of labor security. The public debate will center on a fundamental clash of philosophies: the government's priority on employment flexibility and job creation versus the opposition's priority on job quality, security, and worker protection. The outcome will set a new direction for Finnish working life, with the April implementation target indicating the government's desire for rapid change.