Abstract
New dynamics of the division of work and employment relations are emerging in the Nordic labour market. The use of flexi-time and agency and posted workers, typically of foreign origin, is becoming more widespread. Simultaneously, certain parts of manufacturing and construction processes are being standardized and relocated abroad. The present analysis reveals that there is a new regime emerging, intertwined with the international disintegration of production, which relies upon the inequality of different parts of the labour process and ‘spaces of exception’ and is rendered possible by European Union provisions of free movement of services. Hence, the Finnish — and the Nordic — consensual labour market model is under attack. Although it is too early to draw conclusions as to whether Finland has turned into a more ‘free-market’ model, the crucial question is the extent to which negotiations on labour relations remain in the grasp of labour unions in the coming years.
Keywords
Introduction
For decades, the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) have been labelled in terms of a unique and uniform ‘Nordic model’. Although grouping the countries under the broad umbrella of ‘Nordic’ may be problematic, it is justified on certain grounds. There are similarities between the Nordic countries in terms of characteristics of corporate culture (see e.g. Geert Hofstede's (1980) Nordic cluster), industrial relations (the Northern model; see Winterton & Strandberg, 2004: 37–39), the welfare state model (e.g. Esping-Andersen's Nordic welfare regime), and political orientation (Denmark, Finland, Norway, and Sweden have a long tradition of a ruling social democratic party). They are also usually grouped together in traditional Varieties of Capitalism (VoC) typologies (Whitley, 1999; Hall & Soskice, 2001; Amable, 2003). On the other hand, certain labour market regime differences have existed between the Nordic countries (e.g. Elvander, 2002).
Pressures caused by economic ‘globalization’ since the 1980s have restructured the Nordic labour market regime. This is presently understood in terms of flexible accumulation, which ‘refers to the capacity of capital to switch investment according to market initiatives’, and where ‘globalisation has transferred some of the capital intensive production that was once situated in the capitalist core nations, into the peripheral nations of the world system’ (Rojek, 2004: 55). Milberg (2004: 1) speaks of an ‘international disintegration of production’, denoting the dissolution of the production process into different parts and locating these parts in different countries. Such a restructuring of processes draws not only upon the disintegration, but also upon the inequality of different parts of the process for the sake of competitiveness and the ‘natural’ evolution of economies. Closely related is Paul Krugman's (1996: 91) notion of the Ricardian concept of comparative advantage, according to which the loss of manufacturing competitiveness is a natural consequence of economic maturity. Mature economies promote services instead of manufacturing, but on the other hand they can also enhance manufacturing that is capital-intensive. These economies further seek to maximise the exploitation of the country's comparative advantage through the relocation of low-cost labour manufacturing operations that are sufficiently close, as based on the vertical disintegration of production stages. Buckley (2004: 42) emphasizes that this provides the economic rationale behind the integration of the Southern European Member States within the European Union (EU).
As modern-day production disintegrates, some fragments of the production process are treated as mobile. With regard to certain ‘fractions of capital’, the social and political costs of uprooting from a local labour process regime can outweigh the economic gains of relocation, although mobile fractions are more inclined to smooth the inter-locality flow of investment. The fractions tend to form rallying points for capitalists engaged at particular moments within the circuit of capital (Macartney, 2011). These fractions of capital need state-level political support for the defence of their interests (ibid.). This notion calls our attention to something that this special issue emphasizes: paying attention to the agency of social forces is necessary for understanding the causes and consequences of the global shift. For example, financial actors are extremely powerful, enjoying their ‘rentier income’ by way of their position of strength (Stockhammer, 2010). Transnational companies also constitute an important group of actors: although their actions are highly dependent on financial sector developments, they are quite autonomous in their strategic decisions while actively seeking a ‘competitive advantage’. Nordic companies are no exception and they also strive to utilize the most important factors of production: labour power. They do this by exploiting ‘spaces of exception’ (see Ong, 2006) 1 and escaping Nordic standards of labour (Lillie & Sippola, 2011).
Trade unions are one of the interest groups shaping the situation in labour markets, but they are more or less narrowly confined to the national sphere or, with regard to the European Employment Strategy, subsumed as mere carriers of top-down policy making and business interests (Gold et al., 2007). This policy is further reinforced by the European market-driven project of the provision of free movement of services, which undermines the nationally-confined unions' possibilities for regulating labour rights in their ‘national’ territories (Lillie & Sippola, 2011). Hence, the current labour market regime is characterized by the dominance of ‘hegemonic despotism’ with respect to the position of labour (cf. Burawoy, 1985). Contrary to the traditional form of ‘market despotism’ where individual workers were vulnerable in the labour market, the collective worker is now viewed as vulnerable, although the fear of being fired has been replaced by the fear of capital flight, plant closure, the transfer of operations, and disinvestments (see also in this special issue Bieler's article on the agency of labour).
The new openings for transnational business activity do not occur in a vacuum; rather, the nation-state and the supranational EU also play an important role (see also Becker & Jäger and Rodrigues & Reis in this special issue). Although individual capitals exploit segmented, parcelled space, the market upon which they depend is often largely based upon ‘national’ or unified space as marked out and maintained by the state (Bruff, 2012). In consequence, the state embodies the general domination of those owning the means of production over those who do not, and it makes concessions to subordinate classes and social groups in return for their co-option into a system of production relations (Poulantzas, 1978). This is sometimes seen in the Nordic countries in terms of a virtuous circle of ‘path-dependency’ (Rothstein, 1998: 29) or a set of national/state-level compromises (Kettunen, 2004), the latest of which is seen in the 2011 framework agreement covering some 90 per cent of all wage earners in Finland.
The argument of this article is that, under an all-encompassing (global) growth model based on flexible accumulation, there is a tendency for ‘the invasion of the periphery to the core’ (Kunda & Ailon-Souday, 2005: 210) in the Finnish labour market in particular, and in the Nordic labour market system in general. While transnational firms have been reserved a new role in shaping the production regime by utilizing ‘spaces of exception’ (Ong, 2006), the (national) trade union actors have assumed a rather defensive position. The empirical substantiation for these claims will be taken mostly from Finland, albeit the same change in productive and social relations is also occurring elsewhere in Scandinavia (see also Bieler in this special issue for a different perspective). The analysis utilizes data acquired in the course of a study of the Olkiluoto 3 nuclear power construction site in 2006–08, where interviews were made with Finnish government officials, managers of construction firms, and representatives of trade unions. These data are complemented by a media survey of Finnish newspapers.
The following section elucidates both institutional and actor-based grounds for the current shape of the Nordic labour market regime. First, prominent features of the ‘traditional’ Nordic labour process are exhibited. Second, it is explained how the state and the EU have contributed to the state of affairs. Third, an actor-based view of regime change is put forward: I outline how dominant actors, i.e. transnational firms, are utilizing the ‘spaces of exception’ in the current Nordic labour market regime. The discussion section prior to the conclusion draws up theoretical lessons based on the analysis. In conclusion, the future directions of the Finnish — and also Nordic — labour market regime are reflected upon in light of the findings of this study.
The Nordic labour process
Spatial relations of production are always combined with social relations of production adapted for the purpose. According to Massey (1984, cited in Herod et al., 2007), spatial patterns are not merely a consequence of social relations but partially condition social relations too. Since this article is concerned with the social relations at the Nordic end of the disintegrated labour process, I will place emphasis on the latter aspect. Emergent networks of neoliberalization disseminate and impose market-oriented regulatory transformations at an accelerating pace (Brenner et al., 2010), an unprecedented process that has also become manifest in Nordic societies. In Nordic countries, pressures caused by economic globalization are perceived as a national challenge (Kettunen, 2004). What is more, according to Kettunen (2004: 303), there are certain determinants in the new situation that increase asymmetry between ‘labour market parties’ — including the multinational and transnational character of companies — networked companies, the increase of so-called ‘atypical’ employment, and the difficulty in setting the boundary between wage work and entrepreneurship. In the Nordic countries, employers have learned to live with the strong rights of workers, an occurrence which Whitley (1999: 69) relates to skill-based labour management. One might wonder if skill-based labour management still constitutes the foundation of the Nordic business model. In a later section I will provide examples (mostly from Finland) in which de-skilling occurs not only in the case of the lower tier of the labour market, but also with respect to white-collar workers. There are aspects of flexible employment policies that bring management onto a collision course with unions. Employers appear to sacrifice a secure Swedish employment system for the sake of ‘flexibility’ (Mabon, 1995: 80). Moreover, Ryner (2002: 161) proposes that in Sweden:
Globalisation has weakened the ability of trade unions and other social groups to realize an alternative accumulation strategy based on norms of de-commodification. As a result, the dominant trend of socio-economic restructuring […] corresponds to the preferred trajectory of Swedish capital: a neo-liberal post-Fordism.
In fact, the financial crisis between 2008–09 offered Nordic employers an opportunity to introduce even more drastic structural changes. With regard to the manufacturing industry, 2010 was noteworthy for the increase in employment of foreign subsidiaries at the expense of domestic employment in Finnish multinational companies. During that year the number of workers employed abroad (306,000) exceeded the number employed in Finland (290,000) in these companies (Teknologiateollisuus, 2011). However, the Finnish engineering industry lost 40,000 jobs during the financial crisis (ibid.).
One can also observe an overall intensification taking place in the Western labour process, especially with regard to the work of professionals. One might even ask if the ‘degradation’ of work would concern the entire (Western) labour force, as Braverman (1974) famously predicted. In the worst scenario, it will not make a big difference whether one's job is in manufacturing or services, whether it requires high or low-level skills, research and development is also being relocated to China (see e.g. Sun et al., 2008). The ultimate question is whether white-collar workers constitute a ‘flexible’ layer between ordinary (core) work and outsourced (numerically flexible) operations. Is the combination of high effort and high job discretion (e.g. Hartikainen et al., 2010) the factor that leads to extreme results in Scandinavian job quality surveys in terms of the quality of work tasks, employees' opportunities to participate in decision making (Gallie, 2003), possibilities for self-development and learning at work (Green, 2006; Parent-Thirion et al., 2007), and the extreme results in Nordic workers' performance? The labour process conceptualization helps us to understand the mechanisms behind this phenomenon, where performance gains originate in work intensification, offloading of task controls, and increased job strain (Ramsay et al., 2000). Such development is evidenced in ordinary ‘blue-collar’ work to a lesser extent than in white-collar jobs, as a study at North Karelian workshops shows (Sippola, 2012); however, traditional blue-collar work is in decline in the Nordic countries.
In the Nordic countries, the historical trajectory of work organization and the labour movement has led to a high degree of flexible specialization and employee participation, but as already mentioned they have not remained immune to the reorganizations caused by global pressures (see also Bieler in this special issue). The rationalization of production processes is a path that will soon draw to a close. There are also premonitory signs implying that the ‘competitive edge’ of the northern labour process will not be based infinitely on technological innovations. Although the Swedish economy, for example, has performed relatively well in recent years, there are warning signs of relocation of research and development (R&D) in the key export-oriented manufacturing sectors, plus communications equipment, pharmaceuticals, and automotive work, the employment situation of which has been under debate in recent years. As Karlson (2006) argues, R&D and innovation are still rooted at ‘home’, but the outcome of continuous R&D transfer to South-East Asian countries is uncertain.
The state and the EU as progenitors of the new regime
In the political discourse revolving around economic ‘globalization’, the well-known ‘Nordic model’ is on the defensive. One might argue that it is not globalization as such that advances the current mode of capitalist accumulation in the Nordic countries, for these countries have served as a base for open markets throughout their history. Given their poor economic self-sufficiency in some basic products, historically they have been heavily dependent on world markets. Thus, the opening of international trade characteristic of the era of globalization is nothing new in these countries. Rather, there is an ideological alliance between neoliberal/technocratic governments, supranational organizations, and employers' lobbies that is shaping the current regime. In other words, the strategic role of national, regional, and local state apparatuses as active progenitors of neoliberalization has to be taken into account (Brenner et al., 2010).
The role of the state
Pontus Braunerhjelm, economics professor at Sweden's Royal Institute of Technology, has argued that: ‘There are certain weaknesses in the Nordic model and they are being “stress-tested” by globalization’. He refers to the threats of structural problems in the industries (too many large companies), an ageing population, and increased immigration (Milne & Ward, 2009: 7). Moreover, to take Sweden as an example again, the centre-right government that has been in power since 2006 has systematically been reducing the country's ‘tax burden’ and making the labour market more ‘flexible’ (ibid.). With the introduction of such reforms, the Swedish government has been replicating mainstream economic models rather than correcting the shortcomings of the Swedish economy; the latter have been masked by the fact that the Swedish economy has performed the best among European countries, even better than Germany, since the financial crisis of 2007–08.
Changes in the financial sector have given an impulse to the shift towards a more market-based regime. Finland and Sweden were among the first countries facing financial problems caused by the liberalization of financial markets at the beginning of the 1990s. Previously, when financial markets were more regulated, politicians took part in the administration of pension funds, and these funds made strategic investments in, for example, the Finnish industry. Since the Finnish liberalization, the guiding principle of these institutions has been the high level of return on investments. Along with this policy shift, a blind eye was turned to the negative consequences of these actions for Finnish workplaces. The changes in economic institutions are perceived as ‘technical’, rather than political, although the benefit of such operations for overall society has been at least questionable. Finnish government documents reveal that, since the early 1990s, several reports have been written on the possibilities of increasing wage differences (Kananen, 2011). Behind this is the ideology that economic growth can be achieved by offering incentives to workers in the form of wage differences. Besides the fostering of this ‘competition ideology’, particular sanctioning and controlling devices have been developed especially in sectors with the worst conditions for labour. Along with the ideological shift, social policies have been put forward that subject Finnish people to the ‘rules of the market’, which is a far cry from the former Nordic welfare state ideals of equality of opportunity (Kananen, 2011).
It is also symptomatic that Finnish state-owned companies have adopted labour management strategies which are similar to those of transnational companies. In February 2011, a subsidiary of the Finnish railway monopoly (VR) — Transpoint International — was caught paying its workers wages that were below the level set by the collective agreement. The company paid its Russian truck drivers according to the Finnish tariffs only when they visited Finland, and a fixed sum for working in Russia. The Finnish managing director of Transpoint International originally insisted that the company would face difficulties if it paid according to the Finnish collective agreement, since its Russian competitors would get all the jobs (Seitsemän Uutiset, 2011), but VR then acknowledged its mistake and set the wage levels according to the Finnish standards. However, after a few months, VR outsourced all transport to its Russian daughter company, and thus moved the drivers to the Russian regulations in order to save on labour costs.
The role of EU regulation
The changing regulatory framework imposed by the EU also has had a significant impact on the Nordic labour market since the mid-1990s. Here, the free movement of labour serves as a proxy for institutional changes. Furthermore, recent developments in EU regulation have opened up labour markets in ways which hamper the ability of unions — and also labour inspectors and other authorities — to regulate them according to ‘Nordic’ principles. The EU politics of labour mobility in construction are shaped by a series of court cases before the European Court of Justice (ECJ): the 1996 Posted Workers Directive, the 2004 accession of Central and Eastern European countries to the EU, and the 2006 Services Directive. Taking the Posted Workers Directive, it established that posted construction workers are entitled to the statutory minimum conditions of their host state or sending state, whichever is better from the worker's perspective. This was seen at the time as consolidating a ‘host country’ principle in employment relations in construction, which has since been reinterpreted by the ECJ in precisely the opposite direction. In addition, from 2003 to 2006, EU-level lobbying by the service industry, in conjunction with the European Commission, sought to pass a directive on the free movement of services which would establish a ‘country of origin’ principle for regulating service firms. The Services Directive provoked vociferous criticism and protest from labour unions and was only passed when the offending clause was removed (Gajewska, 2009). However, the unions' victory proved short-lived. In four decisions in 2007–08 the ECJ supported the practical implementation of a country of origin principle by asserting that union or government regulation of labour conditions directed at foreign service providers operating in their territory violates the free movement of services. 2
While the recruitment of agency labour through ‘service provision’ has been made attractive to employers, individual work-related migration has been rendered more difficult. Dølvik & Eldring (2008: 51–52) point out that intra-EU migration of individuals and migration as posted workers are both regulated under EU law via separate channels. Those who migrate as individuals are regulated under the EU framework for labour mobility, while those who are posted are regulated as dependent employees of service providers. This difference is silently accepted even though both kinds of workers compete in the same labour and product markets. Since this shift in the regulation of migrant workers, the Nordic labour market system with its strong regulating rights of labour unions and state authorities has been on the defensive. In 2007, the ECJ condemned the Swedish Building Workers' action against the Latvian construction firm Laval un Partneri as illegal. This ruling struck at the heart of the Nordic labour system: until this point, Swedes had taken for granted the fact that collective agreements defined the employment relations at the workplace level and that no employer was entitled to undermine the system. There is the spectre that in the long-run the decision will lead to a wider acceptance of exceptions to the national collective bargaining system and thus end the virtuous circle of ‘path-dependency’ and nullify compromises achieved at the state level (Rothstein, 1998: 29; Kettunen, 2004).
One has to note, however, the ‘response’ side of the Polanyian ‘double-movement’, which implies that spontaneous and conciliatory socio-political responses are possible as a counter-tendency to the disruptive effects of marketization (cf. Brenner et al., 2010). For example, massive labour protests have been seen in Greece and Italy as well as in the UK against government-led austerity measures (but see Rodrigues & Reis in this special issue for a more cautious note with regard to labour protests in Portugal). On the other hand, Finland's government has shown a progressive response, urging the labour market parties to arrive at an agreement for the 2011 national framework in the face of low-growth economic prospects. Here we see variation in the national and EU-level reactions. While, in the Finnish context, the response can be seen as a means of strengthening the ‘competitive state’ (see Kettunen, 2004: 306), the protests in the Mediterranean countries can be considered by EU politicians as disruptive action legitimating even stricter counter-measures of EU-level financial and economic control (see also Rodrigues & Reis in this special issue).
‘Hollowing out’ the foundation of the Nordic labour market regime: A joint agenda of domestic and transnational companies
Both domestic and transnational firms are able to circumvent institutional constraints at the national level (Herrmann, 2008; Lillie & Sippola, 2011). They manage to do this by relying on open international labour markets and atypical contracts (Herrmann, 2008), as well as introducing foreign agency labour onto the work site and applying labour regulations of their own — not those of the nation-state (Lillie & Sippola, 2011). Given the increased role of the firms and lobbies, an apt framework for scrutinizing labour relations would be that of an ‘actor’ perspective rather than the ‘institutionalist’ one (Lillie & Greer, 2007). The problem with this is that globalization is not happening in some external space, which from time to time invades national spaces through gates guarded by national institutions. Labour market actors design strategies in reference to pressure from both within and outside their ‘national systems’ (Lillie & Greer, 2007). This is not simply a shift in levels, but rather a de-centring of regulation away from the nation-state, to a multiplicity of regulatory venues (Mackenzie & Martinez Lucio, 2005).
Domestic ‘core’ work
The domestic firms' influence upon Finnish working life is understood better in qualitative rather than quantitative terms. Although there is little reason for the argument that part-time and temporary jobs would have increased since the 1990s in any case (Uusitalo, 2008), flexi-time arrangements have been widespread in Finland along with Sweden, Austria, Germany, and Denmark (OECD, 2010). In Finland, half of the flexible working-hours arrangements have been entirely set by the company (ibid.). Debate on accumulated (banked) working hours, and the possibility that employers are able to exploit such a system, has been an acute topic in Finland at the local level of bargaining (Sippola, 2012). Besides the qualitative shift facing ‘core’ (permanent, full-time) jobs, there are qualitative — and even quantitative — changes facing part-time and temporary workers. In a report commissioned by SAK, the Central Organisation of Finnish Trade Unions, it was revealed that part-time/temporary jobs are often short of paid holiday typical for ‘normal’ jobs, and are characterized by repeated breaks between work periods (Suoranta, 2008: 25–26). Such jobs are strikingly gendered: female jobs are far more likely to be part-time/temporary than male jobs (ibid.).
Although, at 13 per cent, the proportion of part-time workers in the entire labour force is relatively small, there is evidence that labour conditions have deteriorated in such jobs in Finland. Furthermore, the proportion of part-time workers in the retail, hotel, and restaurant sectors has grown steadily from the 1990s. Yet, 40 per cent of these employees work part-time against their will; 40 per cent are working part-time because of their studies; and only 20 per cent of part-timers do so because of personal reasons such as health or childcare (Suoranta, 2011). Perhaps unsurprisingly, the utilization of part-time labour in the private sector is accompanied by lower labour costs (ibid.).
The restructuring associated with the financial crisis also has implied changes in the material conditions of labour. To take a Swedish example, there are some signs denoting the new vulnerability of the worker. One might ponder if the introduction of a lower-level salary scheme — so-called yrkesintroduktion — for young and inexperienced workers, agreed upon by IF Metall and corresponding employers' organizations in 2010, is a sign of the emergence of ‘concession bargaining’ on Swedish soil. The agreement allows employers to pay employees wages that amount to only 75 per cent of the national wage agreement. It was argued that the conclusion of such an agreement would alleviate youth unemployment (which mirrors the claims made for such schemes elsewhere in Europe). Simultaneously, entrepreneurs in Sweden preparing themselves for the next crisis are already demanding a greater degree of flexibility in working contracts.
Looking elsewhere in the labour market, highly qualified engineers and other white-collar staff of multinationals are facing increasing competition from their colleagues in former ‘developing’ countries. The stagnation of engineers' wages has already been seen in Finland in recent years (Törmänen, 2011), and there are several examples of a gradual outsourcing of research and development from Finland. For instance, a Finland-based consulting and design company, Pöyry, decided to dismiss 400 employees in Finland in December 2010 due to ‘over-capacity’ of such work in the country, while it simultaneously increased its presence and workforce in Russia and Latin America. A Finnish mobile communication corporation, Nokia, provides another example of such outsourcing; in April 2011 it announced the dismissal of 1,400 employees in Finland and an outsourcing of 3,000 white-collar employees worldwide to Accenture, a consulting company. Also in the case of Nokia, the trend has been to outsource to Asian subcontractors at the cost of employment in Finland. And finally, the Finnish forest industry offers examples of the closing down of profitable units for the sake of coping with ‘over-capacity’. Between 2000 and 2010, more than one-third of both blue-collar and white-collar jobs have been outsourced and, even more significantly, the total value of investments in the industry dropped from nearly €800 million in 2008 to slightly more than €200 million in 2010 (Haukkasalo, 2011). The latter figures provide a strong indication that the financial crisis offered employers a proxy for dismissals and divestments.
Dismissals of the core workforce are accompanied by increasing job effort for those who have managed to keep their jobs. For instance, so-called High Performance Work Systems (HPWS) practices tend to seek higher organizational performance through work intensification, lesser job security, and greater worker autonomy; in other words, through an increase in job strain (Ramsay et al., 2000). There is evidence that implies profound changes in some aspects of the Finnish manufacturing labour process. For example, research on the Finnish metalworking sector in Spring 2010 (Sippola, 2012) reports some increase in work intensity and the plateauing of job autonomy (pace of work, order of job tasks, etc.). The interviewed employees (N = 29) reported that new managerial initiatives have been taken to improve efficiency and control. Such ‘continuous improvement’ and ‘small-step’ initiatives are currently changing the Finnish manufacturing industry from an anti-Taylorist basis to lean production. 3 Moreover, in many instances during the aforementioned study, interviewees highlighted the increased stress of white-collar workers; this trend was also evidenced in a few interviews with middle managers and white-collar staff themselves. In addition, in the aforementioned case study the use of agency labour for white-collar work had increased (Sippola, 2012). All these changes mainly reflect pressures to increase profits, which, in fact, would lead to the undermining of the key base of competitive advantage in the firms: their ‘human capital’ (Gough, 1996).
Returning to Nokia, it has used labour management strategies that seek to intensify white-collar work. On paper, it has upgraded thousands of engineering and office jobs to ‘senior salaried employee’ (professional and managerial employee) positions in order to make working hours more flexible. The regulation of working hours is stricter for junior than for senior salaried employees, and nominal wages for the latter are higher. Although the senior salaried employees are regarded as belonging to management rather than the workers, the majority of them have joined the union. In 2010, Nokia announced that it would terminate the transfer of union fees directly from the senior salaried employee salaries, even though this has been a common practice since the 1960s, when centrally coordinated wage bargaining began in Finland (Moisio, 2010). The chairman of the Union of Professional Engineers in Finland suspected that Nokia wanted to hamper the possibilities for its engineers to join unions and, fortunately for the ‘senior salaried employees’, Nokia eventually cancelled its decision.
In summary, we are witnessing a development that is conceptualized by Kunda & Ailon-Souday (2005: 210) as: ‘the invasion of the periphery to the core’. That is to say, ‘in many organizations work conditions that were once typical of peripheral employees are shared by core employees’ (ibid.: 209). This observation is similar to that of Sassen's (1998: 147) notion of an overall tendency towards a ‘casualization of the employment relation’ that incorporates not only the traditionally labelled ‘casual’ jobs but also jobs at a high professional level. It is important to note that the direction of the development is already empirically evidenced (e.g. Suoranta, 2008; OECD, 2010). However, the reviews of statistics and surveys do not fully grasp the underlying developments in the labour process caused by the outsourcing of domestic production on the one hand, and the invasion of irregular (posted, undocumented, etc.) labour into the Finnish market on the other. These phenomena will have an effect on core manufacturing jobs and more contract-type jobs in construction.
Foreign (agency) work
Besides the notion of ‘the invasion of the periphery to the core’ (Kunda & Ailon-Souday, 2005: 210), there is a tendency towards a two-tier labour market as a corollary to the flexible accumulation tendency — and as a consequence for the ‘need’ to utilize simultaneously a ‘higher tier’ of skilled workers and a numerically flexible ‘lower tier’. One example of reproducing a two-tier situation in the labour market is the use of ‘spaces of exception’ within so-called coordinated market economies. One case in point is the Olkiluoto 3 nuclear power plant construction site in Finland, where in 2011 4,000 mostly foreign engineering and building workers were working with varying wages and other conditions (Lillie & Sippola, 2011). In this case, the ‘space of exception’ is located within a relatively strict regulatory framework. Polish workers of an international labour contracting firm, Atlanco Rimec, struggled to claim from their firm and thus appealed to the Finnish construction union, Rakennusliitto. However, the case study revealed the inability of a national union to defend the rights of workers against transnational employers (Lillie & Sippola, 2011). This is even more striking in Finland because it has one of the strongest national construction unions in the Western world, with a membership rate of 70 per cent. There have been continuous violations of labour codes on the site, the latest ones being breaches of contractors' liabilities in long contracting chains typical of construction sites (Koponen, 2011), the case of unpaid wages to 115 Polish workers (worth €3 million), and the dismissals of Polish electricians belonging to the union (Holi, 2011). It is widely believed that the breaches found by the labour inspectors constitute only the ‘tip of the iceberg’ on the site, and the violations of the labour code in the case of Polish posted/agency workers are much more widespread than revealed in the media reports.
Interviews with personnel managers in the three biggest Finnish construction firms in 2008 and the media coverage in May 2011 (M.O.T., 2011) reveal the double standards of the Finnish construction companies in combating the grey economy. Two out of the three interviewees insisted that they have a strict method for ensuring the main contractor's liability. However, a Finnish television programme (M.O.T.) documented that one of these firms actively engaged in negotiating cheap masonry work with an Estonian firm offering a contract below the Finnish collective agreement, without checking the supplier's background (M.O.T., 2011). This is a clear breach of the 2008 law on the main contractor's liability, and it means that, officially, collective agreements and the law are obeyed, but in practice the grey economy is allowed to flourish.
The ‘invasion of the periphery to the core’ in the Finnish construction sector is mainly a result of the use of Estonian contractors, owned by Estonians or Finnish businessmen, as a ‘Trojan Horse’. A regional inspector of Rakennusliitto (the Finnish construction workers' union) asserts that virtually every Estonian subcontracting firm in central Finland has problems in adhering to clauses of Finnish collective bargaining agreements (Lotila, 2011). In the contracting chain, the Estonian (or Estonian-Russian) workers are themselves placed between a rock and a hard place. According to the regional inspector, there is a typical pattern that a Finnish customer makes an intentionally below-cost-price contract with an Estonian contractor (Lotila, 2011). The poor wage rates, and the lack of fringe benefits and holiday compensation, will dawn upon the Estonians only later. They will be left empty-handed, as the Finnish customer refuses to cancel the contract. Moreover, wages are still three to four times higher in Finland than in Estonia: an average construction worker receives around €600 per month, and this difference makes the elimination of the grey economy from the construction sector difficult. These workers are reluctant to raise an issue about their salaries as long as the wage difference remains that high (Lotila, 2011).
It is already recognized by some observers that the south-west regions of Finland have already been ‘lost’ in the war against grey construction business (Lotila, 2011). However, there are signs that such practices are spreading to the more sparsely populated and more easily supervised (by labour market institutions) north of Finland. At the beginning of August 2011, an industrial dispute erupted at the construction site of the blast furnace at Rautaruukki, caused by violations of Finnish labour law and collective agreements. A German supplier of masonry work, Beroa, had concluded an agreement with its Polish workers at €3–4 per hour, while the correct level should have been €15 per hour. Also, Finnish working time rules were violated. As Beroa, along with the contractor, Rautaruukki, denied this, 1,000 metalworkers went on a two-day strike on 4 August 2011. This case underlines the notion of ‘spaces of exception’; at the same time, it also highlights the prospects for a counter-movement in the Finnish context. Along the lines of Ong (2006), Beroa's use of underpaid Polish masonry workers is a manifestation of zoning technologies, where different physical spaces and work contexts are regulated differently depending on the citizenship or ethnicity of the individuals or firms involved. There is also a counter-tendency aspect (see e.g. Brenner et al., 2010) in this case, which manifests itself in the spontaneous strike of Rautaruukki's workers. Such a massive protest is still possible in the ‘stronghold’ area of Finnish unions, but the protesting power is slipping away from the unions in south-west Finland, where most of the agency work is concentrated.
The biggest problem is the temporary nature of work contracts. Estimates of temporary foreign workers range between 30,000 to 50,000, although no exact estimate has been made (Toivonen, 2011). A ministerial adviser at the Finnish Ministry of Employment and the Economy argues that the 2007–08 crisis did not decrease the number of temporary foreign workers but in fact increased it (Vainio, 2011). The construction, transport, and service industries are laying off their permanent staff and hiring new workers for temporary positions. The ministerial adviser maintains that an official explanation for hiring foreign temporary workers is that there are not enough skilled Finnish workers available, but the fact is that skilled workers in some cases are substituted by such workers who have no previous professional experience in the field (Vainio, 2011).
Discussion: Theoretical lessons
In the ‘ideal-type’ VoC consideration, the difference between coordinated and liberal market economies is based on nationally confined territories with common ethnic, citizenship, and regulatory characteristics, where the differences between homogeneous, nationally-bound regulatory systems would provide the competitive edge for certain types of production (for a broader theoretical critique, see Ebenau in this special issue). Rough classifications like the distinction between coordinated and liberal market economies do not take into account the penetration of exceptional spaces into coordinated systems, which is made possible by EU principles concerning the cross-border movement of labour and services, thus allowing more room for in situ strategies by which capital is able to reconstruct local labour market relations (Peck, 1992). Simultaneously, spatial strategies (utilizing particular combinations of labour process, labour supply, and its subsequent reproduction) are also deployed, with certain parts of the production process being relocated abroad (ibid.). In particular, the 2004–07 EU enlargements have made the spatial strategies of multinationals from Western Europe more feasible. These developments not only upgrade the production processes in more peripheral countries (if seen positively) but also undermine or even downgrade the labour process in the more prosperous countries. The openness of the Nordic economies which previously has highlighted the superiority of the ‘coordinated’ model (Milne & Ward, 2009) is now, combined with the interfering effect of EU resolutions (Laval, Viking, and Rüffert) (Bruun & Jonsson, 2010: 27), undermining the foundation of the model and thus the competitive edge itself.
According to Ong (2006: 77), developmental decisions favour the fragmentation of the national space into various non-contiguous zones, and governmental or regional policies promote the differential regulation of citizens connected (or not) with global circuits of capital. Thus, national contexts are not homogeneous spaces but instead are split into sub-spaces with differentiated sovereignty, discipline, and government of populations imposed by the government. When defined negatively, some zones are freed from national tax, labour, and ethnic representation laws; positively defined, zones promote opportunities to upgrade skilled workers, improve social and infrastructural facilities, and experiment with greater political rights (Ong, 2006: 78).
The Finnish examples provided here mainly support the neoliberal governmentality approach (Ong, 2006; see also Brenner et al., 2010), which emphasizes the ‘migration’ of governmental techniques and programming technologies, and their deployment in diverse socio-political settings. Although Brenner et al. (2010) aptly criticise the partial inability of this approach to identify patterned or patterning processes of neoliberalization and the underlying commonalities (with an emphasis on market logics, private property rights, economic optimization, and commodification), they unfairly maintain that such a ‘technology of rule’ approach ignores historical grounds and macro-level developments. The ‘non-historicity’ of the labour process must be considered against the backdrop of overall value theory (Gough, 1996) rather than as an intentional, path-dependent project of neoliberalization. Although the spatial aspect of relations of production has not been explicitly discussed here (for a discussion on e.g. the Baltic-Nordic labour process, see Sippola, 2009), the Nordic relations of production must be set against the spatial disintegration of production stages and the capitalist search for comparative advantage (Buckley, 2004: 42) in both domestic and geographically distant areas, taking the rationale of competition between different capitals into account (Julkunen, 1987: 379–80). 4
Conclusion
The regime of flexible accumulation, with Nordic governments and the EU as its supporters, allows transnational capital to exploit institutional ‘holes’ and exceptional ‘spaces’ of the Nordic labour market regime. Strikingly, this is seen in the government's negligence of the grey economy and the sharp increase of posted workers in the Nordic labour market. The analysis supports Roche and Geary's (2000) point that, as national institutions are continuously ‘hollowed out’ by competitive forces (e.g. domestic and transnational firms, and international lobbies), the consequence will be a greater diversity of competitive postures and employment models between and within nations. In consequence, it is to be feared that the neoliberalization of regulatory arrangements qualitatively transforms the institutional landscapes and leads to subsequent neoliberalization projects (Brenner et al., 2010).
What does this mean with respect to the Nordic labour process? The main conclusion of a study on the impact of the labour process in the Baltic States on Nordic countries (Sippola, 2009; Sippola, 2010) was that, while direct modes of disciplining labour and undermining union power were pervasive in the Baltic ‘peripheral’ units, a high degree of worker discretion and a high-level involvement of trade unions — so far — have characterized the labour process at the Nordic ‘core’. However, the Finnish end of the disintegrated labour process has not been left untouched by global economic forces. The ‘casualisation of the employment relation’ (Sassen, 1998) can be observed in the tendencies towards the growth of ‘spaces of exception’ in labour market regulation (Lillie & Sippola, 2011) and the flexi-time arrangements in Finland that are imposed by employers (OECD, 2010). The new regime of hegemonic despotism, which has strengthened its influence in the Nordic countries since the 1990s, is accompanied by the notion of concession bargaining on the part of the Nordic worker.
The new global growth regime, associated with the transformation of the division of labour on a planetary scale, does not necessarily satisfy the demands of the advocates of free trade; however, neither is this regime of capitalist accumulation self-regulating (of course the same is true for the previous accumulation regimes as well). On the verge of a regime of slackening growth, policies, mentalities, and institutions do not develop at the same rate as techniques, working methods, and markets (Aglietta, 2000: 414). One also has to note nationalist tendencies currently prevailing in Europe, which might contribute to the ‘re-nationalisation’ of industrial relations. Furthermore, somewhat paradoxically but perhaps ostensibly, the Finnish 2011 nation-level framework collective agreement, concluded for the sake of industrial peace and national competitiveness, appears to support the idea of a pendulum swing from neoliberalism towards socially coordinated capitalism. Gareth Dale (2012), however, asserts that there is no sign of the recent global financial crisis heralding a pendulum swing from neoliberalism towards socially coordinated capitalism, and therefore there is little general support for the Polanyian double movement theorem (see also Becker & Jäger and Ebenau in this special issue). Nevertheless, recent developments on the Olkiluoto 3 construction site show that counter-action is still possible, although the unions continue to assume a rather defensive role on the site. While the attempts of Rakennusliitto alone to defend the Polish workers were feeble in 2007–08 (the construction phase of the reactor building proper), now (in the installations phase) an ‘alliance’ between Rakennusliitto, Metalliliitto, the Sähköliitto, and trade union Pro seems to have a more assertive approach to recruiting and representing foreign members. In 2011, the Sähköliitto brought a legal action against Elektrobudowa SA, a Polish contractor, regarding the unpaid wages of Polish workers, and there was industrial action against the dismissals of Polish union members. The ‘alliance’ of the four unions even declared a boycott of the Olkiluoto site, but the issues were settled before the action was realized. In other words, the tone at the site by the end of 2011 had started to reflect a more ‘normal’ discourse in such a situation in Finland. Simultaneously, it seems that the Finnish government is now ready to invest the Labour Inspectorate with more powers, which eventually should lead to the intensification of the efforts to fight the grey economy. Nevertheless, this can be only a vibratory motion against the long-run pendulum swing in the opposite direction. Although the proportion of part-time jobs is still low in the Finnish labour market compared to many other European countries, its share is growing. Moreover, the quality of service-sector jobs in which part-time regimes are used is deteriorating, and the number of posted/agency workers is increasing. It is to be noted that the number of foreign workers did not decrease during the financial crisis; rather, the domestic workforce was dismissed. Also worth noting is the fact that labour inspectors and union officials so far have been powerless in imposing control on illegal work, and in some regions (the Helsinki/Uusimaa and Turku regions) the utilization of cheap Estonian-Russian, Polish, or other labour is largely beyond their control.
Paradoxically, although the ‘coordinated’ market economy (Hall & Soskice, 2001), or ‘social-democratic’ growth model (Amable, 2003), constitutes the backbone of the competitive advantage of the Nordic economies, it may prove too vulnerable under the evolving, ‘globalized’ regime. The relatively good Finnish quality of working conditions, which concern mostly the core labour force, is not applicable to the second tier of the labour force (the posted, undocumented, irregularly employed, etc.). Furthermore, the relocation of white-collar jobs to the East may prove fateful for the core jobs too. In this respect, it is questionable if ‘skill-based labour management’ (Whitley, 1999: 69) will prevail for the major part of the labour force in the future; however, it is too early to definitively conclude that Finland's growth model is now more ‘free market’ in content and it remains to be seen whether the 2011 national framework agreement will be continued in the coming years, which would enable labour relations to remain in the grasp of labour unions.
Footnotes
1
Ong labels the phenomena of zones of exception ‘variegated sovereignty’ and ‘neoliberalism by exception’, by which she means that different physical spaces and work contexts within the same territorial jurisdiction are regulated differently depending on one's citizenship or ethnicity.
2
ECJ Case C-438/05, Viking Line vs. the Finnish Seamen's Union and the International Transport Workers' Federation (2007); Case C-341/05, Laval un Partneri vs. the Swedish Construction Workers Union and Swedish Electrical Workers Unions (2007); Case C-346/06, Dirk Rüffert vs. Land Niedersachsen (2008); and C-319/06, Commission vs. Luxembourg (2008).
3
The Scandinavian experiments in work organization in the 1960s and 1970s may be regarded as a pure manifestation of anti-Taylorist programmes, which include socio-technical systems design, industrial democracy, and humanization of working life (see Pruijt, 2003). Lean production systems, on the other hand, are characteristically neo-Taylorist, as they introduce quality management and eliminate slack in the production while keeping the core attractions of Taylorism intact (ibid.).
4
Instead of deriving the changes in the labour process from the mere production of surplus value, it is more fruitful to examine labour process changes from the perspective of a dual logic of capitalism — the competition between different capitals and the wage-earning relationship — as well as assessing the coercive power of economic crises in rationalizing the work process.