A look at fixed-term employment contracts in Finland

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Employment relationships in Finland are by default permanent. Fixed-term employment contracts in Finland are allowed only in specific circumstances. Thus employers need to clearly give a reason for suggesting a fixed-term contract. You can learn about those circumstances both in our short Mini-course on Finnish employment contracts and in our longer Working in Finland -course. In this blog post, we won’t go into those but focus on some characteristics of fixed-term employment contracts in Finland.

The changing nature of work

When reading the newspaper, watching the news, or just following one’s Twitter thread, one cannot escape noticing the constant message of how work is changing in dramatic ways. 

We are being told that the skills future workers will need are so-called soft skills. These skills are, according to the Osaamisen vallankumous 4.0. -report of the Manpower Group, analytical, communication, leadership, negotiation and management skills, and resilience. We need so-called meta-skills. In any other, robots and AI can and will replace us.   

This will lead to a polarization of the labor market where there will be only two types of jobs. Those that require higher education and advanced skills, and those that don’t. There won’t be jobs in the middle. For example, Mika Pajarinen and Petri Rouvinen concluded in 2014 that about 36 % of employees in Finland are currently employed in professions that are under severe threat of disappearing. 

These speculations often lead also to discussions about how employment relationships will also inevitably change. There’s been a lot of talk about increases in freelance work, fixed-term work, and entrepreneurship. Depending on who’s doing the talking, these changes can be presented as either positive or negative. 

For example,  a report by the Manpower Group claims that almost half (45 %) of the globally surveyed employees stated that they prefer something other than full-time permanent employment. 

On the other hand, a recent survey of Finnish vocational school students reveals that 58 % of them strongly prefer full-time employment.  They also ranked permanent employment relationships on a scale from 1 (most desirable) to 5 (least desirable). 45 % of them ranked permanent employment relationships as very desirable or desirable on that scale. In contrast, only 29 % ranked fixed-term employment relationships as such. 

So it seems that in Finland at least the youngest generation still prefers full-time permanent employment relationships over other types. But since many of us are or have been employed in fixed-term employment contracts, let’s look at what those are like in Finland. 

Getting ready to sign your first Finnish employment contract? Be better prepared by taking our online course “Mini-course on Finnish Employment Contracts”. You can find it in our online store.

Fixed-term employment contracts in Finland: some characteristics

In this part of our discussion, we will mostly rely on the Statistics Finland survey of Finnish working conditions that they published last year. 

Despite the increased discussion about the changing nature of work, the percentage of employees in temporary employment contracts in Finland has not risen notably. In fact, the highest recorded percentage was in 1997 when 18 % of all employees were in temporary employment relationships (21 % of women and 16 % men). 

These days, Finland has a slightly higher (12.5 %) percentage of temporary workers than the European Union countries on average (EU28 average 11.9 %). 

What is particularly noticeable in Finland, however, is that the percentage of women in temporary employment relationships is higher (17 % at the end of 2019) than for men (11.3 %). 

The high gender segregation of the Finnish labor market partly explains the higher rate of fixed-term employment contracts with women. We discussed a particular aspect of that segregation last week

Women in Finland take longer family leaves than men. This combined with the high gender segregation results in a higher need for substitutes especially in fields dominated by women. And those doing the substituting are again mostly women. 

Another notable characteristic in Finland is that large numbers of students have a part-time/temporary job during their studies. Thus the summer jobs of Finnish students raise the annual percentages for temporary work. 

Interestingly, the proportion of fixed-term employment contracts is particularly high in the university sector. 40 % of those employed in the sector were working in fixed-term contracts in 2018. In the private sector, the same figure was 10 %. Acatiimi, the magazine of the three employee unions of the university sector, recently published an article describing the situation in Finnish universities. We also talk about this in our course Working in Finnish universities

The preference for permanent employment expressed by the vocational school students shows in this Statistics Finland survey as well. Only about 22 % of those employed in fixed-term employment contracts said that they were in them voluntarily.

Types of temp jobs in Finland

One of the reasons temporary employment percentages are tracked in Finland and elsewhere is that so-called “atypical employment relationships” are often thought of as bad jobs. That the temporary status of the job also means poor working conditions in general. 

However, in most cases, this isn’t true. At least not in Finland.  Satu Ojala and her fellow researchers have shown that much depends on the individual temporary job and on the employee in it. 

These researchers identified three types of temporary workers based on the type of fixed-term contracts they had. These were substitutes, project-workers, and those more on the periphery of temporary workers. These latter were, for example, people on employment subsidy, temporary agency workers, and seasonal workers. 

When following their study subjects for eight years from one labor market transition to the next, they found that the majority of these temporary workers did end up in a more secure labor market position down the road. The exception was the third group. It was at the highest risk of being excluded from the labor market altogether. 

The researchers identified both individual and structural reasons for these divergent paths towards more secure employment. On one hand, substitutes and project workers in their study were highly educated (33 % and 30 % with higher education respectively). Of the third group, only 11 % had higher education. They also had more experience with intermittent unemployment. 

On the other, researchers argued that while large scale statistics don’t yet show the anticipated polarization of the labor market, these types of small-scale analyses do. Although all of these people were in temporary jobs, they were in very different types of jobs.

So, temporary jobs are not all the same. In general, it seems that fixed-term work in Finland does lead to more permanent jobs down the road. These types of fixed-term jobs in Finland for the most part aren’t bad quality jobs. But it really isn’t that way for every temp job. 

Let’s see what temp workers in the Statistics Finland survey think of their future prospects.

How workers in fixed-term employment contracts see their employment

In 2018, temporary workers usually assumed that their employment will continue with a new temporary contract. This was particularly true for women. 50 % of women believed that their employment would continue with another temporary contract. Only 37 % of men believed the same. 

Men (16 %), instead, were more confident than women (9 %) that their employment contract would be changed into a permanent contract. 

Often, though, fixed-term employees had to live with uncertainty. About 16 % of the men and 21 % of the women in 2018 didn’t know what happens after their current contract ends. The certainty that permanent employment brings was what both women (68 %) and men (57 %) missed the most. Interestingly, though, for both men and women, this percentage had come down from 1997. 

This lowering trend in negative feelings towards fixed-term positions has been going on for the last 20 years. For example, in 1997 69 % of women found the financial insecurity caused by fixed-term contracts mentally taxing. By 2018 that percentage had come down to 49. For men, the same percentages were 51 in 1997 and 43 in 2018. 

This lowering trend shows that although most of the employees in 2018 still were in fixed-term positions involuntarily, they didn’t view their position as negatively as employees in the past had. Does this mean that although younger generations still prefer permanent contracts their lives are less defined by job security? And if so, why? Because they’ve accepted the inevitable changes in the nature of work we’ve all heard so much about? 

Make sure you know what you are signing. Enroll in this short and inexpensive online course “Mini-course on Finnish Employment Contracts”. You can find it in our online store.

The mission of Finnwards is to help internationals thrive in their life abroad. We provide coaching, consulting, and training services that help them do just that. Check out our Services for Businesses and Organizations or our Expat Inspiration Catalog for more information! While we serve internationals and their employers all over the world, our specialty is Finland. With our help, internationals can build a uniquely Finnish life for themselves and their family. In addition to the coaching, consulting and training services, we also offer a wide selection of self-guided online courses about Finland. Contact us and let us help you or your employees succeed in their professional and private lives abroad and in Finland.

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