Finnish government proposes employee representation on management boards of smaller companies

Finnish Prime Minister Petteri Orpo announced on Tuesday that the government aims to include employee representatives in the management boards of smaller companies. While the proposal is viewed positively by labor representatives such as Jarkko Eloranta, chair of the Central Organization of Finnish Trade Unions (SAK), and Riku Aalto, chair of the Industrial Union, they do not consider it significantly impactful.

Eloranta described the initiative as more of a “band-aid for an open wound,” emphasizing that it does not address the broader cuts and losses the government is implementing. The proposed governance reform is part of a major overhaul of labor market regulations. Currently, companies with at least 150 employees are required to have a staff representative on their management board, and the government wants to extend this obligation to smaller firms, thereby giving employees a voice in decision-making processes.

This legislative overhaul has been criticized by labor unions, who argue that it primarily benefits employers. Additionally, the government plans to modify local agreements on labor conditions, allowing all companies to negotiate terms freely, regardless of their affiliation with employer associations.

Orpo stated that a facilitator will be appointed in the fall, along with a tripartite working group to prepare the governance representation reform starting early next year. Eloranta expressed readiness to participate in this group but questioned the sincerity of negotiations. He advocates for significantly lowering the employee threshold from 150 to at least 50, citing that in Sweden, companies with over 25 employees must allow at least two representatives on the board.

Antti Palola, chair of the Finnish Confederation of Professionals (STTK), was more optimistic, viewing Orpo’s announcement as a gesture towards labor organizations and calling for fair reforms. He believes it is essential for employee representatives to be included on company boards, rather than just advisory bodies.