Temporary Agency Work in Finland

Executive summary

In recent years temporary agency work (TAW) has rapidly been expanding in Finland. This has shown both in the increase of the number of temporary agency workers¹ and of the number of user firms as well as in the growth of industry’s business turnover².

Reliance on temporary agency work in Finland is still quite modest. In 1999 the share of temporary agency workers of all labour force in Finland was around 1.2 per cent, i.e. around 31 200 workers, whereas the corresponding share in Europe was on average 2.5 per cent. Around 15 000 of these workers had temporary agency work as their major source of living. The number of temporary agency firms was around 170, of which nearly half operated in the entertainment industry. The business turnover of the whole industry in 1999 was around 1.08 billion FIM. In addition to hiring labour, some Finnish temporary agencies have broadened their scope of operation to include other services as well (e.g. recruitment, outsourcing).

Use of temporary agency work in Finland is concentrated in services, clerical work, and industry (including transport). Service sector is by far the biggest user of temporary agency work: over sixty per cent of all temporary agency workers work in the service sector.

In Finland temporary agency employment relationships are predominantly fixed-term contracts. By the Finnish law, an employment relationship in temporary agency work is established between an employee and a firm that acts as a temporary work agency. Another kind of contractual relation is set up between the temporary work agency and the user-enterprise, who hires a temporary agency employee. A temporary work agency pays wages and social security contributions, and bears the primary employer responsibility as regards tort liability and occupational safety. As far as occupational safety is concerned, a user firm is also partly responsible.

Typical motives for doing temporary agency work are need for change, using temporary agency work as a stepping stone to a permanent employment relationship, earning extra income, and unemployment. Workers regard as the greatest disadvantage connected to temporary agency work job insecurity, in particular economic insecurity and, thereby, difficulties to plan one’s own economy. Another disadvantage is that temporary agency workers are not in as good position as permanent workers regarding statutory social security, although their social security has improved with legislative changes.

For user firms the most common reasons for using temporary agency work are easing workload, using temporary agency workers as vacation substitutes, and using hires as a way to recruit permanent workers.

There is relatively little specific legislation regulating use of temporary agency work in Finland. In 1994 use of temporary agency work was deregulated so that it was no longer a subject to a licence. Collective bargaining also plays a role in the overall regulation of temporary agency work in Finland. A general agreement (1997) exists between The Confederation of Finnish Industry and Employers (TT) and The Central Organisation of Finnish Trade Unions (SAK) about the conditions of temporary agency employment relationships and their use.

According to the new Employment Contracts Act (which enters into force 1.6.2001), the conditions of temporary agency workers are safeguarded so that they are defined on the same basis as those for permanent workers in the user enterprise. In other words the temporary work agency is obliged to apply to temporary agency workers the same collective agreement as the user enterprise applies to its workers. The new law defines one exception: if a special collective agreement exists on temporary agency work, then the temporary agency firm is obliged to apply that collective agreement. However, no collective agreements on TAW exist except one minor branch level agreement and some undertaking level agreements between some unions and the temporary work agency in question.

¹ Annual growth rate of those having temporary agency work as their major source of living has been around 15 per cent.
² Annual growth rate of business turnover has been around ten per cent.

• ISSN: 1457-2923
• ISBN: 952-5071-61-8
• Publication in PDF-format