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Finland is a business-friendly economy. Whether you are a local business or an international firm looking to set foot in the nation, you can look forward to a wealth of opportunities awaiting you. Setting up a business in Finland will also give you the ideal foundation to get quick access to Northern Europe’s growing markets. Easy access to an extremely skilled, educated, and future-ready workforce, powered by the latest technologies, is a big reason for setting up and a running business in Finland.
The Finnish culture of openness, combined with high funding, low tax rates, focus on sustainability, and reliable infrastructure, has created an environment that encourages innovation, collaboration, and business success, all of which attract businesses to the land. Whether you plan to set up or have already started doing business in Finland, it pays to know a few vital things about salary trends, the typical work days, and benefits applicable to employees.
Finland’s Work Schedule and Salary Trends
According to salaryexplorer, an individual working in Finland usually earns around €4,690 per month. This translates to an annual salary of €56,280. Though salaries depend on multiple factors like the type of job, the level at which the person is employed, educational qualification, experience, and location, among others, the average salary in Finland sits between €1,190 (lowest average) and €20,900 (highest average).
Without selecting a specific career, talking about the average salary would not be wise. For example, a registered nurse earns much more than a bartender or bank teller.
The experience level is the most important factor in determining the salary because the more years of experience you possess, the higher will be your wage. For instance, the average salary of a research engineer in Finland is €78,427, according to the Economic Research Institute. An estimated salary of the professional in 2028 stands at €90,742 with an almost 16% increase within 5 years.
Image courtesy: Economic Research Institute
It has been found that employees with 2-5 years of experience earn on average 32% more than their junior counterparts and freshers across all disciplines and industries. Professionals with 5+ years of experience tend to earn on average 36% more than those with 5 years or less of work experience. However, one thing can be said for sure: Compared to its Nordic neighbours and other countries in the world, Finland’s average salary is relatively high.
Is There a Minimum Wage in Finland?
Finland has no universal minimum wage. The collective agreements between the parties involved determine the minimum wage and different work conditions. Despite the absence of any legal labour agreement, employers in Finland must pay fair salaries based on what’s the accepted standard in their specific industry or sector.
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It’s interesting to note here that in 2017 and 2018, Finland’s government ran a 2-year universal basic income experiment for the first time where 2,000 unemployed citizens between the age group of 25 and 58 were given €560 monthly with no strings attached. However, this experiment failed to generate any significant short-term employment effects in spite of offering larger improvements in employment incentives than any pragmatic countrywide policy could provide.
This was revealed in this study by Kari Hämäläinen, Ohto Kanninen, and Jouko Verho. Despite the novel feature of this experiment that made the treatment group receive basic income payment irrespective of their job search efforts or labour market status, it had minor employment effects at best. Despite the considerable boost in work incentives, days in employment stayed statistically unaffected in the experiment’s first year.
Additionally, even though all job search requirements were waived, reemployment services witnessed high participation. The experiment concluded that boosting financial incentives for employment can be a futile policy tool for some clusters of jobless people, particularly if the boost in incentives peaks at comparatively elevated wage levels.
After this failed experiment, no further efforts have been made to set a minimum wage in Finland.
Employee Work Schedule in Finland
Working hours in Finland are guided by the Working Hours Act, which is strongly rooted in labour protection. Working hours refer to the hours used to perform work and the time the employee needs to be present in the workplace and available for work, even though s/he wouldn’t actually work. The act says that regular working hours may not go beyond 8 hours daily and 40 hours weekly.
Though Sanna Marin, Finland’s Prime Minister, tweeted about the idea of a 4-day workweek and 6-hour working days in August 2019, the country hasn’t introduced it yet. But some employers may be open to the idea, especially where their employees seek flexible work arrangements. As a business owner, being open to such requests and accommodating them could be a game-changer in retaining top talent.
In the employment contract, working hours are agreed upon by the concerned parties. The country’s most common regular working hours are 7.5 hours daily and 37.5 hours weekly. Employers in Finland are obliged by the law to monitor the actual working hours of their employees and their compensation.
In case of flexible working hours for period-based work, employees are allowed by law to work for a maximum of 80 hours in a 2-week period or 120 hours in a 3-week period. Employees shouldn’t work 40+ hours a week for 4 months for such arrangements.
After working for 6 hours, employees should have a 1-hour break. Additionally, they should rest for 11 hours in between working days and get a 35-hour consecutive break after 7 working days.
When it comes to overtime, an employee can work not more than an average of 48 hours weekly for 4 months. In case there are internal or technical issues, overtime for 6 or 12 months is allowed. As a business owner, when you make your employees work overtime, the first two hours should pay a 50% increase in wages based on what their daily pay rates are. The pay increase should be 100% if the overtime runs for 2 or more hours.
Despite Finland’s standard work schedule, most jobs requiring specialised educational qualifications and experience are no longer time-bound and location-based. As the country supports and encourages work-life balance and a growing number of its employers are working toward achieving a more dynamic working life, work today has become flexible. Employees looking for something more beyond the salary these days prefer to work for businesses that offer them a supportive and flexible work environment.
Employee Benefit Trends in Finland to Look Out For
As an employer, you must pay the following ancillary costs other than salary:
- Health insurance premium
- Occupational pension contribution
- Group life insurance premium
- Unemployment insurance premiums
- Accident insurance premium
You will also need to pay your employees in Finland certain mandatory benefits they are entitled to. These include:
1. Holiday
Employees in Finland earn holidays on the basis of the 14-day or 35-hour rule. Employees who work for at least 14 days every month, governed by their employment contract, are covered by the 14-day rule. They accumulate holidays for every calendar month during which they have worked for at least 14 days or spent the equivalent days at work.
Employees putting in less than 14 days every month but a minimum of 35 hours monthly according to their contract are governed by the 35-hour rule. They accumulate days of holiday for every calendar month during which they have worked for at least 35 hours or put in the same number of hours equivalent to work.
Employees who worked for less than 35 hours monthly are entitled to a leave equivalent to the annual holiday. They are entitled to 2 working days of leave for every month during which their employment relationship was active. For employment relationships with 1+ years, the employee is entitled to get 4 weeks’ leave.
Finland’s leave system also applies to employees working from home. Employees who have been employed by the same employer under recurring fixed-term employment contracts with small interruptions are also entitled to a leave.
In Finland, the annual holiday is earned and used for working days. Even though weekends aren’t working days in many cases, Saturdays are considered working days. Employees must take summer holidays (24 working days) in the holiday season from May 2 to September 30. The rest of the holiday must be granted by the employer no later than the start of the following holiday season. However, the employee and the employer may agree on taking the holiday outside the holiday seasons and could even use a segment of the holiday as shorter working hours.
When it comes to the holiday bonus, which is 50% of the holiday pay, an employer’s obligation to pay it is guided by the employment contract, collective agreements, or well-established practices. The Annual Holidays Act has no provisions that make it compulsory for employers to pay holiday bonuses.
2. Sick Leave
Sick employees are entitled to get 100% salary from their employers for 9 days in case they have been employed for a month. After 10 days, they can apply to Kela, Finland’s Social Insurance Institution, to get sickness benefits up to 300 days.
If the employment period is less than a month, the employees are entitled to receive 50% of their daily wages for the sick days.
3. Maternity/Paternity Leave
In Finland, maternity leave starts at the earliest 50 working days, and at the latest 30 working days, prior to the estimated due date. Once the maternity leave starts, mothers get benefits from Kela for 105 working days from the day the leave starts, including Saturdays.
The paternity leave in Finland can last up to 54 working days or approximately 9 weeks. Fathers can align their paternity leave with the mother on maternity leave, and stay at home for 1 to 18 days. They can take the remaining part of the paternity leave in a maximum of 2 disconnected periods after the parental allowance comes to an end.
In case 1+ child is adopted or born at a time, the father gets an extended paternity allowance period of 18 working days for each child. The paternity allowance period can extend to 72 working days for 2 children, 90 working days for 3 children, and 105 working days for 4 or more children respectively.
4. Parental leave
Both parents are eligible to get parental leave, during which they can stay at home and are entitled to a partial allowance or can work part-time. Kela offers a parental allowance for 158 working days (which is almost half a year).
Your parental allowance will end when your child is about 9 months. The allowance will end sooner if you start receiving paternity or maternity benefits on account of another child being born.
5. Study Leave
Employees can take 2 years of unpaid study leave during a 5-year period if their employment relationship with the same employer has lasted for 1 year at the least in one or more periods.
For employment periods of less than a year but more than three months, employees are eligible for a 5-day leave.
Final Words
To lure and retain top talent in today’s highly competitive business landscape, it pays to offer some additional incentives to employees, which some forward-thinking companies in Finland are already doing. If you too follow suit, it will help you to sweeten your basic salary packages and attract the best candidates.
Focusing on your company culture, work environment, and policies are equally vital to entice and hold onto the top-notch candidates in your industry.
If you need help in finding and hiring top talent in Finland, reach us at InHunt World today!
This article was written by InHunt World