A ten-month saga drew to a close on Wednesday as the Finnish government announced it would accept a deal brokered between unions and employers to transfer some social payments from employers to employees, lengthen working hours and cut holidays in the public sector.
The deal had been demanded by Prime Minister Juha Sipilä’s government to improve Finland’s competitiveness by cutting unit labour costs.
Speaking at the Prime Minister’s official residence at Kesäranta, Sipilä announced on Wednesday evening that, after a day of one-on-one meetings with union leaders, he would support the agreement.
Back on the shelf
"The government supports the labour market organisations’ deal," said Sipilä.
"The government’s own competitiveness package (of spending cuts and tax rises) will go back on the shelf, and this deal creates the conditions under which the government’s additional savings package can be shelved."
The government had threatened spending cuts and tax rises, along with cuts to sick pay and holiday bonuses, if the labour market organisations did not reach a deal. Sipilä said that the government might now consider tax cuts to help support spending power if Finland's model of local wage bargaining progresses far enough.
Boost employment
Off the back of the agreement, the government hopes to raise employment to 72 percent. It is currently just under 67 percent. In practice that means the creation of an extra 110,000 jobs, but according to calculations by the Finance Ministry released yesterday, Monday’s package will only create some 35,000 jobs.
The minister for Employment and the Economy, Jari Lindström, said that this was just the start.
"These 35,000 jobs are a significant step towards the tough, 110,000 job target," said Lindström, who was standing in for his Finns Party leader Timo Soini. Soini is away on business in his capacity as Foreign Minister.
"This gives a totally different kind of tool for the government and the Employment minister to meet this kind of challenge," said Lindström.
The package of measure has been accepted by the Akava and STTK trade union confederations, which represent highly educated and white collar workers respectively. The blue collar SAK confederation said on Monday that it would take a week to confirm that its member organisations would accept the package.
