Government hastily called off a press conference earlier today amid fears that municipal labour organisations could bring down its competitiveness-building pact. On Monday unions representing local government workers sent the government triad an ultimatum calling for it to back down on planned cuts to municipal funding. They say they will not sign up for the labour market deal if their demands are not met.
The story broke on Wednesday morning when it was reported by Lännen Media outlets. Government coalition leaders were due to speak to the media at 1.00 pm ahead of the start of budget talks at the Prime Minister’s residence at Kesäranta, but the government pulled the plug at very short notice.
The official chairing the press conference said at the time that it had been scuppered because the demands made by the municipal workers had been made public. Later in the day the government's communications department said the event had been cancelled because of what it described as an 'information break'.
Municipal, public sector unions get cold feet
Earlier on Wednesday Lännen Media news agency reported that unions representing public sector and municipal workers had called on the government to remove from next year’s budget proposal measures aimed at additional cuts to municipal funding. The agency reported that if the government did not back down on the spending cuts, the unions would pull out of the so-called competitiveness pact aimed at reducing the unit cost of labour for employers.
In their letter to the government on Monday, the public sector and local government unions had given the administration until noon on Wednesday to respond to their demands. Local government and public sector labour organisations are due to sign the competitiveness deal next Monday.
Unions: Pact could cost municipalities 90m euros
The unions noted that the Finance Minister’s budget proposal includes additional austerity measures that would disproportionately affect local governments and municipal services. The organisations said that in effect the additional cuts would target education, early childhood education and care services. They would also put thousands of municipal workers out of jobs, they claimed.
The letter also pointed out that in addition to measures already agreed in the competitiveness pact, the draft budget would reduce government contributions to the municipal sector so that vacation pay cuts and longer working hours agreed to in the competitiveness deal would erode any benefits offered by the agreement.
If the competitiveness deal is implemented in its current form they argued, local councils would lose an estimated 90 million euros, although the assumption is that the deal would not weaken their financial position. The unions have called for the government to modify the details of the competitiveness pact during their budget discussions to neutralise the effect of the combined set of measures on municipal finances.
On Tuesday Finance Minister Petteri Orpo, Labour Minister Jari Lindström and Economic Affairs Olli Rehn had reportedly been in meetings with labour market leaders and had spent much of their time trying to sort out the knot caused by the municipal and public sector unions’ demands.
