Finland Times

The political and labour market impasse in Finland further worsened on Wednesday as the latest round of talks between employees and employers on a pact to cut down production costs collapsed.

     This was the third attempt to reach what Prime Minister Juha Sipilä has considered vital for a revival of the Finnish economy. This round of talks started in autumn in the wake of major demonstrations against a government plan to cut workers' welfare and compensation with binding legislation.

    Sipilä expressed his disappointment on Wednesday saying it looked like the labor market negotiating partners could not meet "the requirement of modern times."

    Sipilä said he saw no other alternative but to proceed with enforcing legislation, which has been presented to the parliament. If enacted, the legislation would increase working hours, shorten vacation time for many, reduce holiday bonus payments by a third and make paid sick leave more expensive.

    

Such legislation is unprecedented in Finland as governments have never deprived the unions of the right to negotiate. However, following the major demonstrations in early autumn, the government made some concessions.

     Tuomas Ojanen, professor of constitutional law at Helsinki University, told national broadcaster Yle that the planned laws may be in contravention of international agreements Finland has signed. They include the European Union basic charter and the International Labor Organization decrees, which guarantee the right of workers unions to enter agreements.

     The current process in Finland has been nicknamed as trying to create an "internal devaluation."  If Finland was still using its own currency, the external exchange rate would be adjusted by 10 percent. But as Finland is in the euro zone and uses the euro, the only way around this is to cut internal production costs.

     The final reason for the breakdown in Wednesday's talks was the Transport Workers Union pulling out. As a result, the Confederation of Industries said they would not join if the Transport Workers were out.

     Lauri Lyly, chairman of the largest central union organization SAK, blamed the employers for not being interested in reaching agreements. But Jyri Häkämies, CEO of the Confederation of Industries, dismissed the claim and said they wanted a solution that was better for Finland's competitive edge than the upcoming enforced legislation.

     Had discussions been successful, the result was likely to see a salary system whereby export industries would have defined a salary ceiling.