Finland Times

 

(From Left) Minister of Justice and Labour Jari Lindström, Prime Minister Juha Sipilä and Finance Minister Alexander Stubb spoke on government's position on labour market solution on Monday. Photo Lehtikuva.

The organisations of employers and employees reached a major agreement in the social contract negotiations on Monday and handed over the results to the government for approval, reported the news agency Xinhua quoting the local media.

 

The so-called social contract is a key part of the government’s programme aiming to improve the competence of the economy. The government has hoped to cut 5 per cent of the production costs.

 

The labour market representatives finally found a solution on Monday, following failures in four rounds of negotiations in 2015.

 

The new solution aims at improving the competitiveness of enterprises by freezing salaries, increasing annual working time by 24 hours, cutting public sector’s holiday pay by 30 per cent, raising employees’ pension contribution by 1.2 per cent and so on, according to the Finnish language daily Helsingin Sanomat.

 

Meanwhile, the employee organisations required the government to abandon its plan of 1.5 billion euros of additional spending cuts and tax hikes, as well as to implement tax relief of 1 billion euros.

 

The agreement is expected to replace the alternative means proposed by the government last autumn, including shortening holidays, reducing pay for overtime work, Sunday work and sick leave through legislation.

 

SAK Chairman Lauri Lyly talked to media about the results of labour market negotiations on Monday. Photo Lehtikuva.

The government will assess the result of the negotiations, said the national broadcaster Yle.

 

The social contract was initiated by the current government after it had assumed office last May. 

 

Prime Minister Juha Sipilä welcomed the breakthrough in the negotiation between the labour market organisations, reported the news agency STT.

 

It appears that the social contract has provided conditions to replace the legislative package prepared by the government, said the prime minister.

 

The government has, however, not yet approved the negotiation’s resolution. 

 

The premier said the Ministry of Finance shall establish more detailed estimates of the impact of the outcome of negotiations on unit labour costs, public finances and employment. 

 

Sipilä also said that outstanding issues still remain, primarily with local labour agreements.

 

The government is scheduled to meet with the labour market organisations on Tuesday and ask detailed questions on the outcome of the negotiations.

 

The government will also meet separately with representatives of the Federation of Finnish Enterprises to discuss local labour agreements. 

 

According to the federation’s view, the labour organisation negotiations do not meet the government objectives concerning local labour agreements.

 

The government is estimating a possible need for more cuts and income tax reductions, considering the economic situation.