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Finland will be able to narrow the competitiveness gap between itself and Germany as a result of the moderate wage hikes introduced in recent years, views to Olli Koski, the chief economist at SAK.Some of the five per cent productivity leap sought by the Government of Juha Sipilä (Centre) has already been achieved, estimates Olli Koski, the chief economist at the Central Organisation of Finnish Trade Unions (SAK).

His estimate is based on a report released by the Information Committee on Cost and Income Developments.

The report indicates that the competitiveness of Finland is set to improve as a consequence of the moderate wage increases introduced in recent years: while the unit labour costs of Finland are projected to rise by a total of five per cent in 2013–2017, those of Germany are to rise by more than nine per cent.

“The competitiveness gap between Finland and Germany will close by nearly five per cent. Some of the productivity leap sought by the Government has therefore already been achieved as a result of labour market agreements,” analyses Koski.

The Information Committee on Cost and Income Developments also forecasts that this year the combined purchasing power of Finns will continue to improve at an annual rate of one per cent per for the second consecutive year. The purchasing power will improve as a result of sluggish inflation and, especially, the bump in standard tax credits for earned income that will reduce the taxation of low and middle-income households.

Next year, however, the purchasing power will erode despite a projected improvement in the employment situation. “Finland needs a wage settlement promoting employment and purchasing power that will boost competitiveness also in the coming years,” Koski says.

The Information Committee on Cost and Income Developments was appointed by the Government and includes representatives from SAK, other labour market confederations and the Ministry of Finance.

Aleksi Teivainen – HT
Photo: Markku Ulander – Lehtikuva
Source: Uusi Suomi

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