Lauri Lyly, the president of the Central Organisation of Finnish Trade Unions (SAK), was mobbed by members of the media as he commented on SAK's proposal to boost the competitiveness of businesses.Employer and employee organisations are clambering to iron out a dispute between trade unions and the Government over measures to improve competitiveness.

The Central Organisation of Finnish Trade Unions (SAK) unveiled on Thursday its proposal for measures to boost the competitiveness of businesses. The proposal, however, was rejected as insufficient by a number of stakeholders, including Minister of Finance Alexander Stubb (NCP), employer organisations and the Confederation of Unions for Professional and Managerial Staff (Akava).

Industrial organisations will nonetheless explore whether an agreement on the necessary measures can be found.

“We've sat down and decided to see which preconditions for presenting a joint proposal to the Government are in place,” commented Antti Palola, the chairperson of the Finnish Confederation of Professionals (STTK).

Sture Fjäder, the chairperson of Akava, reminded that the negotiations remain tentative. “We aren't quite yet in a place that the negotiations could start,” he said.

SAK proposes, for example, that wage increases be waived in 2017 and that the “extreme” wage moderation could continue into 2018. Employees, meanwhile, would be made responsible for certain social security contributions instead of employers.

The proposal is a response to the Government of Juha Sipilä (Centre), which has identified wage cuts as a means to boosting the competitiveness of businesses. The Government is poised to present the legislative changes to the Parliament for consideration next week unless labour market organisations can agree on a joint proposal by 4pm on Monday. The tight deadline has been deemed unattainable by labour market organisations.

The proposal unveiled by SAK contains a number of difficult features from the viewpoint of the Government.

First, labour costs would not decrease in accordance with the objective prescribed by the Government. SAK has calculated that its measures would reduce unit labour costs by 4.2 per cent, 0.8 percentage points less than the objective of the Government.

“The underlying reason is whether or not we can bring about improvements in competitiveness in the short term. It doesn't meet the objectives of the Government,” stated Vesa Vihriälä, the managing director at the Research Institute of the Finnish Economy (Etla).

Second, SAK proposes that unemployment security and other labour market questions be addressed as part of the agreement, demanding that the cuts in unemployment security laid out by the Government are scaled down.

The Confederation of Finnish Industries (EK) and Local Government Employers (KT) doubt that the proposal satisfies the demands of the Government. Jyri Häkämies, the chief executive at EK, considers the proposal on wage moderation nevertheless a step in the right direction.

Fjäder, on the other hand, has criticised the proposal. Akava has announced its willingness to seek a compromise by adjusting holiday bonuses and working hours.

“SAK should finally face the facts. Why should we go about this by adopting complex increases in employee contributions, when the whole matter could be solved by raising weekly working hours by an hour?” he asks.

He is also bemused by the willingness of SAK to revisit the pension agreement reached earlier. SAK proposes that pension contributions be temporarily lowered and that the subsequent deficit be erased in the 2020s.

The key for SAK is that, unlike the proposal of the Government, its proposal does not affect the terms and conditions of employment. In addition, wage earners would shoulder the burden of the measures more evenly as the proposal of the Government would place a greater burden on people working overtime and on Sundays.

SAK would also refrain from slashing the wages of employees, although their net earnings would decline as a result of an increase in the contributions deducted from wages.

“It's quite a tough compromise,” described Eero Lehto, the head of forecasting at the Labour Institute for Economic Research.

Teemu Luukka, Juhani Saarinen – HS
Aleksi Teivainen – HT
Photo: Arttu Luhtala / HS